SOP Development Services
SOP Development Services in the UAE
An Inventory Audit is an integral part of Inventory management. The UAE is an international hub for exports and imports; hence, many companies maintain physical stock of items. Conducting an inventory audit ensures that the stock written in the financial books is verified against the physical stock tally. Auditing firms in Dubai help companies analyze their stock accurately. Read on to find out more.
Does Your Company Require an Inventory Audit?
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Some factors that determine your company requires an Inventory audit are:
1. The volume of stock
If the stock of raw materials, finished goods, or other assets cannot be counted and verified by a single person counting by hand, you need an inventory audit procedure.
2. The type of goods
Suppose the type of goods volume is required to be verified by law. According to the IAS 2, inventory must be measured at its Net Realisable Value.
3. Speculation of phantom inventory.
More than once, when you have required goods or raw material based on the stock count in books but have not found it in the physical inventory, it is called phantom stock. You may face challenges such as loss of time or money to arrange the stock from elsewhere. Several reasons, such as theft and data entry and accounting errors, can cause phantom inventory and is one of the most important aspects that should be included under any inventory audit procedure.
4. If the goods are placed at a third-party warehousing
Some companies require inventory audit in Dubai because their stocks are stored in third-party warehouses within Dubai or other emirates.
5. You have an inventory management process.
An inventory management audit process is incomplete without a proper internal or external inventory audit.
Inventory Audit Procedure in Dubai
Protax is your partner in conducting an internal inventory audit or an external inventory audit for your company. Every company has a different size and volume of goods they manage, and hence we understand the same and provide a custom inventory audit process for our clients. Our inventory audit report aims to reduce our client’s stress when it comes to errors in inventory management and the subsequent rise in working capital. Analytical ratios such as inventory turnover ratio or unit costs of inventory are a crucial part of the financial analysis of the stock. Here is how it works: