Stock audit

The main objective of stock audit is to ensure that the stock maintained in the books reconciles with the stock available physically. 

During the stock audit you can observe the following:

a. Whether the stock are properly segregated specially the stock of company and stock of third party

b. Stock of damaged goods whether they are maintained separately 

c. Usage of proper bin cards for the appropriate identification of stock

d. Maintenance of reorder levels 

e. List of stock in transit which are included in the stock register

f. Stock given to the job workers and may not be available physically

Dear Mam,

What about the applicability?Is there any threshold limit exceeding which the stock audit is mandatory?

Stock Audit is usually done when an entity takes Loan ie EPC/PCFC/CC against stock of Goods. The Stock audit is done to ensure that there is adequate stock against the Limits availed by the Business Entity.

Kindly check the Stock of Goods, Physical verification and valuation

Check the Debtors position and its Ageing

Check the Creditors Position and the Ageing

Check the CA- CL and the Net should at least cover 75%, Check the Sanction letter from the bank and see if the Withdrwal are within limits

Different banks have different borrowing limits beyond which stock audit is done.