What is an inventory verification or inventory audit?
An inventory verification process is one that aims at examining and validating the existence and location of various stocks in a main inventory control system.
Accurate accounting of inventory can make all the difference between an entity reporting a profit or incurring a loss. An efficient system in this area of business also ensures that the organisation’s working capital requirements and cashflow are well planned, and the instances of ‘surprises’ are reduced to a minimum.
Periodic physical review of inventory helps identify variances between physical and book quantities and assists in evaluating internal control on movement, accounting and safeguarding of inventory. It also provides assurances to principals and business owners that the inventory reflected in the accounting records does not vary from the physical quantities. It can act as a deterrent against theft, damage and unauthorized write-offs.
PKF’s Role as an Inventory Auditing Firm
PKF assists its clients with the complete inventory verification process. Inventory verification includes, amongst other things, appropriate marking of physically verified stocks, identification of damaged and slow moving or obsolete items, deriving variances from book quantities and identifying the absence of adequate supporting documentation.
Making inventory verification a regular exercise can lead to developing a much more efficient supply chain system and save on unwanted stock maintenance costs.