Stock Audit Services

Q: What is the difference between a stock audit and a statutory audit?

A statutory audit is an annual legal requirement covering entire financial statements. A stock audit is a specific physical verification of inventory and assets, conducted separately and often more frequently for bank compliance or internal control purposes.

Q: What happens if a discrepancy is found between book stock and physical stock?

Discrepancies are quantified and reported with probable causes. Significant shortages may indicate pilferage or inadequate controls. The report enables management and lenders to take corrective action and adjust drawing power under credit facilities.

Independent Verification of Inventory, Fixed Assets, and Warehouse Stock for Businesses and Lenders

A stock audit is an independent physical verification of inventory and assets to confirm that what is recorded in the books matches what actually exists on the ground. It is required by banks and financial institutions as a condition of working capital facilities, and is also conducted internally by businesses to identify discrepancies, pilferage, and obsolete stock.

Our stock audit services cover the full range of physical verification needs — from inventory stock audits for manufacturing and trading businesses, to fixed asset audit and verification, and warehouse audits for logistics and distribution businesses. These services connect with our broader audit and assurance practice to provide a complete picture of physical and financial asset integrity.

Our Stock Audit Services

Inventory Stock Audit

Physical count and verification of raw materials, work-in-progress, and finished goods against book records, for internal control and bank compliance purposes.

Fixed Asset Audit & Verification

Physical verification of plant, machinery, equipment, furniture, and other fixed assets against the fixed asset register to confirm existence and condition.

Warehouse Audit

Comprehensive audit of warehouse stock including receipt, dispatch, storage, and handling procedures to verify quantity, quality, and condition of goods.

Bank Stock Audit

Stock audit conducted on behalf of lending banks to verify the value and condition of inventory pledged as collateral under working capital credit facilities.

Discrepancy Reporting

Detailed reporting on variances between physical stock and book records, including quantification of shortages, excesses, and obsolete or damaged stock.

Valuation Review

Review of the valuation methodology applied to inventory and assets to assess whether it is consistent with accounting standards and lending institution requirements.

Benefits of Regular Stock Audits

Confirms that inventory and asset records are accurate and complete
Satisfies bank requirements for stock audits under working capital facilities
Identifies pilferage, shrinkage, and obsolete stock before they become significant losses
Supports year-end financial statement preparation with verified physical counts
Improves internal controls over stock receipt, movement, and dispatch
Provides management with a reliable picture of actual asset base and condition

Frequently Asked Questions

What is a stock audit and why is it required by banks?

A stock audit is a physical verification of inventory and assets conducted by an independent party to confirm the existence, quantity, and condition of goods or assets. Banks require stock audits for businesses availing working capital loans — particularly cash credit facilities — to verify that the collateral (stock) supporting the credit facility actually exists and is correctly valued.

How frequently should a stock audit be conducted?

Banks typically require quarterly or half-yearly stock audits for businesses with significant working capital facilities. Internally, businesses may conduct monthly or annual stock audits depending on the nature of inventory and the level of internal control risk. High-value or fast-moving inventory generally warrants more frequent verification.

What is the difference between a stock audit and a statutory audit?

A statutory audit is an annual legal requirement covering the entire financial statements of an entity. A stock audit is a specific physical verification exercise focused on inventory and assets. While a statutory auditor reviews inventory as part of the annual audit, a stock audit involves dedicated physical counts and is conducted separately — often more frequently and for a specific purpose such as bank compliance.

What happens if a discrepancy is found between book stock and physical stock?

Discrepancies are quantified and reported, along with probable causes. Minor discrepancies may be due to transit stock, timing differences, or recording errors. Significant shortages may indicate pilferage, misappropriation, or inadequate controls. The report enables management and lenders to take corrective action and, where necessary, adjust the drawing power under credit facilities.

Can stock audit services be customised for our specific business and lender requirements?

Yes. Stock audit scope, reporting format, and frequency are typically specified by the lending bank in the sanction letter. We work within those requirements and can tailor the physical verification process to the specific nature of the business — whether manufacturing, trading, warehousing, or distribution — to ensure the audit report meets the bank's and management's needs.

Know What You Own — Really Own

Independent stock audit services trusted by businesses and their banks.