Inventory - what is it? Goals, methods and types of inventory

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Inventory is a special procedure, the main purpose of which is to identify certain violations in different companies. Through this process, it is possible to establish how true and accurate the data is regarding the items in stock. Errors in the work of various specialists of the enterprise are revealed. Additionally, it acts as a certain method of monitoring the work of employees.

Process concept

Inventory is a certain method of accounting in an enterprise that has control functions. It is designed to determine whether the actual quantity of certain goods in the company corresponds to the information contained in the organization's documentation.

If various errors or shortages are found during the inventory process, this becomes the basis for an internal investigation in relation to financially responsible employees of the company.

Problems arise not only when there is a shortage, but also when there is an excess of values, as this leads to difficulties in collecting receivablesdebt or loan repayments. The results of the inventory are important for the tax inspectorate, since serious discrepancies can be the result of illegal acts on the part of the management or employees of the company.

What functions are performed?

Inventory is a complex process, during the implementation of which different functions can be performed:

• controlling;
• account;
• detecting crimes.

There are several types of this procedure, which are selected depending on the purpose of the conduct and the circumstances.

Features of the procedure

The management of any company is interested in conducting an inventory. This is due to the fact that its results can reveal the slightest discrepancies between the actual property and the data contained in the company's records.

Specialists who are not interested in its results are engaged in verification, therefore, independent experts are often hired for this by the management of the enterprise.

The main purpose of the event

The main purpose of the inventory is to determine the correctness of accounting, for which real indicators are compared with the data contained in numerous company documents. Therefore, different results are achieved by checking:

• all items involved in the inventory process are recalculated, measured or weighed;
• obtained totals are compared withthe data that is available in the accounting documentation;
• monitoring the implementation of the rules established in the company and designed to preserve the integrity of different values;
• goods or materials are identified that will soon be damaged;
• damaged property is discovered;
• all valuables that are not used at the enterprise are identified, which are often simply sold after the inventory;
• discrepancies are found in different documents;
• checking the conditions in which goods and items are stored;
• controls the correct display of numerous business transactions in accounting.

If there really are serious errors in accounting, then this can cause negative consequences for the company, represented by material losses. Therefore, an inventory of the cash desk is necessarily carried out regularly.

If tax inspectors, as a result of checking a company, find that the organization does not regularly conduct an inventory, then this is equated to the absence of accounting in the enterprise, therefore, significant administrative sanctions may be applied to such firms. Often, the results of the audit are drawn up incorrectly by an accountant or other responsible person, which is considered an administrative offense for which punishment is imposed by the tax inspectorate.

Legislative regulation

The rules for conducting and accounting for inventory can be studied in the provisions of the Order of the Ministry of Finance No. 49. In addition, there are special Guidelines containing information on the procedure for conducting an audit.

Each company can additionally create its own internal regulations, on the basis of which unique rules for the implementation of this process are fixed. Some firms prefer to conduct an inventory of property monthly or quarterly. It is the management of the enterprise that independently solves this issue.

Mandatory is the check carried out before the immediate preparation of the annual accounts. If there is no such inventory, then the company may be held administratively liable, as well as fines are imposed on company officials.

Main types of process

There are several classifications that characterize this check. They differ in many ways.

The choice of one or another type depends on the purpose of the inventory.

On mandatory verification

Inventory can be mandatory or initiative. In the first case, it is required to conduct it on the basis of legal requirements, therefore, situations usually arise in the company that are predetermined by law. Employees of the Federal Tax Service or other government agencies can insist on such a check.

Initiative verification is carried out on the basis of the adoption of an appropriate decision by the leaders of the organization. In this case, there are no restrictions on the grounds for conducting the process. Usually the need for this processoccurs when management has doubts about the honesty of employees.

At venue

Inventory is a procedure for checking that actual property matches data from documents, so it can be carried out by companies in different locations.

Therefore, the procedure can be implemented at the cash desk of an enterprise or in production, in warehouses or in a store.

Objects to check

Inventory objects can be different values belonging to a particular company. This includes fixed assets represented by buildings, structures or equipment, inventories, money, finished products, or even financial obligations of the enterprise.

A specific object is pre-selected by the initiator of the check, after which this information is transferred to the commission involved in the procedure.

According to the process implementation method

The procedure can be complete or partial. Each variety has its own characteristics:

• Full check. It is carried out before the formation of annual accounts or before an audit. Often implemented during revision. All material values, money and liabilities available at the enterprise and reflected in the company's accounting are subject to verification. Even property received by the company on the basis of a lease is subject to inventory.
• Partial. It can be carried out at any time, which requires only the appropriate decision of the company's management. For this, usuallycovers property grouped by type, location or other principles. For example, only one warehouse or valuables for which one employee is responsible can be inspected.

Companies themselves should be interested in regular partial inventory of funds, as in this case it is possible to monitor the correct work of various specialists in the company.

According to the method

According to the method of conducting an inventory, it can be selective or continuous.

Random inspection is performed based on the decision of the management of the enterprise. The survey is carried out in relation to several values chosen by the director. Often this method of verification is used in large firms. If the results of such an inventory reveal even minor discrepancies, then a full check will certainly be assigned.

A complete inventory can be carried out at any time after the decision is made by the company's management. During this process, all property of the company is subject to evaluation, as well as various valuables located in divisions or branches.

Unexpectedly

Inventory can be:

• planned, taking into account the schedule drawn up at the beginning of the year by the management of the enterprise, and the terms of its implementation are additionally announced in advance;
• unscheduled, implemented in the event of certain unforeseen circumstances, for example, a responsible person is replaced or an emergency occurs at the enterprisesituation;
• repeated, appointed on the condition that the results of the last check are considered unreliable or doubtful, therefore it is required to confirm certain facts;
• control, carried out upon completion of a complete inventory, for which all the actions of the commission are evaluated and the accuracy of the procedure is verified.

All of the above types of inventory can be carried out based on the decision of the company's management.

The concept of technical verification

Technical inventory is represented by an inventory of property that determines all its characteristics and cadastral value. Usually carried out in relation to different properties.

Procedure to be followed prior to annual accounts. Based on the drawn up act, one can understand how much the cadastral price of the object has changed.

When is inventory required?

This check is absolutely required in these situations:

• property being bought, sold or rented;
• before the annual accounts;
• replaced responsible person;
• theft or damage to property is detected;
• after a natural disaster or other emergencies;
• when closing or reorganizing a company.

Inventory may also be performed in other situations provided for by law.

Verification procedure

The inventory order is considered simple, for whichsequential actions are performed:

• an appropriate order is issued by the company's management;
• an inventory commission is being formed;
• setting deadlines for the process;
• documents are transferred by financially responsible employees;
• direct inventory is carried out, involving weighing, counting, measuring and performing other similar actions;
• the results obtained after the implementation of the inventory are compared with the data available in the company's accounting records;
• discrepancies are identified;
• determining the causes of problems;
• results are being processed.

At the end of the check, an inventory act is formed. It contains all the facts revealed as a result of the inventory. Based on this document, you can understand how effective the inventory was. A sample of this document is located below.

The act should contain different information. It includes information:

• date of inspection;
• lists all persons who are members of the inventory commission;
• objects under study are given;
• describes all methods used to obtain information;
• fit results;
• signs of all participants are put at the end.

Act is considered important documentation in any company. It may be subject to verification by the employees of the Federal Tax Service, therefore it must be stored at the enterprise for at least fiveyears. If there are doubts about the accuracy of the information contained in this document, then the head of the company may appoint a re-verification.

Conclusion

Inventory is considered an important process, on the basis of which the actual data is reconciled with the information that is recorded in the company's records. It can be presented in numerous forms.

There are situations when an audit must be carried out without fail based on the requirements of state authorities. The process is carried out only by a specially created inventory commission, which includes only professionals, and often even outside experts who are not interested in the results of the inventory are invited here.