How should inventory discrepancies be handled?

• A. Investigate, reconcile, and update records; implement controls to prevent recurrence.
• B. Ignore minor discrepancies.
• C. Fire the person responsible.
• D. File a report only if the discrepancy exceeds a threshold.

Answer: (A)

Discrepancies in inventory must be treated as issues to investigate, reconcile, and correct in records, with preventive controls added. When a variance is found, conduct a thorough check of counts, receipts, and shipments to determine where the mismatch came from. Reconcile by adjusting the inventory records to match the physical count and document the reason for the variance. Then implement controls to prevent recurrence—such as stronger receiving procedures, proper separation of duties, regular cycle counts, and training—to reduce future discrepancies and keep accurate records for compliance. Ignoring small differences or punishing individuals without addressing the process would miss the underlying causes and fail to maintain auditable, accurate inventory.