Your book record says what you hold. An inventory audit checks that record against the real stock. Lenders, auditors, buyers and insurers often ask for one. Many teams do not know what the work covers or what they receive.
This article explains inventory audit services. It compares an audit, a physical count and a verification. It shows who orders an audit, what the report contains and how to scope the work before you ask for a quote.
What an inventory audit service is
An inventory audit service checks your stock against your book record. It looks at three facts:
- Quantity. How much of each item is on site.
- Location. Where each item is.
- Condition. Whether the item is fit for use.
Some buyers want a party outside the company to do the check. Each case is different, so write the need into the scope.
Audit, count and verification: three words compared
Providers use these three words in different ways. Ask each provider what its words mean. The table shows the common use.
| Term | Purpose | Who often asks | Output |
|---|---|---|---|
| Physical count | Set or test the stock quantity | Finance and operations | Counted quantity by item and location |
| Inventory audit | Test the book record against the real stock | Lenders, auditors, internal audit | A report of the scope, differences and findings |
| Verification | Confirm that listed items exist at the stated place | Lenders, buyers, insurers | A confirmation list with exceptions |
A count can be part of an audit. A verification can be a smaller audit. For the full service pages, see our physical inventory counting services and our inventory audit services.
Who orders an inventory audit
Five groups order most audits. Each group needs a different proof.
Lenders and asset-based lending
A lender wants to know that the stock behind a loan exists. The lender needs a report from a party that it can rely on. See our page on collateral verification.
External auditors
An external auditor needs evidence for the financial statements. PCAOB AS 2510 says that "Observation of inventories is a generally accepted auditing procedure."[S1] Your auditor decides what to observe. Learn about our inventory observation support. Read how auditors view statistical sampling of inventory counts.
Acquirers and sellers
A buyer wants proof of the stock it buys. A seller wants a clean record at the date of sale. Both sides use an audit to agree the opening position. See our transaction inventory verification page and our opening balance sheet count checklist.
Insurers
An insurer may ask for proof of stock after a loss. An insurer may also ask for proof before it sets cover. The insurer needs a list of items, places and condition.
Internal audit and compliance
An internal audit team tests your controls over stock. It needs to know if the records are right and if the controls work. Read our guide to SOX inventory controls.
What the report contains
Ask for a written report. It should list these five items:
- Scope. The sites, areas and stock types that the audit covers.
- Locations covered. Each place that the team visited.
- Variances. Each difference between the book record and the real stock.
- Items not found. Items on the book that the team could not find.
- Items not on the book. Items on site that the book record does not list.
Also ask for the file format that your finance team and your auditors can use. Our project managers, with our engineering and production department, plan your count. CPCON reports 500+ Projects Completed.
How to scope an audit
Answer these six questions before you ask for a quote. They set the size of the work.
- Why do you need the audit? For a loan, an audit, a sale, a claim or a control test.
- Which sites and areas are in scope? List each site and each area.
- Which stock types are in scope? For example raw material, work in process, finished goods, spares or stock held for others.
- Which book record is the baseline? Name the system and the date of the data.
- Who gets the report, and in what format? Name each reader.
- Which access, safety and operating rules apply? Healthcare areas, secure government sites and hazardous stock can all add rules.
Send your answers to us. We write a scope for you. Start with our inventory audit services.
Red flags in a provider proposal
Check each proposal for these warning signs:
- The proposal has no written scope.
- The proposal does not say what the report contains.
- The provider promises an accuracy figure before it sees your data.
- The proposal does not say how the provider treats items not found.
- The proposal does not say who owns the data.
- The proposal does not say who does the work: the provider or a subcontractor.
- The proposal does not mention your access and safety rules.
A clear proposal answers all seven points in writing.
Frequently asked questions
- Is an inventory audit the same as a count?
- No. A count finds the quantity of stock. An audit tests your book record against the real stock and reports the differences. An audit often includes a count.
- How long does an inventory audit take?
- It depends on the scope. The number of sites, the stock types and your deadline all matter. A written scope states the schedule.
- Can the audit run while we operate?
- Sometimes. It depends on the stock, the areas and your operating rules. Put your limits in the scope, and the provider can plan around them.
- Who receives the report?
- The party that orders the audit receives it. You decide if you share it with a lender, an auditor, a buyer or an insurer. Agree this before the work starts.
Ask for a scope
Send us your sites, stock types and need. We write a scope for you. See our inventory audit services. For a plan around a year-end date, read our guide to the year-end physical inventory count.
Sources
- [S1] PCAOB, AS 2510 "Auditing Inventories", paragraph .01: https://pcaobus.org/oversight/standards/auditing-standards/details/AS2510 (read 2026-11-11).