Glossary
Audit & Controls

Inventory Count

By: Alec Hollingsworth
Updated:  
June 16, 2025

DEFINITION:

An inventory count is the physical verification and reconciliation of stock items with accounting records to ensure accuracy and prevent loss.
An Inventory Count is the process of physically verifying the quantity and condition of items held in stock by an organization. This procedure involves counting each item or group of items and comparing the results to inventory records. Regular counts help ensure that financial statements accurately reflect inventory holdings and prevent losses due to theft, misplacement, or spoilage. Inventory counts can be performed periodically (such as annually or quarterly) or continuously through cycle counting. Effective inventory counts require proper documentation and reconciliation with accounting systems to maintain internal controls and compliance with audit requirements.

Key Takeaways

  • Verifies actual stock against records
  • Prevents loss, theft, or misplacement of items
  • Supports accurate reporting and audit compliance
  • Can be periodic or ongoing for better tracking

Why It Matters

Inventory counts safeguard assets and ensure accurate financial reporting.

Real World Example

A food bank receives regular donations of canned goods and other items. To ensure their records are correct and to prepare for their annual audit, the staff organizes a full inventory count. Volunteers count every item in the warehouse, compare the figures to what's recorded in their Aplos accounting system, and note any discrepancies. They discover that some items were misplaced and a few expired products need to be discarded. By updating their records after the count, the food bank can present accurate inventory figures in their financial statements and demonstrate strong internal controls to auditors and donors.

How Aplos Helps

In Aplos, you can track and reconcile inventory as part of your nonprofit's fund accounting. Accurate inventory counts help ensure your records in Aplos match physical stock, supporting internal controls and audit readiness. This is vital for organizations that manage donated goods, resale items, or supplies.
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Frequently Asked Questions

Why is an inventory count important for nonprofits?

Inventory counts help nonprofits prevent loss, ensure accurate records, and comply with audit requirements, especially when managing donated or purchased goods.

How often should inventory counts be performed?

The frequency depends on organizational needs, but many nonprofits perform annual counts, while others use ongoing cycle counts for better accuracy.

How does Aplos support inventory counts?

Aplos allows you to record and track inventory, making it easier to reconcile physical counts with your accounting records and maintain strong internal controls.

Related Terms

IRS Form 990
Statement of Financial Position
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Role‑Based Access
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Bank Feed

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