management-services

STOCK AUDIT @ Rs 3500

Stock Audit at Rs 3500. 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 approaches 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 as the stock audit process is concerned, the process mainly involves the counting of physical stock present at 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.

List Of Documents Required For Stock Audit:

• Stock Statement as on date of verification.
• Provisional balance Sheet, Trial balance as on date of verification.
• Documents relating to constitution of the business.
• Invoices of Purchases, Sales.
• Stock Register.
• Method of valuation of closing stock.
• Stock list of non-moving, obsolete, dead stock.
• Latest audited financials.
• Debtors and Creditors list for the latest 6 months.

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 gaps in current inventory management process.
• Enable accurate valuation of inventory.

Auditing Explained: Auditing is the process of verifying that the financial records of an entity are accurate and fairly represented. Transactions in financial records must fairly represent the entity’s financial positioning and actual operating activities.

Evidence in Auditing: Evidence is needed to determine whether financial statements or records have been prepared in accordance with standards and free from material error.

Importance of Auditing Inventory: Observation of inventory is a generally accepted auditing procedure, where an independent auditor issues an opinion on whether.

Inventory Audit Procedures:

• ABC analysis
• Analytical procedures
• Cut-off analysis
• Finished goods cost analysis
• Freight cost analysis
• Matching
• Overhead analysis