Difference Between Stock Take, Stock Count and Stock Audit
Describe the Scope of Service of 3 Different Services
|
Particulars |
Stock Count |
Stock Take |
Stock Audit |
|
Meaning |
Counting physical quantity |
Overall exercise of determining physical inventory position |
Independent examination of inventory |
|
Primary Objective |
Determine quantity |
Establish complete physical stock position |
Verify quantity, records, valuation and controls |
|
Scope |
Mainly physical quantity |
Physical stock + reconciliation process |
Physical stock + books + system + transactions + controls |
|
Comparison with Books |
Usually limited |
Generally performed |
Detailed reconciliation |
|
Valuation |
Normally not covered |
May be considered |
Can be covered |
|
Stock Ageing |
No |
May be prepared |
Yes |
|
Damaged/Obsolete Stock |
May be identified |
Generally identified |
Detailed analysis |
|
Transaction Testing |
No |
Limited |
Yes |
|
Internal Controls |
No |
Limited |
Yes |
|
Fraud/Leakage Review |
Limited |
Limited |
Yes |
|
Output |
Physical quantity |
Physical stock statement |
Detailed Stock Audit Report |
|
Performed By |
Warehouse/stock-count team |
Internal/external team |
Independent auditor / professional team |
A simple example
Suppose the ERP shows:
Product A – 1,000 units
The team physically counts:
Product A – 950 units
Stock Count
The conclusion would simply be:
Physical quantity = 950 units.
Stock Take
The exercise may identify:
Book quantity = 1,000
Physical quantity = 950
Shortage = 50 units.
Stock Audit
The auditor would go further and investigate:
- Why are 50 units missing?
- Were 50 units dispatched but not invoiced?
- Were sales returns incorrectly recorded?
- Were stock transfers properly recorded?
- Is there pilferage?
- Are there damaged goods?
- Are there timing/cut-off differences?
- Is the ERP stock ledger accurate?
- Who approved the stock adjustment?
- Does the warehouse follow the prescribed SOP?
- Is the inventory valuation appropriate?
Therefore, the key difference is:
Stock Count = Counting
Stock Take = Establishing Physical Stock Position
Stock Audit = Verification + Reconciliation + Investigation + Controls + Reporting