1/9/12 CAclubindia Nes : Basic of Stock Audit

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Baic of Sock Adi
Peface:

The eecie f c adi a iiiaed b he ba i a bac 1992 ad, afe Hahad Meha Sca.
The idea i eif he eci ffeed he ba agai he ai faciiie b a ideede ahi
... i adeac ce he ii a aica dae.

Se f he ba hae ce he ii R.5/- ce ad abe acc ea bai hie he ce
acc e R.1/-ce. Ba a iiiaed haf ea eificai b he ae agec.

Se ba a eied, he ii hd be cdced ag ih he ba fficia ih a iei ha, he
ba fficia he eai i he acc ad abe ae decii f ha acc ic, a e a
he cede aded b he ideede agec f eificai, ad he deficiecie if a beed
hie eificai.

The main ppoe i:

A ideede aee ae f eci. Checig f ecd e f he eci.

Aee f daig e he dae f ii.

Cai f baace a he dae ih ae f eci.

The chage i bie acii ad aee f eiee i de cec. Cdc f acc, fiacia
aagee.

Adeac f iace ce f eci, ia a e a caea. Geea beai he eai f
he be.

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Ho to proceed.

Vii he banch o aceain he condc of a/c, ancion lee, deficiencie obeed b he banch inpeco,
RBI adi, con-cen adi, aio compliance, aemen of eci like ock, book deb bmied.

Vii o he booe place hee he eci i kep, faco, godon, job oke hee he ock ae kep.
Vii he booe office o eif he eci of book deb, inoice fo alaion, ao ecod,
compliance fo bank, dicion on deficiencie obeed.Compilaion of deail and pepaaion of epo.

Details to be collected:

From Branch:

Copie of, lae ock aemen, lae ancion lee, lae QIS epo bmied Obeaion b aio
adio on accon and i aificaion if an.

Saemen of oede in Packing cedi, deilmen of L/C, gaanee ec. Geneal eie of opeaion, fo
ece, Ad oc alloed.

Compliance o em of ancion ding he financial ea.

Balance in all a/c a on he dae of ii.

From Borroer:
Copies of:

Inance polic fo pima and collaeal eci.

Inoice fo alaion of eci.

1/9/12 CAclubindia Nes : Basic of Stock Audit
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Audited accounts of previous ear.

Methods of valuation adopted for securit statement submitted to bank.

Invoices for purchases in case of term loan.

Actual verification of securit.
Fo Sock:

Select the items to be verified on random basis from the stock statement submitted.

Check these items with the records available for correctness of quantit.

Reconcile and arrive the stock as on the date of visit for selected items.

Phsicall check the stocks, an variation should be adjusted with the stock shown in the statement submitted.

Check the valuation of these items with the records available.

Identif and note the stocks more than 180 das old, slow moving, out of order, rejected, non-moving stocks,
generall the banks does not consider the value of these items in securit while calculating the drawing power.

Fo book deb:

Select the list of accounts to be checked from the total debtors list.

Test check the invoices, with dispatch of martial, Ascertain the method of adjusting the receipts in case receipts
are not against a particular bill.
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Veif he age of he eceiable.

Veif he ledge accon fo eleced debo fo la i monh. ,,. ale, eceip, ejecion , pamen
paen, cedi peiod ec.

Check all he balance of debo fom debo ledge fo he aemen bmied.

Aie a he Daing Poe; The paamee fo eci ale aken fo daing poe ae gien in he
ancion lee.

Value of securit:

Sock Le. Cedio fo good.R.

Sock again L/C no paid.

Slo, non-moing, ejeced ock.

Ne Sock

Le. Magin(A iplaed in ancion)

Sock fo daing poe.(A)

Receiable

Le. Magin(A iplaed in ancion)
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Receivables for drawing power.(B)
Drawing power.
(A)+(B)
Bal in the account as on that date.

Checking should confirm:

The value of securit not shown higher b,

In cae of ock.

Enter fictitious purchase bills, twice entr in stock record.

Not entering the issues.

Overvaluation

Rejected, out of order, non moving stocks not separated.

Recording job work stock as own stocks.

Phsical stock not properl stored whereb unable to count , given on estimation basis.

Entr of fictitious pament to creditors, to reduce the value.
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In case of receivables:

Recording oI Iictious sale bills or enter twice.

Not entering oI receipts against outstanding.

Records sale bills where martial not dispatched.

Non recording oI goods return or rejected.

Date oI invoice not correct, diIIiculty in ascertain the age oI receivables.

Non genuine debtors parties.

Debts oI sister concern included, which are already Iinanced in respective Iirms.

Records to verif:

1. Excise records Ior stocks are reliable, iI maintained veriIy the same.

Name oI the record Purpose

RG-23 Part I For Raw martial & excisable items to ascertain value.
RG-23 Par II For Raw martial & excisable items quantity to ascertain Qty.
RG-1 Qty oI Iinished stock Ior Qty, Sale price and duty component to
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aceain ale.
Anne I Sock end/ eceied fom oide poceo

2. Phical eificaion fo eleced iem i m.

3. Financial dicipline of he booe .. bmiion of aemen o bank, opeaion ihin he limi, No
oede .

4. Reie of bine acii fo nea fe

M Eperiences:

Fe eamples:.

1. A ade in chemical ho eal ignal, hoee aken o hi godon fo eificaion of ock. The noe
book a mainained o ho nmbe of dm in he godon. When e ak he maial in he dm, he nable
o eplain and old he ame i knon o he one onl. We decided o ake a con, he dm a he bae ae
moed b imple hand indicae he ame ae emp, hen aked, i a eplained o , ha hen he maial i
old he ae kep don, and filled dm ae oed aboe. We pie ho and 150 k.g. fll dm oe in
hee and fo ppe lae.

I ak him o ake a coin of R.5/- and hi all he dm fo a con. When he hi, a big ond emege indicaing
all he dm ae emp.

The gon keepe finall admi he emp dm.

2. A ii i aanged o faco , he chedle i e igh, e hold onl ge ome ho in he faco
pemie. When e eached he deinaion and pickp b booe inead of faco he fi ake fo lnch.

When a faco, he eplained ho mch cleical eci offeed o he bank, hich i moe han hee o fo
ime he fnded limi.
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He eplained ho ch adi i bden o he booe and nnecea. The acconan a aben and
em ae no oking.

When e hae ond o he faco, a aff i coninol aching o moemen and dicion e had ih
he oke.

Ulimael he ii ended ih no eificaion o o aifacion, e epoed he ame. The booe called
an agen of ne bank manage ho ha behind him fo eglaiaion of ece.

The accon naall no o NPA.

Hope he aicle gie eal gidance and baic of hi aignmen.

CA Satish Badve
badveco@ahoo.co.in
Soce : Self -