How to self-audit inventory
/What is Inventory Self-Auditing?
Inventory self-auditing occurs when employees review the transactions recorded by each other, either through the review of a small inventory count or a full-blown transaction reconstruction. This auditing can be used to minimize the number of inventory transaction errors, of which there are many types. The types of errors discovered usually involve a keying error, quantity miscounts, the wrong items being picked, or the complete misidentification of the parts being recorded.
Inventory self-auditing is only feasible if there is a sufficient amount of excess staff time available for self-auditing. Possible self-auditing methods are noted below.
Cycle Counting
Have the warehouse staff review any exceptions found by their fellow cycle counters. This can also include a mutual review of any changes made to the inventory database for location or unit count alterations.
Picking
Have inventory pickers compare what they picked to what is stated on their picking tickets.
Transaction Entry
The data entry staff can compare the paper transactions from which information was entered to a log of entered information from the computer system.
Related AccountingTools Course
While useful, it is difficult to enforce self-auditing, for several reasons. First, it is difficult to monitor auditing activities. Also, employees may pressure each other to not report any errors found. These issues can be reduced by paying a bonus to the warehouse staff that is based on the accuracy of inventory records.