Essentials of Inventory Audit in Tally ERP 9

AUDIT AREA: - INVENTORY

OBJECTIVE: - Risks

Ø To eliminate the risk of Inventory records may not be complete

Ø To eliminate the risk of Inventory transactions may be processed in the wrong period

Ø To eliminate the risk of Inventory items may not exist

Ø To eliminate the risk of Inventory carrying values may not be realizable

Using Tally.

1.      Location wise list can be obtained for physical verification of inventories.

-         Activate integrate accounts & inventory by press F11.

-         Activate maintain multiple location by typing yes under inventory features.

-         Create Various Locations. Inventory Info-Location-Create.

-         While entering purchase bills we can enter the locations.

-         We can also give various bin numbers to the locations under alias.

-         Inventors lying at our location, which belongs to other company, can be clearly identified by this feature.

-          By using this feature physical count of inventories is very much possible.

The above-mentioned feature can be used for the locating wrong entry and frauds. Eg:- While creating location we can mention capacity in bracket with the name of location. Then we can check the actual storage of goods in locations for that particular location record. If the qty stored is more then the capacity then there may be a recording problem or there is some thing serious matter to look in.  

2. Determination of slow moving items.

1.      We can do age wise analysis of inventory items. Display-Inventory Books-Age Analysis.

2.      Press F6 to change aging periods.

3.      By using above functions we can determine movements of inventory items.

3.Proper Accounting of Transfer/Issue of material from one location to another location.

Gateway of Tally – Inventory Vouchers- Stock Journal (F 7). By using this options all material requisitions of the production department can be accounted for. All goods transferred from one location to another can be also traced out properly.

4. Entering physically verified stock and ascertaining shortages and excess:

Gateway of Tally – Inventory Vouchers- Physical Stock Verification. (F 10).  

By using this option, we can enter physical stock verified in the books.

After going to each of the stock items individually, we are able to view the excess on physical verification (shown as inwards without value) and shortage (shown as outwards without value).

5.  Fixing of Reorder level and minimum level for purchase of inventories.

There may be some material, which may carry huge inventory cost. If proper planning not done by maintaining the stock level this may amount huge blockage of funds for such items.

Gateway of Tally – Inventory Info- Reorder Level.

6. Various details regarding stock items

Gateway of Tally – Display – Statement of Inventory – Stock Query

This gives various details as item name, group, part no., category, closing stock (quantity, cost, value, standard selling price, location wise stock), last purchase (date, party, quantity and cost) as well as last sale (date, party, quantity and price)

7. Movement analysis –

Gateway of Tally – Display – Inventory Books – Movement Analysis

This gives information about purchase and sale of stock items partywise giving details of quantity and cost/price. This feature is very much useful for analyzing pattern of purchases and sales.

8. Gross Profit Feature

Gateway of Tally – Stock Summary – F7 Show Profit

This will show profit groupwise. To get details further details groupwise and itemwise press Alt + F1. This feature gives information based on costing method and valuation method employed. With help of this information, it is easier to identify profit itemwise and look into the details wherever required. You can have further details of profit for various different time intervals as per choice given or your own choice by either pressing Auto Column or New Column or right hand panel.

9.      Processing of Sales  & Purchase order.

-         We have facility of entering Sales Order & purchase order with respective due dates.

-         Pending Sales Order – Gateway of Tally – Display-Statement of Inventory – Sales Order Summary-Press F 7. Here we can get Nos. of sale order received and sales order pending for execution.

-         Pending Purchase- Gateway of Tally – Display-Statement of Inventory – Purchase Order Summary-Press F 7. Here we can get Nos. of purcahse order received and purchase order pending for execution.