17 July 2013
To, .............................................................. Mumbai
Subject: - Report on the Stock Audit of the factory at ........ of M/s .............. LIMITED, as on 10th OCT’2013.
Ref: - Appointment received from your goodself dt. 11th June’2013
Dear Sir,
We have carried out the Stock Audit of Khapoli Factory of M/s ....... Limited, as on 10th Oct’2013, as per the scope of work, guidelines and audit programme given by your goodself.
Our Stocks Audit Report consists of:- I. Audit Observations covering the audit programme. II. Annexure supporting the Audit Observations.
The draft audit report was discussed in detail with Shri -------------------- (Sr. Manager, Accounts & Commercial- Factory) and Shri ------------- (Manager, Dispatch -Factory), their comments on each of the points are incorporated in the respective parts.
OBSERVATIONS ON THE STOCK AUDIT AS ON 10th OCT’2013
The Stock Audit was carried out counting each and every item lying in the finished goods godowns of the factory as on 10th Oct’2013. The exercise continued for 18 days wherein all the incoming and dispatches of materials were considered while working out the exact stocks. Following are the major observations:- Stocks in the godowns are not placed uniformly. There is no proper marking of the area in the godowns for placing the stocks in particular grade-wise. There is one godown namely FG1 godown. Mostly stocks in this godown. Which are taken as fresh in the book stocks, were observed in damaged and non-saleable condition. The total value of the stocks in this godown is approximate Rs. 1200.00 lacs. The un-finished stocks / stocks in process were found kept in the finished goods area. Many of the stocks were found damaged due to been rust affected, especially in the godown named FG1. The rain water was observed coming from the roof. The anti-rust and dust repellent treatment was not been done, as explained to us. The stocks were affected by cobweb and dust layers at many places. No proper attention is given on the guidelines regarding the maintenance and safety of the stocks. The fire extinguishers were not installed as per the guidelines. Most of the fire extinguishers were observed expired. The physical verification of the stocks was not done at factory level. Some HO personnel came on 30th June’2013 and physically taken the stocks. Very rough working sheets were provided to us regarding these stocks. Further, as explained and certified to us, the variations observed during this physical verification were adjusted in the books. During our physical verification of the stocks, following are the major details:- S/n Particulars Book Stock Physical Stock Variation (%) 1 Stocks physically found and observed in books (---- items) - - -% 2 Stocks physically found but not observed in books (---- items) 0 - -% 3 Total - - -%
Remarks:- 1. The detailed working on the Book Stocks v/s Physical Stocks (grade wise) are attached as Annexure “a”. 2. Summary of the Base Boards and Rejected Boards are attached as Annexure “b”. 3. Details of the stocks kept in FG1 godown (almost non saleable) is given in Annexure “c”. 4. The statement obtained from Shri -------------------- (Sr. Manager, Accounts & Commercial- Factory) accepting our observations on stocks, are attached as Annexure “d”.
In the end, we are thankful to the concerned personnel of the factory who have extended their support during the audit exercise.
CAclubindia
