Audit

Faculty of Management (Bachelor of Accounting) ASSIGNMENT AUDITING 1 (BC 200) Prepared for,

Lecture: MR HARI RAMULU A\L MUNUSAMY Prepared by, GROUP MEMBERS

REFILWE NCHE TLHAPISO LIM SUE ERN KHOO WEI MUN

1061110257 1061111641 1061111717

FUJITSU SDN BHD CORPORATE PROFILE

Fujitsu Component (Malaysia) Sdn Bhd (FCM) is a Malaysian based subsidiary of Fujitsu Component Limited, Japan.Established in October 1980; FCM began commercial production of electromagnetic relay coils thereafter assembled by Fujitsu (Singapore) Pte. Ltd., the parent company of FCM. In lieu of Fujitsu's globalisation policy and the recognition of FCM as a major overseas electromechanical devices manufacturing base, the ownership of FCM was transferred to Fujitsu Limited, Japan in June 1986. In July 1995, Fujitsu Takamisawa Component Limited was formed to strengthen the collaboration of technical expertise between Fujitsu Limited Japan and Takamisawa Electric Company Limited. FCM thus became a subsidiary of this newly formed company. Fujitsu Takamisawa Component Limited had since become Fujitsu Component Limited and Nagano Fujitsu Component Limited, with FCM now being a subsidiary of Nagano Fujitsu Component Limited under Fujitsu Component Limited. Now FCM is a subsidiary of Fujitsu Component Limited, Japan. Today, FCM's product focuses on two key areas of electromechanical components Relays, Keyboards/Mouse/Pointing Devices, and their parts thereof. For support purposes we also manufacture dies and assembly machines for the electronic products. Our products are sold through the worldwide network of Fujitsu Component sales offices, whilst technical and administrative support is provided by both Fujitsu Component Limited and Nagano

Fujitsu Component Limited.

PHILOSOPHY Fujitsu pledges to always strive to provide innovative, superior goods and services to its customers throughout the world. In doing so, it will establish and maintain harmonious relations both locally and internationally.it seeks to make a positive contribution to world society.

VISION To be a global leader in Electro-Mechanical component parts manufacturing fully pleasing our customers.

MISSION Fujitsu specialises in the manufacturing and installation of specific products for the customers.

CUSTOMER SATISFACTION By establishing a quality management system to achieve customer satisfaction and prevent non-conformity from development to servicing, FMS was amongst the first IT organisations in Malaysia to be awarded the ISO 9001 certification in 1994.

ORGANISATIONAL CHART

SYSTEM OF INTERNAL CONTROL Effective internal control is a foundation for the safe and sound operation of any institution. It is a process affected by an entity’s board of directors, management, and other personnel. It is designed to provide reasonable assurance about the achievement of the institution’s objectives with regard to the reliability of financial reporting, the effectiveness and efficiency of operations, and compliance with applicable laws and regulations. The design and formality of an entity’s internal control will vary depending on its size, the industry in which it operates, its culture, and management’s philosophy. Examiners perform an overall assessment of an institution’s system of internal control during each examination. An external auditor brings an independent and objective view to an institution’s financial reporting process. This, in turn, contributes directly to the achievement of the institution’s objectives for this process by performing a financial statement audit and, in some cases, an internal control audit or examination. Indirectly, this process provides information useful to management, the board of directors, and its audit committee in carrying out their responsibilities. The objective of an audit of an institution’s financial statements is for the external auditor to express an opinion on the fairness with which the financial statements present, in all material respects, the institution’s financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. The auditor’s opinion is communicated to the institution’s board of directors, audit committee, and management through the auditor’s report. When conducting a financial statement audit, the auditor must obtain a sufficient understanding of the institution’s internal control to plan the audit and determine the nature, timing, and extent of tests to be performed during the audit. Although the auditor may become aware of control deficiencies during the course of a financial statement audit, the auditor is not required to perform procedures for the specific purpose of identifying deficiencies in internal control.

Nevertheless, among the responsibilities of the external auditor in connection with a financial statement audit is to communicate to management and the audit committee (or board of directors) matters related to the institution’s internal control over financial reporting that were identified during the audit. An external auditor may also be engaged to audit or examine the effectiveness of an institution’s internal control over financial reporting and express an opinion on it at the end of the fiscal year. In connection with such an engagement, the auditor also has a responsibility to communicate certain information concerning internal control matters to management and the audit committee

BASIC STANCE ON INTERNAL CONTROL FRAMEWORK AND STATUS IMPLEMENTATION OF FUJITSU SDN BHD The Company, through a resolution by the Board of Directors, has adopted the following basic stance on the framework for internal revised

on

April 28,

control (resolved on

May 25,

2006, and

2008).

1. OBJECTIVE The Fujitsu Way, which embodies the philosophy, values, principles and code of conduct for the Fujitsu Group, describes the vision of the Fujitsu Group as follows: “Through our constant pursuit of innovation, the Fujitsu Group aims to contribute to the creation of a networked society that is rewarding and secure, bringing about a prosperous future that fulfills the dreams of people throughout the world.” The compabanye believes that by conducting our activities in accordance with the Fujitsu Way, they maximize the value of the Fujitsu Group and enhance their contribution to the communities in which they operate and to society as a whole. In addition, in order to continuously enhance the corporate value of the Fujitsu Group, it is necessary to pursue management efficiency and control risk arising from our business activities. Recognizing that it is essential to strengthen our corporate governance in order to accomplish this, we will continuously strive to implement the policies described below.

(1) SYSTEM TO ENSURE EFFICIENT BUSINESS EXECUTION BY DIRECTORS At Fujitsu, there is a separation of the oversight and operational execution functions of management. The Board of Directors oversee the execution functions of the Management Council and other management bodies, and makes decisions on important matters. Among executive organs, the Management Council discusses and decides upon basic management policies and strategies and also decides upon important matters regarding management execution. Matters taken up by the Management Council, including discussion items, are reported to the Board of Directors, and the Board of Directors decides upon any important issues. b. To strengthen the management oversight function, Fujitsu proactively employs outside directors and auditors. c. The Board of Directors clarifies the scope of authority for board directors, corporate vice presidents and managing directors (hereafter collectively referred to as “senior management”) as well as other business execution organs, and ensures that business is conducted in accordance with the division of business duties. d. In performing their duties, senior management follows appropriate decision-making procedures, such as the Board of Directors Rules, Management Council Regulations, and Regulations on Corporate Decision-Making. e. In addition to making employees thoroughly aware of management policies, senior management sets and achieves concrete goals in order to accomplish overall management goals. f. To pursue operational efficiency, senior management promotes continuous improvement of internal control systems and reform of business processes. g. By having senior management and other business execution organs provide monthly financial reports and business operation reports, the Board of Directors observes and oversees the status of achievement of management goals.

 ( 2) SYSTEM TO ENSURE THAT BUSINESS EXECUTION OF DIRECTORS AND  EMPLOYEES COMPLIES WITH LAWS AND ARTICLES OF INCORPORATION a. Senior management adheres to the Fujitsu Way as a basic vision for compliance issues, including compliance to laws and the articles of incorporation, and proactively promotes the Group’s overall compliance on an ethical basis. b. By continuously administering training, senior management instills adherence to the Fujitsu Way in employees and promotes the overall Group’s compliance. c. Senior management clarifies the legal and other regulations that relate to the Fujitsu Group’s business activities and implements internal rules, training and oversight systems necessary to adhere to them, thereby promoting the compliance of the Group as a whole. d. If senior management or employees become aware of the possibility of a major compliance violation in connection with the execution of business activities, they immediately inform the Board of Directors and the Board of Auditors via normal reporting channels. e. In order to use independent information sources outside of normal reporting channels to discover and deal appropriately with compliance problems on a prompt basis, senior management establishes and operates an internal reporting system that protects whistleblowers. f. The Board of Directors receives periodic reports on the status of business execution from executive officers and verifies that there are no compliance violations in relation to the execution of work.

3) SYSTEM TO ENSURE APPROPRIATENESS OF AUDITS BY STATUTORY AUDITORS Ensuring independence

of

auditors:

a. Fujitsu has set up a Statutory Auditors’ Office with employees assigned to assist the statutory auditors in carrying out their duties. Appropriate employees with the ability and expertise required by the statutory auditors are assigned to the office. b. In order to ensure the independence of the staff in the Statutory Auditors’ Office, matters relating to their appointment, transfer and compensation are decided on the basis of prior consultation with the auditors. c. In principle, senior management does not assign office staff to other divisions or duties. In instances, however, where a need arises to give dual assignments to staff with specializedknowledge in response to requests from statutory auditors, care is given to ensure their independence. REPORTING SYSTEM a. Senior management of Fujitsu and Group companies provides the statutory auditors with the opportunity to attend important meetings. b. In cases where risks arise that could affect management or financial results, or where there is an awareness of major compliance violations in connection with the execution of business activities, senior management as well as employees of Fujitsu and Group companies immediately reports on them to the statutory auditors. c. Senior management as well as employees of Fujitsu and Group companies periodically reports to the statutory auditors on the status of business execution. ENSURING

EFFECTIVENESS

OF STATUTORY AUDITORS

a. Senior management of Fujitsu and Group companies periodically exchange information with the statutory auditors. b. The internal audit organization periodically reports to the statutory auditors on audit results.

c. The auditors have the independent accounting auditor explain and report on accounting audits as required and periodically exchange information with the independent accounting auditors.

REVENUE CYCLE PROCEDURES The cycle concept presents a framework for viewing the interrelationship between accounts affected by the same transaction or business activity. Audit evidence verifying the existence and proper valuation of accounts receivable also provides evidence of the existence and valuation of recorded revenue,and vice versa.When examining sales transactions, the auditor also gathers evidence on proper credit authorization and the proper valuation of the recorded transactions.Further,a review of sales contracts provides evidence to analyze the adequacy of the client’s warranty expenses and related liability. Sales transactions often serve as a basis for computing commissions for sales staff.Sales information is used for strategic long-term decision making and marketing analysis.Thus, the accuracy of accounting in the revenue cycle is important for management decisions as well as for the preparation of financial statements. 1. FUNCTIONS OF THE REVENUE CYCLE Revenue cycle includes following functions: • Concluding services contracts with customers, client acceptance procedures, • Credit control • Activation and disactivation of subscribers • Providing cellular communications services and products • Customer master file maintenance • Customer billing • Sales analysis • Customer returns and allowances • Collection of accounts receivable • Provisioning for doubtful accounts • Receipt of cash from trade customers (initial deposit, prepayments, under/over payment, regular receipts.

2. CRITICAL FORMS AND DOCUMENTS ASSOCIATED WITH THE CYCLE: • Service agreements with clients; • Billing system output (minutes used by clients); • Invoices • Credit memos; • Bank statements evidencing payments for services received

3. COMMON RISKS ASSOCIATED WITH THE REVENUE CYCLE AUTHORIZATION AND ACCURACY OF CONTRACTS WITH CLIENTS • Unauthorized rates or prices are quoted.

• Extension of credit terms to customers who represent unacceptable credit risks to the company. • Orders may be accepted/contracts concluded from/with related parties without management’s knowledge. • Orders may be accepted at prices or on terms that violate governmental laws and regulations.

OVERVIEW OF FUJITSU’S REVENUE PROCESS The revenue cycle of Fujitsu is trigeered by a salesorder from customers.fujitsu has a sales line so that custmers may speak to one of the knowleagable sales represaanttative who can help the customers with their production selection. Sales staff can exploit the information accumulated in the system to make proposals to customers that best suit customers’ individual needs. In addition, sharing a variety of sales information makes possible systematic sales activities. If the customers have more technical pre sales questions their questions they are advised to email them and hence they will be forwarded to the appropriate pre sales staff. Evaluation and post sales must go through Fujitsu’s web support tool. When oreders are reeceived from new customers, the credit department performs a credi check on the credit standing of the customer. The customer is requestd to fill a credit approvla form to make certain that credit is extended to desirable customers in order to preventexcessive mount of uncloolectible debt as well bad debts. The amount of the credit lilmit is stipulated in the credit approval form.

BASIS ACCOUNTS RECEIVABLE PROCESS OF FUJITUSU CASH RECEIPTS (CASH SALES) SALES ORDER CONFIRM SHIPMENT ACCOUNTS BILLING FORWAD TO BILLING DEPARTMENT

BILL SALES ORDER

RECEIVABLE CASH RECEIPTS

CASH RECEIPTS (CASH SALES)

APPLY CASH

The customer sends a sales order to Fujistu by way of telephone and email. This document contains the details of the type of goods and the quantity ordered by the customer. This sales order is then sent to shipping department to authorise them to deliver the gooods to the customer. Goods are not shipped without proper authorisation as the sales oreder is matched with the order of the customer. Thes shipping depattment packs the goods and sends them to the adress of the customer. After the delivery of the goods, the shipping department furnishes the billling department with the sales order. The billing department ensures that the goods billed are authorised price to avoid quoutes of prices that are unlauful or misleading. The billing department also ensures that credit notes are only issued for goods that have beeen returned after the receivig department has issued the acknowledegemt of receipt of goods from customers. The cash colected is properly identified and promptly deposited intact at the bank. The cheques are deposited daily as a plocy by the company.

STEPS TAKEN BY THE COMPANY TO ENSURE CONTROL OVER RECORDS One of the most important controls in any accounting system is proper segreagation of duties. This is particualarly important in the revenue process because of potential theft and fraud.therefore individuals in the order ebtry, credit, shipping or billing should not have acceses to the accounts reeivable records, the general ledger or any cash receipt activities. The company has ensured segregation of duties. Only authorised people are in cahrge of certain primary activities. The individual who grants credit is not the individua who bills the customer to avoid the issue of sales oreder to ficticious people. The shipping function also

performs a function that is sepaarte from the billing function. The billing department scrutinises the sales order and the delivery note for any mismatches and irregularities. The accouts receivable is also segreagated from the accounting department to aoid situations where sales are not recorded and as a measure for preventing theft of goods.

CUSTOMER MANAGEMENT

CUSTOMER WORKBENCH

CUSTOMER MAINTENANCE

CUSTOMER BILL TO LOCATION

CUSTOMER SHIP TO LOCATION

CUSTOMER BUYING LOCATION

CREDIT SALES FLOWCHART

CUSTOMER

SALES

WAREHOUSE

CUSTOMER SERVICE

PLACE ORDER NO

ORDER COMPLETE

YES

SEND ORDER TO WAREHOUSE TO FULFIL

ITEM IN STOCK

YES RECEIVE ITEM

PURCHASES CYCLE

COMMUNICATE WITH THE CUSTOMER

As code in the definition, internal controls are to be an integral part of any organization's financial and business policies and procedures. Internal controls consists of all the measures taken by the organization for the purpose of; (1) protecting its resources against waste, fraud, and inefficiency; (2) ensuring accuracy and reliability in accounting and operating data; (3) securing compliance with the policies of the organization; and (4) evaluating the level of performance in all organizational units of the organization. Internal controls are simply good business practices. Internal control is highly related in each and every department in a company. To integral purchase control with the organization’s financial and business company policies procedures, Fujitsu has adopted various ways to ensure the business runs smoothly. Fujitsu Way is a guideline of all controls in the business as it leads the core value of the company. Fujitsu Way comprise of four core elements, which include corporate vision, corporate value, principles and code of conduct. Besides, Fujitsu business policy is a strategies pursued in accordance with the Fujitsu Way. Base on the Fujitsu Way, stakeholders are able to understand Fujitsu Corporation better where the existence of the corporation, value, principles as well as rules are clearly stated in the Fujitsu Way. The main goal of having Fujitsu Way is to cultivate the good practice in their company stakeholders. The tradition and atmosphere occur in the corporation has also been lead the employees to follow the discipline set and gradually lead to a better internal control in the corporation as the mind set of the employers and employees are at the right and true path. At the mean while, the Fujitsu Way which respect employees diversity and support individual growth allow a space to the employees to have self improve and opportunity to carry out own unique way in dealing business transaction also lead the corporation to have a better internal control. As different individual are able to create unique controls to suit different individual, the Fujitsu Way has bring out many innovation people thought and dynamic corporation value, which can then lead to a better control in the corporation. In addition the fair evaluation and rewards to the employees have also decrease the risk in internal controls as well as provide a safe and comfortable working environment to the corporation.

With the Fujitsu Way, employees are strongly motivated and have ample opportunities for advancement and feel pride, confident and joy working with Fujitsu Corporation. Furthermore, Fujitsu Corporation build a mutually benefits relationship with their business partners. As we dealing with purchase controls, business partners are part of the business transaction. A good relationship with business partner will aid the company purchase controls system as both parties can hand in hand cope with the errors that will possibly occur. For example, Fujitsu and their suppliers can corporate and come out with supervision team to overview the corporation day to day transaction. Besides that, Fujitsu emphasis on fair trade, regulatory compliance, information security to fulfill the corporation social, ethical and legal obligations have been practice from the start of Fujitsu and highly influence the corporation’s culture and stakeholders. At the mean while, senior management of Fujitsu strives to maintain the Fujitsu business continuity that they assign certain department to deal with each type of risk and put in place into the appropriate risk management system. As long as there is any potential risk arising in the business, the senior management will carry out risk mitigation initiatives and try to minimize the losses from risk occurred. In addition, a risk management committee is created to carry out necessary countermeasures. A periodically analysis risks will be engages to prevent recurrence risks. With accordance, an internal reporting system has been also set up to ensure the protection of whistle blowers. Follow with the rules set in Fujitsu, senior management established an appropriate system appointing a few documentation managers to have segregation of duties and to ensure strong internal controls. There is also a system enable the directors and auditors to verify the status of execution of business duties as the documentation kept by the documentation manager are accessible in the system. Furthermore, special internal control department in Fujitsu who responsible in pursuing initiatives to implement operational execution structure by reviewing and revising corporation regulations and business operation make up a strong system in internal controls. Fujitsu Way that have been established is a one of the conductive guideline for all created by this special department and will be revise from time to time to suit the nature of business.

As human are not perfect, careless mistake will occur in every business, the same situation occurs in Fujitsu. Human error, misunderstandings, fatigue and stress will lead to the error in running a business transaction. Due to this matter, Fujitsu try their best to provide a peaceful and good environment for their employees to reduce any unforeseen constrain in carrying our their duties. Moreover, there is no such thing as a perfect control system. The number of employees will obstruct efforts to properly segregate duties, yet the implementation of compensating controls can ensure that objective is achieved. Sometimes, the cost of implementing a specific system control will exceed the expected benefit of the control. An adequate control may not suit all type of corporation, so Fujitsu has chosen the best suit control system to ensure it fits to the organization needs and requirements. Internal controls is mean to reduce the risks associated with undetected errors or irregularities, but designing and establishing effective internal controls is not a simple task as thought and cannot always be accomplished through a short set of quick fixes in a short period. Fujitsu believe that there is a always space of improvement, so the corporation is willing to take any necessary cost to maintain their high creditability in internal control and to increase the value of Fujitsu Corporation.

Steps in the Purchasing Cycle Recognize, describe, define the need

Classification Of Needs 1. 2. 3. 4. 5.

Specification Of Need

Type Of Need Strategic Or Operational? Repetitive Or Non-Repetitive Size (quantity; dollars) Speed/Timing Transmit the need (requisitions) A. B.

standard requisitions traveling requisitions

Determine sources, investigate, and select supplier/analyze bids Prepare and issue the PO Follow-up the order (including expediting and de-expediting) Receive and inspect the material (use of receiving report: purchasing, accounting, user, receiving) Clearance of the invoice and payment to supplier

Close the order/records

INVENTORY CYCLE

Purchasing process

•

Purchase of raw materials

•

Payment of manufacturing costs

Inventory management process

Revenue process

Sales of goods

Human Resource management process

Assignment of direct and indirect labour costs

As a leading manufacturing firm, inventory is a major component of the balance sheet of Fujitsu. However, it also represents one of the most complex parts of the audit since the company manufactures more than one product in its manufacturing process. Sales, purchasing, production, transfers and adjustments all have an impact on inventory, which itself is often maintained at different locations. Therefore, it is important for Fujitsu to implement an effective inventory control that is designed to support the requisition processing, inventory management, purchasing, and physical inventory reconciliation functions of inventory management through a set of highly interactive capabilities. The inventory management process of Fujitsu is affected by the control procedures for the revenue, purchasing, and human resource management process, each of these processes interacts closely with the inventory management process.

At Fujitsu, inventory control system uses the following documents for entering and maintaining information: •

Production Schedule

•

Receiving Report

•

Material Requisition (MR)

•

Stock Issue Confirmation(CI)

•

Stock Return(SN) –Revised accounting at issue

•

Inventory Adjustment (IA)

•

Inventory Master File

•

Production Data Information

•

Inventory Status Report

•

Shipping Order (SO) At Fujitsu, the inventory control process can be divided into the following general

categories: Demand management which covers the processes for sales and operations planning, sales forecasting and finished goods inventory deployment planning. Once the marketing department forecasts consume and predicts that there is expected demand will exist for a particular product, the design department will responsible to prepare production schedule periodically based on the expected demand predicted. The production schedules contain information on the planned level of operating activity such as the inventory planning and ordering which is often accompanied by material requirement planning (MRP). Once the goods are received from the suppliers, they are transferred from the receiving department to the warehouse department and the data must be recorded into the Receiving Report to update the entity’ perpetual inventory records. After that, when the goods have arrived in the warehouse, the warehouse department is responsible to safeguard the goods against pilferage or unauthorised use. The employees are also given the proper instructions for counting, weighing, measuring and checking the goods in the warehouse on a daily basis. Besides that, the employee that responsible for the inventory records is different from individual who responsible

for controlling the inventory to prevent unauthorized shipments of goods occur at Fujitsu. The inventory records must be approved by respective manager before they could be reflected in the system and also updated in the Inventory Master File. This demonstrates that the inventory stores function is segragated from the cost-accounting function. In order to track the raw materials needed for production purpose, the Material Control Department is responsible to prepare the materials requisitions and issues the goods to the appropriate manufacturing department. The cost accounting will be conducted periodically for ensuring that there is adequate control over the physical flow of the goods and proper accumulation of the costs attached to the inventory as goods are processed through the manufacturing process. Managers will examine the costs of high value item, the investigation and also adjustments for the inventory will be conducted if necessity. In the mean time, the manager is responsible to ensure all the stock has been properly valued in terms of lower-of-cost-or net realisable values, whichever is lower. Once the goods are completed from the manufacturing process, they are transferred to the Finished Goods Stores. Again, the manager will ensure there are adequate safeguards against pilferage or unauthorized use. Logistic Department is responsible to supervising the physical inventory, whereas Finished Goods Stores is responsible for the storage and control over the finished products. Both of the duties are perform by different employees to prevent the existence of possible errors and fraud or misstatement of inventory quantities or values. When the Finished Goods Stores Department receives shipping order from the revenue process, amount of goods ordered by the customer are then transferred to the shipping department for shipment to the customer. Stock Issue Confirmation is then issued by warehouse to confirm that the items have been issued to the customer and thus reduced the on hand quantity of the inventory by the amount issued. Stock Return (SN) is issued to the Finished Goods Stores when the return of stock items to inventory by the customers.

Throughout the inventory management process, the Production Control Department is responsible for the identification of defective, damaged, obsolete, and slow moving stock and also conducts the appropriate investigation to find out the reasons for the occurrence of such unfavourable outcomes as well as the solutions to overcome these deficiencies. Manager of Production Control Department will also evaluates the usage of the slow moving or non movement stock, and determine whether it should be continue to use as inputs of further processing or scrap it as obsolesce items. An independent accountant is assigned to carry out the general ledger function to ensure that all the inventory and costs of production are properly accumulated, classified, and summarised in the general ledger accounts. Periodically reconciliation of the inventory balances and physical counts is conducted as to improve the financial control of the inventory. At Fujitsu, stock-taking instructions are mandatory required to follow by the client’s staff, to ascertain it, all the stock-takes are required to be observed carefully. Effective inventory control is a vital function to help insure the success of a manufacturing firm. Therefore, the effectiveness of Fujitsu’s inventory control is directly measurable by how successful the company is in providing high levels of customer service, low inventory investment, maximum throughput and low costs. In examining the inventory management process of Fujitsu, several underlying inherent risk factors needed to be considered as it will result in material misstatement. At Fujitsu, an independent and integrity senior management is involved in the inventory management process to oversee the entire process and to prevent certain inherent risks such as human errors or mistakes, management override of internal control and collusion. In addition to making employees thoroughly aware of management policies, senior management sets and achieves concrete goals in order to accomplish overall management goals. To pursue operational efficiency, senior management also promotes continuous improvement of internal control systems and reform of business processes.

Finally, by having senior management and other business execution organs provide monthly financial reports and business operation reports, the Board of Directors observes and oversees the status of achievement of management goals. Segragation of duties is a particularly important control and concentration in Fujitsu through the entire inventory management process in order to prevent the potential for theft and fraud or any manipulation of inventory records and costs, which leads to an over- or understatement. At Fujitsu, major control procedures for preventing fictitious records are carried out; including a proper segregation of duties, in addition to the pre-numbered documents and physical safeguards. Procedures for the transfer of inventory, material issuances and requisitions are then reviewed. Therefore, occurrence assertion can be provided. Besides, the most important assertion known as completeness assertion, which relates to the transcription of all inventory transactions and events and they must be accurately computed as the accuracy, this has been demonstrated by senior management and also the respective personnel when they carry out their duties. Overall, Fujitsu have got a very strong accounting and internal control as the stocktaker’s independence and standing (integrity and competence), the bases of valuation used and proper cut-off procedures employed are satisfied.

REFERENCES http://www.qpr.com/reversed-logistics-flowchart.html http://www.glovia.com/pdf/datasheets/GloviaSalesOrders.pdf http://www.glovia.com/pdf/datasheets/GloviaAccountsPayable.pdf http://www.glovia.com/pdf/datasheets/GloviaSalesOrders.pdf http://www.fujitsu.com/my/about/subsidiaries/fcm/ http://erp123.biz/wp-content/uploads/2008/09/inventory-management.jpg