A stock audit, also known as an inventory audit, is an accounting procedure that determines a company’s total stock of physical commodities or raw materials. This procedure is particularly significant in manufacturing and retail businesses with several sites.
The stock audit allows you to keep track of how much physical inventory you have left and make the appropriate arrangements to order new stock. A stock audit will make inventory management easier if the organization deals with a variety of vendors and suppliers.
Internal audit is a wonderful method for reviewing overall business performance for any firm or organization. There is a lot of demand for internal audit jobs in the finance sector.
Objective of Stock Audit
The goal of a stock audit is to ensure that funds lent by the bank are accurately valued and are safe.
Inventory auditing, also known as stock auditing, is the process of evaluating raw resources before they are converted into finished commodities. It is critical to keep information on the quantity and quality of raw materials in stock up to date.
Now let’s learn about:
What is the significance of a stock audit?
There are various important reasons why a company should do a stock audit, including:
- Slow-moving stock, dead-stock, obsolete stock, and scrap should all be identified.
- Find out whether there are any inconsistencies between book stocks and real stock.
- Update the physical stock to reflect the stock in the books.
- Ascertain that stocks are properly preserved and handled.
Stock audits are also a key aspect in assessing what advantages should be provided to institutions. The following are the main advantages of stock audits:
- To cut costs and improve the bottom line
- To avoid thievery and fraud
- As accurate inventory value information to close gaps in the inventory management process
- As part of unique agreements for third-party opinions, such as for agent warehouses
- As a good control mechanism for company operations
The following is a list of documents that are required for a stock audit:
1) As on the date of verification, the stock statement
2) Provisional equilibrium Trial balance as of the verification date.
3) Financial statements that have been audited recently.
4) If you have stock insurance coverage, make sure it’s up to date.
5) Purchase and Sales Invoices
6) Stock Register
7) Closing Stock Valuation Methodology
8) Non-moving, obsolete, or dead stock list.
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