Stock Audit
A Stock Audit, also known as Inventory Audit, is the physical verification of inventory and its corresponding records to ensure accuracy, proper valuation, and regulatory compliance.
Stock audits are crucial for companies that deal in goods, raw materials, or finished products — helping detect pilferage, overstocking, stock misstatements, and irregularities in warehouse or store operations.
Our Stock Audit services provide an objective, systematic review of inventory management and help businesses reduce losses, improve internal controls, and maintain trust with lenders, investors, and regulatory authorities.
Key Features
Physical Stock Verification
On-site inventory verification at warehouses, retail outlets, factories, and storage locations for accurate count and classification.
Stock vs Records Reconciliation
Match physical stock with book stock recorded in ERP or accounting systems to identify and report discrepancies.
Valuation of Inventory
Inventory valuation based on FIFO, LIFO, or Weighted Average method, aligned with applicable accounting policies.
Movement & Obsolescence Analysis
Categorization and analysis of inventory as fast-moving, slow-moving, or obsolete to improve inventory turnover and reduce wastage.
Internal Control Check
Evaluation of stock handling practices, loss prevention, and safety protocols to strengthen internal controls.
Stock Reporting for Banks
Preparation and certification of stock reports for submission to banks and NBFCs for working capital and credit facilities.
Customised Audit Reporting
Flexible report formats tailored to client or lender requirements, industry standards, and audit objectives.
Barcode/Batch/Serial Tracking
Item-level verification and audit of sensitive or high-value goods using barcode, batch, or serial number-based tracking.
Information Checklist
To conduct an effective Stock Audit, the following details/documents are typically required:
Basic Company Information:
- Nature of business (trading, manufacturing, retail, etc.)
- List of warehouses, stores, or outlets
Inventory Records:
- Stock register or ERP inventory report
- Opening and closing stock details
- Item-wise SKU or product master list
- Goods inward and outward records (GRNs and Delivery Challans)
Financial Documents:
- Latest Trial Balance
- Purchase and Sales Register
- Bill of Materials (BOM) for manufacturers
- Inventory Valuation Method used (FIFO/LIFO/WAM)
Supporting Documents:
- Physical layout or floor map of warehouse/storage
- Bin cards or stock tagging mechanism
- List of damaged/obsolete/scrap items
- Access to accounting software or ERP (if applicable)
Additional (for loan-based audits):
- Bank sanction letter or CC/OD facility agreement
- Previous stock audit report (if any)
- Monthly stock statements submitted to bank
FAQs
A Stock Audit is the process of physically verifying a company’s inventory and reconciling it with its book records to ensure accuracy, valuation, and proper stock control.
Businesses dealing in inventory (traders, manufacturers, retailers) and those availing working capital loans or credit limits from banks are often required to conduct regular stock audits.
While not legally mandatory for all, stock audit is often mandated by banks, investors, or internal policies — especially where inventory is pledged or held in large volumes.
The primary goals are to verify stock accuracy, prevent pilferage or fraud, ensure correct valuation, detect obsolete items, and validate compliance with internal control policies.
It depends on the business size and sector. Many companies conduct quarterly or semi-annual stock audits. Banks may also require monthly or bi-annual audits for loan monitoring.
No. Since stock audit involves physical verification, it must be conducted on-site. However, report preparation and analysis can be done remotely after verification.
Discrepancies between physical and book stock, overstocking, slow-moving inventory, expired goods, or stock shrinkage due to theft or mismanagement are common findings.
Retail, FMCG, pharmaceuticals, electronics, logistics, warehousing, and manufacturing industries benefit the most due to their inventory-heavy operations.
Yes, regular stock audits help identify leakage, wastage, and inefficiencies in stock management, thereby improving profitability and reducing working capital strain.
Yes, a comprehensive audit report is provided that includes observations, item-level mismatch reports, valuation summaries, and recommendations for improvements.
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SG Barve Rd, Wagle Industrial Estate, Thane West,
Thane, Maharashtra, India - 400604
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