Inventory Verification significantly reduces the company’s inventory loss, assuring management that the inventory presented in the financial statements is reliable. Inventory is the most valuable asset of any business and the most vulnerable to extortion, fraud, waste, and damage.
In accordance with International Accounting Standards (IAS 2), inventory is the asset held for selling in the regular business course, in producing goods for resale and in the form of materials or supplies to be consumed in the process of producing goods or providing services. Per IAS 2, inventory is measured at lower of cost or net realizable value.
What is Stock Taking or Inventory Verification?
Inventory Verification or Stocktaking is the physical examination of a store’s stock or inventory at regular intervals. Inventory Verification or Stocktaking is performed periodically, typically when accounts are closed / financial statements are prepared for external purposes.
Goals of Inventory Verification
- Confirm the accuracy of store records.
- Prepare the organization’s final financial statements.
- Disclose instances of fraud, theft, and stock loss.
- Identify any flaws in the system of storage and inventory management.
Purpose of Conducting Inventory Verification
- Receiving
- Movement
- Inventory Storage
- General Physical Inventory Management
Types of Inventories
Raw materials
The goods needed to create the company’s product are referred to as raw materials.
Work in progress
In a firm, semi-manufactured or semi-finished products are referred to as work in progress.
Finished goods
In a firm, semi-manufactured or semi-finished products are referred to as work in progress.
Stocks
Benefits of Inventory Verification
Assurances to Principals
Periodically checking your inventory is a great way to make sure everything is accounted for and where it should be. This process helps to identify any discrepancies between what’s physically on hand and what’s recorded in the accounting system.
Efficient Inventory Control
An accurate account of inventory is crucial for any business. Our system ensures that your working capital requirements and cash flows are well planned, minimizing the chances of ‘surprises’ down the road
Protect Your Investment
It’s important to have a system in place that safeguards your inventory. Physical verification helps reduce the chances of lost or stolen goods and keeps your assets secure.
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