The company’s director initiates both full and partial inventory by issuing an official order. While both procedures follow standard regulations, they differ in the scope of verification. The inspection of tangible and intangible assets helps identify violations and errors that could lead to penalties, bankruptcy, or loss and damage of goods.
Full and Partial Inventory: Key Features
Inventory refers to the verification of a company’s assets. Scheduled inventory is typically conducted during the last three months of the year, while unscheduled inventory may be performed at any time. In addition to timing, inventory differs in scope—being either full or partial.
The audit of material and intangible assets serves critical purposes:
- It helps determine the actual quantity of assets on the balance sheet. Commission members may identify shortages, unrecorded items, or misgraded goods. The technical condition of equipment and vehicles is also inspected.
- It allows comparing the actual quantity of assets with the documented records. Discrepancies are recorded in official reports.
- It prepares the company for inspections by regulatory authorities.
Full inventory covers all assets and is conducted before preparing annual financial statements. Additionally, such an audit is required during company liquidation or reorganization, as well as when department heads or executives change.
Partial inventory involves checking specific departments or certain types of material assets. It is necessary when deciding to sell or lease assets, after natural disasters, or when replacing personnel responsible for certain assets. In such cases, only the assets under the employee’s responsibility, as specified in their employment contract, are verified. Selective control of inventory is also required if there is suspicion of theft, misuse, or improper storage of assets.
Regardless of scope, inventory consists of several key stages. The preparatory stage involves drafting an order, approving the commission, reviewing documents, and setting deadlines. Next comes the physical count, where goods are not only tallied but also weighed or measured as needed. Equipment and vehicles are checked for functionality. This is followed by a reconciliation process, after which an order is issued to address discrepancies and hold responsible parties accountable.
The choice between partial and full inventory is made by the company’s management, taking into account the audit’s objectives, available resources, and the scale of work required. A full audit at large enterprises may take over 2-3 weeks but provides a precise overview of stock quantities, locations, and conditions. Based on the findings, management may decide to reorganize storage, liquidate surplus inventory, or adjust production volumes.
Partial audits can be conducted periodically throughout the year. This helps identify issues promptly and simplifies the annual full inventory process.
Inventory Rules
Any type of inventory requires a preliminary order specifying the audit type, timeline, and commission members. Responsible personnel must be informed of the order once signed. However, employees accountable for material assets need not be notified in advance—unannounced audits make it easier to detect theft.
Both full and partial inventory must adhere to the following rules:
- Storage areas containing inventoried assets must be sealed at the end of each day during multi-day audits. Seal integrity is verified every morning.
- Movement of goods is prohibited. Sales require written approval from accounting and management.
- Accountable personnel must be present during counts. Their absence complicates damage recovery in legal proceedings.
- Final reports must be signed by all commission members.
Full and partial inventory can be conducted in any company, regardless of inventory volume or industry. Auditable items include not only goods but also securities, vehicles, equipment, and financial obligations.
