Inventories are a form of tangible property that is held for sale in the ordinary course of business. Stocks generally constitute a significant portion of the total assets, especially in case of manufacturing and trading entities as well as some service rendering organizations. Audit of inventories hence has got particular importance.
Stock Audit is the physical verification of Inventory. However, sometimes it may also include the valuation of the Inventory, this depends on the terms of reference or the engagement letter of the assignment. Every business organization at least must perform stock audit once a year, to ensure and update that the physical stock and the computed stock match.
A stock audit report is used to document the details or information about the existing stocks of the business that has been gathered during a stock audit. Annual stock audit reports provide important details that are used by companies in their financial statements.
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