Article explains what is stock Audit, Reasons why one should look forward for the stock audit, key benefits of stock audit and List of Documents Required For Stock Audit.
Stock audit, in general usage is considered as an important auditing term which refers to the physical verification of the inventory. However at times, it may also involve the valuation of the inventory but it would depend on the terms of reference or the engagement letter of the assignment. When heading forward, it is important to remember and keep in consideration the purpose for which the audit is being conducted because different audits may have different approach which would ultimately depend on the aim.
In other words, stock audit is a statutory process which every business institution needs to perform at least once in a financial year. As far the stock audit process is concerned, the process mainly involves the counting of physical stock presenting the specified premises and verifying the same with computed stock maintained by the company. The reason and purpose behind executing this is to correct the discrepancies present in the book stock when compared to physical stock by passing necessary adjustment entries.
Reasons why one should look forward for the stock audit :
- To update the opening stock details.
- To identify the discrepancy between book stocks also known as computed stock and physical stock.
- To update the actual physical stock as book stock.
- To ensure proper preservation and handling of stocks.
We offer reliable stock audit services to companies and organizations with a dedication and aim to help them safeguard and monitor their physical assets and inventories.
Here are a few listed key benefits of stock audit :
- Direct impact on costs and bottom line
- Prevent pilferage and fraud
- Identifies slow moving stock, obsolete stock, dead stock and scrap
- Third party independent opinion, especially for agent warehouses
- Identifies gap in current inventory management process
- Enable accurate valuation of inventory
List Of Documents Required For Stock Audit:
1. Stock Statement as on date of verification
2. Provisional balance Sheet, Trial balance as on date of verification.
3. Latest audited financials.
4. Stock Insurance policy if any
5. Invoices of Purchases, Sales
6. Stock Register
7. Method of valuation of closing stock
8. Stock list of non-moving, obsolete, dead stock.
9. Documents relating to constitution of the business
10. Debtors and Creditors list for latest 6 months.
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Disclaimer: The above article is only for information purpose and is on based on the author’s interpretation of the relevant provision. The same should not be considered as professional advice.
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