Inventory Count and Verification
An independent inventory count is needed when an owner, a manager or a donor wants to know that the assets, goods and stock recorded in the books are actually there, in proper condition and in the quantities shown in the documents. MK Audit organises and carries out counts of fixed assets, goods in warehouses, stock, cash and documents, or observes a count carried out by the company’s own commission.
The result is a set of inventory lists prepared in the form required by Ukrainian law, reconciliation sheets showing discrepancies, and a report for the owner or donor explaining the causes of shortages and surpluses. The firm has carried out inventory counts since 2000, including unannounced counts at cosmetics and pharmaceutical distributors in several Ukrainian cities at the same time, as well as counts at manufacturing and trading companies.
What is included
- preparation: order, composition of the commission, schedule, routes through warehouses and departments, briefing of custodians;
- counting, weighing and measuring of fixed assets, goods, stock, cash on hand and strict reporting forms;
- reconciliation of physical balances with accounting and warehouse records;
- preparation of inventory lists, reconciliation sheets and the minutes of the inventory commission;
- analysis of the causes of discrepancies: mix-ups, recording errors, shortages, surpluses, damaged property;
- recommendations on recording the results and on write-offs;
- for donor-funded projects: verification of equipment purchased with grant funds, reconciliation with the project asset register, photo documentation;
- unannounced counts without prior notice to custodians, at the owner’s decision.
Formats of auditor involvement
| Format | What we do | When it suits |
|---|---|---|
| Observation of the count | Auditor attends the count, performs test counts, assesses the procedure | Annual count before the audit of financial statements, donor requirement |
| Count performed by auditors | Our specialists join the commission, count, prepare the lists and the report | Change of custodian, suspected shortages, large volumes |
| Unannounced count | Visit without prior notice, at several locations at once | Network of warehouses or shops, control over distributors |
Who needs it
- trading and manufacturing companies, distributors and pharmaceutical companies with warehouse stock;
- LLCs and representative offices of foreign companies whose parent company or auditor requires independent confirmation of balances;
- NGOs, charitable foundations and donor-funded projects: the donor asks for confirmation that equipment, humanitarian goods or supplies purchased with grant funds are in place;
- owners who want to check the work of the warehouse or of custodians;
- companies before preparing annual financial statements, on a change of custodian, on reorganisation or liquidation, or after theft, fire or other events.
How the work proceeds
- Request and proposal. You describe the sites, the number of warehouses and the approximate number of items, and we send a commercial proposal within 1 day.
- Contract and checklist. We sign the contract, agree the date, the commission and the list of accounting data to prepare.
- Execution. The auditors visit the sites, perform the count, record the results and reconcile them with the books.
- Result and support. We hand over the lists, reconciliation sheets and the report, and advise on recording the results.
Documents you will need
- order on the inventory count and composition of the commission;
- book balances as at the count date: account statements, stock cards, WMS or accounting software data;
- list of fixed assets with inventory numbers and locations;
- agreements with custodians;
- for donor-funded projects: project asset register, purchase invoices, acts of transfer to beneficiaries;
- results of the previous count.
Timing
A count of one warehouse or office takes 1 to 3 days, and documenting the results another 2 to 5 working days. For a network of warehouses in different cities we form several teams and count simultaneously. We recommend planning the annual count in advance so that its results can be included in the financial statements.
An inventory count is part of a grant audit and of a voluntary audit of a company. If your asset records need tidying up, this can be done as part of our accounting services for NGOs and business.
Leave a request in the form below: we send a commercial proposal after reviewing the task and reply within 1 day.
Is it mandatory to involve auditors in an inventory count?
No, a company may carry it out with its own commission. Auditors are involved when an independent assessment is needed: for the owner, a donor, an external audit, or when shortages are suspected.
Can you count in several cities at the same time?
Yes. We have experience of unannounced counts at distributors in several Ukrainian cities simultaneously. We form a separate team for each site.
What does a donor need from a count of grant-funded equipment?
Usually confirmation that the equipment exists, is used for its intended purpose and matches the project asset register. We prepare a report with lists, photos and observations in the format the donor accepts.
What if a shortage is found?
We document the discrepancies, analyse the causes and recommend how to record them and what to do next, including the liability of custodians.