DEPARTMENT OF ACCOUNTANCY
UNIVERSITY OF ILLINOIS
MEMORANDUM

TO: Mooreman’s Hardware
FROM: Alex Gebert
DATE: March 5, 2013
SUBJECT: Evaluation of Mooreman’s Hardware’s Inventory Controls

Objectives
The inventory acquisition control objectives of Mooreman’s Hardware help ensure the company goals of customer satisfaction, quality inventory, and accurate inventory levels are being met. Mooreman’s purchasing techniques ensure that the necessary amount and the correct type of inventory are being purchased. By doing so, Mooreman’s various store locations maintain adequate inventory levels to satisfy customer demand. The receiving techniques used by Mooreman’s ensure that incoming orders are error-free in terms of both inventory quantity and inventory quality. The recording process coordinates agreement between the receiving of inventory and the corresponding payments.
Process Map

Risks
Mooreman’s inventory acquisition process faces significant risks. When Mooreman’s receives an incoming order; a company employee compares the physical count of the inventory received with the physical count listed on the vendor’s packing list. If a discrepancy between the two goes unnoticed, the company inadvertently pays for goods that it never receives. Such payments place financial burden on the company. Mooreman’s also faces the risk of employee theft during the unloading inventory because of the lack of employee oversight during the process. As a result of the theft, Mooreman’s inventory count may disagree with the packing list provided by the vendor. Because of this disagreement, the company risks losing a vendor that is actually trustworthy.
Control Activities
Mooreman’s uses a series of control activities to ensure the accuracy of its inventory acquisition techniques. During the receiving phase, a warehouse clerk not involved in the physical unloading of