Is the stocktake a requirement of the owners of the of licence or is it a Franchise off licence in which case you will need to ensure that you have the correct qualifications to meet their requirements.
For some specific guidance refer to Practice Note 25 Attendance at a Stocktake and also (to a lesser extent) ISA501 Audit Evidence, specific considerations for selected items which includes inventory, litigation and operating segments.
Assuming that this engagement is not related to an audit then you can become involved in the actual counting rather than only observing the counting.
You are looking specifically for :
1) Everything is there that should be there (and no more)
2) The stock is in sellable condition. Specifically on this point you will be looking for damage or obsolesence.
3) That stock is carried in the financial records at it's proper value (two crates of Moet is not the same as two crates of Krug no matter what the owner of the shop might say).... For reference one always follows the guidance of IAS2 Inventories in that stock should be carried at the lower of stock and net realisable value.
The two main assertions that you are looking to clarify are Existance and Valuation.
Have a read of Practice Note 25 and then post any follow up questions that you may have,
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thank you very much for the prompt response. I will read up on the notices you have suggested and will only make a decision once I have all the information.
