What Makes Auto Components Stock Different
📌 TL;DR - Stock Audit for Auto Components Services at a Glance
A stock audit for auto component manufacturers follows material spending much of its life at a vendor rather than inside the plant. Job work challans, work in progress by stage, and the bill of materials against actual issues are reconciled together. Under section 143 of the CGST Act, inputs must return from a job worker within 1 year and capital goods within 3 years. Suited to plants running heavy outsourced machining.
The count has to follow material that spends much of its life outside the plant. Castings go out for machining, parts go out for plating and heat treatment, and sub-assemblies sit at a tier-two vendor waiting for a schedule. The company owns all of it. Counting only what is inside the gate understates inventory, and counting what is at the vendor without evidence overstates it.
Stock That Lives at a Vendor for Half Its Life
job work stock sent out for machining, plating or heat treatment stays on the sender's books throughout. GST rules on job work also expect inputs to come back within a defined period, with capital goods allowed longer, so material sitting at a vendor beyond its window is both an inventory question and a compliance one. The count therefore runs on challans, vendor confirmations and returns, not on a walk around the shop floor.
Half-Finished Value Sitting Between Operations
A component part-machined through four of seven operations is neither raw material nor finished goods. sub-assembly stock waiting for a bought-out part sits in the same category. The auditor's task is to establish the physical quantity at each stage and the stage each item has actually reached; management applies the costing. Where the two are confused, work in progress ends up recorded at a stage it never reached.
Why the BOM and the Issue Slip Disagree
The bill of materials says a part should consume a set quantity. The issue slip says what the stores actually released. Rejection at first operation, rework drawn a second time, and material issued in round quantities against a fractional requirement all open the gap. A stock audit tests management's reconciliation of issues to output and examines the evidence behind how the residual has been classified as scrap, rework or unrecorded consumption, each of which lands somewhere different in the accounts.
