One of the main requirements for accounting is the reliability of its indicators, which is provided in many ways, one of which is an inventory.
The obligation of enterprises is to conduct an inventory to ensure the reliability of accounting and financial reporting data, during which the presence, condition and evaluation of its assets and liabilities are checked and documented, in part 1 of article 10 of the Law of Ukraine «On Accounting and Financial Reporting in Ukraine» as of 16.07.1999, No. 996-XIV.
Inventory – checking and documentary evidence of the assets and liabilities of a company by establishing the availability and physical condition and compliance with the recognition and evaluation criteria.
In compliance with the requirements of ISA 510 «The first audit engagement – balances at the beginning of the period», in order to assess the internal control system for the safety of inventories, to obtain audit evidence of the balances of fixed assets and stocks, the auditor takes part in the inventory as an external observer. Also, the auditor can make his own recalculations, record the results of the inventory and make an analysis of the control system in the company.
Types of inventory and conditions for its implementation
By the volume of checking distinguish full and partial inventory.
Full checking of the assets and liabilities of the company. For example, before preparing annual financial statements. It can be carried out in several stages, each of which will be a partial inventory, but as a result they will constitute a complete one
Certain types of objects are subject for checking. For example, only stocks or funds. Also carried out in case of a change in the materially responsible person
By the method of conducting distinguish continuous and selective inventory.
All objects of the corresponding type are subject for checking. For example, when conducting an inventory in a warehouse, all values that are stored in it are subject for checking
Individual objects of the same type are checked. For example, to strengthen control over the availability of goods in stock
By the frequency of conducting distinguish planned and unscheduled inventory.
Established by the management of the company the term of the inventory, as well as presented materially responsible persons
It is conducted with the aim of checking the availability of specific values without prior notification of materially responsible persons. In addition, it can be carried out at the request of regulatory authorities or as prescribed by investigative authorities
By the frequency of conducting distinguish periodic and one-time inventory.
Conducted at the request of company management. For example, to strengthen control over the safety of property, to avoid errors and fraud. It can be carried out at different times: monthly, quarterly
Held before the preparation of the annual financial statements, as well as solid and complete
What are the inventory methods?
The inventory is conducted by various methods, the main of which are:
|retail inventory method;|
|gross margin method;|
|method of actual piece recount of stocks;|
|external reconciliation of debtors and creditors;|
|mathematical methods for calculating total reserves;|
|scientific methods for calculating the costs of nuclear fuel («Fuel Element») using elements of higher mathematics, chemistry and other applied sciences.|
What do we offer
HLB Ukraine provides services for organizing, participating or monitoring inventory:
|at the request of the founders of the company, including in order to evaluate the system of internal control over the safety of inventories;|
|when changing the materially responsible person;|
|when conducting an audit of financial statements as part of the procedure for confirming inventory balances.|
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