Physical Stock Count Procedures and Stock Verification

Stock take & Verification of Actual Stock as at year end.

Written instructions that describe the procedures to be performed by the individuals participating in the count are an important part of the effort and should be prepared and distributed well in advance of the physical inventory date.

The instructions should cover each phase of the procedures and address these 11 matters:

1. Names of persons drafting and approving the instructions

2. Dates and times of inventory taking

3. Names of persons responsible for supervising inventory taking

4. Plans for arranging and segregating inventory, including precautions taken to clear work in process to cutoff points

5. Provisions for control of receiving and shipping during the inventory-taking period and, if production is not shut down, the plans for handling inventory movements

6. Instructions for recording the description of inventory items and how quantities are to be determined (e.g., count, weight, or other measurement)

7. Instructions for identifying obsolete, damaged, and slow-moving items

8. Instructions for the use of inventory tags or count sheets (including their distribution, collection, and control)

9. Plans for determining quantities at outside locations

10. Instructions for review and approval of inventory by department heads or other supervisory personnel

11. Method for transcribing original counts to the final inventory sheets or summaries

Physical inventory count teams should be familiar with the inventory items. The counts should be checked, or recounts should be performed, by persons other than those making the original counts.