Stock Audit Services — count, value, verify.
Independent stock audit, inventory verification, and Drawing Power computation — bank-mandated stock audits, stock and receivables audit (SARA), and multi-location warehouse audits performed by ICAI-registered Chartered Accountants.
For any business with working capital exposure, stock is more than inventory — it's collateral. Banks lend against it, insurers cover it, and balance sheets rest on its valuation. A stock audit is the independent verification that ties these threads together: confirming what's physically there, what the books say is there, and what the bank can lend against.
Most stock audits are commissioned by banks for borrowers with cash credit, packing credit, or overdraft against stock — typically when the exposure crosses ₹5 crore, though policies vary. The auditor visits godowns and warehouses, physically counts inventory, reconciles to books, applies bank-prescribed margins on eligible stock, and certifies the Drawing Power available as on the audit date. The same exercise also exposes pilferage, dead stock, slow-moving SKUs, and misstatements in earlier bank stock statements.
Our stock audit team works with banks, NBFCs, manufacturing units, traders, and retail businesses across Mumbai and India. We bring a structured methodology — site visits planned, cut-off procedures rigorous, valuation independently re-verified — and a report format that meets bank requirements while giving management a clear, usable view of their inventory health.
Stock Audit Services We Offer
Bank Stock Audit
Independent stock audit assignments empanelled with banks — covering physical verification, valuation, and Drawing Power certification.
Stock & Receivables Audit (SARA)
Extended audit covering both inventory and book debts — debtor ageing, related-party screening, and combined DP computation.
Drawing Power Computation
DP statement preparation as per bank-prescribed margins — eligible stock, non-eligible exclusions, and reconciliation with sanction terms.
Physical Verification
On-site physical count of raw materials, WIP, finished goods, and stores — with sample testing, count sheets, and audit trail.
Inventory Valuation Review
Verification of valuation method (FIFO, weighted average), cost build-up, NRV testing, and provisioning for obsolete or slow-moving stock.
Multi-Location & Warehouse Audit
Coordinated stock audit across multiple godowns, branches, and third-party warehouses — with consolidated reporting for management.
Internal & Management Stock Audit
Voluntary stock audit for management assurance — focused on shrinkage, fraud risk, control gaps, and inventory turnover insights.
Insurance & Claim Support Audit
Stock verification and certification to support insurance policies, claim filings (theft, fire, flood), and surveyor representations.
Our Stock Audit Process
Scoping & Bank Briefing
Engagement letter, sanction letter review, prior audit reports, and clarity on bank-prescribed margins, eligible stock, and reporting format.
Site Planning & Records
Identifying all godowns and warehouses, requesting stock registers, GRN/GIN records, sales register, and prior stock statements for review.
Physical Verification
On-site visits, sample-based or full count depending on SKU mix, cut-off procedures, condition assessment, and identification of third-party stock.
Reconciliation & Valuation
Reconciliation of physical count with books, valuation method verification, NRV adjustments, and segregation of non-eligible items.
DP Computation & Report
Drawing Power computation, exception list, observations on controls, and final stock audit report submitted to the bank and management.
Why Stock Audit Matters
Frequently Asked Questions
A stock audit is an independent physical verification of inventory — including raw materials, work-in-progress, finished goods, and stores — followed by reconciliation with the books of account and valuation in accordance with applicable accounting standards. It is typically commissioned by banks for borrowers with working capital facilities, but is also performed for management assurance, fraud prevention, and insurance purposes.
Stock audit is most commonly required by banks and financial institutions for borrowers with fund-based working capital exposure — typically ₹5 crore or more in cash credit, packing credit, or overdraft against stock. It is also voluntarily commissioned by manufacturing, trading, and retail businesses for internal control, insurance claim support, and pre-investment or pre-acquisition due diligence.
Bank-mandated stock audits are usually conducted annually, half-yearly, or quarterly depending on the bank's policy, the borrower's risk profile, and the size of the credit facility. For higher exposures or accounts under enhanced monitoring, banks may require monthly or more frequent stock audits. Internal stock audits commissioned by management are typically annual, aligned with the financial year-end.
Drawing Power is the maximum amount a borrower is permitted to draw from the working capital facility at a given time, calculated on eligible current assets — primarily stock and book debts — after applying bank-prescribed margins. The stock audit verifies the value of eligible stock, deducts non-eligible items (obsolete, slow-moving, third-party goods), and computes the DP available to the borrower as on the audit date.
Stock and Receivables Audit (SARA) is an expanded form of stock audit that also covers the borrower's book debts and trade receivables. The auditor verifies physical stock, ages and validates receivables, checks for related-party or stale debts, and computes the combined Drawing Power against both inventory and eligible receivables. SARA is commonly required by banks for borrowers with significant credit sales.
Typical records include stock registers, raw material and finished goods inventory listings, purchase and sales invoices for the audit period, GRN and stock movement records, bank stock statements submitted earlier, insurance policies covering inventory, debtor ageing reports, godown and warehouse maps, and prior period stock audit reports. We share a complete checklist on engagement so the visit moves smoothly.
The terms are often used interchangeably, but in practice 'stock audit' typically refers to bank-mandated verification of inventory used as security for credit facilities — with a focus on Drawing Power computation and bank reporting. 'Inventory audit' more often refers to internal or management-commissioned verification focused on operational accuracy, valuation, and control improvements rather than bank compliance.
Most single-location stock audits are completed within 2 to 5 working days, including physical verification, reconciliation, valuation review, and report drafting. Multi-location audits or those involving multiple SKUs and warehouses may take 1 to 3 weeks. Timeline depends on inventory volume, record-keeping quality, accessibility of stock, and whether receivables are also being audited under SARA scope.
Schedule a Stock Audit
Talk to our stock audit team about bank-empanelled audits, SARA assignments, or an internal stock verification — site visits planned, reports delivered to format.
Talk to a Stock Auditor or call +91 9819 000 511