If your business holds physical stock, what is recorded in your books and what is actually on the shelf can quietly drift apart. FinApt Group’s inventory audits confirm your stock exists and is correctly valued. They make sure it is accurately reflected in your financial statements, before a small gap becomes a bigger problem at year-end.
What an Inventory Audit Covers
Physical Stock Verification Independent physical counting of raw materials, work-in-progress, finished goods, spare parts, packaging and returned or damaged inventory, across your warehouses, stores or distribution centres.
Inventory Reconciliation Comparing physical count results against your accounting or warehouse management system records, and investigating the gaps: missing stock, duplicate entries, posting errors, or warehouse transfer mistakes.
Inventory Valuation Review Checking that inventory is costed and valued correctly, including how freight, overhead and labour costs are absorbed into stock value.
Ownership Verification Confirming that stock recorded on your books actually belongs to your business. This matters where consignment stock, goods held for third parties, or in-transit shipments can blur the picture.
Findings Report A written report setting out discrepancies found, their likely cause, and recommendations to tighten controls going forward.
Types of Inventory Audit
- Physical / Annual Inventory Audit: a full count and reconciliation, typically timed to support year-end financial reporting
- Cycle Count Audit: smaller, rolling counts through the year instead of a single annual exercise, useful for businesses with high stock turnover
- Inventory Valuation Audit: focused specifically on costing methodology and valuation accuracy, rather than physical existence
Why This Matters
- Supports your statutory audit: external auditors generally require physical inventory verification (ISA 501) as part of financial statement auditing, so a completed stock audit removes friction at year-end. See our external audit services.
- Protects against shrinkage and fraud: regular counts surface theft, unauthorised movements and unrecorded losses before they compound.
- Improves purchasing and planning decisions: accurate stock data prevents overstocking, understocking and the cash flow pressure both create.
- Supports financing and insurance requirements: lenders and insurers with stock-based cover often require independent verification of inventory value.
Who Needs This
Businesses with significant physical inventory benefit most from regular independent stock audits. That includes retail, manufacturing, logistics, wholesale and trading, e-commerce and fulfilment operations. It matters most where stock sits across multiple locations or turns over quickly.
Why FinApt Group for Inventory & Stock Audit
- Our licensed auditors deliver inventory audits as a standalone engagement or as part of your annual statutory audit
- Findings connected to the bigger picture: inventory issues often affect valuation, tax position and financing, which our wider audit and advisory team can act on directly
- Practical recommendations, not just a discrepancy list
Frequently Asked Questions
Is a stock audit the same as my annual statutory audit?
No. A stock audit is a focused physical verification of inventory, while a statutory audit covers your full financial statements. Auditors typically require inventory verification as part of the statutory audit, so the two are closely linked but not the same engagement.
How often should we do a stock audit?
It depends on your stock turnover and risk profile. Businesses with high-value or fast-moving inventory often run cycle counts through the year, in addition to a full annual count.
What happens if the audit finds discrepancies?
We investigate the likely cause. That could be theft, posting errors, transfer mistakes or valuation issues. We then recommend how to correct the records and tighten controls to prevent recurrence.
Do you audit inventory across multiple warehouses or locations?
Yes. We can coordinate physical counts across multiple sites as part of a single engagement.