How is an inventory count carried out: 7 steps from the order to the comparison statement

At the "Poydevor" building materials warehouse, director Farhod aka announced the year-end count day. Storekeeper Rustam said: "I'll come in the morning and count it, it'll be ready by evening." Chief accountant Zarina stopped him: an inventory count is not a job Rustam does by himself. It is carried out by a commission, and every step leaves a trace on paper. Otherwise nobody will recognise the result later.

Below are the seven steps under NAS No. 19, each with the paragraph it relies on.

Who starts an inventory count and with what document?

When and what to check is decided by the head of the organization: the number of inventory counts in the reporting year, their dates, and which assets and liabilities are checked. The only exceptions are the mandatory cases in paragraphs 5 and 6 of the standard (paragraph 7).

The check is carried out by a commission (paragraph 8): - Standing commission: the head or their deputy (chair) and the chief accountant. Representatives of the internal audit service may also be included - Working commission (when the volume of work is large): a representative of the head (chair), specialists (merchandise expert, engineer, technologist, mechanic, works manager, economist and others) and an accounting employee

The same paragraph sets two important restrictions: it is prohibited to appoint the same employee as chair of a working commission twice in a row for the assets kept by the same persons with material responsibility. If a commission member does not take part in the count, this is grounds for declaring the results invalid.

In what order are the seven steps performed?

The most common mistake at step 4: the storekeeper says "300 bags of cement" and the commission writes that down. Paragraph 38 strictly prohibits this: the balance is not recorded from the words of the person with material responsibility or from accounting data, it is determined only by counting or weighing.

What should you watch for when filling in the count sheet?

Paragraph 18 sets strict rules for a paper count sheet: - Blotting out and erasing are not allowed - On each page, the number of line items and the total quantity of valuables on the page are written in words - An error is corrected by crossing out the wrong entry and writing the correct one above it; the correction is explained and signed by all commission members and the persons with material responsibility - No lines are left unfilled; blank lines on the last sheets are crossed out

At the end of the count sheet, the person with material responsibility gives a written statement that the valuables were checked in their presence, that they have no claims against the commission, and that they have accepted the valuables for safekeeping (paragraph 16). The count sheet may be filled in on paper or in an information system (paragraph 18).

What if goods arrive or have to be issued during the count?

• Inventories received during the count are accepted in the presence of commission members and recorded on a separate sheet titled "Inventories received during the inventory count"; the receipt document is marked "after inventory count" with the chair's signature (paragraph 39)
• Issuing inventories during the count is allowed only when the count takes a long time and with the written permission of the head and the chief accountant; these are also entered on a separate sheet (paragraph 40)
• A separate count sheet is prepared for valuables that belong to another organization but are stored in the warehouse (paragraphs 16, 41)

Example: what turned up at the "Poydevor" warehouse?

The warehouse was counted over two days. On the evening of the first day the room was sealed and the count sheets were left in a safe in the locked room (paragraph 11). On the morning of the second day 10 bags of gypsum arrived from a supplier: they were not mixed into the count, they were recorded on a separate sheet and taken onto the books after the count.

Count result (amounts are hypothetical):

Only the cement (shortage 4 × 62 000 = 248 000 soum) and the tile adhesive (surplus 2 × 48 000 = 96 000 soum) went into the comparison statement. There is no difference for the bricks, so they are not included: paragraph 68 says the statement is prepared only for valuables with discrepancies.

Before the warehouse was opened, Rustam could have reviewed the count sheet and pointed out that one line of tile adhesive had been recorded under a different name. Paragraph 19 accepts such an explanation precisely before the warehouse is opened; the working commission checks it and, if confirmed, corrects the error in the prescribed manner. A control check of whether the count was carried out correctly may also be performed; if it is, it takes place in the presence of the commission members and the persons with material responsibility, and always before the warehouse is opened (paragraph 22).

What happens to the differences afterwards is a separate topic: for a shortage see "What should be done if an inventory count reveals a shortage?", and for a surplus see the article on surpluses in this set.

Checklist

• Is there an order, and does it state the start and end dates?
• Has the head approved the commission's composition, and are all members taking part?
• Is the chair not serving as chair at this warehouse for the second time in a row?
• Were the latest receipt and issue documents endorsed, and did the person with material responsibility give a written statement?
• Was every item counted or weighed, with no line recorded "from someone's words"?
• Is the total written in words on each page, and are the blank lines crossed out?
• Are inventories received and issued during the count on separate sheets?
• Does the comparison statement contain only the lines with differences, and are they at the value in the records?