Stocktaking (inwentaryzacja) of assets is one of the fundamental obligations of every entity that keeps accounts in Poland. The process requires not only precise execution, but also proper documentation of all activities. Stocktaking documentation plays a key role in ensuring the reliability of financial statements and compliance with accounting law.
Stocktaking of most items (except, among others, cash assets, securities, work in progress and inventory expensed on the day of purchase – Article 26 section 3 point 1 of the Accounting Act) may start as early as 3 months before the end of the financial year, which means that entities whose financial year is the calendar year can start this work as early as 1 October. Such a schedule makes it possible to spread the stocktaking work over time and avoid concentrating all tasks at the end of the year.
Responsibility for carrying out stocktaking in the form of a physical count (spis z natury) lies with the head of the entity (kierownik jednostki) (Article 4 section 5 of the Accounting Act) and cannot be transferred to other persons. This also applies when certain accounting duties are entrusted to another person or an external business
Proper stocktaking documentation requires knowledge not only of the Accounting Act, but also of the position of the Accounting Standards Committee (Komitet Standardów Rachunkowości, KSR) on stocktaking by physical count. The position is not a legal provision, but it describes detailed procedures, document forms and the duties of each person involved in the stocktaking process.
Legal basis for stocktaking and documentation
The statutory basis for stocktaking comes from the Accounting Act, which obliges entities to periodically determine or verify, by stocktaking, the actual state of their assets and liabilities. An entity's accounting covers, among other things, these key activities, which aim to ensure the reliability of financial information.
Under Article 4 section 5 of the Accounting Act, the head of the entity is responsible for performing the accounting duties set out in the Act, including supervision. Most importantly, this provision expressly states that even when certain accounting duties are entrusted to another person or business, responsibility for carrying out stocktaking in the form of a physical count invariably remains with the head of the entity. How often fixed assets have to be counted is explained in our piece on the rules and deadlines for fixed asset stocktaking.
The basic date for a physical count of inventory is the last day of each financial year under Article 26 section 1 of the Accounting Act. The inventory balance for reporting purposes should be determined as at that day
The Act does, however, allow some flexibility regarding the dates of counting activities. Except for inventory not covered by ongoing accounting records, counting may take place within a time frame permitted by the Act. This frame covers 3 months before the last day of the financial year and 15 days after it, under Article 26 section 3 point 1 of the Act.
When a physical count is carried out before the last day of the financial year, the inventory balance determined in this way is adjusted for the receipts and issues that occurred between the count and the date as at which the inventory balance was determined from the accounting books. Receipts are a positive adjustment and issues a negative adjustment. Counting machinery, buildings and other fixed assets step by step is covered in our guide to carrying out fixed asset stocktaking.
When the count is carried out after the last day of the financial year, by the 15th day of the following financial year, the inventory balance is adjusted for the receipts and issues that occurred in the new financial year. Here, receipts are a negative adjustment and issues a positive adjustment, so that the result can be compared with the inventory balance in the accounting books.
Objectives and tasks of inventory stocktaking
Stocktaking of inventory by physical count serves several key objectives that are fundamental to the proper functioning of the entity's accounting system. The first and most important is to determine the actual balance of inventory both covered and not covered by ongoing accounting records (inventory not covered is inventory expensed on the day of purchase or production, whose balance is determined no later than the balance sheet date – Article 17 section 2 point 4 of the Act). This determines the correctness of the financial statements and the financial result.
Another important objective is to assess whether the actual inventory balances agree with the records and to reveal any differences between them. These differences can take the form of shortages, damage or surpluses, which require detailed explanation and proper accounting settlement.
All differences revealed during stocktaking between the actual balance and the balance shown in the accounting books must be explained and settled in the accounting books of the financial year in which the stocktaking date fell
The stocktaking process also includes explaining the causes of differences and settling them, including creating the basis for holding accountable the persons to whom inventory was entrusted. This is particularly important for employees' financial liability and for protecting the entity's assets.
Stocktaking also serves to assess the quality and economic usefulness of inventory. During counting, the counting teams can identify inventory that is damaged, expired or otherwise losing its usefulness.
Last but not least, stocktaking helps prevent irregularities in inventory management. Regular stocktaking has a preventive and disciplining effect, improving how the entity manages its resources.
The objectives of stocktaking are achieved through the following activities:
- Systematic quantitative measurement of all inventory items
- Assessment of the quality and technical condition of stored materials
- Comparison of actual balances with book balances
- Documentation of all discrepancies and irregularities
- Preparation of the basis for settling stocktaking differences
KSR position on stocktaking documentation
The technical and formal issues of stocktaking are described in detail in Resolution No. 5/2016 of the Accounting Standards Committee of 26 April 2016 on adopting the Committee's position on stocktaking by physical count of materials, goods, finished products and semi-finished products (Official Journal of the Minister of Finance of 2016, item 55). The document is a practical supplement to the statutory provisions.
The head of the entity's responsibility for stocktaking of inventory by physical count includes a number of key duties. These include appointing the stocktaking committee and its chair, issuing a stocktaking order specifying the subject and dates of the count, notifying the statutory auditor (biegły rewident) of the stocktaking dates if the entity's financial statements are subject to audit, and supervising the count and the settlement of its results.
The head of the entity may commission an external provider to carry out stocktaking of inventory by physical count (outsourcing). This does not, however, release them from responsibility, in particular from creating conditions that allow the count to be carried out and its results settled correctly
The KSR position allows a permanent stocktaking committee or a committee for a specific task to be appointed. The head of the entity appoints the chair of the committee and may also act as chair. In entities whose average annual employment does not exceed 10 people, the tasks of the stocktaking committee may be performed by one person acting as the count commissioner (komisarz spisowy).
The task of the stocktaking committee is to organise the stocktaking of inventory by physical count as a whole, carry it out, explain any stocktaking differences and submit to the head of the entity proposals on how to settle them. Counting may be performed by the stocktaking committee directly or by separately appointed counting teams.
Stocktaking order and instructions
The order on inventory stocktaking is issued by the head of the entity, and its content depends on whether the entity has a permanent stocktaking committee or one appointed for a specific task. Where the committee is appointed ad hoc, the order must specify the detailed organisational elements of the stocktaking process.
The order specifies the composition of the stocktaking committee, including its chair, the types of inventory covered by the count, the date as at which the count is carried out, i.e. the date for determining the actual balance, and the start and end dates of the count together with its settlement. It also obliges the responsible persons to be present during the count of the inventory entrusted to them.
Stocktaking instructions help organise the count and its course, making it possible to choose counting activities suited to the entity's specifics. They can be prepared as one comprehensive instruction or several instructions for different groups of participants
Stocktaking instructions can be divided into two basic sets. The first set is intended for members of the stocktaking committee and describes the committee's rules of operation, the appointment of counting teams and count controllers, their scope of responsibility, the division into counting areas, simplifications or special procedures adopted by the entity, a description of the stocktaking documentation, the rules for settling stocktaking differences and the way documents are stored.
The second set of instructions is intended for counting teams and often contains instructions describing how to carry out counting separately for particular types of inventory. These may be detailed guidelines for counting angle bars, rods, rails, sheet metal, glass panes, fabrics, boards, leather, bricks, concrete tiles and blocks, pipes, coal and coke, scrap and other bulk materials whose quantities are determined by estimated measurement.
| Type of instruction | Addressee | Main elements | Level of detail |
|---|---|---|---|
| Instruction for the committee | Members of the stocktaking committee | Rules of operation, division of areas, procedures | General organisation |
| Instruction for teams | Counting teams | Measurement techniques, types of inventory | Detailed procedures |
| Instruction for controllers | Count controllers | Verification methods, documentation | Control procedures |
Physical count process and documentation
A physical count consists of determining the quantity of inventory by measurement, assessing its quality and recording these findings on a count sheet (arkusz spisowy) or another data carrier that records the count results. The process requires a systematic approach and precise documentation of each stage.
The task of a counting team is to determine the quantity and quality of all inventory items in the assigned counting area. This is done by systematically measuring the quantity of individual items in an order corresponding to the sequence of storage locations. All measurement results, together with data identifying the counted items, are recorded on the count sheet.
Items already counted must be properly marked to prevent them from being counted again as the work continues. The marking system should be unambiguous and durable throughout the stocktaking
The counting team records the results of measurements of individual inventory items, including estimated measurements, on the count sheets on an ongoing basis. Counting is considered complete only once the actual balances of all inventory items subject to the count have been recorded on the count sheets, i.e. after counting in the last counting area has been completed.
Completed count sheets must be signed by all members of the counting team and by the person responsible for the items counted. The responsible person's signature means that they have no objections to the findings on the sheets. If they refuse to sign, the responsible person should explain the reasons for refusal as soon as possible. Once signed, no changes are made to the count sheets.
Multi-day counts require particular attention. If a count lasts more than one day, at the end of each day the item at which counting ended is marked on the count sheet. The counting team deposits the count sheets with the chair of the committee or a committee member designated by them. Counting areas where the count will continue the next day must be secured against unauthorised access.
Once counting in a given area is finally completed, the counting team must return to the chair of the stocktaking committee all used and unused count sheets, including incorrectly completed and cancelled ones, as well as other documents containing information on the course of the physical count.
Settling stocktaking results
Settling stocktaking results is a key stage of the whole process, requiring particular care and compliance with accounting law. Members of the counting teams pass on to the chair of the committee their observations on shortcomings revealed in inventory management and on inadequate protection of inventory against destruction or misappropriation.
The chair of the stocktaking committee reconciles the returned count sheets using a control list and checks that the count documents are complete and correctly filled in. This process involves checking all count sheets for compliance with procedures and completeness of documentation.
The conduct and results of stocktaking must be properly documented and linked to the entries in the accounting books in line with Article 27 of the Accounting Act. This documentation is the basis for settling stocktaking differences
Differences revealed during stocktaking between the actual balance and the balance shown in the accounting books must be explained and settled in the accounting books of the financial year in which the stocktaking date fell. The process of explaining differences should be detailed and documented.
Settling stocktaking differences can take various forms depending on the nature of the discrepancies revealed. Shortages may result from natural loss, theft, damage or recording errors. Surpluses may result from recording errors, incorrect acceptance of deliveries or other irregularities.
Basic steps in settling stocktaking results:
- Preparing a list of stocktaking differences
- Explaining the cause of each difference
- Establishing responsibility for the shortages revealed
- Making adjustments in the accounting books
- Documenting the whole settlement process
Responsibility of the head of the entity
The head of the entity's responsibility for stocktaking is non-transferable and cannot be passed to other persons, even when certain activities are entrusted to external providers. This concerns responsibility for stocktaking in the form of a physical count (Article 4 section 5 of the Accounting Act), which the KSR position also confirms.
The KSR resolution states that the head of the entity's duties include appointing the stocktaking committee and its chair, issuing the stocktaking order, supervising the count and the settlement of its results, and creating conditions that allow the count to be carried out and its results settled correctly.
The head of the entity cannot release themselves from responsibility for stocktaking even when it is outsourced to an external provider. They must ensure the conditions for carrying out the count and settling its results correctly
The head of the entity's supervision of stocktaking should cover all stages, from planning through execution to settling the results. This includes checking the competence of the people carrying out the stocktaking, monitoring compliance with procedures, monitoring the timeliness of tasks and assessing the quality of documentation.
The head of the entity is also responsible for providing appropriate technical and organisational conditions for stocktaking. This includes access to warehouses, securing inventory against movement during the count, making the necessary documentation available and ensuring the participation of the persons responsible for individual assets.
The head of the entity's responsibility covers the following areas:
- Organisation and supervision of the whole stocktaking process
- Appointment of the appropriate stocktaking bodies
- Ensuring compliance with the law and standards
- Settlement of stocktaking results in the accounting books
- Drawing conclusions and implementing corrective actions
Stocktaking documents and forms
Stocktaking documentation includes a range of different documents that must be prepared, completed and stored in line with legal requirements. The basic document is the count sheet, on which counting teams record the results of quantitative measurements and qualitative assessment of inventory.
Count sheets must contain all the information needed to clearly identify the inventory items counted. This includes the item's code, its location, the unit of measure, the quantity and any comments on its quality or technical condition.
All count sheets, both used and unused, incorrectly completed and cancelled, must be returned to the chair of the stocktaking committee. They form an integral part of the stocktaking documentation
Stocktaking documentation also includes the head of the entity's stocktaking order, instructions for the various groups of participants, minutes of the stocktaking committee's work, control lists of count sheets and documents settling stocktaking differences.
Pay particular attention to the control list of count sheets, which is used to account for all forms issued. It should contain the numbering of the sheets, information on the counting teams, the dates of the count and the persons responsible for signing the sheets.
Minutes of the stocktaking committee's work record the course of committee meetings, decisions taken, irregularities revealed and proposals for settling differences. These minutes are the basis for preparing the final stocktaking report.
Practical example: a manufacturing company carried out stocktaking of materials in three warehouse halls. The stocktaking committee divided the area into 12 counting areas, issued 150 count sheets and appointed 6 counting teams. All sheets were reconciled in the control list, and the stocktaking differences were documented in the committee's minutes.
Storing stocktaking documentation
Stocktaking documentation must be kept for at least 5 years, counting from the beginning of the year following the financial year to which it relates (Article 74 section 2 point 7 and section 3 of the Accounting Act). These documents belong – alongside the accounting books and accounting vouchers – to the records protected by the Act (Article 71 section 1) and must be secured against loss, destruction or unauthorised access. We record stocktaking results in the books of the clients we provide bookkeeping services for.
Stocktaking documentation should be stored in a way that allows easy access to the documents during an inspection or an audit of the financial statements by a statutory auditor. Documents are kept in their original form (Article 73 section 1); their content may be transferred to electronic data carriers (Article 73 section 2), provided their integrity and legibility are ensured throughout the storage period.
Stocktaking documentation must be stored in a set order, divided by reporting periods, in a way that allows it to be found easily (Article 73 section 1). It must be possible to find quickly the documents concerning a specific stocktaking and to link them to the entries in the accounting books
When documentation is stored electronically, appropriate technical and organisational safeguards are needed. This includes regular backups, access control and monitoring of data integrity.
The entity should develop procedures for storing stocktaking documentation, setting out how the archive is organised, the rules of access to documents, the procedures for making copies and what to do if documents are damaged or lost.
The most common mistakes in storing stocktaking documentation are:
- Lack of proper labelling and sorting of documents
- Insufficient protection against destruction
- Incorrect archiving of electronic documents
- Lack of procedures for access to documents
- Not keeping a register of stored documents
