How should stock discrepancies be handled during monthly stock reconciliation?

• A. Ignore and adjust later
• B. Immediately replace all stock
• C. Investigate differences; adjust records with proper approvals; document root cause; implement corrective actions; escalate if needed; exclude potential theft from routine adjustments
• D. Adjust records without approvals

Answer: (C)

Handling discrepancies found during monthly stock reconciliation requires a controlled, accountable process. When a difference is detected, investigate to determine the cause—whether it’s a data entry error, a mismatch in supplier receipts, damaged goods, or loss. Document the findings and adjust records only after proper approvals are obtained. Implement corrective actions to prevent recurrence, and escalate to management if needed, especially if theft or fraud is suspected. This approach keeps inventory records accurate, supports audit trails, and maintains controls over stock movements. Ignoring the discrepancy and adjusting later misses accountability; replacing all stock immediately skips verification and can misstate inventory value; adjusting without approvals bypasses governance and weakens internal controls. Emphasizing root-cause analysis and corrective steps ensures the issue is resolved and similar discrepancies are less likely to recur.