Stock & Fixed Assets Audit – A Comprehensive Overview

Stock & Fixed Assets Audit is a systematic review of a company’s inventory and fixed assets to ensure accuracy, proper valuation, and compliance with financial and regulatory standards. This audit helps businesses maintain control over their assets, prevent discrepancies, and enhance operational efficiency.

1. Stock Audit (Inventory Audit)

A Stock Audit involves verifying the quantity, quality, and valuation of a company’s inventory. It ensures that the stock records align with actual physical stock and accounting standards.

Key Objectives of Stock Audit

• Accuracy – To ensure stock records match physical inventory.
• Valuation – To assess if stock valuation follows accounting norms.
• Fraud Prevention – To detect discrepancies, pilferage, or mismanagement.
• Compliance – To ensure adherence to tax and regulatory requirements.

Stock Audit Process

1. Physical verification of stock against records.
2. Review of stock movement (purchases, sales, wastage).
3. Assessment of valuation methods (FIFO, LIFO, weighted average).
4. Identification of obsolete, slow-moving, or damaged stock.
5. Reporting discrepancies and recommendations.

2. Fixed Assets Audit

A Fixed Assets Audit involves reviewing a company's tangible assets (such as land, buildings, machinery, and equipment) to confirm their existence, ownership, valuation, and condition.

Key Objectives of Fixed Assets Audit

• Existence & Ownership – To verify that assets are physically present and owned by the company.
• Valuation & Depreciation – To ensure correct valuation and depreciation calculations.
• Asset Utilization – To assess whether assets are being efficiently used.
• Compliance & Record Maintenance – To check compliance with accounting standards and proper asset records.

Fixed Assets Audit Process

1. Physical verification of assets.
2. Matching assets with financial records.
3. Review of depreciation and impairment calculations.
4. Assessing maintenance records and asset condition.
5. Identifying ghost assets (non-existent but recorded assets).
6. Reporting findings and recommendations.

Conclusion

A Stock & Fixed Assets Audit helps businesses prevent fraud, optimize resources, comply with accounting standards, and enhance financial transparency. Regular audits ensure better financial planning and operational efficiency.