Auditing Assignment

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Auditing Assignment

1. A stocktake is a count of the business inventory in stock to provide an accurate idea of the number of items that the company still owns and this procedure is important part in operating many business that involved in sell, transport and produce stocks (Wild 2004). This allows the variances between the physical count vs. the stock from the record to be spotted. After considering the stocktake procedure stated, I believe that it has several weakness points that can be pointed out as following;  

First of all, the first weakness that can be noticed is that they did not separate between the items that still own by the company and the items that have been invoiced to customers but still in the warehouse. This might lead to big error in the stocktake, as the business will have incorrect figures of what is still owned by the business and what has already been sold. Also the unrelated items should be marked and moved away from inventory. We need to clarify this at the first step, To improve this, the business must make sure that they have identified the invoiced items and disregard these items from the stocktake.

Second, several blank sheets of paper should not be provided but the warehouse supervisor should create a standard format of table for the stocktake so that everyone has a same form and know what would be the information that they need to put in. Otherwise individual staff will create their own format and each format might miss some important information and details. Besides, write off sheets should be provided to the staff too so that they can make sure they check the condition of the inventory while they are counting. The business should use a structured stocktake form which had a table with numerous columns. These columns could have item code, item name, quantity, etc. This keeps the stocktake consistent and reliable when collecting the numbers from each worker and combining all the numbers together into a stock database.

Next, it does not state clearly how the warehouse supervisor determined the area for the staff to count because a similar items or product should be put and grouped altogether, it’s much easier for each staff to count and will be much faster. There may be a more effective and efficient way of dividing the tasks, as area can sometimes be confusing. If one employee accidently counts an area that has already been counted, this could easily cause discrepancies in the stocktake. To improve this issue, the areas must be very specific and easily understood, or the supervisor should choose a better method of allocation such as by item instead of area.

Also, the pencil is not an appropriate equipment to use. The staffs should be given different colour of pens which is easier to notice for example different area of stocktake should use different colour of pens. An even better method would be to carry out the stocktake electronically. This can easily reduce the amount of human error in the counting and recording, as well as allow edits and fixes to be made easily. Using code scanners or specific RF Scanners to help make stock control and monitoring much easier. The RF Scanner is a very simple and easy to use device that tracks and monitors each product individually and therefore, can be used to handle stocktake easily. Once the product is scanned it is then stored into the database and therefore can be counted automatically. This also makes the stocktake procedures a lot easier, as the items will be scanned and the items that are missing will be the items that are no longer found and therefore not scanned during the end stock take, .

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Auditing Assignment
Last updated: Feb 2024

Page 1

is not an appropriate equipment to use. The staffs should be given different colour of pens which is easier to notice for example different area of stocktake should use different colour of pens. An even better method would be to carry out the stocktake electronically. This can easily reduce the amount of human error in the counting and recording, as well as allow edits and fixes to be made easily. Using code scanners or specific RF Scanners to help make stock control and monitoring much easier. The RF Scanner is a very simple and easy to use device that tracks and monitors each product individually and therefore, can be used to handle stocktake easily. Once the product is scanned it is then stored into the database and therefore can be counted automatically. This also makes the stocktake procedures a lot easier, as the items will be scanned and the items that are missing will be the items that are no longer found and therefore not scanned during the end stock take, .

Finally, when each staff finished their stocktake in their curtain area the crosscheck between the physical count vs. accounting records should be arranged and then differences can be spotted for example once the warehouse supervisor received all the result of the count from the staff he or she should enter it into the system and spot the differences. After that the investigation for any variances should be set by re-counting where necessary. This is a strategy to identify discrepancies with the final stocktake and the expected stock levels from the accounts.

References: 

Inthergroup, 2014. One stop shop for RF scanning. [Online] Available at: [Accessed 26 January 2015].

Smith, H., 2013. 7 steps to a successful stock take. [Online] Available at: [Accessed 26 January 2015].

Wild, T. 2004. Improving Inventory Record Accuracy: Getting Your Stock Information Right. First Edition. Butterworth-Heinemann. 

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Auditing Assignment
Last updated: Feb 2024

Page 2

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