The document discusses the process and importance of inventory audits, which involve physically checking inventory against recorded financial records. It highlights the benefits of identifying inefficiencies, managing inventory levels, detecting theft, and improving budgeting. Additionally, it covers various types of audits and their purposes in ensuring accuracy and compliance within financial and operational processes.

1. STARTUP
BUSINESS
Presentation by
ANNA ROSE C. GARCIA

2. Inventory Audit

3. Index
Information requirements and Next Steps
Indicative High Level Plan

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 Inventory audit is the process of physical checking of inventory and cross-
checking them with the record mentioned in the books.
 Financial records are also checked in the process. An inventory count can
be a simple-looking process but it is very complex.
 Help Management to ensure appropriate inventory levels, identify
inefficiencies and budget more accurately
 It can also help identify more nefarious activities, like theft, as well as
damaged or forgotten goods.
1. Inventory Audit

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2. Audit Procedure

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3. Key Points in Audit report

10. Shrinkage
and
Negative
Inventory
• Details of inventory shrinkage and negative inventory.
Dead Stock
• We will provide you details of Dead stock and damaged stock lying in warehouse.
for
Internal
controls
• We review the internal controls placed. It gives the over view of stock control and
helps us to find any process gap for effective stock control. Ex- Observing Stock
inward and outward procedures, and Inventory movement documentation

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3. Advantages of Inventory Audit
 Know what’s missing – As you compare physical counts with your records, you
can identify which items are missing. If you find consistent inventory
shrinkage with supplies or products, further investigation can help determine
if they were lost, stolen, damaged, or discarded. And you can take action to
stop shrinkage.
 Assess overall inventory status – Regular inventory audits will reveal if specific
items are consistently understocked. You can also identify which supplies
aren’t being used and are taking up storage space It can also help identify
more nefarious activities, like theft, as well as damaged or forgotten goods.
• Budget better – When you understand which items you need the most, it’s
easy to budget more efficiently. Regular inventory audits prevent wasting
money on buying and storing products that are always in surplus. Audits help
you determine if you need to discontinue surplus items and redirect funds to
goods that are frequent stockouts.

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• Revenue – money coming into the business from
sales
• Purchases – only include items that the business
trades with; sells on.
• Inventory – these are the goods that the business
has in stock
• Cost of Sales – cost to the business of the goods
which have been sold in the financial year
• Carriage in – the expense to the business of having
purchases delivered

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17. INTRODUCTION
1
What is an audit?

18. Auditing typically refers to
financial statement audits or an
objective examination and
evaluation of a company’s
financial statements – usually
performed by an external third
party.
2

19. Purpose of Auditing:
Ensuring accuracy,
reliability, and compliance
in financial and
operational processes.

20. • Financial Audits
• Operational Audits
• Compliance Audits
• Information Systems Audits:
Types of Audits

21. FINANCIAL AUDITS
5
• Examination of financial
statements to ensure
accuracy and compliance
with accounting standards.

22. OPERATIONAL AUDITS
5
• Evaluation of an
organization's operations,
including efficiency and
effectiveness.

23. INVENTORY AUDIT
7
• is the process of physical checking of
inventory and cross checking them
with the record
• help management to ensure
appropriate inventory levels, identify
inefficiencies and budget more
accurately
• can help to identify more nefarious
activities, like theft as well as damaged
or forgetten goods

24. PHYSICAL INVENTORY
COUNTING
7
• this is the common way to
perform an inventory audit. It
involves physically counting every
item in your inventory and
comparing the numbers against
the number in system
• an easier for business that use a
just in time of inventory method