Stock audit or inventory audit is a term that refers to physical verification of a company or institution’s inventory assets. Every business organization needs to perform an audit once a year to update and ensure that the physical stock and the computed stock match.

The process of auditing is done through a set of rules and regulations as per the companies’ act 2013. It examines the financial statement of a company to determine the prepared statements to be true and fair in terms of company affairs.

Similarly, a stock audit is a process that refers to physical verification of the inventory which includes evaluation of inventory items based on the reference of the assignment.

The stock audit process is necessary to reduce the avoidable investment on stocks or inventory to ensure proper balance in the process. As high levels of stock result in overstocking which may result in the poor value of cash flows and financial losses.