How Do I Perform an Inventory Audit?

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  • Written By: Alex Newth
  • Edited By: Angela B.
  • Last Modified Date: 13 October 2019
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Performing an inventory audit is a lengthy process, especially in large retail stores and warehouses, but it is not a difficult procedure. The auditor starts by looking at past inventory count records, so he or she will know how much inventory should be in the store or warehouse. After that, the auditor looks at any documents that will detract from overall inventory. The auditor then visits the store or warehouse and performs the inventory audit with a handheld device that verifies and counts the product. Aside from counting inventory, the auditor also will check prices to ensure no product is being sold at an inaccurate price.

Warehouses and stores keep records of all product movement. These records detail how much product was purchased, when it was delivered, and how much was sold. To know how much product should be in the store or warehouse, and to understand the ordering practice of the establishment, the inventory auditor will look through the past few months, perhaps the past year’s worth, of documents before performing the audit. This helps the auditor watch out for suspicious ordering practices and understand the store or warehouse’s ordering trends.


Along with ordering, there are usually documents that detail non-sales-related detractions from inventory. These documents count the number of thefts, faulty products, returns that cannot be placed back on the shelf, and anything else that leaves an item unsellable or out of the store. To correctly perform an inventory audit, the auditor must know this information, so he or she will know the correct amount of product in the store or warehouse.

The actual inventory audit occurs when the auditor physically goes to the store or warehouse and checks every product, often with a handheld scanner. Each product or case is scanned, the scanner will pick up the product’s bar code and keep track of the number of that particular item in the store. This number is compared to the order and sales documents, to ensure the store has the correct amount of products. If there are not enough products, the auditor will usually have to investigate to find out what caused the imbalance.

Along with the number of products, the inventory audit also checks for correct pricing. The handheld scanner commonly details the correct price of the item, and the auditor can check the item’s tag to ensure nothing is being sold too high or low. This helps the store chain coordinate sales and ensures the business as a whole is making optimal profits.


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