Pharmacy Inventory and Its Specifics

What It Is and When It Is Conducted

Inventory is conducted by a special commission. Its results are reflected in inventory lists, acts, or other documents approved by Legislation. This procedure is also called a recount. In pharmacies, inventory is organized on a mandatory basis as part of the annual reporting. The timing of additional checks is set by management, based on the tasks at hand. For example, inventory is organized in cases of shortages in the pharmacy, after a fire, or when closing the company. Reasons for its organization can also include:

• Sale of the pharmacy.
• Change in the ownership form of the organization.
• Appointment of new financially responsible persons.
• Force majeure circumstances: fires, floods, and other natural disasters.

Managers have the right to independently establish the frequency of audits according to necessity or needs: quarterly, monthly, or within other timeframes.

Advantages

• Reducing losses. Regular audits make it easier to identify shortages or theft of goods, and prevent their spoilage due to violations of storage conditions.
• Stock control. After the check, the owner receives accurate information about the quantity of goods in the warehouse, enabling management and preventing deficit or surplus of certain items.
• Compliance with legal norms. Inventories are necessary for the accounting of medicinal products.
• Identification of in-demand goods and items not in demand, to optimize purchases and improve customer service quality.
• Checking the completeness of transaction recording.

Types of Inventory

• Full

Its recommended frequency is once every three years. All valuables are subject to recount, including medical devices, medicines, equipment, fixed assets, cash in the register, furniture, equipment on the balance sheet, as well as credit obligations.

• Interim

Necessary for assessing the real situation, identifying shortages.

• Annual

Planned checks are conducted annually, between October 1 and December 31, before closing the annual report. The listing of medicinal drugs is done by form, dosage, name, and packaging. They are accounted for in monetary and quantitative terms.

If surpluses are found, the unaccounted items are accepted onto the balance sheet, where they are reflected as other non-operating income of the company at the accounting cost. That is, they are essentially considered material reserves or unaccounted profit.

If a shortage is identified, its cause is determined first. Sometimes it is related to accounting errors, for example, when writing off inventory items. Other probable causes of shortages:

• natural loss;
• damage due to careless handling or non-compliance with storage conditions;
• errors in selling goods, leading to misgrading;
• theft or embezzlement.

In all these cases, financially responsible persons provide written explanations, indicating the actual cause of the shortage. Its amounts are reflected in a separate account and written off by management decision onto the guilty parties or the company’s own expenses.

Three scenarios are used to cover the costs:

• If the goods were lost due to natural causes (drying out, evaporation, breakage during transportation or storage), they rely on norms approved for each category of goods. These expenses are included in the general costs. However, in the pharmaceutical industry, to which the pharmacy belongs, these amounts are minimal.
• In situations where the cause of the shortage was employee incompetence or dishonest attitude, the amounts of lost inventory items are recovered from the guilty parties in full. They are deducted from the salary or the employee pays the money into the cash register. Such compensation for losses is possible if a liability agreement is signed and there is direct evidence of involvement in the shortage.
• If the loss of inventory items occurred not due to natural causes or staff fault, the loss is written off to the pharmacy’s expenses, reducing its financial result.

All these procedures are documented and confirmed by an act signed by the manager.

Stages

Inventory is performed in a specific sequence, which cannot be changed or violated:

1. A commission is created by order of the manager, or the work of a permanent group is resumed. Its composition usually includes a representative of the administration (this could be a deputy manager or the head of the pharmacy), an accountant, a merchandiser, warehouse workers, pharmacists, and pharmacy assistants. The commission can be permanent or appointed each time before an audit.
2. A statement with data is filled out. If the pharmacy has several departments, the recount is conducted for each separately with the participation of responsible persons.
3. The inventory group receives a package of expenditure and receipt documents with reports on the movement of inventory items (acts of acceptance of medicines and medical devices, invoices, acts of consumption and write-off, reports).
4. Persons responsible for the storage of inventory items write receipts confirming the handover of documentation, confirming that all information stated therein is accurate.
5. Weighing, measuring, and counting of remaining stock is performed. During the inventory, the dispensing and movement of material assets is suspended to prevent distortion of information.
6. The results are entered into a statement, which is always prepared in two copies: one remains with the financially responsible person (this employee must write a receipt), and the second goes to the accounting department.

During the inventory, goods with expired shelf lives are identified; they must be disposed of, documenting the procedure. These amounts, supported by relevant acts, are included in the list of expenses. In small pharmacies, the check takes no more than one day. In warehouses and large organizations, this period increases to several days, and this is recorded in the order.

All recounts are conducted in the presence of the financially responsible person: this employee either participates in the check themselves or monitors that its results are reflected in the documents correctly and accurately. This is necessary for the transparency of the inventory and to guarantee that neither the commission members nor the seller or other responsible employee will doubt the accuracy of the count.

Inventory lists and acts are signed by participants on each page. For goods or valuables whose actual quantity does not match the documentary data, comparison statements are drawn up. At the conclusion of the audit, the responsible employee signs with a note of agreement or disagreement with the results.

Inventory should be conducted promptly and quickly, without delay, to prevent losses. Upon its completion, the commission presents written results to management. Based on these, the administration makes decisions on the identified problems and discrepancies.

The accounting department reflects the results of interim recounts in the postings of the month in which the audit took place. The results of the planned inventory, conducted in October-December, are included in the annual balance sheet.

Pharmacy Inventory with GPC “Doerfer”

Conducting inventory before the preparation of the annual accounting balance sheet is a mandatory procedure for any organizations, including pharmacies. Separate accounting is maintained for narcotic, psychotropic, toxic, and potent drugs. Each unit is accounted for individually.

Our company has been operating for over 15 years, offering professional inspector services in different countries worldwide. Rich practical experience and the use of modern software products for inventory allow us to guarantee the client an accurate result, which will help in making the right decisions and insuring the business against losses. We are constantly developing, improving our qualification level, so we are always ready for any challenges and quickly respond to market changes. To order an inventory for a pharmacy or another organization, it is sufficient to contact our specialists. We will answer all your questions and provide a detailed consultation.