Question

suggest some specific controls that management must provide over inventory in a business that sells diamonds

Answer 1

Some of the specific controls that the management must provide for inventory are:

1. Safe custody : Given that diamonds are precious stone, they must stored in a safe place with a trusted custodian.

2. Maintain Economic ordering quantity system for placing orders.

3. Conduct periodic stock taking activities to ascertain inventory levels.

4. Order only at Re order point and maintain safety stocks.

5. ERP must be linked to inventory to match the physical stock with actual production and sales.