In performing stock auditing, there are several procedures that could occur, which include the following:
Cut-off Analysis - This involves the test of the last few receiving and shipping transactions before conducting the physical count and transactions that follow it. This makes sure that they are fully accounted for.
Physical inventory counting - It involves the process of counting every piece of inventory assets to account for them all. An auditor usually uses technology like a bar code scanner to physically count each item.
Inventory layers - The process undertaken to find out which inventory methodology is used (such as LIFO, FIFO etc.) and whether it is valid.
Inventory-in-transit analysis - An analysis to track the time between the date of shipment and the date of receipt when materials are moving between two locations or more. This audit helps to make sure that all the items are safe and are not lost while in transit.
Finished-goods cost analysis - the inventory which have been completed and are ready to sell is known as finished goods. An auditor then analyses the value of the inventory for the current accounting period.
ABC analysis - An ABC analysis includes grouping different value and volume inventory. For example, high-value inventory, mid-value, and low-value products can be grouped separately. The items can be tracked and stored in their separate value groups as well.
Overhead analysis - Overhead analysis includes analysing the indirect costs of the business and overhead costs that may be included in the costs of inventory. Rent, utilities, and other costs can be recorded as part of inventory costs in some cases.
Reconciliation - Reconciliation includes solving discrepancies that are found in an inventory audit. Errors may be re-checked and reconciled on financial records.
