The document outlines the process of stock verification in material management, emphasizing the importance of reconciling physical inventory with book balances to identify operational weaknesses and ensure accuracy. It details various types of stock verification methods, such as spot, routine, annual, and perpetual verification, along with their objectives, merits, and demerits. Additionally, it discusses the procedures for stock verification and types of discrepancies that can occur, highlighting the need for accurate records and thorough checks to prevent theft and loss.

1. Presented by :
RN Ankita Ashok Kadam
PGDHA II (2019-2020)
Roll no. 04
Garware Institute of Career Education & Development
STOCK VERIFICATION
Material Management

2. Store verification is a process
of physically counting &
checking inventory in the unit,
against its book balance at
least once in a year
DEFINITION

3. • Reconcile the physical & book balances are of prime
importance.
• Identify the weaknesses in the operations.
• To ensure the input, output & stock on hand accounted for
accuracy.
• Ensure proper placement of materials.
• It also helps to identify slow, non-moving & reduce obsolete
items.
• The chances of collusion amongst the various staff members.
• In order to avoid discrepancy in stocks.
• Constant review of orders.
OBJECTIVES

4. • better management &
control over various
activities of production.
• goods in process &
finished goods.
• basis of inventory control
by value.
• Accounting of all materials
received.
• Tally of accounts- physical
v/s accounting
• Determining ordering
quality
• Stock taking- physical
inventory/ stock
verification
Value of Stocks Items of Stock
STORES& ACCOUNTING

5. Physical verification is necessary since
they are the assets of the organization
• Correctness of stocks & values of stocks.
• Detection of frauds, thefts, loss & damage
– deviation from procedure etc.
• Examines the process of storage for any
weaknesses.
• Moral check on the staff.
PURPOSES

6. 1. Spot Verification
2. Routine Verification
3. Annual or Periodical Verification
4. Perpetual/ Continuous Stock Verification
5. Low Point or Out-of-Stock Verification
KIND OF PHYSICALVERIFICATIONS OF
STOCKS

7. • While issuing or receiving
• Voluntary, simple, good,
regular
• No official recognition
• Serves as self check
mechanism for internal
procedures of stores
• Always in addition to other
methods
SPOT VERIFICATION

8. • By store staff for own
satisfaction
• No official recognition
• Mechanism for internal
control
Objectives
• Check store records
• Accuracy of store records &
quantity of stocks
• Detecting theft, wastage etc in
time
• Moral check on staff
• Prepare staff for inspection &
internal audit
ROUTINE VERIFICATION

9. • Whole stock is physically verified
at the end of the given period,
usually annually at the time of the
ending of the financial year.
• Total official recognition & the a
counting is tallied.
• Small stores can be done in one
day.
• Large stores can be done in few
days.
ANNUAL/ PERIODIC
VERIFICATION

10. • Simple, convenient &
satisfactory.
• Value of closing stock is
taken into account
• No extra shelf is required
in small stores.
• Authentic verification of
stores.
• Extra staff required for extra
large stores.
• If staff is disinterested or
inexperienced the results are
not satisfactory.
• Discrepancy detected only
once in a given period. Proper
investigation not possible.
• Delay in preparing of final
accounts due to formalities.
Merits Demerits
ANNUAL/ PERIODIC VERIFICATION

11. • An advanced chalked out program is set.
• No deviation is allowed.
• All items physically checked at least once
a year & certain items checked daily.
• Few well trained verifiers, directly under
the control of the materials control
department or account department.
• Detailed stock records are maintained.
• Stores may not be closed for the store
checking.
PERPETUAL/ CONTINUOUS STOCK
VERIFICATION

12. • When particular stock items are on a low point & needs
replenishment.
• When the particular item is out of stock.
Method :
• Done by store staff.
• Records are kept by storekeeper & are used in annual
accounting.
• Records sent to accounts & purchase department.
• Requires greater c-ordination between stores & accounts.
LOW POINT / OUT-OF-STOCK
VERIFICATION

13. • Appointment of a team of verifiers(internal & external)
• Provision of stocktaking sheets which are numbered & dated when
used
• Verification of sheets with stock types
• Physical verification of stock
• Noting of discrepancies, expired goods, damage goods etc.
• Investigating into the discrepancies & reporting to the designated
authority.
• Preparation of internal discrepancies resolution report as well as
stock written report after approval of higher authorities.
• Preparation of stock valuation sheet/ inventory valuation sheet
incorporating details of all the stocks taking sheets.
PROCEDURESFOR STOCK
VERIFICATION

14. • Difference in quantity,
complimentary items.
• No record of an item
purchase which physically
exists.
• No stocks but records
present.
• Batch number discrepancy
TYPES OF DISCREPANCIES

15. • Stock is less due to theft
• Pilferage
• Natural loss
• Loss stock due to changing in temperature
• Errors in counting
• Loss due to careless handling & careless
measurement
• Any other losses may be the nature of
avoidable or unavoidable.
RESULTS OF STOCK
VERIFICATION