Inventory auditing is the accounting procedure within a company to maintain a record of the products and merchandise that is being stored while tracking the Company’s current supply count. Most companies consider their inventories as an asset and claim a certain valuation for it. This where auditors use lengthy procedures to test whether this valuation is placed correctly or not. Usually, auditing has multiple benefits, each of which will determine how the company shall progress with the changing industry without landing into troubles like overstock and shortfalls.
Most companies consider their inventories as an asset and claim a certain valuation for it. This where auditors use lengthy procedures to test whether this valuation is placed correctly or not. Usually, auditing has multiple benefits, each of which will determine how the company shall progress with the changing industry without landing into troubles like overstock and shortfalls.
As an auditor for a company, you will have to keep yourself updated regarding everything that is happening. You need to investigate to see whether the company is moving in a direction that will have no speed bumps, and you need to give a very clear and accurate count to the client regarding the current inventory size while he handles the product and service exchange aspect of his business.
But to make sure that your auditing process is accurate and not lengthy, there are a couple of systems you need to have in place. They will make your work faster and keep you well informed regarding the overall transaction that the company is partaking in, and how that will affect its inventory.
Inventory Locator: First things first- you have to figure out all the inventory locations. Do you keep inventories in different places? If so, where? These questions will help you to get accurate figures which in return, would help the company assess its value. The Inventory Locator services will help you to quickly spot the products that are meant for transactions. Always check out the warehouses, overstock locations, or any other storage areas where you can see all the stock for yourself before the physical inventory count begins.
Inventory Audit Checklist: It is extremely important that you start with a checklist of all the items that should be in the inventory before starting the count. If your results are not accurate, it might lead to misstatements about the company’s inventory and can lead to budget mismanagement, theft, and overall customer dissatisfaction. Given below is a sample of an Inventory Audit Checklist that aims to cover all the aspects of a firm’s inventory planning and management. You can add to this list, or make changes as required.
Inventory Audit Checklist
A. Regarding the inventory level:
- Have you invested too much money in his inventory?
- Are there shortages in the stock on a regular interval?
- Does the inventory contain obsolete items which are hardly used?
B. Regarding Inventory Policies:
- Are there any realistic reorder point levels in the Company?
- Are there any safety stock levels in the Company?
- Does the Company have realistic inventory lead times?
- Are all the inventory policies and regulations properly documented?
C. Regarding Inventory Monitoring:
- Are the records regarding the Company’s inventory regularly updated?
- Are all incoming and outgoing materials properly documented during transactions?
- Are the inventory records verified?
- Are the surplus items properly stored and listed in the inventory?
This Inventory Audit Checklist will help you to maintain an impeccable record, where all data is regularly updated and presented systematically.
Inventory Management Systems: This system makes your auditing process much easier and quicker. It is a blend between inventory control software, smart devices, barcode scanners and barcode printers. With this, you can easily track the company’s inventory throughout the whole process starting from receiving to disposal or shipping. You can figure out the quantity, cost and location of every single product in the storage areas.
Why do you need these systems in place for inventory auditing?
In transactions, it is quite difficult to remember every single product that is currently stocked as the company’s asset. If some products are already shipped but the data is not entered into the system, it will be hard to explain where the items have disappeared to. Customers can get disappointed when they do not get their products, and overall the budget mismanagement can affect someone’s income very negatively. A company can declare its value depending on its current list of stock, and any mistakes in accounting will lead the company into trouble. This is why using a very clean efficient system is very important, which can make inventory auditing quite fast and regular without leaving any room for error.
If you are currently running Intacct or Quickbooks and would like to schedule a free consultation to see if QStock is right for you as your next potential Warehouse management system, Contact Us Today by filling in the form below. We would love to hear about your business and how QStock can help you achieve your business goals.