CIM Inventory Auditing & Data Accuracy 2 — Questions and Answers
Question 1: Which audit method involves counting a small subset of SKUs every day so that all items are counted multiple times per year?
- Annual physical inventory
- Cycle counting (Correct answer)
- Spot checking
- ABC stratified sampling
Correct answer: Cycle counting
Cycle counting divides inventory into segments counted on a rotating schedule, eliminating the need for a single annual shutdown count.
Question 2: A warehouse reports 500 units on-hand in the WMS, but a physical count yields 487 units. What is the inventory record accuracy (IRA) for this SKU?
- 97.4% (Correct answer)
- 2.6%
- 97.6%
- 98.5%
Correct answer: 97.4%
IRA = (487 / 500) × 100 = 97.4%, measuring how closely records match physical reality.
Question 3: Under ABC cycle-counting, 'A' items are typically counted:
- Once per year
- Once per month
- Most frequently — often monthly or more (Correct answer)
- Only when discrepancies are suspected
Correct answer: Most frequently — often monthly or more
A-class items represent high value or high velocity and are counted most frequently to maintain tight accuracy.
Question 4: What is the primary purpose of a 'blind count' during a physical inventory audit?
- To speed up the counting process
- To prevent counters from being biased by system quantities (Correct answer)
- To allow counting in low-light warehouses
- To eliminate the need for a recount
Correct answer: To prevent counters from being biased by system quantities
A blind count withholds system quantities from counters so they record what they actually see rather than confirming the system figure.
Question 5: Which document is typically used to reconcile discrepancies between physical inventory counts and system records?
- Bill of lading
- Inventory adjustment memo (Correct answer)
- Purchase order
- Packing slip
Correct answer: Inventory adjustment memo
An inventory adjustment memo (or adjustment transaction) formally records and authorizes corrections to system quantities after a count discrepancy is investigated.
Question 6: A 'phantom inventory' problem occurs when:
- Items exist physically but are not recorded in the system
- Items show positive balances in the system but are not physically present (Correct answer)
- Items are stored in an off-site location
- Items are miscounted during a cycle count
Correct answer: Items show positive balances in the system but are not physically present
Phantom inventory refers to stock that appears in the system but doesn't physically exist, often caused by theft, damage write-offs not processed, or receiving errors.
Question 7: Root cause analysis after an inventory audit discrepancy should focus primarily on:
- Punishing responsible employees
- Adjusting records to match counts without investigation
- Identifying the process failure that allowed the error to occur (Correct answer)
- Scheduling the next audit sooner
Correct answer: Identifying the process failure that allowed the error to occur
Sustainable accuracy improvement requires finding and fixing the underlying process failure, not just correcting the number.
CIM Inventory Auditing & Data Accuracy 2
Which audit method involves counting a small subset of SKUs every day so that all items are counted multiple times per year?