Types of Stock Audit
The process of auditing stock is considered one of the most challenging tasks for businesses, especially when the business becomes bigger the more the process is. When it comes to stock audit, the process is classified into various types depending on how auditing is performed.
Following is the list of stock audit procedures that we use while auditing the most valuable assets of your business- your inventory!
- Cut-off Analysis
- Physical Inventory Count
- Analytical procedures
- ABC Analysis
- Freight Cost Analysis
- Finished Goods Cost Analysis
- Overhead Analysis
- Reconciling Items
Let’s have a look at the different types of Stock Audit which are in today’s demand.
- Internal Audit: This type of audit is performed by the company itself. Everything is managed by the company internally from finding issues to resolving them.
- External Audit: This is performed by the external auditors to check and validate inventory records with physical records.
- On-site Audit: It includes visiting the site in person and verifying the stock physically with respect to the submitted documents.
- Remote Audit: Remote audits are performed by evaluating documents related to the inventory & their verification simply by means scanning available inventory/stock tags.
Reporting in Stock Audit
Reporting in Stock Audit is essential to maintain a document with relevant information about the stock availability, quality, and all other details that are gathered during the stock audit. Usually, annual audit reports give crucial details that help businesses to overcome faults in their financial statements and accounting systems.
Depicting the role of timeliness in Stock Audit, it is very important to maintain audit stock reports in order to reduce unwanted investment on stocks that are available in surplus. Usually, it is observed that many businesses have to deal with an overstocking situation resulting in poor cash flow and huge financial loss due to the lack of on-time stock audit.
