Stock

Stock audit, in general usage is considered as an important auditing term which refers to the physical verification of the inventory. However at times, it may also involve the valuation of the inventory but it would depend on the terms of reference or the engagement letter of the assignment. When heading forward, it is important to remember and keep in consideration the purpose for which the audit is being conducted because different audits may have different approach which would ultimately depend on the aim.

In other words, stock audit is a statutory process which every business institution needs to perform at least once in a financial year. As far the stock audit process is concerned, the process mainly involves the counting of physical stock presenting the specified premises and verifying the same with computed stock maintained by the company. The reason and purpose behind executing this is to correct the discrepancies present in the book stock when compared to physical stock by passing necessary adjustment entries.