Reconciling stock before a head-office audit: a four-week plan

When head office finance or internal audit looks at an Uzbek subsidiary, the questions are rarely about the total alone. They ask how the figure was reached, who counted, on what date, and whether the records can be traced. A warehouse that has counted well but cannot show how will still face a long exchange of emails. A four-week preparation plan keeps this from becoming a scramble, and its main idea is that the evidence file is built along the way rather than after the count. The weeks below are a template; adjust them to the size of your site and the date of the audit.

Week 1: scope and basis

Start on paper, not in the warehouse. Decide exactly what is being confirmed and on which date.

• Scope: which warehouses and yards, and which kinds of stock. Own goods, consigned goods, goods in transit, scrap and quarantined items should each have a decision.
• Cut-off: one date and hour for the whole count, written down and communicated.
• Basis: item codes, units and currency in the form that head office will read. Build the mapping table between the head-office ERP and the local 1C or Excel records now.
• Request list: ask the auditors what they will want to see, so that the evidence is collected as you go and not rebuilt afterwards.

Freeze changes to the item master during the count period, or at least log them.

Week 2: clean the records and prepare the site

A count is only as good as the records it is compared with.

• Review the book for negative balances, unposted documents, duplicate items and items with no movement for a long time. Fix what can be fixed and list what cannot.
• Walk the site. Add location labels, print missing item labels, tidy the aisles and separate damaged or doubtful goods.
• Assign teams and zones, agree roles, and brief the people who will count. The tidy-up should be finished before counting begins, not during it: if cartons still block the aisles on count day, the team spends its time moving them and the records drift.

Week 3: count and compare on the same day

Count by zone, scan locations and items, and compare each zone with the book on the same day so that errors are still fresh. Lines with a large difference are recounted by a different person. Classify what remains: timing, entry error, wrong location, probable real shortage. A first rough split, for illustration, might be 120 variance lines of which 70 come down to timing or entry, 30 to location problems and 20 are unexplained and need follow-up.

Week 4: explain and assemble

Use the last week to finish what the auditors will actually read.

1. Final variance list with the cause and the owner of each difference.
2. Proposed adjustments, held back until approved. Do not post corrections to the books before the explanations exist.
3. An evidence folder: scan logs, signed count sheets, photographs of unusual items, the mapping table, the cut-off record and the list of unmatched items.
4. A one- or two-page summary: scope, method, results, main causes and next steps.
5. A short rehearsal. Ask a colleague who did not take part in the count to read the file and put questions to the team.

A count that cannot be traced will be recounted by someone else, at a worse moment.

What usually goes wrong

• The plan starts in week 3, so cleaning and mapping are skipped.
• The cut-off is agreed verbally and remembered differently by each team.
• Adjustments are posted first and explained later, which leaves the audit trail unreadable.
• Evidence is collected after the fact and has gaps that nobody can fill.

Summary

Four weeks is enough for a site of moderate size if the work is divided in this order: basis, records, count, explanation. Smart Inventory supports each stage, from agreeing the basis and scanning to reconciliation against your 1C, Excel or ERP records and the packaging of the evidence, so that the result can be presented to head office with its causes attached.