STOCK AUDIT CHECKLIST Regarding Stock: 1. Verification of stock by checking stock register prepared by management.2.Valuation of stock 3.

Valuation of absolute or non moving items 4. Age wise categorization of stocks5.Review of stock valuation system6.Adequacy of insurance cover 7.Segregation of fire hazard inventories8.Verification of fire fighting instruments and their working condition9.Making ABC Analysis of inventories.10.A Category inventories frequently verified by management11.Check verification carried by the management at least once in a year.12.Verify whether any safe guard measures taken against fire, marine and natural calamities.13.Verify whether any safe guard measures taken against theft or misuse.14.Verification of ownership of stock. 15. Determination of drawing power 16.Separation of hypothecated inventories17.Verify at least of 25% of raw materials and 80% of finished goods18.Check whether insurance cover against fire, marine and natural calamities.

19. Bifurcate stocks into paid and unpaid and only paid stocks are taken for the purpose for thecalculation of drawing power.20.Check authorization of goods issued note to production department.21.Check any tag or board attached to the

hypothecated or pledged goods.22.Age wise analysis of stock should be done. 23. Check authorization of goods received to godown.24.Go through the previous records regarding stock verification.25.Check degraded stock has been return off or not.26.Work in process of valuation27.Percentage of completion of work in process 28. Stock in transit should be taking into an account for calculations of total stock.29.Obtain or enquire the reasons for sudden increasing stock 30.Whether the borrower maintains account with any other bank.31.Verify whether the godown is own or rented. if owned obtain ownership deed, if rentedobtain rent receipts. 32. Check the excise duty records are maintained or not.33.Physical verification of stock Purchase order, GRN, Quality control dept., purchase dept., issue to godown, issue to production Dept.34.To exclude items not qualifying for credit35.Suitable environment for stock and securities36.See that acceptable method of valuation of stock is being followed 37.Stock include not only raw material but also W.I.P and finished goods38.Check whether the godown has more than 1 door and if having more than one door ensurethat the doors accept one is locked inside Regarding Debtors: 1.Accounting procedures followed for credit sales and collections2.Verify whether large amounts are not concentrated in little class of debtors.

3. Debtors should be separated into above 90days and below 90days and consider only below90days debtors. Calculation of drawing power 4 . N i l b a l a n c e a / c s h o u l d b e verified.5.Credit balances of debtors should be v e r i f i e d 6.Debtors should be verified before cutoff period and after cutoff period select randomly7.Authorization should be check the if the debtors are more than reasonable amount8 . W h e t h e r reasonable discounts are allowed or not 9 . C h e c k the sales returns a/c. 10. Sales return a/c is wrong verify then original credit sales of the client 11. Verify whether the debtors account balances are correct or not through confirmation letters12.Bad debtors has been written off or not should verify13.See that debtors should not be overstated.14.Verify whether stipulated margin against book debts15.If there is any payment toward book debts is paid directly in the bank branch a/c. 16.Certain a/c had appeared on the previous year a/c. receivable schedule but not on the currentyear schedule should be selected.17.List down the debtors sanction drawing power and current balance in a/c. of the originalsanction letter and latest review note18.See whether the party is regularly submitting the statement of stock and debtors19.See whether the insurance policy has been issued in favor of bank or not. 20.

In case of working capital facility granted is more than 10lakhs balance sheet and profit &loss a/c. must be audited by charted accountant.21.Specify the name of the auditor Regarding Creditors: 1.See that Creditors should not be u n d e r v a l u e d . 2.Compare purchase registers and creditors ledger 3.Check the authorization of purchase of inventories4.Get the procedure followed by the client for purchases5.If any weaknesses found in purchases guide them and get the feed back 6.Purchases made but not receive should be taken in to account for physical count7.Purchases of unreasonable amount from related parties should not be considered.8.Debit balance of creditors a/c should be verified 9. If the client not paid to creditors for more than one year the reason should be noted. 10. Do not include un paid stock 11.

Stock Audit