Financial Year End Stocktaking

For those Malaysian companies involve in trading or manufacturing businesses, the inventories or stock are quite common that we can see from the financial report. The inventories or stock are categorised into three, raw materials, work in progress and finished goods.

When come to financial year end, no matter whether it is an enterprise or Sdn. Bhd. they are required to perform a financial year end stocktake to quantify the quantity and also the value of closing stock as at year end.

As per Income Tax Public Ruling 5/2000 (Revised), it is compulsory for a business to perform the stocktake to qualify the closing stock value. For the management, it should be a complete or 100% inventories count. After the counting, the physical quantity counted should be compare with the stock record (either in computer system or manual book), any difference noted should be adjusted to the income statement immediately.

Enterprise as there are no auditors involved, the stocktake will be performed by the management of the enterprise only. However, for Sdn. Bhd., the auditors have to attend the financial year end stocktake as per approved auditing standards in Malaysia. The auditors should observe and select samples on test checked basis to verify the quantity of the stock.

Please ensure the financial year end stocktaking is performed with proper documentation in order to avoid any tax audit risk.