Stock Audit firm for Retail Stores in India

Retail business is an important sector in India which accounts for 10% of GDP and employs millions of people, contributing significantly to the Indian economy. Retail stores consist of traditional Kirana markets, franchise stores and supermarkets where goods are kept for the general public for purchase. The Indian retail market is projected to reach $ 1.3 trillion by 2025, making it one of the fastest-growing markets in the world. Retail business also enhances supply chain efficiency and boosts overall economic development in India. Retail stores display inventory which is sold to the customers. It is necessary to conduct stock audit for inventory regularly to for the proper inventory management checking any damage or pilferage. BizFoc is a leading Retail stock auditor with a PAN India presence and over ten years of experience in inventory verification across different sectors.

What is a Stock Audit for Retail Stores?

A stock audit is also known as an inventory audit, which means physical verification of the quantity and value of stock with what is recorded in the books of accounts. The aim is to enhance the overall inventory management system by identifying potential risks, such as any misappropriation or damage and putting checks in place to ensure compliance with regulations. The inventory can be kept at different retail stores located at different cities in India like Delhi-NCR, Bangalore, Mumbai, etc. The stock audit can be a blind count where stock is counted independently of what is recorded in the book of accounts. The stock audit involves suggesting best practices for improving stock management and recommending stock management software.

Stock audit for Retail stores Applicability & Limit

Many MSMEs conduct retail audits due to management requirements rather than the regulatory requirements. The retail stock verification is carried out as prescribed under the Companies (Auditor's Report) Order, 2020, also known as CARO, 2020. The CARO, 2020 is applicable to below the organisations.

Public Listed companies

• The retail audit applicability on private companies in case any of the following limits are satisfied:
• Gross receipts or revenue is more than ₹ 10 crore in the financial year.
• Paid-up share capital plus reserves is more than ₹ 1 crore
• Holding or subsidiary of a Public listed company
• Borrowings is more than ₹ 1 crore throughout the financial year

Stock audit for Retail stores Report Format

There is no standard format prescribed for the stock audit report of a retail store. Every business house can have their format depending on the purpose of the audit. The auditor's report is usually accompanied by an Excel sheet for conducting any further analysis by the company. The report typically contains the following information:

• Location code and name of the retail store
• Date of stock audit
• Details of SKU
• Count of physical stock for each SKU
• Count of stock as per books of accounts for each SKU
• Variance between physical stock and books of account for each SKU
• Any remarks for the variation
• Signature of retail store incharge
• Signature of Stock auditor

Procedure of Stock Audit for Retail Stores

There is a comprehensive guidance on the process of stock audit which helps to conduct the audit properly:

Step 1: Planning of Audit

It is necessary to know the auditing scope, types of inventories, retail stores locations, and specific items to be audited. The warehouse audit timeline must be set, considering the company’s function schedule.

Step 2: Conducting Physical Verification

To perform a physical count of the inventory stocks, one must use a systematic approach, like ABC analysis or cycle counting, to ensure comprehensive coverage, and discuss with the appropriate SKUs for the counting process.

Step 3: Physical Inventory vs. Book Inventory

Compare the physical counts with the inventory, which has already been recorded. Write down the outcomes, investigate and reconcile irregularities, and document the reasons for variations after discussing them with the team at the retail store.

Step 4: Report Preparation and Submission

Make a report of retail store inventory audit findings, which includes any irregularities and suggestions for enhancement. To give a summary record to high-level management, highlight key outcomes, and recommend appropriate actions.

Stock Audit for Retail Store Checklist

Inventory audit checklist that is required to be followed for conducting an effective warehouse audit:

• Decide on scope of audit, time period and locations of retail stores to be covered
• Gather required stock / SKUs details against which stock needs to be verified
• Recording the stock auditor team in and out time to the premises
• Recording the physical counts of stock / SKUs
• Ensure all stock / SKUs covered in the SKUs are covered
• Discuss and get the confirmation of the stock audit finding between retail stores in charge and stock auditor
• Present your findings along with any suggestions for improvement

Stock Audit for Retail Stores Fee in India

The fee for inventory verification services in India can vary depending on various factors such as the number of SKUs, night audit, location, days required, and inventory complexity. The stock audit fee starts from ₹2,499 per man day, which excludes out of pocket cost and varies with the stock audit scope.

Benefits of Stock Audit for Retail Stores

• Financial report development: Improving the existing inventory management, which leads to accurate financial reporting. Maintaining well stock ledger means presenting a correct financial condition in the business, and also helps to take better decisions.
• Identifying and preventing fraudulent affairs: It helps to identify fraudulent affairs like misappropriation or theft of stock, and any discrepancies, which may affect business severely. It helps companies take necessary actions and prevent future occurrences or financial losses.
• Streamlining stock processes: The warehouse management must be efficient; thus, it leads to streamlining business operations. It shows the inefficiencies in the stock handling procedure and allows companies to optimize their process for better efficiency.
• Recognizing Overstock and Understock Situations: Overstocking ties up capital, while understocking can result in missed sales opportunities. Warehouse audits help in recognizing optimal stock levels, minimizing financial losses, and improving cash flow.

Bizfoc: Stock Auditor Company in India

Bizfoc is a leading stock audit service provider firm in India with a presence in PAN India. The Bizfoc team has more than 10 years of experience in inventory audits, assisting companies like Nykaa, Blinkit, and Asian Paints. Bizfoc provides best-in-class services at transparent pricing with a high degree of precision.

Conclusion

Stock audits for retail stores are important for organisations where significant money is invested in the inventory. Organisations like manufacturing units, car dealers, franchisee retail stores, pharma companies, FMCG, and quick service restaurants deal with a lot of inventory, which makes auditing crucial. It ensures the correctness of the stock recorded in the book of accounts and highlights any discrepancies like theft, slow-moving items, and supply chain issues related to inventory. Thus, retail audits help improve the organisation's profit and loss.

Frequently Asked Questions (FAQs) on Stock Audit for Retail Stores