Stock & Inventory Audit

We conduct independent physical stock counts across manufacturing plants, raw material yards, finished goods warehouses, consignment agents, and project sites. In strict adherence to ICAI SA 501, our procedures include tag-to-sheet and sheet-to-tag cross-verifications, cutoff testing on goods received notes (GRN) and dispatch delivery challans, inspection of storage security controls, and identification of non-moving, slow-moving, obsolete, or damaged inventory.

We audit inventory valuation methods (FIFO, Weighted Average) to ensure strict conformity with Accounting Standard 2 (AS 2 / Ind AS 2), verifying that stock is stated at the lower of cost and net realizable value (NRV). Under Clause (ii)(a) of CARO 2020, we examine whether physical verification has been conducted at reasonable intervals and verify whether discrepancies of 10% or more in the aggregate for each class of inventory were appropriately adjusted. Under Clause (ii)(b) of CARO 2020, for entities sanctioned working capital limits exceeding INR 5 Crores from banks or financial institutions on the basis of security of current assets, we reconcile quarterly stock and debtor statements with general ledgers.

For corporate borrowers operating under banking consortiums, we audit monthly stock and book debt statements submitted to lenders. We verify paid stock by netting out unpaid trade creditors (creditors for goods)—evaluating supplier payment terms under the MSMED Act, 2006 and the deduction timing rules under the corresponding section of the Income-tax Act, 2025 (formerly Section 43B(h) of the Income-tax Act, 1961). We verify aging and realization of book debts, exclude non-moving inventory older than sanctioned aging limits, and certify true Drawing Power (DP) availability in accordance with Reserve Bank of India (RBI) credit guidelines.