STOCK AUDIT:

A stock audit is an examination or verification of a company's inventory (stock) to ensure that it matches the recorded quantities and values in the financial or inventory records. The audit is usually conducted by an internal or external auditor and involves physical checks of stock items, as well as reviewing documentation related to purchases, sales, and stock movements.

1. Inventory Count

1. Physical verification of inventory, comparing it with recorded stock quantities.
2. Involves counting items in warehouses or storage areas.
3. Valuation of StockEnsures that stock is valued accurately, typically in accordance with accounting standards (e.g., FIFO, LIFO, weighted average).
• Verifying cost of goods sold (COGS) and ensuring no obsolete or damaged stock is overvalued.
4. Verification of Transactions Checking purchase orders, sales records, receipts, and shipping documents to ensure transactions are properly recorded.
• Reconciliation of purchase and sales data against stock levels
• Control Procedures Review of internal controls regarding stock management to minimize theft, fraud, and errors.
• Evaluation of stock movement (e.g., goods in, goods out) and security protocols.
• Evaluation of stock movement (e.g., goods in, goods out) and security protocols.
• Reviewing the rate at which stock is sold and replaced, which can provide insights into inventory efficiency and overall business health.