Stock Audit

What is Stock Audit?

Stock auditing is a regulatory procedure that every corporate organization is required to complete at least once a year. The stock audit procedure primarily entails counting physical stock exhibiting the defined premises and confirming the same with computed stock held by the company. The rationale and objective for doing this is to reconcile the disparities between book stock and physical stock by passing relevant adjustment entries. However, it may also include inventory value at times, depending on the terms of reference or the engagement letter of the assignment. When proceeding, it is critical to recall and keep in mind the objective for why the audit is being undertaken, because various audits may take different approaches, which will ultimately depend on the goal.