Field notes
Preparing your warehouse for inventory observation
What auditors look for on count day — cut-off tags, slow-moving piles, and the quiet chaos of a well-run floor.
11 May 2026 · Aya Fujimura
Inventory observation is often the most visible day of a financial audit. Auditors arrive before the first shift, walk the aisles with your count teams, and test whether the quantities on the floor match the perpetual records that feed the balance sheet.
Freeze the cut-off
Agree the last receiving and shipping documents that belong in the count. Goods that leave after the freeze belong to the next period. Goods that arrive after the freeze stay out of the count. Ambiguous dock tickets are the fastest way to create reconciling items that delay the opinion letter.
Tag what moves slowly
Auditors sample high-value and slow-moving SKUs more heavily. If dust sits on a pallet, expect a question. Pre-identify obsolete stock and write-down candidates before count day; surprise obsolescence during observation rarely ends well for the timeline.
Brief the floor supervisors
Count teams should know who may adjust tags, who holds the master list, and how to escalate discrepancies. Dual counts on a sample of bins reduce late-night reconciliations.
After the floor closes
Keep shipping and receiving logs for the observation window. We reconcile movement against the perpetual system before signing off the count. Companies that treat observation as a quiet operational day — not a performance — finish faster.