Internal Control Checklist/Questionnaires/Assessment on Manufacturing Operation

Using the salient points below, you are able to establish internal control checklist and or
statement of policy of your companys manufacturing operations:

General
Policies and procedures for production planning, production process, modification process,
quality control, equipment maintenance, scrap and security should be clearly documented
and communicated.

Production/Modification Planning
Standard documentation should be used to communicate sales orders and
production/modification requirements to production personnel.
Production/modification schedules should be compared to sales orders to ensure that
production timing and quantities are appropriate.
Production/modification schedules should be reviewed and approved by an appropriate
officer.
Standard documentation should be used to communicate material requirement plans
(including quantities and dates) to the purchasing department.
Material requirement plans (MRPs) should be compared to production/modification
schedules weekly to ensure that quantities and timing (including the effect of lead times) are
appropriate.
Instances of insufficient or excessive raw material inventory should be monitored
weekly/monthly.
The MRP should be based on accurate and up-to-date bill of materials
(BOM).Production/Modification Process
Employees should be trained in the use of the equipment.
Employees should be trained to perform a number of tasks to provide cover for other skilled
employees.
Continuous improvement initiatives should be pursued in the following areas:
set-up and change-over time reduction
travel distance reduction within the entire manufacturing process
plant layout simplification and physical flow improvement
visual control systems to surface problems quickly
materials and tools stored at point of use rather than storerooms
Management should review and follow-up daily/weekly on:
order book status and order intake trends
production volumes and variances by product and location
machine utilization rates
production efficiency data (e.g. usage, scrap, rework etc.)
 Scheduled and unscheduled downtime
inspection and testing results
product quality data (defects, failures, customer complaints, warranty costs etc.)
output per employee and per productive hour
Production performance measures should be benchmarked internally and against other
organizations, including:
machine utilization rates
materials usage costs as a percentage of total production costs
scrap and rework levels
scheduled and unscheduled downtime as a percentage of total production time
inspection and testing costs as a percentage of total production costs
defect and failure rates
warranty and product liability costs as a percentage of total production costs
customer complaint and return rates
material stock levels divided by average daily usage employee productivity levels

The costing of the modification job should be approved by an appropriate officer.

Quality Control
There should be formally documented instructions / procedures on:
tests to be performed at each stage of the production process
steps to be taken in the case of negative results
documentation required to evidence completion and results of quality checks
Sufficient quantities of each production run should be tested to enable compliance with
quality control standards to be assured.
Quality assurance procedures should be integrated into the production process.
Defect rates, customer returns and complaints due to poor quality should be monitored.
Measuring equipment and devices should be calibrated at least once a year.

Maintenance
Responsibility for all aspects of equipment maintenance and management should be clearly
defined.
There should be a planned program for scheduled preventative maintenance.
Production equipment should be maintained in accordance with:
manufacturers specifications
contractual agreements
legal requirements

Scraps
Scraps should be classified and segregated for most profitable disposition.
Weights of scrap sold should be determined and verified independently.
Scrapping process should be witnessed by independent company personnel.
Security
Sensitive areas should be identified should include:
inventory storage and handling
high value part storage
shipping and receiving
vaults
toxic materials
Entry and exit points for sensitive areas should have appropriate security controls such as:
security personnel
gate passes
restricted access mechanisms
card keys
cameras and lighting
perimeter fencing
Smoke detection and fire-fighting equipment should be functional and provide adequate
protection.
Equipment and evacuation procedures should be tested on a regular basis and documented.
Security incidents should be formally reported and tracked.