A count is useful only if it explains differences
Physical inventory is not a formality. It is the moment when the company compares the software quantity with the real warehouse quantity. In Algeria, where stock can have a direct impact on the closing file, the count must be prepared, supervised and documented.
The goal is not only to obtain a final quantity. The goal is to explain why differences exist and to prevent the same difference from coming back next month.
Prepare the count before closing the warehouse
Before counting, freeze or clearly separate movements. Receipts not yet entered, deliveries waiting for confirmation and transfers between depots can all create false differences. The team should also print or export a count sheet that identifies the item without revealing the expected quantity when blind counting is required.
Prepare zones, item codes, units of measure and count teams. If the same article exists under two codes, correct the master data before the count starts.
Treat differences by cause
A useful inventory report separates:
- counting error;
- wrong unit of measure;
- unrecorded receipt;
- unrecorded delivery;
- damaged or obsolete goods;
- transfer entered in the wrong warehouse;
- supplier return or customer return not closed;
- theft, loss or unexplained shortage.
Each material difference should have a comment and an approval before the adjustment is posted. An unexplained adjustment may solve the quantity but it weakens the audit trail.
Link the count with valuation
The stock valuation page explains why quantities and costs must be reviewed together. A difference of five low-value items is not the same risk as one missing imported machine part. The closing review should list high-value differences separately.
After validation, the count result should be consistent with stock movements, multi-warehouse balances and the balance sheet.
Controls to run after the count
Check negative quantities, zero-cost items, old dormant items, large value adjustments, duplicate references and items counted in the wrong warehouse. The count file should also show who counted, who reviewed and who approved.
For recurring differences, review the process. If returns are always missing, the return procedure is weak. If transfers create differences, the source and destination warehouses are not validating the same event.
Official references
- Law 07-11 on the Algerian financial accounting system
- SCF implementing order, inventory accounts and financial statements
Keep count evidence
An inventory count is reliable when the company can explain the differences, approve the corrections and keep a clean link between warehouse reality, valuation and accounting.