Articles on: How To Guides

POS Inventory Audit Guide

Overview


The Inventory Audit feature allows businesses to perform physical inventory counts and reconcile them with system records. This helps identify discrepancies, calculate shrinkage costs, and maintain accurate inventory levels.



Key Concepts


Audit Process


An inventory audit involves three main steps:


  1. Physical Count: Counting actual inventory on hand
  2. Comparison: Comparing physical counts with system records
  3. Reconciliation: Updating system records to match physical reality


Shrinkage


Shrinkage is the loss of inventory due to:


  • Theft
  • Damage
  • Administrative errors
  • Miscounting


The system calculates shrinkage value by multiplying discrepancies by product prices.


Discrepancies


A discrepancy occurs when the physical count doesn't match the system quantity. Discrepancies are color-coded:


  • Red/Negative: Physical count is less than system count (loss)
  • Green/Positive: Physical count is more than system count (gain)
  • Zero: Counts match perfectly



Starting an Audit


Navigate to Audit Tab


  1. Go to POS > Inventory Management
  2. Click the Audit tab in the navigation


View Current Inventory


The audit table displays:


  • Product Name: Name of the inventory item
  • SKU: Stock Keeping Unit identifier
  • Category: Product category
  • Price: Current selling price
  • System Qty: Quantity according to system records
  • Counted: Field to enter your physical count (initially empty)
  • Discrepancy: Difference between counted and system quantity
  • Shrinkage Value: Financial impact of the discrepancy



Performing the Physical Count


Counting Methods


Method 1: Sequential Counting


  1. Print the inventory list using the Print Report button
  2. Walk through your inventory systematically
  3. Count each item and record on the printed sheet
  4. Enter counts into the system afterward


Method 2: Real-Time Entry


  1. Use a laptop or tablet in the inventory area
  2. Count items and immediately enter into the Counted field
  3. Move through inventory in order displayed on screen


Method 3: SKU Scanner Method


  1. Use the search/filter to find products by SKU
  2. Scan barcode and enter count for that item
  3. Repeat for all items


Entering Counts


  1. Locate the product row in the audit table
  2. Click in the Counted field
  3. Enter the physical quantity counted
  4. The system automatically calculates:


  • Discrepancy = Counted - System Qty
  • Shrinkage Value = Discrepancy × Price
  1. Press Enter or Tab to move to the next field


Partial Audits


You don't have to count everything at once:


  • Enter counts for items as you go
  • Uncounted items remain empty
  • You can save your progress and continue later
  • Only items with entered counts are included in reconciliation



Reviewing Discrepancies


Audit Analysis Button


After entering counts, click Perform Audit to analyze results.


Discrepancies Table


The system displays:


  • All discrepancies (items where Counted ≠ System Qty)
  • Sorted by shrinkage value (highest losses first)
  • Total shrinkage cost summary


Understanding the Data


High-Value Discrepancies


  • Review these carefully for counting errors
  • May indicate theft or damage issues
  • Consider recounting before reconciliation


Positive Discrepancies


  • May indicate items were:


  • Received but not properly logged
  • Returned but not processed
  • Miscounted in previous audit


Zero Discrepancies


  • Items counted correctly
  • Good inventory management
  • Not shown in discrepancy report



Reconciling Inventory


What Reconciliation Does


Reconciliation updates your system inventory to match physical counts:


  • System quantities are overwritten with counted amounts
  • Transaction history is preserved
  • Audit timestamp is recorded


Before Reconciling


⚠️ Important Checks:


  1. Review all discrepancies carefully
  2. Recount high-value discrepancies
  3. Verify no data entry errors
  4. Confirm you have management approval for large adjustments
  5. Export audit results for records (see below)


Reconciliation Steps


  1. Click Reconcile Inventory button
  2. Review the confirmation dialog:


  • Number of items to update
  • Total shrinkage cost
  • Warning that this action updates live inventory
  1. Click Confirm to proceed
  2. System updates all counted items to match physical counts
  3. Success message confirms completion
  4. Inventory quantities now reflect actual stock


After Reconciliation


  • Audit timestamp is set
  • Discrepancies table is cleared
  • Updated quantities appear in main inventory
  • Sales and reservations use new quantities
  • Audit results are saved for export



Exporting Audit Results


Export Options


The Export dropdown provides two formats:


1. Export Full Inventory


  • Content: All inventory items with current quantities
  • Columns: Name, SKU, Category, Price, Quantity, GL Code
  • Use Cases:


  • Pre-audit inventory snapshot
  • Sharing with accounting
  • Backup before major changes


2. Export with Counts


  • Content: Audit results with before/after comparison
  • Columns: Name, SKU, System Qty, Counted, Discrepancy, Price, Shrinkage Value
  • Use Cases:


  • Audit documentation
  • Management reports
  • Accounting adjustments
  • Identifying theft patterns


Export Process


  1. Click the Export button (download icon)
  2. Select export type from dropdown menu
  3. File downloads as CSV format
  4. Open in Excel, Google Sheets, or accounting software


File Naming


Export files are automatically named:


  • inventory_export_YYYY-MM-DD.csv (full inventory)
  • inventory_audit_YYYY-MM-DD.csv (with counts)



Best Practices


Frequency


Recommended Audit Schedule:


  • High-value items: Monthly or weekly
  • Regular inventory: Quarterly
  • Complete audit: Annually or semi-annually
  • After major events: End of season, post-sale, after incidents


Preparation


  1. Schedule During Slow Times


  • Before opening or after closing
  • Off-peak days/seasons
  • When fewer transactions occur
  1. Organize Inventory First


  • Group similar items
  • Clean and straighten displays
  • Remove damaged/unsellable items
  • Consolidate scattered inventory
  1. Assign Responsibilities


  • Divide inventory among staff
  • Use two-person teams for accuracy
  • Have supervisor review high-value items


During the Audit


  1. Count Systematically


  • Follow consistent pattern (left-to-right, top-to-bottom)
  • Don't skip items
  • Mark areas as completed
  1. Double-Check


  • Recount items with high values
  • Verify unusual discrepancies
  • Have second person verify contested counts
  1. Document Issues


  • Note damaged items separately
  • Record location of items
  • Take photos of problem areas


After the Audit


  1. Analyze Patterns


  • Which items consistently have discrepancies?
  • Are losses occurring in specific categories?
  • Time patterns (season, day of week)?
  1. Investigate Significant Losses


  • Review security footage if available
  • Interview staff about missing items
  • Check for administrative errors
  1. Implement Improvements


  • Increase security for high-loss items
  • Improve POS procedures
  • Adjust reorder points based on actual usage
  1. Financial Reporting


  • Export audit results for accounting
  • Update inventory asset values
  • Record shrinkage expenses



Troubleshooting


Issue: Counted Field Won't Accept Input


Possible Causes:


  1. Browser permissions issue
  2. Field is disabled


Solution:


  1. Refresh the page
  2. Ensure you're on the Audit tab
  3. Check that you have proper permissions
  4. Try a different browser



Issue: Discrepancy Calculation Seems Wrong


Check:


  1. Did you enter the count correctly?
  2. Is the system quantity accurate before starting?
  3. Has inventory changed during the audit (sales, returns)?


Solution:


  1. Verify your entered count
  2. Check recent transactions for that item
  3. If sales occurred during audit, recount that item
  4. Consider pausing POS sales during critical audits



Issue: Unable to Reconcile Inventory


Possible Causes:


  1. No counts entered
  2. Insufficient permissions
  3. Network connectivity issue


Solution:


  1. Ensure at least one item has a count entered
  2. Contact admin to verify permissions
  3. Check internet connection
  4. Try again after refreshing



Issue: Export File is Empty


Possible Causes:


  1. No inventory in system
  2. No counts entered (for "Export with Counts")
  3. Browser blocking download


Solution:


  1. Verify inventory exists in Inventory tab
  2. Perform audit first (for counts export)
  3. Check browser download settings
  4. Try different export format



Issue: Large Discrepancy But Count is Correct


Investigation Steps:


  1. Review transaction history for that item
  2. Check if item was recently received but not logged
  3. Verify no duplicate SKUs in system
  4. Look for recent returns not processed
  5. Check if units of measure changed (boxes vs. individual)


Resolution:


  • Document the reason for discrepancy
  • Proceed with reconciliation if count is verified
  • Update procedures to prevent recurrence



Issue: Audit in Progress But Need to Stop


Mid-Audit Pause:


  1. Your entered counts are not saved automatically
  2. Export current view to save progress externally
  3. Take screenshot of entered counts
  4. Or leave browser tab open and return later
  5. Do not refresh or navigate away


Recommendation:


  • Complete audit sections systematically
  • Do category-by-category if needed
  • Use export function to save snapshots



Audit Report Interpretation


Key Metrics


Total Shrinkage Cost


  • Sum of all negative discrepancies
  • Represents financial loss
  • Compare to sales percentage (industry standard: 1-2%)


Accuracy Rate


  • Percentage of items with zero discrepancy
  • Goal: 95%+ accuracy
  • Track improvement over time


Discrepancy Patterns


  • Consistently affected categories
  • Seasonal variations
  • Day-of-week patterns


Using Audit Data


For Operations:


  • Identify training needs
  • Improve product placement
  • Enhance security measures


For Finance:


  • Adjust inventory asset values
  • Record COGS adjustments
  • Budget for shrinkage


For Purchasing:


  • Verify vendor counts
  • Adjust par levels
  • Improve receiving procedures



Kiosk-Level Audits


If you're using kiosk-level inventory tracking:


Auditing Individual Kiosks


  1. Navigate to Inventory Management
  2. Select specific kiosk from the kiosk dropdown
  3. Go to Audit tab
  4. Only that kiosk's inventory will appear
  5. Perform count for that location
  6. Reconcile affects only that kiosk


Auditing All Locations


  1. Select "All Location Inventory" from kiosk dropdown
  2. Audit shows combined totals across all kiosks
  3. Reconciliation updates location warehouse inventory
  4. Individual kiosk counts remain separate


Best Practice for Kiosks


  • Audit each kiosk separately for accuracy
  • Schedule different kiosks on different days
  • Reconcile individual kiosks, not combined totals
  • Track shrinkage by location to identify problem areas



Frequently Asked Questions


Can I edit counts after reconciliation?


No. Reconciliation is permanent. To make adjustments after reconciliation, perform a new audit or manually adjust inventory in the Inventory tab.


What happens to items I don't count?


Uncounted items (empty "Counted" field) are not affected by reconciliation. Their system quantities remain unchanged.


Can multiple people count at the same time?


The system doesn't prevent this, but it's not recommended. Coordinate to avoid duplicate entries and confusion. Consider dividing inventory into sections.


How do I handle partial units (opened packages)?


Count partial units as fractional quantities if your system supports decimals, or establish a policy (e.g., opened = 0.5 units).


Should I count reserved/held inventory?


Yes. Count all physical inventory on hand, regardless of reservations. Reservations are tracked separately from quantities.


What if I discover damaged items during audit?


  1. Count damaged items separately
  2. Enter total physical count (including damaged)
  3. After audit, use proper channels to write off damaged inventory
  4. Document damage for insurance/accounting


How long should an audit take?


Depends on inventory size:


  • Small inventory (<100 items): 1-2 hours
  • Medium inventory (100-500 items): 3-4 hours
  • Large inventory (500+ items): Full day or multiple sessions


Can I undo a reconciliation?


No. Reconciliation permanently updates quantities. Export audit results before reconciling so you have a record of previous quantities.



Appendix: Sample Audit Workflow


Complete Audit Example


Pre-Audit (Week Before):


  1. Export full inventory for baseline
  2. Schedule audit for Tuesday morning (slow day)
  3. Assign staff: Alex (counts), Jamie (enters data), Manager (reviews)
  4. Prepare count sheets and clipboards


Audit Day:


  1. 8:00 AM - Begin before store opens
  2. 8:15 AM - Alex starts counting from Aisle 1
  3. 8:20 AM - Jamie enters counts as Alex calls them out
  4. 10:30 AM - Break, review progress (60% complete)
  5. 10:45 AM - Resume counting
  6. 12:30 PM - Counting complete
  7. 12:45 PM - Manager reviews high-value discrepancies
  8. 1:00 PM - Recount 5 items with large discrepancies
  9. 1:15 PM - Export audit results with counts
  10. 1:20 PM - Click "Reconcile Inventory"
  11. 1:25 PM - Verify updated quantities in Inventory tab


Post-Audit (Same Week):


  1. Email audit results to accounting
  2. Meet with staff to discuss discrepancy patterns
  3. Implement improved procedures for problem categories
  4. Schedule next audit


Total Time: ~5.5 hours for ~300 items

​Result: 4.2% shrinkage identified and reconciled

Updated on: 06/01/2026

Was this article helpful?

Share your feedback

Cancel

Thank you!