Field notes · 11 May 2026
When inventory counts still matter for a Taiwan manufacturer
Why physical observation remains central to year-end assurance for factories holding raw materials and work-in-progress.
Factories around Chu-nan often close the books with substantial raw materials, components, and unfinished goods. Ledger totals alone cannot prove those items exist in the form management claims.
What observation actually involves
We attend the count, test a sample of lines from floor to sheet and sheet to floor, and watch how cut-off is handled for goods received near year-end. The goal is not to recount the warehouse; it is to see whether the company’s own count procedures produce a reliable figure.
Common friction points
Night-shift production that continues during the count, consignment stock held for customers, and scrap bins that never enter the perpetual system. Each of these can move the inventory balance by more than materiality if left unchecked.
A practical tip for finance teams
Publish the count instructions a week early, freeze movements during the count window where operations allow, and keep a clear log of any production exceptions. Auditors spend less time chasing explanations when that log already exists.