Checking the document pack before signing: ten points

The count is over, the figures are collected and committee members rush to sign one after another. This is exactly when mistakes are cheapest to catch; after the signature they get expensive. One line from the count list is missing in the report, the total on the reconciliation sheet does not match when added by hand, a date reads the 14th in one document and the 15th in another. Small mismatches like these later become a question from the accountant, an auditor or a manager: "what is this?" Below is a ten-point checklist to run before signing.

What the pack contains

The exact names and forms of the documents depend on the company's internal procedure and accounting requirements, so agree the full set with your accountant. A pack usually consists of:

• the order to hold the count and the committee's membership;
• count lists: the sheets filled in during the count;
• the book balance on the count date;
• the reconciliation sheet: the difference between books and actual stock;
• the report or final summary;
• written explanations, annexes and photographs.

If you write down the pack's contents before the count, you will not lose days at the end hunting for a missing paper.

The ten points to check

Tick off each point before signing:

1. Date and time. The count date is the same in every document and it is clear which date the balance was taken for.
2. Committee. The names in the report match the order and every member has signed.
3. Custodians. Each custodian is on the list and has a receipt confirming that all receipt and issue documents were handed in.
4. Sheets. Count sheets are numbered, none is missing, and crossed-out or corrected places are initialled.
5. Number of lines. The number of lines on the count list matches the report.
6. Units. Pieces, kilograms, boxes: the unit for each product is the same in every document.
7. Totals. Shortage and surplus sums have been re-added by hand.
8. Explanations. Every difference has a note or a written explanation, and no line is left "unexplained".
9. Cut-off date. It is clearly written whether receipts and issues after the count are included in the balance.
10. Annexes. Confirmation of off-site stock, photos and explanations are attached, and the number of annexes is stated in the report.

A hypothetical example

The count list has 1,240 lines and the reconciliation sheet 1,238. Two lines are missing. On checking, two items were on the last sheet and never copied across. They were corrected before signing. Had an auditor found this later, the report would have had to be reopened. The figures are invented.

The most common mismatches

Before working through the list, it helps to know where confusion arises most often:

• one product named two ways in the count list and the report;
• rounding that differs: 12.5 kg in one document, 13 kg in another;
• one product's surplus offset against another's shortage without explanation;
• a corrected figure with no signature or date beside it;
• receipts after the count included in the balance with nobody noting it.

Most of this is not deliberate, only haste and copying slips. But later it may be judged as carelessness, so correct it before signing. How a surplus of one item may be set against a shortage of another should be agreed with the accountant.

Who checks, and when

The best method is to show the pack to someone who did not take part in the count, a fresh pair of eyes. That can be the accountant or another committee member. Set aside time for the check at least a day before signing: in a hurry the list itself becomes a formality. A mismatch goes back to the owner of the document, and the correction is entered with date and signature, without erasing the earlier entry.

After signing

Changes to a signed pack follow a separate procedure: the original document stays as it is, and the correction is drawn up as an additional document. All copies must be identical and kept in one place in one order, so no time is lost looking for a document later. Where and for how long the pack is kept depends on accounting rules, so confirm that with your accountant.

Conclusion

A check before signing takes an hour; a correction after signing takes days. Inventory hands over the results of goods and fixed asset counts with a discrepancy analysis in Excel or 1C format, which makes it easier for the accountant to check the document pack against ready figures.