Effective provision of asset accounting and control is important for sustainable business development. Many challenges in business are due to the influence of both internal and external factors. Management and prevention of risks determined by external factors in some cases does not depend only on making the right decisions in business and their implementation, which is absolutely the opposite in the case of internal factors.
Therefore, it is not surprising that for business development, it is inevitable to produce correct, timely and fair accounting of operations, which affects the company’s income and expenses and ultimately profitability. A complete and accurate accounting of assets, which includes both inventory and fixed assets and their control, requires special attention. There are frequent cases when the established control practices are incomplete, weak or contain such a deficiency that materially harms the interests of the company. This becomes especially important when the problem is obvious and requires timely response and correction. In such cases, there is a high tax risk and financial risks, such as incorrect data on the quality and value of the asset, high risk of accurate assessment of profit or loss, operational risk, and others that clearly indicate the lack of control and correct accounting. The listed risks are manifested by the following symptoms:
- Identifying significant excess and/or shortages in inventory
- A large volume of losses
- Existence of unreasonable costs in business
- Write-off – existence of useless fixed assets on the balance sheet for a long time
- Existence of disadvantaged commodity material stocks
- Material differences between book balance and actual balance with selective verification
- Disproportionate amount of stock on SKU (Stock Keeping Unit – unique identification number) in relation to sales
- Artificially created warehouse balances, accumulated unspent (frozen goods balances) commodity material stocks and others
Prevention, risk reduction and insurance of the above threats can be done by establishing a proper control system. This means the correct delegation of rights and duties, the creation of policy-procedures and work instructions, the establishment of the correct reporting system, the regular implementation of inventory, the arrangement of the operational process for the involved employees taking into account the specifics of the business, the number and scale of transactions, the adaptation of the job description to the correct operational process, the precise description of responsibilities and finally Implementation of monitoring of compliance with the introduced rules. Given, it is recommended to constantly undergo observation in the direction of refinement and improvement of processes, so that the increase in the efficiency of spending time and financial resources is constantly relevant.
A measure of the efficiency of the developed process and a cost reduction tool is the inventory. It is necessary and recommended to develop an inventory policy appropriate to the complexity of the business, where such issues as:
- Complete inventory of commodity material stocks
- Complete inventory of fixed assets
- ABC analysis, which includes the classification of assets according to value or other distinguishing characteristics and their inventory
- A partial inventory that makes up a continuous chain of inventory
- Constant control of negative balances and search for causes, etc.
Inventory is an important tool for management to have information about deficiencies in the operational process. The implementation of this control mechanism ensures the prevention of many risks and the reduction of losses, which is primarily a natural need for conducting a healthy business and establishing a permissible margin for reasonable errors. It is necessary and necessary to limit the maximum amount of loss, to determine the acceptable level of concentration of losses and to set limits taking into account other similar and business specifics – approval and continuous monitoring, targeting of results and updating of limits – review.
It is impossible to fully prevent, insure and/or mitigate all risks, however, modern management, within the scope of equal economic development opportunities, tries to use all possible tools of correct business management and make the most practical and result-oriented decision. All commercial activities are based on profit maximization so that Binzes can maintain and improve asset quality, ensure continuity of operations, develop activities and obtain maximum results, provide timely, accurate and relevant information to interested parties, be solvent and correctly determine the amount of tax in the budget.
