Inventory & Stock Audit Services
MOE (Ministry Of Economy) Approved Auditors
Inventory & Stock Audit Services in the UAE
Know exactly what’s actually on your shelves, not just what your books say is there.
Farahat & Co. provides inventory and stock audit services for businesses across the UAE, verifying that physical stock matches accounting records and supporting accurate, defensible financial reporting.
- IAS 2-compliant valuation review, confirming inventory is correctly measured at the lower of cost or net realisable value
- ERP-compatible methodology, working with SAP, Oracle, Odoo, Tally, and manual record-keeping systems alike
- Multi-location capability, supporting simultaneous counts across warehouses to eliminate transfer and double-counting risk
If the volume of stock you hold can no longer be counted and verified by hand, or if your inventory records and physical stock have started to drift apart, an inventory audit gives you a verified, reliable baseline to work from.
Our Specialists In Inventory & Stock Audit Services
Dr. Imad Kutum
Participant - Audit
Jose Varghese – CA
Participant - Audit
Mamdouh Ali
Participant - Audit
Mohamed Zahran
Audit Manager
V Ramakrishnan
Participant - Audit
As an Approved and trusted Audit Firm In UAE, Farahat Co. Offers Below Audit Services:
What Is an Inventory or Stock Audit?
A stock audit, also known as an inventory audit, is a systematic examination that verifies whether the physical stock of goods and materials held by a company matches the figures recorded in its books, ERP system, or warehouse management software.
Beyond quantity, an inventory audit confirms ownership: that the stock physically present genuinely belongs to the company rather than being customer-owned inventory or goods held on consignment from a supplier. It also identifies phantom stock, where goods appear in the books but cannot actually be located in the warehouse, often caused by theft, data entry errors, or accounting mistakes, and represents one of the more damaging discrepancies an inventory audit can uncover.
Why Inventory Audits Matter
Inventory is often the largest single asset on a trading or manufacturing company’s balance sheet, and inaccuracies here distort far more than just the stock count.
- Valuation accuracy: under IAS 2, inventory must be measured at the lower of cost or net realisable value, using an approved method such as FIFO or weighted average. An audit confirms this is being applied correctly.
- Financial reporting integrity: overstated or understated inventory directly misstates cost of goods sold, gross margin, and reported profitability.
- Fraud and loss detection: independent verification identifies theft, data manipulation, or misreporting that internal counts alone often miss.
- Tax accuracy: with VAT and Corporate Tax now in effect across the UAE, reliable inventory valuation and movement data supports accurate FTA returns and reduces exposure during a tax audit.
When Do Businesses Need an Inventory Audit?
The law does not mandate an inventory audit for every business, but in practice, most businesses holding physical stock encounter it in one of the following situations:
- During the annual statutory audit, since external auditors need verified stock figures to sign off on financial statements
- Before submitting financial statements to government bodies or free zone authorities such as DMCC, JAFZA, DAFZA, or other licensing authorities
- When seeking financing, since banks and investors frequently require an independently verified inventory report before approving credit facilities or funding
- When the FTA initiates a VAT or Corporate Tax audit, where accurate inventory records materially affect the outcome
- When transitioning to new inventory or ERP systems, to ensure historical stock data carries over accurately
- When stock is stored across multiple or third-party warehouses, where visibility is naturally harder to maintain
Our Inventory Audit Process
We follow a structured process designed to deliver accurate results with minimal disruption to your operations.
- Kick-off and walkthrough: we meet key stakeholders and walk through your existing inventory processes and locations.
- Planning and sampling: we plan count procedures, assign audit teams, and define materiality thresholds for the engagement.
- Pre-count controls: where required, we coordinate a freeze on inventory movement and lock down stock areas ahead of the count.
- Physical count: our team conducts systematic, zone-by-zone or category-by-category counts, using barcode scanning or manual forms with supervisory checks.
- Reconciliation: count results are compared against your accounting books, ERP records, purchase orders, and goods receipt notes to trace any variances.
- Reporting: we report findings, quantify any required adjustment entries, and rank control weaknesses by priority.
- Closure and follow-up: we validate the resulting journal entries, help revise documentation, and confirm corrective actions have been implemented.
What Our Inventory Audit Covers
Physical verification and categorisation
We physically count and inspect stock across raw materials, work-in-progress, and finished goods, applying ABC categorisation, ranking items as high, medium, or low value, so audit effort is weighted appropriately toward your most significant stock.
Ownership and consignment verification
We confirm that stock on your premises genuinely belongs to your company, distinguishing it from customer-owned inventory or goods held on consignment from suppliers.
Obsolescence and condition review
We identify slow-moving, damaged, or obsolete inventory and recommend appropriate write-down or write-off treatment in line with UAE accounting standards.
Internal controls testing
We test the systems and procedures in place to prevent stock misuse, theft, or manipulation, including access controls, segregation of duties, and approval workflows, reporting any weaknesses with practical recommendations.
Cost and valuation analysis
We review freight, handling, and holding costs, including warehouse rent, security, and utilities, to confirm these are properly reflected in the value assigned to inventory on the books.
Benefits of Inventory Audit Services
- Reduced shrinkage and loss: identifying the root cause of process or security weaknesses that facilitate theft or error
- Improved cash flow management: better visibility of slow-moving and aging stock supports more efficient purchasing decisions
- Stronger controls: practical recommendations that prevent the same discrepancies from recurring
- Faster statutory audits: pre-validated inventory data reduces the time and cost of your year-end external audit
- Greater credibility: a clean, independently verified inventory report strengthens confidence with banks, investors, and insurers
Why Choose Farahat & Co. for Inventory Audit Services
Farahat & Co. has conducted internal and external inventory audits for companies across the UAE for decades, helping clients regain control over their inventory management processes.
- Sector breadth: experience across retail, manufacturing, logistics, wholesale, and e-commerce operations
- System compatibility: we work with SAP, Oracle, Odoo, Tally, and manual record-keeping systems alike
- Multi-location capability: simultaneous counts across Dubai, Abu Dhabi, Sharjah, and the Northern Emirates, avoiding double-counting risk on stock in transit
- Customised methodology: every business has a different size and volume of stock, and we scope the audit checklist accordingly
- Established track record: over four decades supporting UAE businesses across audit, accounting, and compliance disciplines
