What a personal inventory count means
A personal inventory count is a practical self-check of the property, documents, and liabilities for which a specific employee, individual entrepreneur, or head of a small organization is responsible. The statutory inventory count procedure does not contain a separate definition of this term. It is therefore reasonable to use it as an internal working term for preparation for an official inventory count, rather than as an independent procedure replacing a commission-led inspection.
It is important for an accountant to distinguish between two processes. During a personal check, the materially responsible person may count the property in advance, compare it with accounting records, collect primary documents, and identify possible discrepancies. An official inventory count is conducted in accordance with the established procedure: based on a decision by the head, with the participation of an inventory commission, and with the results duly documented.
Such preliminary control is particularly useful before preparing financial statements, changing the responsible employee, or handing over responsibilities. Its purpose is to identify discrepancies in a timely manner, restore missing documents, and prepare the items for physical inspection.
An internal and official accounting inventory count should be distinguished from an inventory count conducted during a tax audit. Tax authority officials are entitled to inspect property that is subject to taxation or related to taxation and to conduct an inventory count of the audited person's property, excluding residential premises (Article 160 of the Tax Code of the RK).
Who and what property the inspection covers
According to paragraph 60 of Chapter 4 of the Accounting Rules, an inventory count of assets and liabilities must be conducted at least once a year to ensure the reliability of accounting data and financial statements. An exception is provided for small businesses with no more than ten employees: they determine the inventory count period independently.
Paragraph 61 establishes a broad range of items subject to inspection. All property is subject to an inventory count regardless of its location, including:
- the organization's or individual entrepreneur's own assets;
- property held in safekeeping;
- property leased under an agreement;
- valuables received for processing;
- property accepted on consignment;
- items that, for any reason, were not recorded;
- all types of liabilities.
Consequently, personal preparation cannot be limited solely to goods in a warehouse or available fixed assets. The responsible person should check all valuables entrusted to them and the related documents, including third-party property accepted by the entity under an agreement.
A separate statement form is provided for investments. It records information about the investment item, balance sheet account, cost, revaluation, and actual amount compared with the accounting records. The form also contains acknowledgements by the responsible person and the signatures of the chair and members of the commission. Therefore, a personal reconciliation of documents may serve as a preparatory stage, but the final document is completed as part of the official inventory count.
When an inventory count is mandatory
In addition to scheduled inspections, paragraph 62 of Chapter 4 provides for cases in which an inventory count is conducted regardless of the business category to which the entity belongs:
- when materially responsible persons change — on the date responsibilities are handed over and accepted;
- when theft, abuse, or damage to property is identified;
- after a natural disaster, fire, accident, or another emergency caused by extreme conditions;
- when an entity is reorganized, before the separation balance sheet is prepared.
A personal self-check does not eliminate the need to conduct an inventory count in the situations listed above. For example, a departing employee may count the valuables entrusted to them in advance, but the handover and acceptance must be documented as part of the official procedure.
The number of scheduled inventory counts, their dates, and the list of assets and liabilities to be inspected are established in the accounting policy. Therefore, the accountant must first check the current accounting policy and the head's orders and then prepare a work schedule.
How to conduct personal preparation
The first step is to define the area of responsibility. A list should be prepared of the premises, storage locations, property groups, and documents assigned to a specific person. The actual availability of the items is then compared with records, statements, agreements, and other accounting data.
The practical preparation procedure may be as follows:
- Collect the latest receipt and issue documents.
- Check whether received property has been recorded and whether disposals have been documented.
- Separate owned, leased, and safekeeping valuables.
- Ensure that each item can be identified by its name and accounting documents.
- Set aside damaged, unused, or unrecorded property without independently deciding to write it off.
- Submit missing documents to the accounting department and report any discrepancies identified.
Before the official inventory count, actual balances must not be artificially altered and documents must not be substituted. Any discrepancy identified should be documented and reviewed in accordance with the established procedure.
Paragraph 64 requires the establishment of an inventory commission whose composition is approved by an order of the entity's management. Before the inspection begins, the commission members review the materials from the previous inventory count and the measures taken based on its results, seal storage locations with separate entrances and exits, check that weighing and measuring instruments are in working order, and obtain the latest registers of receipt and issue documents or reports on property movements.
The materially responsible person provides an acknowledgement that property received for safekeeping has been recorded and that property disposed of has been written off. The same procedure is also reflected in the investment inventory statement form: before the inspection, receipt and issue documents must be submitted to the accounting department.
How to document the result
The result of personal preparation may be recorded in an internal working list: item, recorded quantity, actual availability, supporting document, and discrepancy identified. Such a list helps the accountant organize the work but does not replace the inventory documents prepared by the commission.
Official documentation should be completed using the forms applicable to the relevant type of assets or liabilities. For example, Form Inv-2 for investments provides for information on the actual amount and accounting account data, the total according to the inventory list, the commission's signatures, and confirmation by the materially responsible person that the inspection was conducted in their presence.
If a shortage, surplus, property damage, or a liability unsupported by documents is found during the self-check, the accountant should retain the documents, notify the head, and ensure that the matter is reviewed by the commission. The procedure for recognizing the result in the accounts is determined with due regard to the nature of the transaction and the documented inventory count results: the responsible person's personal assessment does not replace the commission's decision.
Frequently asked questions
Does a personal inventory count replace an official one? — No. It is a preliminary self-check, whereas the official procedure is conducted by an inventory commission whose composition is approved by an order of the entity's management.
Does leased property need to be inspected? — Yes. Valuables held in safekeeping, received for processing, or accepted on consignment are also subject to an inventory count.
When should property be inspected when the responsible person changes? — The inventory count is conducted on the date responsibilities are handed over and accepted.
Who determines the dates of scheduled inspections? — The number of inspections, their dates, and the list of assets and liabilities are established in the accounting policy.
Can the responsible person sign the final inventory list instead of the commission? — No. Inventory forms provide for the participation and signatures of the commission, while the responsible person provides an acknowledgement and confirms that the inspection was conducted in their presence.
Sources
Chapter 4. Inventory Count Procedure
Investment Inventory Statement and Acknowledgement by the Materially Responsible Person