Stock Audit Services · Inventory

Inventory Stock Audit accurate counts, reliable valuations.

Independent physical verification and valuation of raw materials, work-in-progress, and finished goods — for bank mandate compliance, year-end financial reporting, and internal management control across all industries.

Inventory is one of the most audit-sensitive assets on any balance sheet. It is susceptible to misstatement through counting errors, valuation inconsistencies, inclusion of obsolete or damaged goods, and — in more serious cases — fictitious entries inflating the borrowing base. An independent inventory stock audit provides an external check on all of these risks.

For businesses with bank working capital facilities, the inventory stock audit verifies that the stock pledged as collateral actually exists and is correctly valued — and that the Drawing Power being claimed is legitimate. For businesses without lender requirements, it provides management with an independent view of actual inventory levels versus book records, quantifying shrinkage, theft, or process failures.

At Beyonte Compliances, our inventory audit teams are trained in physical counting techniques, sampling methodologies, and valuation principles applicable to different industries — from FIFO and weighted average in manufacturing to net realisable value testing in retail and pharmaceuticals.

What Our Inventory Audit Covers

Physical Count & Tagging

Systematic physical count of all inventory — raw materials, stores, WIP, and finished goods — using count sheets, barcode scanners, or weighing scales as appropriate for the nature of stock.

Valuation Review

Verification that inventory is valued on the correct basis — FIFO, weighted average, or specific identification — and that the method is consistently applied and appropriate for the entity's industry.

Book vs. Physical Reconciliation

Comparison of physically verified quantities with book records and stock statements — identifying and quantifying differences, and tracing material variances to their source.

Obsolescence & NRV Testing

Identification of slow-moving, obsolete, expired, or damaged inventory — with Net Realisable Value testing to confirm that inventory is not overstated above its realisable amount.

Drawing Power Verification

Computation of eligible stock for Drawing Power purposes — applying the bank's prescribed margins and exclusions — and confirming that borrowings do not exceed the verified Drawing Power.

Cut-Off Testing

Verification that inventory receipts and despatches around the count date are recorded in the correct period — preventing artificial inflation of stock at year-end or audit date.

Transit & Consignment Stock

Verification of stock held at third-party locations, in transit, or on consignment — confirming ownership, quantity, and correct inclusion or exclusion from the stock count.

Shrinkage & Loss Analysis

Analysis of inventory losses — comparing opening stock, purchases, production, and sales to identify unexplained shrinkage or losses requiring management attention or write-off.

Our Process

Pre-Audit Planning

Reviewing the prior stock audit report, stock ledger, stock statement, and Drawing Power workings — and planning the count sequence, sampling approach, and team allocation.

Simultaneous Physical Count

Independent physical count by our team alongside the client's own count — ensuring no movement of stock occurs during the count and all differences are captured contemporaneously.

Valuation & NRV Assessment

Applying the correct valuation method to verified quantities and testing NRV for slow-moving or damaged items — flagging any items that require write-down.

Reconciliation & Difference Analysis

Reconciling physically verified stock with book records — tracing all differences to system errors, timing differences, shrinkage, or other causes — and quantifying the net impact.

Report Delivery

Issuing the inventory audit report in the format required — bank format, management format, or both — with a clear summary of findings, variances, and recommendations.

Why It Matters

✓Meets bank requirements for working capital credit limit renewals

✓Confirms Drawing Power is supported by verified, eligible inventory

✓Identifies obsolete and slow-moving stock before it distorts accounts

✓Quantifies shrinkage, pilferage, and unexplained losses

✓Cut-off testing prevents artificial year-end inventory inflation

✓Industry-specific valuation expertise — manufacturing, pharma, retail

✓Covers transit, consignment, and third-party held stock

✓Delivered on the agreed date — no delays that affect credit reviews

Frequently Asked Questions

The audit date is agreed in advance with the client and, where applicable, the bank. For bank-mandated audits, it is typically at or near the financial year-end or at the date specified by the lender. The client is required to freeze inventory movement during the count window to ensure an accurate snapshot.

We have conducted inventory audits across manufacturing (auto components, engineering goods, chemicals), pharmaceuticals, FMCG, retail, textiles, food processing, and trading. Each industry has specific count methods, valuation rules, and NRV considerations — and our teams are briefed on these before each engagement.

All differences are documented in the audit report with the likely cause — system timing differences, shrinkage, count errors, or unexplained variances. Material differences require management investigation and — where confirmed — adjustment in the books of account. We assist management in tracing and explaining differences wherever possible.

Yes. For multi-location audits requiring a simultaneous count on the same date, we deploy teams to each location concurrently. This prevents stock being shifted between locations between counts — which would otherwise distort the total picture.

Know exactly what stock you hold — and what it is worth.

Talk to our team about an inventory audit that meets your lender's mandate and gives management a reliable count.