"CA Neeraj Kumar Rastogi is a Fellow Member of the Institute of Chartered Accountants of India and a Certified Fraud Examiner (USA). He holds the ICAI Certificate in Forensic Accounting and Fraud Detection and the Certificate in Concurrent Audit. He has over 36 years of professional experience and has conducted over 700 stock and receivables audits across manufacturing, trading, NBFC, MFI, HFC, jewellery and capital market sectors. He is the author of a professional reference series on stock and receivables audits. Author can be contacted at neeraj@caneerajrastogi.in and www.caneerajrastogi.com."
The article explains why debtor realisation and ageing should be analysed over at least three months to assess receivable quality and drawing power accurately.
Explore what IBA framework says about working capital lending and its importance for stock auditors in finance discussions.
CMA data forms the backbone of working capital assessment by helping banks determine genuine funding requirements and borrower contribution. It also serves as the benchmark for ongoing monitoring and stock audits.
The article explains how unusually flawless records may signal a managed presentation rather than genuine business performance, requiring auditors to apply greater professional scepticism.
Focusing only on receivables can miss significant risks embedded in related-party payables. A bilateral review reveals internal group funding structures, offsetting balances, and potential drawing power distortions.
This comprehensive checklist covers every stage of a stock and receivables audit, from engagement acceptance to final reporting. It helps auditors avoid common mistakes and improve audit quality through practical guidance.
A perfect stock valuation can still conceal serious lending risks if critical operating licences have expired. Auditors should verify licence validity to identify threats to a bank’s security.
The article highlights practical dilemmas faced during stock audits by borrowers, auditors, and bankers. It explains how professional judgment, ethical concerns, and commercial realities often create situations with no perfect solution.
Stock audits are fundamentally different from statutory audits and must be treated as special purpose assignments. The article explains how this classification impacts scope, reporting, ethics, and auditor liability.
Learn how banks use stock and receivables audits to independently verify inventory and debtors before allowing working capital withdrawals. The article explains drawing power, audit procedures, and why accurate stock verification is critical for lenders.
