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Hi
Could you help me with a query on perpetual inventory count please?
Is perpetual inventory count a random inventory count? Does this mean not all inventory will be counted under perpetual inventory system?
Many thanks
Short answer is “no” to both your questions.
This is assumed knowledge of MA/F2.It is inventory records that are described as perpetual when they show every movement in/out and balance.
Perpetual records facilitate “continuous stock-checking” i.e. counting items at any time.
For a continuous stock-checking system to be an effective control, all items must be counted at least once a year – all counts must be documented – and the follow-up of all discrepancies documented and resolved.
If the auditor’s testing of the effectiveness of stock-checking is satisfactory, there will be no need for a full physical count at the year end as quantities can be taken to be the balances on the inventory records. If the control is lax and not effective, a full physical count would be required to ascertain year-end quantities.
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