Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Why banks require it
When a bank lends working capital against stock and receivables, the loan limit (drawing power) depends on the value of that security. A stock audit gives the bank independent assurance that the pledged stock genuinely exists, is valued properly, and matches the monthly stock statements the borrower submits to claim its limit.
What the auditor does
The stock auditor physically verifies inventory (counts, condition, slow-moving/obsolete items), checks valuation, reviews receivables ageing, and reconciles all of it to the books and the statements given to the bank — flagging any over-statement of drawing power. It protects the bank, but a clean audit also protects the borrower’s credibility. Scope is set by the bank’s terms.
A worked example
Example: a manufacturer borrows against ₹3 crore of declared stock. The stock auditor counts the warehouse, finds ₹20 lakh of obsolete stock the borrower had still valued at full, and reports the adjusted drawing power — so the bank’s exposure is accurate. Borrowers who keep clean stock records sail through. Our team can carry out stock audits for lenders or borrowers.