I need to do a physical inventory count before the audit — how do I prepare it properly?

If inventory is a material item on your financial statements, international auditing standards (ISA 501) require the auditor to either attend the physical count in person or, where attendance isn't feasible, verify the results through alternative procedures. In other words, telling the auditor "the figure is in the books" isn't enough — they need to observe the counting process itself, or a sufficient part of it, to confirm the recorded quantity actually exists and is in sellable condition.

To make the count run smoothly, prepare written count instructions well ahead of the day: freeze any goods movement in or out during the count, keep the counting team separate from the staff normally responsible for the stock (segregation of duties), and document any damaged or slow-moving items separately. After the count, a quick reconciliation between the counted quantity and the book balance should follow, with any variance investigated and explained immediately — before it turns into a finding in the auditor's report. RASEEKH helps clients set up count procedures and attend alongside them, so count day becomes routine rather than a crisis at audit time.