Given the unprecedented situation that we face at present and the government’s actions taken to stem the spread of coronavirus, there are many lessons that can be learnt about contingency planning for business. However, a few simple adjustments can mean that your accounting function can continue to process the year end remotely, enabling your business to meet its statutory deadlines. Here we focus on avoiding the complications of an inability to perform a stock count.
There has been an announcement that statutory deadlines can be extended in certain circumstances by applying for an extension but this means another task to perform in an already frantic reactionary period. One way to reduce the confusion and uncertainty surrounding this process is to store all of your accounting documentation electronically and provide for remote access to this data. Another is to plan for your year end stocktake.
Stock counts are often essential in organisations with large amounts of stock, enabling management to accurately identify the stock levels at a point in time to assist with planning, budgeting and ordering. Likewise, if your organisation is subject to an audit then your auditor will be required to obtain sufficient appropriate evidence regarding the existence and condition of inventory by attendance at physical inventory counting, which can prove problematic given the current restrictions on movement in the UK. However, there are some solutions that should be discussed both internally and with your auditor.
1. A virtual attendance for your auditor may be a possibility, for example via video call facilities;
2. Counting at an alternative date (with auditor attendance, if required) and counting back to the year end using goods received and dispatched records. This may be the best option where your organization has limited stock movements during the government’s restrictions on travel;
3. Obtaining writing confirmations from third parties who hold your organisation’s stock; or
4. Extending the accounting period by changing the year end to a later date when travel restrictions have been lifted.
Thomas Westcott have experience in assisting organisations with planning to face issues such as an inability to perform a stock count or have an auditor in attendance and would be happy to assist your organisation with such matters.
By Audit and Assurance Manager, Alan Sanders