Stock Audit Services in Mumbai

Stock Audit is conducted to physically verify the stock/inventory of a company to ensure that the physical stock matches the book stock. It helps in identifying discrepancies and allows you to correct them by passing all the important adjustment entries. During this process, the inventory of a company is physically verified and counted. The aim is to match the physical count of the company with the inventory levels that have been shown in the books of account of the company and to find out any discrepancies. This helps in identifying issues of obsolescence, theft, damage, misplacement, or clerical errors.

Sapient Services offers stock audit solutions involving inventory’s physical verification, evaluation of internal controls, and reconciliation with financial records related to stock management. Our team conducts detailed inspections and identifies any kind of discrepancy, such as excess stock, shortage, or obsolete inventory.

Objective of Stock Audit Services?

Let’s take a look at the main objectives of conducting a stock audit.

• Identifying discrepancies.
• Verification of physical stock.
• Supporting business decision making.
• Inventory management efficiency.

Why is Stock Audit Important?

Let’s try to understand the importance of conducting a stock audit in Mumbai.

To Meet Legal Requirements

In India, industries need to carry out stock audits, especially businesses that have to deal with banks or those regulated by government bodies.

Financial Transparency

Stock audits help ensure that financial records reflect the real state of inventory, enhancing business credibility.

Operational Efficiency

It becomes easier to streamline operations, reduce wastage, and make informed purchasing decisions when you have accurate stock data.

To Access Ongoing Concerns

In financial reporting, ongoing concern is considered to be a fundamental aspect. It helps in assuming that for the for seeable future, the company will continue its operations. However, if in the existence of inventory or valuation, there are discrepancies, it may raise some doubts about the ability of the company to continue as a going concern.

Why Banks Insist on Stock Audit in Mumbai

In Mumbai, businesses often have to operate with tight margin high volumes of transactions. Drawing power can be impacted by even small reporting errors.

Banks can verify the following with the help of a stock audit.

• Obsolete or slow-moving stock.
• Related party debtors.
• Receivables ageing.
• Incorrect valuation method.
• Overstatement of inventory.

The prudential norms of the RBI mandate banks to monitor the quality of assets regularly. In many sectors, weak inventory controls lead to loan-related stress.

Stock Audit Procedure

We follow these steps while conducting the stock audit procedure.

Planning of Audit

It is important to know the types of inventories, locations, the auditing scope, and specific items that need to be audited. We set the stock audit timeline, keeping in mind the function schedule of the company.

Conducting Physical Verification

To perform an inventory stock’s physical count, one must use a systematic approach. This ensures comprehensive coverage. We conduct systematic on-site inspections, and our valuation professionals check inventory, asset and equipment.

Physical Inventory vs. Book Inventory

We compare the physical count inventory with the book inventory, which is recorded already. We write down all the important outcomes, reconcile, and navigate inventories. Post discussion with the team, we also document the reasons for variations.

Submission and Report Preparation

We prepare a stock audit findings report, which includes suggestions and irregularities. We also give suggestions for the enhancement of the report. We recommend the required actions and highlight key outcomes.

Timeline for Stock Audit in Mumbai

The timeline for the stock audit depends on the type of borrower.

• If you’re a trading entity stock audit will take around 3-5 working days.
• For manufacturing SMEs, it takes 5-7 working days.
• For large corporations, a stock audit will take around 2-3 weeks.

The timeline will also vary depending on the accessibility of the site and data readiness.

Common Issues Identified During Stock Audits

These are the common issues that are identified during stock audits.

• Inflated closing stock that is required to maintain DP.
• Mismatch between the stock record and the GST return.
• Beyond 180 days, debtors are deemed eligible.
• In ERP, negative stock.

If these issues are encountered, they may lead to:

• Negative remarks by the auditor.
• Enhanced bank monitoring.
• Reduced drawing power.

Why Choose Us?

• Our team takes communication seriously and is easily approachable. This means you can reach the auditor who is handling your audit. We try our best to provide answers to your questions. We also address concerns you may have in your mind about our services as swiftly as possible.
• We have worked with both small and large companies, and we have years of experience in the industry. We provide specific and result-oriented solutions as we believe that every business is different in its way of functioning.
• We are the most dependable stock auditors in Mumbai. We carry out external audits with accuracy and dedication.
• We offer quality external audits. Our auditors know about the latest regulations and are highly capable.

Industries Where Stock Audit Is Critical

• Metal and steel trading.
• FMCG distributors.
• Garment and textile units.
• Pharmaceutical wholesalers.
• Warehousing and logistics.
• Electronic traders.

Documents Required for Stock Audit

The following documents are required for the stock audit.

• Stock statements.
• Copy of the sanction letter.
• Trial balance.
• Sales and purchase register.
• Insurance policy.
• Ageing report of debtor.
• GST returns.

FAQs

Q-1: Why is a stock audit conducted?

Ans: Stock Audit is conducted to physically verify the stock/inventory of a company to ensure that the physical stock matches the book stock.

Q-2: Why do banks insist on a stock audit in Mumbai?

Ans: In Mumbai, businesses often have to operate with tight margin high volumes of transactions. Drawing power can be impacted by even small reporting errors.

Q-3: Can audit observations be challenged by the borrower?

Ans: With the help of supporting documents borrower can challenge audit observations.

Q-4: Is the audit affected by a GST mismatch?

Ans: If there is any discrepancy between books and GST, it may raise red flags.

Q-5: Why should you choose Sapient Services?

Ans: We are the most dependable stock auditors in Mumbai. We carry out external audits with accuracy and dedication. We provide specific and result-oriented solutions as we believe that every business is different in its way of functioning.

Q-6: What issues are identified during stock audits?

Ans: The common issues that are identified during stock audits include inflated closing stock that is required to maintain DP, a mismatch between the stock record and the GST return, and, in ERP, negative stock.

Q-7: How much time does a stock audit take?

Ans: A stock audit can take around 3 days to 4 weeks, based on the type of business, stock records complexity, and the size of the inventory.

Q-8: What steps are followed during the stock audit procedure?

Ans: We plan audit, conduct physical verification, compare the physical count inventory with the book inventory, and prepare a stock audit findings report.

Q-9: Are statutory audit and stock audit the same?

Ans: A stock audit focuses on verifying acompany’s physical inventory. On the other hand, a statutory audit examines the financial statements of the company.

Q-10: What can banks verify with the help of a stock audit?

Ans: Banks can verify obsolete or slow-moving stock, related party debtors, receivables ageing, incorrect valuation method, and overstatement of inventory with the help of a stock audit.