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Main Subject - Internal Control - The Why and How
Many retailers do not have good internal controls in place and place little importance on them. They are concerned with the buying and selling of merchandise and do not place enough emphasis on making certain that the sales get recorded, the money gets in the bank, the invoices are paid only once and the inventory reports are correct
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
.
Why should you be interested in establishing and maintaining sound internal controls? Good internal controls help ensure the accuracy, completeness and validity of information. They help to prevent anyone from deliberately tampering with information and also help prevent employee dishonesty. Internal controls do this by buildi
Why should you be interested in establishing and maintaining sound internal controls? Good internal controls help ensure the accuracy, completeness and validity of information. They help to prevent anyone from deliberately tampering with information and also help prevent employee dishonesty. Internal controls do this by buildi
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
g checks and balances into your procedures and record keeping system.
What happens when internal controls are lacking? Following are several examples of actual incidents where we were called upon by retailers after they discovered occurrences of internal theft.
The store manager who was "transferring" merchandise from one store to
What happens when internal controls are lacking? Following are several examples of actual incidents where we were called upon by retailers after they discovered occurrences of internal theft.
The store manager who was "transferring" merchandise from one store to
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
another. In fact, he was diverting the merchandise for his own use.
The bookkeeper who "adjusted" her own charge account so she was getting her merchandise free.
The salesperson who processed cash refunds using fictitious names and pocketed the money.
The cashier who destroyed cash sales tickets and pocketed the cash.
The bookkee
The bookkeeper who "adjusted" her own charge account so she was getting her merchandise free.
The salesperson who processed cash refunds using fictitious names and pocketed the money.
The cashier who destroyed cash sales tickets and pocketed the cash.
The bookkee
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
er who used company checks to pay her personal bills.
The receiving clerk who helped himself to new merchandise that had been received.
The above examples resulted in losses to these retailers ranging from several thousand dollars to fifty thousand dollars. In all these instances, good, sound internal controls were either lacking o
The receiving clerk who helped himself to new merchandise that had been received.
The above examples resulted in losses to these retailers ranging from several thousand dollars to fifty thousand dollars. In all these instances, good, sound internal controls were either lacking o
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
not being enforced.
The above examples emphasized internal theft; however, lack of sound, well-enforced internal controls can also result in other problems for the retailer. For example, without them the following can occur:
Vendor invoices paid twice. This not only reduces cash but overstates book inventory and results in shrink
The above examples emphasized internal theft; however, lack of sound, well-enforced internal controls can also result in other problems for the retailer. For example, without them the following can occur:
Vendor invoices paid twice. This not only reduces cash but overstates book inventory and results in shrink
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
age.
Inaccurate management information resulting in wrong decisions being made.
If charge sales or payments are posted to customers accounts incorrectly you run the risk of losing valuable customers.
How difficult is it to institute a system of good internal controls in your store? It does not require excessive amounts of extra wo
Inaccurate management information resulting in wrong decisions being made.
If charge sales or payments are posted to customers accounts incorrectly you run the risk of losing valuable customers.
How difficult is it to institute a system of good internal controls in your store? It does not require excessive amounts of extra wo
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
k and time to put good them in place. Many controls are very easily established with only minor changes to the existing procedures. The hardest part is actually identifying all the areas where
internal controls are lacking. While the store owner is the person
most familiar with the store's operations, many times it takes the r
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
eview of a retail specialist to identify the areas where internal controls are needed.
If you are wondering if your internal controls are adequate, following is a sampling of several common control procedures and why they are important.
If handwritten sales slips are being used, they should be numbered and all numbers should be acco
If you are wondering if your internal controls are adequate, following is a sampling of several common control procedures and why they are important.
If handwritten sales slips are being used, they should be numbered and all numbers should be acco
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
nted for in the office. This helps prevent employees from destroying cash sales slips and pocketing the money. It also helps to prevent the inaccuracy of sales, inventory and accounts receivable records due to misplaced or lost sales slips.
All transfers of merchandise from one store to another should be documented using numbered,
All transfers of merchandise from one store to another should be documented using numbered,
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
4-ply transfer documents. One copy of the transfer document is sent immediately to the office. One copy is kept in the sending store, one copy is sent by mail to the other store. The another copy is sent with the merchandise to the receiving store. The receiving store uses the transfer document to ensure they received all the mer
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
chandise. Once they have signed off, one copy of the receiving document is sent to the office where it is matched with the first copy. This ensures that all transfers are accounted for and recorded properly.
Cash refunds should always be a two-person transaction, with the store manager being the second person. Require the custome
Cash refunds should always be a two-person transaction, with the store manager being the second person. Require the custome
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
's signature, address and phone number on the cash refund slip to verify that they received the cash. Someone in the office should follow up on customer returns with a phone
call to the customer to make sure the customer was well treated in the store when they made their return. This also serves to validate the fact that the return
call to the customer to make sure the customer was well treated in the store when they made their return. This also serves to validate the fact that the return
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
was in fact made. Require that the customer's copy of the original sales slip be attached to the cash refund slip. Enterprising shoplifters have been known to try to obtain a cash refund by returning stolen merchandise. Also, if a customer wants a refund for merchandise paid for by check, a refund check should be mailed after suff
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
cient time has elapsed to ensure that the customer's check will not be returned to you by the bank.
Checks should never be signed unless all the supporting documentation is there; then this documentation should be "canceled" in some manner so it cannot be used for another check. This is also a good time to check for discounts that w
Checks should never be signed unless all the supporting documentation is there; then this documentation should be "canceled" in some manner so it cannot be used for another check. This is also a good time to check for discounts that w
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
re not taken or for credit memos that were not deducted.
One are in which employees can accomplish theft in wholesale quantities is in the receiving area. To prevent employees from putting boxes of merchandise in with the empty boxes from receiving so they can take it out for an accomplice to pick up later, keep the trash area separ
One are in which employees can accomplish theft in wholesale quantities is in the receiving area. To prevent employees from putting boxes of merchandise in with the empty boxes from receiving so they can take it out for an accomplice to pick up later, keep the trash area separ
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
ate from other areas in receiving so the store manager can easily check the trash at any time. You could also require that the empty boxes be broken down so no merchandise can be hidden in them. Clear plastic bags should be used to collect trash.
If you are using a computerized record keeping system, ensure that passwords are used
If you are using a computerized record keeping system, ensure that passwords are used
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
herever appropriate to prevent unauthorized persons from knowingly or inadvertently changing data. A disgruntled employee could deliberately sabotage the company's records or change their balance in accounts receivable.
As a retailer, you should be very concerned with having good internal controls in place to safeguard your assets (
As a retailer, you should be very concerned with having good internal controls in place to safeguard your assets (
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
cash and merchandise) and to ensure that the company's records are correct. Once internal controls are in place steps must be taken to ensure that all procedures are followed at all times.
The National Retail Federation publishes a handbook titled "Internal Audit Manual" that can be helpful in determining your company's weak areas.
The National Retail Federation publishes a handbook titled "Internal Audit Manual" that can be helpful in determining your company's weak areas.
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
If you do not have the time or inclination to do this yourself, seek outside assistance. It will be well worth the money spent.
If you do not invest the time and money to set up good internal controls now, you will be paying for it later in the form of theft, by employees or others, and inaccurate, misleading management information
If you do not invest the time and money to set up good internal controls now, you will be paying for it later in the form of theft, by employees or others, and inaccurate, misleading management information
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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