ACPN CONFERENCE 2024_102216_0021856.pptx

Life details

1. Accounting, Internal Controls, Inventory Management and Performance Evaluation for Community Pharmacists in Unstable Economy A Talk by Dr. Ekubiat J. Udo, FCA During Association of Community Pharmacists of Nigeria (ACPN) Akwa Ibom State Chapter 3rd Annual Scientific Conference (Ibom Day 2024) on the Theme: “Medicine Security in Unstable Economy: The Role of Community Pharmacists” On June 11 – 12, 2024 ,

2. Who Are You? Community Pharmacist As Chief Accounting Officer (CAO) Let me start by reminding Community Pharmacist that as an entrepreneur, you are the Chief Accounting Officer (CAO) of the Pharmacy. You are the Chief Accounting Officer (CAO) as well as the Chief Executive Officer (CEO) or the Managing Director (MD) and you must perform the following major tasks for the Pharmacy business: a. Oversees all accounting records and accounts (Books of Accounts); including ledgers, assets, credits, receipts and payments; b. Oversees payroll and budgeting. c. Oversees internal and external audits, and makes recommendations and changes to processes; d. Tracks, plan and file local, state and federal taxes; e. Ensures the preparation of financial statements/reports; f. Carryout analysis of the financial statements; and g. Sets up effective and efficient internal control system to achieve the pharmacy’s objectives.

3. Essential Books/Accounts for Pharmacy Business These include documents and books used in the preparation of financial statements. - Purchases Account - Payroll Account Sales Account - Cash Book Expenses Account - Final Accounts Expired Product Account Accounts Receivable Accounts Payable Non-Current (Fixed) Assets Ledger

4.   INVENTORY MANAGEMENT Inventory Management Methods Visual (physical) Method – Under this method, the pharmacist or the designated person takes physical count of the stock available only against the product list quantity at irregular interval. Period Method: Here, the Pharmacist or designated person takes physical count of the stock available and their respective costs against the product list quantity at regular intervals and a purchase order is raised when the quantity fall below the minimum amount. Hybrid of Method: Using physical count (visual and period methods) while maintaining a computerized system (perpetual method) comparing the quantities in the computerized system with what is actually on shelves (stock in hand). It also called perpetual method.

5. The Role of Information Technology in Inventory Management Utilizing hand-held scanning device for periodic inventory control by scanning the barcodes on the product packaging or shelf labels. The use of radiofrequency identification (RFID) microchips or “tag” from stores to pharmacies. Automation/computerization in pharmacy inventory management through the use of accounting software like Quickbooks , Sage 50, FreshBooks, etc. The use of stock management software is advisable. Note: The main purpose for stock management software that automatically tracks drug stock levels, ensures timely replenishment, forecasts demand, and records product expiry dates.

6. THE CONCEPT OF INTERNAL CONTROLS International Auditing Guidelines defined internal controls as the whole systems of control measures, financial or otherwise established by the management of a business entity to achieve the following objectives: To ensure adherence to management policies; To ensure that the business is being run in an orderly and efficient manner; To safeguard the assets; To secure as far as possible the completeness and accuracy of the financial records.

7. Types of Internal Control Measures Essential for Pharmacy Business P = Physical supervision and security (secure the pharmacy’s assets from unauthorized person like using CCTV, digital locks, passwords, reflective mirrors, barricades, etc ) A = Automated system/computerization R = Reporting/Reports – diverse reports (stock, sales, performance) and roll calls. P = Personnel Control (engage the right and high caliber of staff) S = Strategic meetings – focused gathering of key staff to discuss, define and refine overarching goals and tactics of the pharmacy. I = Internal audit and checks. S = Segregation of duties M = Management control – the use of budgets and forecasts A = Acknowledgement of performance – Transactions/operations should be acknowledged by means of signatures, sighting, initials, stamps, approvals, etc. D = Discipline erring staff while rewarding enterprising staff.

8. FINANCIAL PERFORMANCE EVALUATION Key Financial Performance Indices evaluate the success or failure of the pharmacy. It involves the interpretation and analysis of financial statements as well as indicating the financial performance that centers on worth, profitability, liquidity, risk, growth and expansion. Revenue (₦) xx Gross Profit Margin [Gross Profit/Revenue] [%] xx Operating Expenses [₦] xx Profit for the Year [₦] xx Accounts Receivables Turnover[times] xx Accounts Payables Turnover [times] xx Current Ratio [current assets/current liabilities] [ratio] xx Inventory Turnover Rate (ITOR) [COS/Av. Inventory] [times] xx Cash flows [Cash received less Cash payments] [₦] xx Total Assets [₦] xx

9. S/n Categories of Assets Depreciation Rate Estimated Useful Life I. Land & Building 2% 50 yrs II. Plant & Machinery 10% 10 yrs III. Motor Vehicle 25% 10 yrs IV. Tools and Equipment 10% 10 yrs V Furniture & Fittings 10% 10 yrs VI Patent Cost/Estimated life   VII Leases Cost/Estimated life   Concept of Depreciation Depreciation is a reduction in the value of non-current (fixed) assets of the business over the time (usually a year) due to wear and tear. Estimated provisions for the depreciation must be made to reflect the true and fair view of the assets carrying values.

10. Comments Session Last Word