Annual inventory 2026: a complete guide for goods and fixed assets

November and December are annual inventory season. Before the annual financial statements are prepared, goods and materials (stock) and fixed assets must be counted, and the procedure is set by the national accounting standard BHMS 19, "Organisation and Conduct of Inventory". In practice most mistakes happen not during the count itself but before and after it: the order comes out late, documents are not closed by the cut-off date, and there is no time left to analyse the differences. This guide covers the whole path of the 2026 annual inventory: timing, the order and the committee, preparation, counting goods and fixed assets, documents, results and typical mistakes. There is a free template for each stage.

Timing, the order and the committee

First agree two dates: the cut-off date (the day the balances are taken for) and the day the results are handed to accounting. Leave at least a week between them for analysing differences and recounting. In a large company preparation starts several weeks before the cut-off date, so it makes sense to draw up the plan as early as November. Fixed assets and stock do not have to be counted on the same day: the chief accountant decides this based on the accounting policy. If the company has several branches, use one cut-off date and one set of templates for all of them, otherwise combining the results becomes difficult.

The manager issues an order stating the reason, the sites, the deadlines, the committee members and the chair. The committee includes representatives of management, accounting and the relevant departments. The custodian (the person financially responsible for the stock) is not a committee member but takes part in the count. The order is signed before the count starts, and committee members sign to confirm they have read it. Even when an outside contractor does the counting, decisions on differences remain with the committee and the manager.

Preparation

Good preparation shortens the count and reduces differences. The main tasks:

• post all receipt, issue and transfer documents up to the cut-off date;
• get a receipt from each custodian confirming that all documents have been handed over;
• export the list of balances from the accounting system and remove duplicates and zero lines;
• divide the warehouse into zones and update location codes and labels;
• set aside damaged goods, returns and goods held for third parties;
• export the fixed asset register with inventory numbers and locations.

To tick off what has been done, download the preparation checklist and write the name of the person responsible next to each item.

Counting goods (stock)

The count goes zone by zone, usually in pairs: one person counts, the other records. Counters are not shown the system balance; they write down only what they see. The result goes onto a separate count sheet for each storage location and each custodian, and you can use the stock count sheet template for this. Goods in transit, goods held for safekeeping and damaged goods are recorded on separate sheets. During the count, stock movements are stopped or logged in a separate journal.

Lines with differences are recounted by a different counter. A good share of the initial differences comes from haste or confusion over units of measure and disappears on the recount. A finished zone is closed, and no goods go back into it.

A barcode scanner adds speed, but keep paper as a backup: if the scanner runs flat or a code will not read, the count must not stop. Each count sheet ends with the signatures of the counters, the committee members and the custodian.

Counting fixed assets

Fixed assets are checked by inventory number: is the item in place, do the inventory and serial numbers match the register, and what condition is it in — working, under repair or idle. List assets outside the office in advance: laptops at employees' homes, vehicles, equipment away for repair. To record the results, use the fixed asset count sheet template. An item with no tag, or one not found in the register, goes on a separate line and is investigated later. Leased equipment and equipment belonging to others is also kept on a separate list so that it does not end up on your balance sheet.

Documents and results

Based on the signed count sheets, accounting prepares a reconciliation statement covering only the items with differences: surpluses and shortages in quantity and in so'm. The reconciliation statement template can be used for this. For every significant difference, a written explanation is obtained from the custodian.

An illustrative example: in a warehouse with 3,000 items, differences first appeared on 180 lines, and after the recount 70 remained. Exactly those 70 lines go into the statement; the rest are corrected as count sheet errors. One day spent on recounting saves several days of writing explanations later.

The committee summarises the results in its minutes: differences, causes, the calculation for mixed-up items (one product recorded as another) and proposals. The manager makes the decision, and accounting records the results before the annual statements are prepared.

An annual inventory ends not with the count, but when the manager's decision is entered in the accounts.

Typical mistakes

• The order is written after the count, or the actual committee differs from the one in the order.
• Documents are not closed by the cut-off date, so part of the difference turns out to be just a timing gap.
• Count sheets are not signed at the end of the day.
• Fixed assets are "ticked off" from the list without being seen in place.
• Expired or damaged goods are recorded as a shortage.
• No time is left for analysing differences.
• The duties of the outside contractor and the committee are not split in writing.

The Inventory team carries out the annual inventory itself, from preparation to the final report: it counts stock and fixed assets, analyses the differences and hands over draft documents, while the committee's decision and the signatures remain with you.