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A step-by-step guide to stocktaking of company assets


​by Agata Wierzbowska

27 October 2023

Companies are required to carry out a stocktaking at the end of every year. This is a statutory obligation and failure to comply with it triggers legal consequences. A Rödl & Partner expert discusses major stocktaking issues.

Table of contents

1. What is asset stocktaking?

2. Stocktaking in the context of the Accounting Act

3. Types and methods of stocktaking
  • Physical count
  • Comparison of books of account with relevant documents
  • Confirmation of balance

4. How to take stock?
  • Step I – preparing for stocktaking
  • Step II – carrying out stocktaking (physical count)
  • Step III – clearing of stocktaking differences 
  • Step IV – post-stocktaking activities

5. How long does it take to count stock and when should it be done?

6. Differences between statutory stocktaking and voluntary stocktaking

7. Can stock be counted by an external entity?

What is asset stocktaking?

A periodic determination of available assets and liabilities by means of counting stock allows you to improve asset management and to take corrective actions on time in the event of discrepancies. The entities listed in Article 2(1) of the Accounting Act are required to count stock as of the last day of the financial year. These activities allow you to determine the existing stocks of company assets and to assess their quality. Stock must also be counted as of the day the entity ceases its operations and as of the day preceding the day it goes into liquidation or is declared bankrupt. A physical count is also required for proper preparation of financial statements and determination of profit/loss. A properly carried out stocktaking provides you with information relevant for decision making and lets you assess the existing methods and implement new methods that improve operations. 

Stocktaking in the context of the Accounting Act

Stocktaking is mandatory for enterprises. The timing and frequency are specified in the Accounting Act. The legislator describes the assets to be counted and the methods to be used: a physical count, confirmation of balances and comparison of data included in the books of account with relevant source documents. According to Article 77 of the Accounting Act, failure to comply with stocktaking requirements is liable to a fine or imprisonment for up to two years (or both penalties jointly).

Types and methods of stocktaking

There are three ways to take stock  depending on the type of an asset.  

Physical count 

A physical count is dedicated to:
  • monetary assets (except for cash at bank),
  • tangible securities, 
  • tangible assets and real property classified as investments,
  • machinery and equipment classified as assets under construction,
  • tangible current assets,
  • assets owned by other entities, provided to the company for sale, storage, processing or use (this requirement does not apply to entities providing postal, transport, forwarding and storage services).
This means items that can be counted, measured or weighed.

Confirmation of balances

Confirmations of balances are prepared for financial assets held at bank or by other entities, including intangible securities, the balance of receivables (including loans granted, except for disputed and doubtful receivables) and own assets provided to business partners.

Comparison of data included in the books of account with relevant documents 

This type of stocktaking is used for:
  • hard-to-access tangible assets,
  • land and rights classified as real property, 
  • disputed and doubtful receivables, and at bank – also receivables at risk,
  • receivables from and liabilities to persons who do not keep books of account, in respect of government levies,
  • other assets and liabilities for which a physical count or reconciliation was not possible for justified reasons. 

How to take stock?

Stocktaking is usually associated with an official and time-consuming duty, although it can run smoothly if well planned. Regardless of the company size, it is useful to break down stocktaking tasks into steps such as: preparing, counting, clearing and post-stocktaking activities.

Step I – preparing for stocktaking

The responsibility for carrying out stocktaking rests with the entity's manager, who appoints a stocktaking committee and a committee chair. He also specifies by means of a written order: the dates and duration of stocktaking, the areas to be covered by stocktaking and the methods of stocktaking, and ensures that people taking stock are trained and instructed. In addition, if the entity's financial statements are subject to audit, the entity notifies the audit firm of the stocktaking dates, thus enabling the statutory auditor to observe the stocktaking process. 
The stocktaking committee prepares stocktaking sheets and necessary measuring tools. If needed, it provides protective clothing. It is also a good practice to ensure that the documentation is in order before the stocktake.

Step II – carrying out stocktaking (physical count)

The stocktaking committee chair supervises the stocktaking to ensure its timely completion and proper conduct. All stock receipts and issues and the production process should be stopped for this time. 
The stocktaking team records the existing stocks of assets using stocktaking sheets. To maintain the integrity of stocktaking, the stocktaking teams should not be informed in advance of the quantity of assets to be counted. In the sheet's comment field, additional entries are made, e.g. assessment of suitability for use, random check by a statutory auditor or stocktaking inspector. Once the stocktake has been completed, the sheet should be marked at the bottom of the page with the clause: “The stocktake was completed at item ...”. The completed stocktaking sheets should be signed by members of the stocktaking team and the person financially responsible for the counted stock.  

Step III – clearing of stocktaking differences 

The stocks of assets determined by a physical count are compared against the stocks included in the accounting records. The stocktaking committee explains the differences and proposes how to clear them in the stocktaking report. The document is then forwarded to the entity's manager. Once approved, the accountant enters the identified surpluses and shortfalls in the accounts. The stocktaking committee also ensures that documents are archived. The original stocktaking sheet is forwarded to the accounting department and a copy is given to the financially responsible person.

Step IV – post-stocktaking activities

The final step is to analyse the outcome of the stocktake and to take improvement actions. The aim is not only to improve the stocktaking process in the following year, but also to draw conclusions about, e.g. debt collection or suitability of certain assets. 

How long does it take to count stock and when should it be done?

The Accounting Act specifies the timing and frequency of stocktaking. The legislator allows three options [1]:

1. once a year  
  • applies to assets – excluding monetary assets, securities, work-in-progress and raw materials, merchandise, finished goods, as defined in Article 17(2)(4). It should be carried out no earlier than 3 months before the end of the financial year and completed by the 15th day of the following year,
  • stocks of merchandise and raw materials (packaging) recorded by value at the entity's retail outlets,
  • timber stocks in forest management units. 

2. every two years 
  • applies to stocks of raw materials, merchandise, finished and semi-finished goods stored in guarded facilities and recorded by quantity and value

3. every four years
  • applies to real property classified as tangible assets and investments and other tangible assets, machinery and equipment classified as assets under construction, located on guarded premises.

The choice of date is up to the enterprise as long as it falls within the statutory time limits. For companies with a balance sheet date of 31 December, the stocktake should not start earlier than in the fourth quarter of the financial year and be completed by 15 January of the following year. Stocktaking can be scheduled at a time that will not disrupt the company's operations. It is important to remember to properly document the outcome of the stocktake and to account for surpluses and shortfalls in the books of the year in which stock is counted. Stocktaking documentation must be kept for 5 years, starting from the beginning of the year following the financial year to which the physical count relates. 

Differences between statutory stocktaking [inwentaryzacja] and voluntary stocktaking [remanent]

In everyday life, we usually use these two terms to mean the same thing. However, statutory stocktaking can have a broader meaning. It is not only a physical count but also activities that help determine the existing stocks of assets and their sources at a specific point in time. We also speak of statutory stocktaking in the context of a statutory obligation. On the other hand, voluntary stocktaking is carried out of the entrepreneur's own free will. 

Can stock be counted by an external entity? 

Stocktaking allows a review of company assets and verifies the reliability of the books of account and the financial statements. It is a good tool for holding accountable those responsible for the company's assets and also helps detect possible theft or fraud in a workplace. It is increasingly common practice to use services of external companies specialising in stocktaking. This ensures that the process runs smoothly and potential irregularities are detected. It should be mentioned here, however, that the responsibility for carrying out stocktaking (including: appointing a stocktaking committee and a committee chair, issuing a stocktaking order, notifying the statutory auditor of the physical count dates) remains with the entity's manager. 

Expert comment

The primary purpose of stocktaking is to confirm the existence of an asset. Determination of the existing stocks of assets and proper clearance of stocktaking differences in the accounting records ensures the reliability and completeness of the books of account and the correctness of the financial statements and the profit/loss. Stocktaking is also conducted to counteract irregularities in the management of company assets. 
If you have any questions about stocktaking, you are welcome to contact our experts.

[1] Accounting Act of 29 September 1994
– [1a] Articles 26, 27


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