Changing the custodian of stock: how the handover count runs

A storekeeper is leaving, or a salesperson is moving to another branch. The keys go to a new person, "everything is in place" is said aloud, and three months later, when a shortage appears, both sides defend themselves: one says "this is what I was handed", the other "this is what I handed over". There is nothing to prove it. So when the custodian of stock changes, a count should be the rule, not the exception. Questions of liability (who bears it, under which document) depend on labour and accounting rules, so settle them with the chief accountant or a lawyer. Below we look at the practical side of the count.

Why a count is needed at handover

When the custodian changes, the balance passes along with the responsibility. A handover without a count is one where nobody can prove that the figure in the document is right. A count protects both sides: the outgoing employee confirms in writing what was handed over, and the incoming one what was received. If a difference shows up later, it is much easier to tell which period it belongs to.

The usual reasons a count is skipped come down to trust: "we know each other well", "there is no time", "we will look later". It is in exactly such cases that the biggest disputes arise, because later there is nothing left to compare against.

Who takes part

• The outgoing custodian: hands over, answers questions, provides documents.
• The incoming custodian: accepts and sees the count with his or her own eyes; "received" cannot be written without this person's participation.
• The committee: appointed by the manager's order, usually the accountant, a management representative and a member not directly tied to the warehouse.
• Optionally, an outside independent contractor. This helps objectivity, especially if the balance is large or trust between the sides is low.

The incoming employee should have the right to ask for any item to be recounted during the count. That right removes doubt on the spot, instead of leaving an objection for later.

The steps

1. The manager's order: the date, the committee and the site.
2. Closing the documents: the numbers of the last receipt and issue documents are noted, and later movements are recorded separately.
3. Preparing the warehouse: goods are grouped, damaged ones set apart, third-party goods marked.
4. The count: in the presence of both custodians, if possible with warehouse operations stopped or in a short pause.
5. The list of differences and written explanations: for each difference both sides give their view.
6. The handover report. On the same day the keys, alarm codes and document files are handed over, and the departing employee's access rights in the system are closed.

What needs special attention

• high-value goods: count them first and twice;
• goods with expiry approaching or passed;
• third-party goods held in the warehouse;
• balances off site: sent for processing or repair, or in transit;
• goods returned by a customer and not yet put away.

An illustrative example: estimating the time

Suppose the warehouse holds 3,800 items. Assume a team of two pairs counts about 1,900 items in an eight-hour shift (this varies sharply with the type of goods). Then 3,800 / 1,900 = 2 shifts, that is two days. On the third day the differences are analysed, the explanations collected and the report signed. So the count has to start when at least four or five working days remain before the employee leaves, or the departure comes before the count.

What to do if there is a difference

If a difference appears, do not rush to conclusions. First re-examine the documents: a large share of differences turn out to be document errors. Get a written explanation from both sides for each difference. The decision is taken by management, and the question of financial liability is settled with the chief accountant or a lawyer. If the new employee accepts the balance with a difference, it must be clearly written in the report: accepting "silently" may later mean that the figure rests on him or her.

Conclusion

A count at a change of custodian gives both sides a fair document: what was handed over and what was received. Inventory can run the count as an external contractor with no stake in the interests of the client's staff and hand over a report with an analysis of the differences; signing the report and deciding on the differences stay with the company's committee.