Stock Audit#
Definition#
Stock audit is a physical verification of inventory to ensure accuracy of stock records, proper valuation, and existence of assets.
When Required#
- Bank finance against inventory
- Statutory requirements
- Internal management control
- Insurance coverage
Process#
- Planning and scheduling
- Physical verification
- Valuation review
- Reconciliation with books
- Reporting
Methods of Verification#
- Physical count
- Cycle counting
- Statistical sampling
- Continuous inventory
Areas of Focus#
- Physical existence
- Condition and quality
- Valuation as per accounting standards
- Slow-moving/non-moving items
- Obsolete stock
- Shortage/excess
Documentation#
- Stock verification report
- Reconciliation statement
- Shortage/excess report
- Valuation certificate
Key Checks#
- Bin card verification
- Raw material quantification
- Work-in-progress valuation
- Finished goods counting
- Scrap/waste identification