Audit Inventory Service
In Inventory audit we uses an analytical procedure to check a company’s inventory methods and confirm that the financial records and actual count of goods match. We also ensure that company always has the right amount of stock at the right time.
What is Auditing Inventory?
Auditing inventory is the process of cross-checking financial records with physical inventory and records. It can be completed by auditors and other parties.It’s important to conduct inventory audits to maintain inventory accuracy, spot causes of shrinkage and ensure that you always have the right amount of stock at the right time. A better understanding of stock flow will also help ensure the business runs smoothly, because you’ll know what products you have on hand.
Importance of Auditing Inventory
- Auditing inventory is an important aspect of gathering evidence, especially for manufacturing or retail-based businesses. It can represent a large balance of assets or capital.
- Maintaining an efficient inventory management process can reduce the length and complexity of audits.
Auditing inventory must verify not only the amount of inventory but also its quality and condition to see whether the value of the inventory is fairly represented in financial records and statements.
Audit Inventory procedures
Here’s a list of the various inventory auditing procedures
- Physical inventory counting is the process of counting each piece of inventory so you can account for all items. You might also want to consider using technology, like a bar code scanner, to help physically count each item.
- An ABC analysis includes grouping different value and volume inventory. For example, high-value inventory, mid-value, and low-value products can be grouped separately.
Finished goods cost analysis applies to manufacturers and includes valuing finished inventory during an accounting period.
- Inventory in transit analysis when materials are moving between two or more locations, you’ll want to track the time between the date of shipment or shift, and the date of receipt. These inventory audits will help ensure nothing is lost or damaged in transit.
- Finished-goods cost analysis is best used if you create your own products. When all the work on the inventory is completed, it becomes a “finished good” and is ready to be sold. You can then analyze the value of the inventory for the current accounting period.
Reconciliation includes solving discrepancies that are found in an inventory audit. Errors may be re-checked and reconciled on financial records.
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