Key Takeaway: An inventory audit is bigger than a stock count. It's a full review of accuracy, dead stock, reorder points, and shrinkage, done on a schedule rather than only after something goes wrong.
What's on This Page
Before the Audit
- Freeze inbound/outbound stock movement during the count window
- Export current system stock levels by location
- Assign count zones to specific staff to avoid duplicated or skipped areas
During the Audit
- Count physical stock by SKU and location using a structured checklist
- Record counted quantity separately from system quantity
- Flag damaged, expired, or unsellable stock as you find it
- Double-count anything with a variance over your set threshold
After the Audit
- Reconcile every variance with a documented reason (see Stock Reconciliation Guide)
- Review dead stock (90+ days with no sales) for markdown or clearance
- Verify reorder points are still set correctly for your fastest-moving SKUs
- Calculate your updated shrinkage rate and compare it to the last audit
Download the free Inventory Audit Checklist to run this exact process step by step.
For further reading, see the Association for Supply Chain Management (ASCM).
Checklist
- Freeze stock movement during the count window
- Export current system stock levels by location
- Assign count zones to specific staff
- Complete the physical count and flag damaged or unsellable stock
- Reconcile every variance with a documented reason
- Review dead stock and reorder points as part of the same audit
Common Mistakes
FAQ
How often should a full inventory audit happen?
Quarterly is a common cadence for small and mid-size businesses, supplemented by ongoing cycle counts in between.
Is an audit the same as a stock count?
A stock count is one step within a full audit. The audit also includes reconciliation, dead-stock review, and reorder point verification.
What should happen to variances found during an audit?
Each one should be reconciled with a documented reason before the system is adjusted, the same discipline used in regular stock reconciliation.
Can a small business run an audit without extra software?
Yes. A structured checklist and a stock count sheet are enough to run a proper audit at small scale.
Calculate This For Your Business
Related Guides in the Inventory Academy
- Stock Reconciliation Guide. the reconciliation this audit produces
- Inventory Shrinkage Explained. the number this audit measures
- Why Inventory Mistakes Destroy Small Businesses. another guide in the Inventory Academy