Stock Taking Processes

Different organizations have different forms used in stocktaking. The forms are serially numbered. All stocktaking from numbers shall be recorded on the issue in the Accountable Document Control Register in accordance with the organizational procedures checked off on completion of the stocktaking.

Prior to the commencement of a supervised stocktaking, the Manager should ensure that:

• All merchandise in the warehouse is sorted and consolidated to facilitate counting and listing
• All merchandise in the receiving dock, including inventory for which the invoices have not been received, is properly marked by the department and/or age code
• All empty boxes, containers etc. are moved from the warehouse to prevent excess counts
• Cases and containers from which units have been removed will be clearly marked to ensure that they are not counted as being full
• Containers and cases of merchandise located in reserve stock will be marked with the department and/or age code
• Goods on consignment are clearly marked and verified on separate stocktaking sheets during the count
• A stocktaking plan is prepared, including a floor plan, and all staff members participating in the stocktaking are instructed in their responsibilities and duties
• All rental equipment is segregated and clearly marked so as to prevent inclusion in the count.

The manager, prior to a scheduled supervised stocktaking shall provide the management with formal advice confirming that action, as outlined in the organizational stocktaking procedures, has been completed. Where supervised stocktaking is carried out on a surprise basis the management shall obtain confirmation from the stocktaking supervisor that all merchandise, cash, and credit documents have been included in the count and that all merchandise is either in a saleable condition or has been recorded on an RPC.

Detailed Procedures For The Physical Count Are Recorded

On completion of the physical count, all stocktaking sheets shall be turned over to the supervising member of the stocktaking team. All stock sheets shall be accounted for. Under no circumstances is a sheet to be destroyed and voided sheets will be clearly marked. The stocktaking sheets shall then be delivered to the management depending on organizational procedures under cover of a Certificate of Stocktaking.

In circumstances where there is an inventory shortage, the following course of action is usually implemented:

• The management should advise the Regional Manager by fax of the shortage. Once advised, they will be responsible to assess the accuracy of the stocktaking and forward findings and recommendations to Executive Management
• Depending on the severity of the shortage, management will advise the appropriate command and request assistance in conducting a Board of Inquiry or Summary Investigation.
• Where an organization makes use of professional stocktaking teams they shall be hired and controlled by the management of the organization. Results of professional stock takers are delivered to the management of the organization. In most cases, professional stock takers are not required to record the results of their count on stocktaking forms. Is a normal practice that only a gross count by the department is recorded.
• To enable the auditor performing the annual audit to express an opinion concerning the fairness of stated inventory levels, the management needs a random sample check (red check) of merchandise by personnel. This check is to be carried out while the professional teams are performing their count.

Extending The Stock Count

Stocktaking forms shall be extended and totalled as quickly as possible. Accuracy and speed in completing the inventory are important, therefore management utilizes all available resources for this task, and if deemed necessary, employ an outside source of services to complete the extensions or, hire extra part-time help.

Stock Taking Costs

All costs related to stocktaking shall be charged to the warehouse counted. Where costs relate to a major stocktaking of several outlets or departments, the Manager shall determine the most reasonable distribution of costs among the outlets involved.

Cut-off Procedures

The stock-taking team must verify that all sales receipts up to the exact time of the physical count have been received, deposited, and properly recorded in the appropriate forms. On the date of the stocktaking, the stock-taking team should ensure that:

• By reference to the Accountable Document Usage Register, record the last receipt number of goods received and the last number issued.
• Reconcile all outstanding receipts and ensure that all completed vouchers have been processed.

Purchase Order (PO) Cut-off

One week prior to the date of stocktaking the stock-taking team should ensure that all relevant forms are issued only on a limited, as required, basis. On the date of the stocktaking, the team should:

• Confirm that all purchase orders received have been processed.
• By reference to the Accountable Document Usage Register.
• By reference to the outlet’s books of RPCs held, reconcile all outstanding numbers and ensure that all completed vouchers have been processed.

Request for Credit

On the date of stocktaking the stocktaking team shall:

• By reference to the Accountable Document Usage Register, record the serial numbers of the last Request for Credit issued and the last number received;
• By reference to the outlet’s outstanding Request for Credit file, reconcile all outstanding numbers and ensure that all completed forms have been processed;
• Record the cost and retail value of the merchandise received, as shown on supplier’s invoices and PO less the amount of the request for credit for inclusion in;
• Record the cost and retail value of other outstanding Requests for Credit and include inappropriate forms; and
• Check off the serial numbers of unused forms and verify that all forms issued have been accounted for.

Repairs

The stocktaking team shall record the selling price and department of all outstanding repair tags covering accountable merchandise returned for repair following organizational procedures.

Adjusting Cut-offs

After the stocktaking team has received and extended the stocktaking count sheets, it will be necessary to adjust the accounting records to action adjustments revealed by the cut-off procedures. The procedure for such adjustments is as outlined below:

Purchase Order

Merchandise Received But Not Invoiced – the stocktaking team shall prepare a Stocktaking Reconciliation Report for the outlet to reflect the responsibility for items included in the stocktaking but not previously auctioned.

Merchandise Not Received and PO Not Used – no action required, and Merchandise Received but a Request for Credit is Outstanding.

Merchandise Requisitions (different organizations have different forms) -Record the details on the stocktaking cut-off procedures form and include them in the reconciliation report.

RPC form - As all merchandise has been valued at the current price and all vouchers have been processed, no adjusting action is required.

Request for Credit form Action as a PO adjustment; and

Repairs

Record the retail value on the Stocktaking Reconciliation Report for purposes of measuring actual discrepancy.

Counting Procedures

• Stock will be counted by teams of two – a counter and a recorder.
• Casuals should, where possible, be used to count the easier sections.
• Locations containing CDs, Cassettes and Accessories must be counted in horizontal rows starting from the left and working towards the right-hand side of the locations.
• Locations containing Pegboard items are to be counted in vertical rows starting at the top and working down.
• Both the counter and recorder individually count the total number of units in the location.
• The counter calls out the total and if both agree it is then entered onto the stock sheet by the recorder under unit pre-count.
• The counter then calls out the unit price and quantity for each item in the order the item is displayed.
• The recorder records the selling price and each unit on the stock sheet. Once 4 units are counted the 5th unit is entered as a slash.
• Once the counting of a location is finished the recorder adds up the horizontal strokes and slashes and records the total for each unit price in the quantity column.
• The recorder now adds up the quantity column vertically and calls out the total quantity. It is not the same as the pre-count then the procedure is repeated until both agree.
• If an error is made, the team must call the Branch Controller to do the correction. Once the total quantity is agreed, the recorder enters the total onto the stock sheet in the column headed QTY and signs the stock sheet.
• He/she then hands the sheet to the counter for his/her signature. The stocktake sheets must be left at the end of the location for inspection.
• The location sticker must be marked with an X.
• No extensions are done by the branch. These will be done by the Internal Auditors.
• Stocktaking and cyclical counts are conducted according to workplace policies and procedures.
• Stock records documentation is completed according to the workplace stock control system.
• Discrepancies in stock are recorded and reported.
• Electronic recording equipment is operated if required and maintained according to the manufacturer’s guidelines.