In this guide
What Makes a Jewellery Stock Audit Different
Jewellery inverts the usual relationship between volume and value: an entire showroom's stock can fit in a safe, and a counting error of a few grams matters more than a miscount of several hundred units would in a warehouse. That changes the method completely. Pieces are verified by weight and purity rather than by piece count, because two rings of identical appearance can differ substantially in both. Weighing is done on calibrated scales with the calibration evidence retained, and gross weight is separated from net weight where stones are set. Purity is established from the hallmark, from assay documentation, or by test, and the audit trail runs from the hallmarking unique identification number back to the piece in hand. Old gold taken in exchange, goods issued to karigars for making, and pieces out on approval all sit outside the showroom and inside the balance sheet, which is where most differences in this trade are actually found.
Weighing, Purity and Assay
Jewellery is verified by weight and purity rather than by piece count, and the weights have to be separated properly or the valuation is wrong from the start. Gross weight is what the piece weighs as it stands. Net weight is the precious metal content after deducting anything that is not metal. Stone weight is the difference, and it is valued on an entirely different basis, since diamonds and coloured stones are not priced by weight of gold and cannot be included in a metal valuation at any rate. Pieces with substantial stone content are where errors concentrate, because a gross weight applied to a metal rate overstates the value by whatever the stones weigh. Purity testing at the count establishes the metal content rather than accepting it. Hallmarked pieces carry their purity, and unhallmarked or older stock is tested, commonly by a non-destructive method at the count with assay used where the value justifies it. Tolerances are agreed before counting and stated in the report. Small differences between recorded and measured weight are expected from wear, cleaning and rounding; differences beyond the agreed tolerance are exceptions and are listed individually rather than absorbed.
Hallmarking and Identification
Hallmarking gives a jewellery count something most inventories lack, which is a unique identifier attached to the individual article. The HUID is a six-character alphanumeric code applied at the assaying and hallmarking centre and recorded against the article, and it lets an auditor trace a specific piece rather than a quantity of a description. Selecting pieces from the records and finding them physically, and selecting pieces from the tray and finding them in the records, both become possible in a way they are not where stock is described only as a weight of a category. Unhallmarked old stock is the population that has to be handled separately. Articles predating the mandatory requirement, articles taken in exchange, and articles held as scrap for refining carry no identifier, so they are verified by weight and purity within categories and reconciled in aggregate rather than piece by piece. Records the count reconciles to are the stock register by category and weight, the making and issue registers for metal out with karigars, and the approval register for goods with customers. A count that reconciles only to the showroom register has verified the smaller part of the business.
Stock on Approval and With Karigars
A substantial part of a jeweller's stock is routinely not on the premises, and the two populations concerned are where most differences are found. Goods out on approval at the cut-off are with customers who have taken them to consider, and they remain the jeweller's stock until sold. They are verified from the approval register, which should record the article, its weight, the customer and the date it went out, and items outstanding well beyond a normal approval period are exceptions in their own right regardless of what the register says. Metal issued to karigars for making is the larger population. Gold given out is reconciled as issue less returns of finished articles less recoverable scrap less agreed wastage, and each element is evidenced from the issue and return registers rather than from a summary. Wastage norms are what an auditor examines most closely. Every making process loses a small proportion of metal, the allowance is established by trade practice and by the jeweller's own measured experience, and claims consistently at the top of the range, or rising without a change in the work, are a finding rather than a variation.
Evidence a Jewellery Count Produces
The output of a jewellery count is a set of weights rather than a set of quantities, and it is recorded by category because the categories carry different purity and different making charges. Gross weight and net weight are stated separately wherever stones are set, since the difference is not gold and cannot be valued as though it were. Purity is recorded against each category from the hallmark, the assay documentation or a test performed at the count, with the basis noted rather than assumed. The second artefact is the reconciliation of metal issued to metal returned. Gold given out to karigars for making comes back as finished pieces plus recoverable scrap and an agreed wastage allowance, and the reconciliation tests whether the issue, the return and the wastage tie together within that allowance. Persistent wastage above the norm is a finding in its own right. The third is valuation at the rate prevailing on the count date rather than at any later date, stated explicitly, because in a commodity that moves daily a valuation without its date attached cannot be checked by anybody.
Preparing a Showroom or Vault for a Count
Segregate before the team arrives. Pieces out on approval with customers, metal issued to karigars for making, old gold taken in exchange and awaiting refining, and goods held on consignment each belong in a different category and each is a different answer to the ownership question. A count that begins by sorting these on the day loses most of its first session, and a count that fails to sort them produces a figure that cannot be relied on at all. Have the issue and return registers for karigar stock current, since that balance is reconciled rather than counted. Security arrangements need agreeing in advance: who is present while the safe is open, whether counting happens outside trading hours, how pieces are handled and returned, and what insurance covers the goods while they are out for weighing. These are not formalities in a trade where the entire stock can be carried in one hand. A specialist team is necessary where purity has to be established, where karigar balances are material, or where the count supports a lender, and stock audit work in this trade is scoped accordingly.
