According to the 2013 Companies Act, a set of guidelines and rules govern the auditing process. It looks at a company’s financial statements to determine whether the prepared statements are accurate and fair in light of business operations.
Similar to this, a stock audit is a procedure that refers to a physical inspection of the inventory and includes an assessment of the inventory items in light of the assignment’s reference.
In order to maintain proper process balance, it is essential to reduce unnecessary investments in stocks or inventory. High stock levels can lead to overstocking, which can cause poor cash flow value and financial losses.
The auditor’s job during the examination process is to verify the statements. The auditor should note any fraud or inconsistency by the company management in his report if they are discovered. The auditor is prohibited from conducting an audit under the presumption that the company’s management may have engaged in fraud.
The primary goals of the audit are to eliminate any necessary adjustment entries by resolving inconsistencies found in the stock record when compared to the physical stock. It is eager to conduct a stock audit for the reasons listed below:
Inventory audits, also called stock audits, are conducted to assess the raw materials that are transformed into finished goods. Information on the quantity and quality of raw materials on hand should be kept up to date.
Inventory audits, also called stock audits, are conducted to assess the raw materials that are transformed into finished goods. Information on the quantity and quality of raw materials on hand should be kept up to date.
These steps have been a part of the procedure since the beginning of the year, or at the time when the first stock was added to the system.
When new stock enters the facility, it is barcoded (labeled/marked), registered, and entered into the system for purchase or use. These barcodes are currently scanned each time an item is taken out of stock for any reason. Additionally, the purpose must be entered in the field provided in order to be known later and verified.
This process continues after the stock runs out and new stock is required. After the stock runs out, its variable use is examined for its requisition.
You can check your stock against these entries and its consumption when a stock audit is performed.
When you carry out all the tasks on a regular basis, the process is very simple. Simply follow all the necessary steps whenever an item is moved or consumed, starting with barcoding it and ending with scanning and uploading. When the audit is carried out, it aids you in verifying the information and specifics.
There are specific steps that must be taken in accordance with a software’s stock audit process, such as:
One crucial area of any business where fraud is more likely to occur is inventory. Its department is where thefts and damages happen more frequently.
For everything to work effectively, it is best to have tight control over all processes, checklists, and regular stock audits. The inventory audit check list is provided below.