Definition
A Stores audit is a systematic examination of physical, transactional, procedural and control practices to determine whether Stores operations are operating according to defined policies and control requirements.
Audit principlePlan → Examine → Verify Evidence → Identify Gap → Determine Cause → Correct → Verify Closure
Audit Objectives
- Assess compliance with Stores procedures.
- Verify inventory and transaction accuracy.
- Evaluate material identification and location control.
- Review receipt, issue, transfer and return discipline.
- Assess preservation, safety and housekeeping.
- Identify control weaknesses and recurring exceptions.
- Establish corrective and preventive actions.
Audit Scope
| Area | Typical Audit Focus |
|---|---|
| Receipt | PO matching, quantity, inspection and GRN |
| Storage | Location, identification, preservation and safety |
| Issue | Authorization, picking, transaction and acknowledgement |
| Transfer | Source/destination and in-transit control |
| Inventory | Physical verification and reconciliation |
| Master data | Item descriptions, UOM and duplicate control |
| RGP / Job-work | Outstanding material and ageing |
| Scrap | Segregation, authorization and disposal |
| 5S / TPM | Housekeeping and equipment condition |
Audit Procedure
- Define audit scope and sample.
- Review procedures and previous findings.
- Conduct physical walkthrough.
- Select transactions and trace them end-to-end.
- Verify physical stock and locations.
- Check ERP transactions against documents.
- Interview responsible personnel where needed.
- Record observations with evidence.
- Classify findings by risk and priority.
- Agree corrective actions and due dates.
- Verify closure and effectiveness.
Evidence Examples
- GRN/MRN records.
- Issue slips and ERP documents.
- Transfer records.
- RGP/job-work registers.
- Physical count sheets.
- Item master records.
- Inspection reports.
- Preservation records.
- Scrap disposal documents.
- Vendor correspondence.
- Photographic or physical evidence where appropriate.
Finding Classification
| Finding | Meaning |
|---|---|
| Observation | Condition worth monitoring or improving |
| Minor non-conformance | Control weakness with limited immediate impact |
| Major non-conformance | Significant failure of a defined control |
| Critical issue | High-risk condition requiring immediate escalation |
Common Audit Findings
- Unidentified stock.
- Incorrect bin/location records.
- Unposted receipts or issues.
- Open RGPs beyond due date.
- Unreconciled job-work material.
- Expired or poorly preserved material.
- Duplicate item codes.
- Unapproved stock adjustments.
- Inadequate segregation of rejected material.
- Weak scrap access control.
KPIs
Audit Closure
Findings closed within agreed due date.
Repeat Finding Rate
Findings recurring from previous audits.
Control Compliance
Audited controls meeting requirements.
Corrective Action Effectiveness
Actions that prevent recurrence.
Audit Checklist Structure
A practical checklist can contain Control Area, Requirement, Evidence, Compliant/Non-compliant, Observation, Risk, Root Cause, Corrective Action, Owner, Due Date, Closure Evidence and Verification.
Related Areas
Stores Management · Inventory Management · Purchase Management · Material Planning · ERP & MIS