Within any organization there are certain tasks that have been performed needs to be rechecked. This gives organizations or stakeholders a confidence that the tasks being performed are fair.
The term “tasks” here refers to the financial reports, the inventory reports and operational reports. Audit is the only process that makes the stakeholders confident about the activities happening in the organization and provide a comfort to the owners or the stakeholders.
Audit actually is a comparison of the reports provided by the person within the organization with the reports provided by an independent person. This report provided by the independent person is not biased and the reviews given are based on the facts. Whereas there are chances that the reports provided by the person within the organization are biased and are not the facts.
That is why it is necessary to perform audit once in a year to keep an eye on the company’s financial and inventory records. There are different strategies and approaches to do the audit in a firm and these strategies must comply with the laws provided for each type of audits.
Many firms are now hiring internal and external auditors to make their financial and inventory reports. To get your auditor you can visit top audit firms in Dubai to make fairer and reliable reports.
What is Inventory Audit?
Apart from preparing and comparing the financial statements of a firm inventory audit is also important. Inventory audit is done in order to cross check the inventory record with the actual number of goods present within the organization.
Inventory audit is not only to cross check the records with the actual goods but it is more than that. In inventory audit the quality of the goods are also checked in order to make a comparisons with the financial statement being prepared for the purchase of these goods.
This way inventory audit help the owners to identify the amount spent on certain goods, the stock remaining to be sold, the stock that is still in the warehouse and is outdated to be sold.
Procedures involved in inventory audit
To make inventory audit reports there are certain procedures to be followed. Following these procedures will help you generate better and accurate inventory reports. Below are some of the procedures necessary to follow:
- What is the inventory count?
- What are the goods with higher values
- Goods with mid value
- Goods with low values
- Goods at risk
- Shipping or freight cost
- Calculate hidden expenses
- Compare the cost of goods shipped with the cost mentioned in financial records
Following these procedures will help an auditor to make the audit reports accurate and reliable.
Why inventory Audit is Important?
Many people ask why audit is so important. The answer to this question is that we can consider audit as a way to evaluate and find where an organization stands. We can also say that audit is one of the accountability techniques being approached by a firm.
Inventory audit has several benefits such as
- Keep a record of goods present and goods sold
- What are the goods which are more prone to risk
- The reports received are not biased and are independent reviews
- Identifies the areas that demands greater attention
- Makes sure that the records in financial reports are accurate
- Checks the quality of goods being purchased
- Identifies the goods whose sales rate are low
- Which goods are in demand and needs to be produced more
Difficulties to carryout inventory audit
The duties of an auditor are not the easier ones, especially when it comes to inventory audit, Inventory audit is one of the challenging and industrious tasks to perform.
One of the main reasons for it being difficult is because it takes a great amount of time. Counting the goods available and comparing their cost with the mentioned costs in the financial reports demands plenty of time.
Another problem that arises with inventory audit is that all the other operations going on in a firm are affected because inventory audit is dependent on the operations such as order fulfilment and shipments etc. this way the firm may lag behind the time mentioned to complete an order.
Future benefits with inventory audit
Inventory audit brings a lot of future benefits. One of the most significant benefits is that it will help you identify what are the future needs? What are the goods that will have a great demand in the future?
No organization wants to sell or keep the goods that are not in demand. Organizations top priority is to identify the needs of their customers and then provide them the products that they were demanding for. This way the firms are more likely to grow and prosper.
Are you ready for an audit?
Hope this piece of reading was enough to give you a better understanding of why quality audit is important and who to ask for when intended to do an audit. The top audit firms in Dubai will lead you on how to perform these beneficial tasks and who will do it for you.
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