Management summary for head office: one page, five items

After the count there is a record running to many pages, count sheets and a difference list with hundreds of lines. Head office usually reads only one of these: the summary. It decides whether queries follow or the matter is ticked off. A good management summary fits on one page, contains five items and can be understood without prior knowledge.

The five items

1. Frame data: site, method, cut-off time, counting period and teams deployed.
2. Scope: number of positions and areas counted, plus a note on anything that was not counted.
3. Differences in figures and value: number, total of surpluses and shortages, largest deviations.
4. Causes and clearing status: groups such as timing gap, wrong posting or suspected shrinkage, plus the number of open points.
5. Actions and next steps: who does what by when, and which approvals are still outstanding.

Everything else belongs in the appendices. For each item refer to the document that supports the figure: record, difference list, action list.

Item 2 includes an honest statement on coverage. If an area was not counted because it was inaccessible, say so here, together with the reason and whether a recount is planned. A known gap worries head office less than an unknown one.

Presenting differences clearly

The most common mistake is to state a single net balance. Surpluses and shortages cancel each other out in the total and hide what really happened. So always give three values: the total of the negative differences, the total of the positive differences and the gross deviation as the sum of both amounts.

An illustrative example: positive differences EUR 31,400, negative differences EUR 36,900, stock value according to the books EUR 2.4 million. The net balance is −EUR 5,500, around 0.2 per cent of stock value. The gross deviation is 31,400 + 36,900 = EUR 68,300, around 2.8 per cent.

Anyone who reports only the net balance names 0.2 per cent and gives the impression that the stock is almost exactly right. The gross deviation shows, by contrast, that substantial postings are needed in both directions and that the causes have to be cleared. How the differences are valued and posted is decided by accounting and the auditor. The summary only presents. Also name the five largest individual deviations with item, quantity and value. These are the points on which head office is most likely to ask questions.

Language, currency, form

• Clarify with head office in which language and in which currency it expects the summary.
• Convert amounts in so'm only with the rate and date stated.
• Write short sentences, use terms consistently and avoid local abbreviations.
• Refrain from judgements such as "good" or "bad". State figures and status.
• Stay with one page, even if it is hard.

The first sentence decides

Start with the key message and give the details only afterwards. An illustrative example: "The count is complete. The gross deviation is 2.8 per cent of stock value, 11 points are still open, and the clearing has dates attached." Whoever reads only this sentence knows where the warehouse stands and whether action is needed. The items that follow supply the evidence.

Agreeing before dispatch

Agree the draft beforehand with the warehouse management and accounting so that no figure comes as a surprise. Open points may stay open if status and date are given. Concealing unresolved points costs more trust than any difference. File the summary together with the record and the difference list so that figures and evidence stay together.

In short

One page with five items, honest figures and clear next steps saves queries. Together with the inventory record and the difference list, AuditMaster delivers a summary for management with the key result, the largest deviations and the next steps.