Preparing for a warehouse audit: 10 steps for owners and accountants

When an auditor arrives, most of the time goes not on the warehouse itself but on hunting for documents. With good preparation the auditor gets to the substance on day one; with poor preparation the work stalls for weeks on "we could not find the document". Below is a routine for preparing for an audit, written for the owner, the finance director and the chief accountant. The aim is not to "get through" the audit but to get the most value out of it.

What preparation changes

Preparation is not about making the result look good; it is about showing the auditor the real picture faster. A tidy document pack, a date set in advance and a team that has been warned shorten the audit. "Cleaning everything up" works the other way: the auditor will find the traces anyway, and trust is lost.

Ten steps

1. Write down the purpose. Why is the audit needed: before a loan, because management changed, because a shortage is suspected, or for year-end? The purpose sets the scope: which warehouse, which period, which product groups.
2. Appoint a single contact. One person on your side, usually the chief accountant or the finance director, answers all of the auditor's requests. The warehouse manager takes part in the count but does not organise it.
3. Agree dates and deadlines. The day the auditor starts, the count date and the report deadline are fixed in writing.
4. Warn the team in advance. Explain that people are not on trial; processes and the system are. A frightened employee delays the paperwork.
5. Assemble the document pack.
6. Export data from your system: balances at the count date, the item master and the log of adjustment documents. Do not edit the exported file; the original must be kept.
7. Close the documents. Before the count date, all receipts and issues must be entered. List goods in transit and expected returns separately.
8. Divide the warehouse into zones. Mark receiving, storage, dispatch, returns and rejects. Do not hide goods without labels, damaged goods or expired goods; set them apart.
9. Prepare access. The auditor should enter the system with view-only rights, and the site access list and the non-disclosure agreement (NDA) should be signed.
10. Tell the auditor about weaknesses you already know. It saves time and builds trust in you.

What the document pack should contain

At least a week before the audit, put the following into one folder, electronic or paper:

• the item list and price list;
• stock movement statements at the start and end of the period;
• receipt and issue documents, supplier delivery notes, return and write-off certificates;
• the documents of the last stock count and how the discrepancies were resolved;
• supplier contracts and a list of consignment and third-party stock;
• liability agreements and the table of warehouse access rights;
• the list of system users and their permissions.

If something cannot be found at once, do not worry: knowing what is missing is useful information, and the auditor will start there.

An approximate timetable

The timing depends on the size of the warehouse: a small one may need a week, a chain with branches a month. A hypothetical three-week timetable:

• Three weeks before: purpose, contact person and dates (steps 1 to 3).
• Two weeks before: warning the team, the document pack and the export from the system (steps 4 to 6).
• One week before: closing documents, zones and access (steps 7 to 9).
• The day before the count: a final check. Do the dates in the system match the copies of documents, are the responsible people in place, are keys and passes ready?

Keep every auditor request and the date of your reply in one table; in a dispute it is the most reliable evidence.

What not to do

Three common mistakes reduce the value of an audit:

• "Fixing" balances in the system before the audit. An adjustment document leaves a trace in the system, and the auditor will see it first.
• Filling in documents with back dates. The creation and modification times of files are preserved.
• Tidying and rearranging the warehouse overnight. The real way of working becomes invisible.

Conclusion

Good preparation does not make an audit more expensive; it directs time to the substance, so the auditor checks the system instead of searching for papers. At the preparation stage OmborAudit exports balances from your accounting system, marks out zones and briefs the team, so some of the steps above can be done together with the auditor.