STOCK AUDIT @ Rs 3500

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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 approach 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 the stock audit process is concerned, the process mainly involves the counting of physical stock presenting 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 latest 6 months.

Few listed 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 gap 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

FAQ on Stock Audit

  • What is the process of stock audit?
    Simply put, a stock audit, sometimes referred to as an inventory audit, is the process of ensuring that the actual goods present in your store's warehouse correspond to the information found in the stock register.
  • What is stock audit in banks?
    The goal of the stock audit is to ensure the following valid points: storage of stock, the process of stock, check whether the obsolete stock is written off, verification of the insurance, check the book count and physical count are the same as bank records, the realization of the hypothecated stock, debtor outstanding.
  • What is stock verification?
    Stock Verification means to verify that the material is as per the details, specifications and balance quantity as mentioned in the material register/record. In other words tallying the Up-to-date Book balance with the Actual physical balance of the Material is called “Stock Verification”.
  • What is full audit cycle?
    An audit cycle is the accounting process an auditor uses to ensure a company's financial information is accurate. The audit cycle typically involves several distinct steps, such as the identification process, audit methodology stage, audit fieldwork stage, and management review meeting stages.