Stock Audit Service
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Table Of Content
What is a Stock Audit
Stock audits, also known as inventory audits, are crucial for every business. These audits not only cover inventory items but also extend to fixed assets, ensuring accurate representation in financial statements. It is the process of inspecting and verifying the physical inventory of the company’s stock. This is necessary to present the accurate physical count of the stock in the financial records of the company without any differences in the number of units the company owns for better decision-making. It must be done once every year to make sure the company’s physical stock in the warehouse is in sync with the actual book records. One of the main goals of the process is to provide a clear picture of the inventory using the best stock audit practices and to update the physical stock. Companies can identify differences in numbers and inefficiencies to improve existing practices of inventory management.
Stock audit services offered by Patron Accounting can allow your company to effectively account for the physical inventory of the company’s stock. It ensures the stock is updated and allows for efficient management of the stock in the inventory, which can impact the operations of the company. Proper stock management is necessary to improve the financial health and stability of the company, contribute to its growth and success, improve inventory turnover, and much more.
Benefits of Stock Audit
Eligibility for Stock Audit
Process for Stock Audit
Step 1
You can look for Patron Accounting offering stock audit services to conduct your company’s stock audit. Before the inventory process begins, forecast the demand for the future based on past data and consumer behavior to ensure the company has enough stock to ensure smooth business operations. Running out of stock can become a major issue during the stock audit process.
Step 2
Take count of the company’s physical inventory in the warehouses and factories. Several processes can be used to count the items, such as physical counting, barcoding, sampling, and inventory management systems. Choose whichever approach is suitable and effective for the company.
Step 3
Double-check the findings of the physical count of the stock. This is a crucial step in the process of stock auditing, as it can identify human errors. Due to the nature and scope of the audit, it is best to verify the findings twice rather than relying on a single source.
Step 4
Several auditing techniques can be used to double-check the inventory. These techniques include finished goods inventory analysis, freight cost analysis, overhead analysis, high-stock value tests, direct labor analysis, inventory in transit analysis, and so on.
Step 5
After double-checking the stock and tallying the physical goods, compare the final findings with the inventory records. This comparison between the actual stock count and the inventory records provides valuable insights. If any differences or mismatches exist between the physical stock and the financial records, further investigation is necessary to identify the root cause.
Documents Required for Stock Audit
FAQs
What does a stock audit report include?
A stock audit report is a document that includes details about the company’s existing stock verified during the audit. It serves as a valuable tool, providing insights into any issues, areas for improvement, and opportunities for better inventory management.
What is the frequency of stock audits required for a company?
The frequency of stock audits varies based on factors such as the type of business, inventory size, and industry regulations. While it is recommended to conduct a stock audit at least once a year on average, some companies choose to perform monthly audits as well.
Who can conduct a stock audit?
Stock audits can be conducted by either external auditors or internal employees of the firm, who employ various audit procedures to accomplish this task.
Are stock audits mandatory?
Yes, stock audits are a mandatory requirement for regulatory bodies.
How do stock audits help in managing stock?
Stock audits help reconcile recorded stock with physical inventory, spotting discrepancies. When differences are found, processes are improved to prevent recurrence.
How long does the stock auditing process take?
The average duration of the stock audit process can take anywhere from a few days to several weeks. It depends on the size of the company, the scale of inventory, and so on.
What are some challenges with stock audits?
Challenges with stock audits include outdated technology, which can slow down the process, and inaccuracies in inventory counts that make auditing difficult. Additionally, discrepancies between recorded and actual stock levels can lead to unreliable results, emphasizing the need for precise initial counts and up-to-date tools.