Eight Face Washes Missing: Deciding Before Adjusting the Books
The beauty section of a departmental store in Nagpur shows 120 units of a face wash in the system. The monthly physical count gives 112. The last full count was 25 days ago. Two staff handle the section across shifts and there is no shrinkage register. The shop has a back stock cupboard that is not locked. On two evenings the POS was down and bills were written manually in a book. During a promotion, 6 units were given as free samples on purchases above ₹999, and staff say the manager told them to give samples. Three tester bottles are open on the display shelf. The owner wants to know where the 8 units went before anyone adjusts the books, and wants a system so the next count does not produce the same argument.
1. List the plausible causes of the 8-unit gap and explain how you would verify each one before drawing a conclusion.
Read the worked answer
Treat the 8 units as unexplained, not as theft, until each cause is tested.
- Manual bills during the POS downtime. Reconcile the manual bill book against the system for those two evenings. Check serial numbers for missing pages and whether the face wash appears.
- Promotional samples (6 units). Check the promotion approval, the sample issue register and the stock movement. Six units plus three testers already come close to the gap, but only if the samples came from saleable stock and were recorded. Verify the manager's instruction in writing.
- Tester bottles (3). Confirm whether they were drawn from saleable stock and whether they were recorded as testers. Unrecorded testers look exactly like theft.
- Returns or exchanges not put back. Check the returns register and the shelf.
- Wrong SKU scanned. A similar face wash may have been billed under another code; check sales of look-alike SKUs.
- Pilferage. Review CCTV for the section and check whether the display is in a blind spot, especially with an unlocked back stock cupboard.
- Count error. Recount the shelf, back stock and storeroom before concluding anything.
Do not accuse staff before the checks. The pattern - samples, testers, manual bills - suggests documentation failure at least as much as theft.
2. Assume the investigation is complete. Explain how the adjustment should be recorded and why the paperwork matters.
Read the worked answer
Record the adjustment with a paper trail, not a quiet edit.
- Recount with two people present and sign the physical count sheet with date and time.
- Prepare a variance report: system 120, physical 112, variance 8, value, and the explanation supported by documents (sample register, tester record, manual bills).
- Split the variance by cause where evidence exists. Samples and testers must be counted accurately, not used as a general explanation for all 8 units.
- Obtain the owner's or manager's written approval for the adjustment.
- Post the adjustment in the stock register or software with a reason code, date and approver. Never back-date it to hide the delay.
- Retain the count sheet, variance report and approvals.
Why: without documents, the same 8 units can be written off twice, staff cannot be held accountable, and the tax and audit records will not match the physical stock. A named reason also tells you which control failed, so you fix the cause rather than the number.
3. Recommend prevention measures for the next count cycle, covering samples, testers, manual billing and access.
Read the worked answer
- Cycle counts: daily or weekly counts for the top 20 high-value SKUs, not only a monthly full count.
- Sample register: record who approved, how many, from which batch, and take a signature. Samples only against a written promotion instruction.
- Tester control: label testers, record them at issue, keep them at the display with a tester sticker, and never draw them silently from saleable stock.
- POS downtime procedure: pre-numbered manual bill book, one person responsible, all pages accounted for at closing, entries posted to the system the same day.
- Access: lock the back stock cupboard and restrict entry to the cosmetics section during non-trading hours; ensure CCTV coverage of the display.
- Returns and damages register with approval and a reason code.
- Weekly reconciliation of the system against the bin card, so the next count is a check rather than an investigation.
Reasoning: each measure attaches a document or a person to a movement of stock. The gap grew because stock moved without a record, so the fix is recording discipline, not another lecture to staff.