📘 How to Do Stock Audit and How Frequently Should It Be Done?

Stock audit is a critical process in maintaining accurate inventory records, identifying discrepancies, and ensuring business efficiency. Whether you're a small business or a large enterprise, knowing how to do stock audit and how frequently should a stock audit be conducted is essential for smooth operations.

✅ What is Stock Audit?

A stock audit is the process of physically verifying the inventory levels, conditions, and records of your stock and reconciling them with the inventory data in your books or ERP system.

✅ How to Do Stock Audit: Step-by-Step Process

Here is a simple guide on how to do stock audit effectively:

1. Define Objectives
   Identify why the stock audit is being conducted — for financial reporting, internal control, or compliance.
2. Prepare Audit Plan
   List inventory items, categories, audit locations, and assign roles. Use an Inventory Audit Checklist to ensure no item is missed.
3. Freeze Transactions
   During the audit, temporarily pause stock movements to maintain accuracy.
4. Use Barcode or RFID Scanning
   Tools like Stockount or other inventory apps can simplify physical stock audit using barcode technology.
5. Conduct Physical Verification
   Match physical count with recorded inventory. Note any damages, losses, or misplacements.
6. Reconcile Differences
   Investigate and document reasons for discrepancies — theft, data entry errors, pilferage, etc.
7. Generate Reports
   Summarize findings, include actionable insights, and recommend process improvements.

✅ How Frequently Should a Stock Audit Be Done?

The stock audit frequency depends on the nature and size of the business. Below are common practices:

• Monthly Audit: For businesses with high stock movement like FMCG, supermarkets, or retail.
• Quarterly Audit: Ideal for medium-scale businesses and distributors.
• Bi-Annual or Annual Audit: Suitable for low-volume or B2B inventory operations.
• Surprise Audits: Recommended to detect fraud or verify real-time stock health unexpectedly.

Tip: Always consider a mix of periodic stock audit and cycle counting to maintain better inventory control year-round.

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