Hiring an inventory count service: define the evidence it delivers

Ask whether the provider supplies counting staff, designs the count, observes management's work or performs a defined professional engagement. These roles produce different evidence. A count contractor's quantity file should not be described as an audit opinion or a conclusion about the value of inventory.

If a practitioner proposes agreed-upon procedures, have it define the specific procedures and report. AICPA describes that service as reporting findings without an opinion or conclusion. If an external auditor needs count evidence, discuss the arrangement with that auditor before purchasing work it may be unable to use as expected.

List warehouses, stores, third-party locations and inventory categories included. Identify goods that may be owned by another party, stock in transit and items inaccessible during the visit. Ask the provider to state what it will count and what management must establish separately.

Agree the unit definitions and product identifiers before the count. A carton, pack and individual unit can produce different totals. Provide approved instructions and representatives who can resolve unclear labels. The vendor should record uncertainty rather than choose a conversion merely to complete the file.

Define how count sheets or device records are issued, completed, reviewed and returned. Specify how recounts, damaged goods and movements during the count are recorded. Management should assign responsibility for access and operating interruptions, while the provider explains the conditions needed to perform the agreed work.

Ask for a record that distinguishes original observations from later corrections. Include who requested a recount and what evidence resolved the difference. A final quantity without its history can leave the company unable to investigate a discrepancy after the counting team has left.

Clarify whether reconciliation to the perpetual system is included. Counting, investigating differences and approving adjustments are separate stages. If the provider prices only the physical count, assign someone else to resolve the resulting exceptions before the company treats the exercise as complete.

The IFRS Foundation's IAS 2 overview addresses inventory cost and write-downs under IFRS. A physical count alone does not settle those measurements, and other frameworks require their own analysis. Have the appropriate accountant determine what valuation work is needed and whether it belongs in this engagement.

Ask the provider to identify observable condition issues without claiming technical conclusions it is not qualified to make. A sealed package may be counted but not inspected internally. A visible obsolete label can prompt review without proving the item's recoverable value. Record the limits of the evidence supplied.

Check that all planned locations and categories are accounted for, including inaccessible areas and unresolved exceptions. Trace selected final quantities to source count records and approved changes. Match the invoice to the agreed staffing, hours, locations and repeat-visit terms.

Ask how the contractor records areas it could not access and products it could not identify. Require those items to appear in the final coverage schedule, with a proposed follow-up, instead of disappearing from the reported count population.

Retain the final files, count instructions, exception log and management approvals. Assign follow-up for missing goods, ownership questions and accounting adjustments. The service delivers useful evidence when the company can distinguish what was observed from what still needs investigation after the contractor's work is finished.