Usually, audits are a long procedure. It might take days or months to complete the audit process. However, still, there is no surety that the audit is done with full efficiency because some assets have gone to some other locations.
But audit is performed to get deep analytics of finance-related information. Not just that it also provides several other crucial information as well related to assets & inventories. An audit is helpful in maintaining & following compliance as per the rules and regulations.
Therefore, with the best inventory audit best practices, you can minimize audit time and the audit can complete quickly. In this blog, we will know, what is inventory auditing & what are the best inventory audit practices! So, let us begin!
What Is Inventory Auditing?
Inventory auditing is an unignorable activity that an organization needs to perform every year. Auditing can be very crucial for business! The purpose of auditing is to verify assets and inventory physically. It makes you more efficient and adds transparency to the organization.
An inventory review is a cycle where a business cross-checks its monetary records against its inventory records. It is an essential piece of inventory administration procedure.
It is done to guarantee all records are exact and reveal any inconsistencies in the stock count or monetary records. These audits can likewise assist with stock anticipating.
Inventory audits can be performed internally or externally. Internal audit is that audit, which is performed by organizations themselves, it makes them more proficient and prepares for the external audit. The objective of an internal audit is to discover issues in advance!
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Organization External audit is that audit in which the organization prepares an asset & inventory list, and the team of external audit inspects all assets & inventories condition and evaluate them!
Lots of organizations invest in automated auditing software that helps them in various ways. As Asset Infinity’s software enables management to create and assign assets as per the location of an asset.
What Are the Benefits of Inventory Auditing?
The benefits of inventory auditing are discussed below:
1. Maintaining Accuracy
Auditing techniques eliminates human error and stock inaccurate counts. With the auditing process, you can ensure accuracy and numbers are precise.
When you have accurate numbers the accuracy of data also increases. So, decisions based on the information will be accurate.
2. Precise Inventory Count
Inventory can be a long and hectic process, but it can be remarkably effective in the long run for business. It lets you know the location of all assets at any time.
3. Better Productivity
When all issues are resolved such as human error and stock-related issues then productivity increases.
What Are the Best Practices of Inventory Auditing?
Best practices of inventory auditing are discussed below:
1. Avoid Stock Issues
Stock issues are common because organizations think that they have a lot of stock but in actual they do not have as per expectation. It leads businesses to loss and delays in deliveries also occur due to which customer disappointment also occurs.
Audit physically verifies all inventory & physical count is also done. One of the best practices is avoiding stock issues. Significantly, your organization follows this practice.
Auditing provides a clear picture of stock so that you can improvise with the data collected from the auditing procedure. With auditing, organizations discover how much they require inventory for a year or a specific period.
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2. Ghost Asset Elimination
Ghost assets are those assets that are mentioned in the book but do not exist. As a result, you are paying taxes for those assets which you are not even using.
Asset audits identify those assets and eliminate them properly by removing them from the account books.
In accounting terms, ghost assets are unaccounted for but accounted for in your account records & data. Ghost assets can hamper your reputation because they overcalculate your asset value.
It is very important that you remove ghost assets, and it is one of the most important practices of inventory audit. When you have asset auditing software you do not have to worry about ghost assets.
3. Depreciation Calculation
An organization must do a depreciation calculation so that it can get a tax rebate every year. The value of an asset decreases every year and each asset has its depreciation rate.
Deterioration gives the way to the organization to disperse the expense of a resource as per the valuable existence of the resource. Lots of organizations face problems in the calculation of depreciation but not when you have this software.
Within the software, there are two methods for depreciation calculation such as written down value and the straight-line method.
4. Eliminate Fraudulent Activities
Asset theft and misplacement are a few of the main fraudulent activities. You eliminate them with inventory audit practices.
According to Statista, “The global market for fixed asset management software is forecast to grow from 3 billion U.S. dollars in 2019 to 5.2 billion U.S. dollars in 2024. Fixed asset management software is used to streamline maintenance processes, extend the longevity of assets, and improve productivity.”
But when you are equipped with Asset Infinity’s software you do not have to worry about it anymore. This software helps in keeping assets and inventory count and acts as a deterrent against pilferage, theft, and damage as well.
5. Ensure Compliance
When you follow rules and regulations as per the industry basis then you are following compliance but if it is found that you are not following then an organization can end up paying huge penalties. It means you are violating rules.
When audits are performed frequently you can get regular compliance. For this purpose, automated audit software and mobile app is required because there are lots of aspects that need to be tracked related to facility, asset maintenance, employees' health, and so on.
So these are the best inventory auditing practices. However, we know it is difficult to perform inventory auditing manually, especially when you have multiple located offices, that is why investing in automated asset management software is important.
It will help you in performing inventory auditing easily. Furthermore, it will provide several other benefits as well. If you want to grow your business, then investing in automated management software is mandatory.
Frequently Asked Questions (FAQs)
1. Does This Software Available as a Mobile Application?
Yes, it is available for mobile applications. With the mobile application, it takes little time to perform asset verification & inventory verification. There is another benefit of a mobile application that is you can verify assets & inventory in the offline mode so whenever mobile get to connect to the internet it will synchronize all data.
2. How Are Assets and Inventory Tracked?
Asset & Inventory are tracked with asset tracking techniques. Asset tracking techniques are available such as Barcode, QR (Quick Response) Code, RFID (Radio-frequency Identification), GPS (Global Positioning System), BLE (Bluetooth low energy), IoT (Internet of Things), etc. Tags and labels come in the form of stickers, and they are attached to assets & inventory. Each tag has a unique identification number through which assets are tracked.
3. What Are Notable Features That Add Value to the Organization?
Although all features of this software add value to the organization. However, you can mark assets as the present, not present, present with incorrect detail, or new asset found during an audit. It not only makes you more aware of your assets but also lets you know that there are new assets that are available assets that are not available because they were under incorrect information.