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Physical count of Inventory found excess
To understand that inventory = beginning inventory + purchases - consumed = ending inventory, which mean make sure all purchases and consumption were booked correctly and updated and if nothing are unbooked a physical recount needed to be done.
Opening Stock + Purchases - Sales= Closing Stock
so we have to check the all the entries are booked properly, if all entries are done properly so the closing stock should be recounted. Still if there is variance opening stock should be verified by reversing the formula,
closing stock - purchases + sales = opening stock.
Physicaly @ random checking the material
Check if you missed a purchase entry or you made a double sales entry. These are the two chances.
May be we have Purchasing invoice for raw material we r not record in store system and we are already received before Physical Account .
Or we have store Issue vocher Duplicate record in stock system .
Check properly if the physical count is correct. Look out for bad or damaged items that are probably not removed from the good stock. Run a complete check from the date of the receipt of stock, check the postings for there could be posting errors on the system, etc
Then we Enter materials Return voucher in system or in other hands we show it surplus and put into surplus bins.
Most importantly, checks have to be made with regard to Sales generated but products not dispatched. There might be chances, that the product has been invoiced in the system but in actual the product might be pending at warehouse for packing.quality checks
You take the system generated reports and reconcile them against the physical stocks. Find out if there are any transactions that were done in the inventory which were never documented or any which were documented but not captured in the system. There could be a possibility also of stocks which need to be dispatched but not yet but in the sytem they have already been knocked out yet physically items still in stocks.
Inventory discrepancies may occur due to the following;
1. Wrong physical counting
2. Wrong recording during incoming and outgoing transactions
3. Wrong item issuance
4. Wrong barcoding of materials
5. Wrong system entries
Assuming the items were checked properly during the receiving process and it was entered correctly in the system, then the mistakes were due to the issuance and documentation of outgoing. You can check by reviewing the documents of issuances. Double check all the items left if carrying the correct barcode because of the tendencies of wrong barcoding or misallocation in the system.
If the phsical count exceeds the current system generated report, there is a good chance that there are orders still requiring picking, or a receipt where the putaway was carried out before the data entry was made. In both cases, suspend the staock and check all current entries and paperwork. If this fails, go back to the last stocktake entry and confirm the information. A good start will be to look for the value of the variance in any inbound outbound order quantities.
