Stock and finance control

Inventory write-off approval checklist

A stock write-off can correct the ledger while the goods remain sellable, recoverable, in another location or vulnerable during disposal. Approval needs one chain from identified inventory and valuation to physical disposition and the final system entry.

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By MINJI Wholesale DeskUpdated August 9, 2026

Direct answer

The short version

Approve an inventory write-off by first distinguishing physical quantity adjustment, accounting write-down, full write-off and physical disposal. Identify the legal owner, item, lot or serial where required, location, inventory status, quantity, unit, acquisition or production reference and carrying-value source. Prove the reason through count records, damage or expiry evidence, quality disposition, obsolescence review, loss investigation, return outcome or other supported facts. Do not assume aged stock has zero value or that a missing item is disposed. Assess usable quantity, expected recovery, salvage, insurance, supplier or carrier claim, return, rework, donation, sale and disposal options under applicable policy. Where accounting relevance exists, qualified finance review should determine measurement and period; IAS 2 addresses inventory cost and write-down to net realisable value but does not create one universal operational approval workflow. Apply delegated authority and separation between requester, custodian, approver and person executing disposition when risk requires it. Protect the stock in a named status and location while the decision is pending. Record the approved quantity and value, account or reason code, tax or claim reference where applicable and effective date. Execute physical disposition only through the authorized route, retaining item-level or batch-level evidence proportionate to risk. Update inventory and finance systems with linked transaction IDs, then reconcile physical quantity, stock ledger, general ledger, recovery and disposal confirmation. Close only when residual goods and value are resolved and no written-off stock can quietly return to available inventory.

Use this before requesting a quotation

Control the decision from stock evidence to final financial and physical outcome

Separate write-down, write-off and disposal

State whether the request concerns an inventory quantity correction, partial value write-down, full carrying-value write-off, physical destruction or transfer to another disposition channel. These actions can occur together but are not interchangeable. Record policy basis, accounting period, reason and systems affected. A write-down can leave goods physically present; disposal can occur after value was reduced earlier; a missing-item investigation can lead to an adjustment without any disposal event. Avoid generic scrap statuses that mix damage, expiry, obsolescence, theft, sample use and administrative error. Assign a distinct reason so finance, warehouse, quality, claims and security teams understand the decision they own.

Prove identity, ownership and condition

List item, description, SKU, lot, batch or serial where required, owner, supplier or consignment status, facility, location, inventory status, quantity and unit. Attach the count, photographs where authorized, inspection result, expiry or shelf-life record, damage report, return record or investigation reference that supports the condition. Confirm the goods are not customer-owned, supplier-owned consignment, bonded, under claim, reserved, quarantined for another decision or already transferred. Check units of measure and package hierarchy. GAO findings on write-off and disposal controls emphasize item-level identifiers and reconciliation; use proportionate traceability so an approved form cannot be reused for different stock.

Assess carrying value and recoveries

Obtain the carrying quantity and value from the controlled finance source, including cost method and valuation date. Separate original purchase cost, allocated freight or other inventory cost, prior write-down, current carrying value and proposed adjustment. Qualified finance review determines accounting treatment. IAS 2 states that inventories are measured at the lower of cost and net realisable value and addresses recognition of write-downs and losses; apply it only when relevant to the entity's reporting framework. Estimate recovery from sale, salvage, rework, supplier return, claim, insurance, recycling credit or other supported route. Do not net an expected recovery against the write-off without a traceable policy and transaction. Record uncertainty instead of inventing a nominal value.

Apply authority and protect pending stock

Define approval thresholds by quantity, value, reason, product risk and disposition type. Record requester, warehouse custodian, quality or security review, finance reviewer and final approver. Prevent the same person from inventing the loss, approving it and taking custody of the goods where separation is required. Place pending stock in a named restricted status and location with access control. Freeze related movements or record any emergency move. High-value, regulated, data-bearing, hazardous, branded or safety-sensitive goods may need additional review and a specific disposal provider. Approval should expire if the stock, quantity, condition or valuation changes materially before execution. Bulk approvals need an attached item population and control total, not a vague category amount.

Execute the authorized physical disposition

Choose one approved outcome per quantity: retain, rework, return to supplier, sell as downgraded stock, recycle, donate where permitted, destroy or transfer for disposal. Record release from restricted location, handler, vehicle or provider where applicable, date, quantity and custody evidence. For destruction, define the required witness or certificate under policy without claiming that a certificate alone proves every item was destroyed. For disposal shipments, reconcile what warehouse staff released with what the receiving facility recorded. GAO has reported risks when excess property shipped to disposal was not properly controlled; maintain visibility through the handoff. Protect personal data, batteries, chemicals and other sensitive contents through qualified procedures.

Post linked inventory and finance entries

Record inventory adjustment ID, financial document, account and reason code, quantity, unit, value, currency, posting date and approval reference. Link prior write-downs so the same value is not expensed twice. Keep physical removal date and accounting date separate where they differ. Reconcile subledger to general ledger according to the applicable close process. Record recoveries, claims or credits under their own transaction and cross-reference them. Prevent a written-off lot or serial from returning to available status through a generic reversal. A reversal needs reason, authority and proof that the underlying facts changed or an error occurred. Test that reporting shows both gross write-off and recovery rather than only a net figure that hides recurring losses.

Reconcile residuals and prevent recurrence

Bridge requested, approved, executed, posted, recovered and residual quantity and value. Physically inspect the restricted location after disposition and investigate any remainder. Confirm item-level disposal or successor status, inventory balance, financial posting and claim status. Keep open cases visible when recovery or provider confirmation is pending. Analyze write-offs by reason, product, supplier, site, location, buyer, age, handler and root cause. Separate preventable damage, forecasting error, expiry, theft, master-data issue, receipt error and legitimate commercial obsolescence. Set corrective actions for storage, rotation, packaging, access, forecasting, supplier terms or count control. Close only when the physical and financial traces agree and every approved item has a final outcome.

Reusable buyer brief

Inventory write-off approval record

Request ID, entity/site, policy, reason and accounting period:
Action type: adjustment, write-down, write-off and/or disposal:
Owner, item, lot/serial, location, status, quantity and unit:
Condition, count, inspection, loss or obsolescence evidence:
Cost method, carrying value, prior write-down and valuation date:
Recovery, return, claim, salvage, rework or sale assessment:
Pending-stock location, access control and movement freeze:
Requester, custodian, reviewers, approver and authority level:
Approved quantity/value, account, reason code and effective date:
Disposition route, handler/provider, custody and evidence:
Inventory transaction, financial posting, recovery and reversal:
Residual quantity/value, root cause, action and closure:

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Before you send the request

Questions buyers often ask

What is the difference between an inventory write-down and write-off

A write-down reduces carrying value, while a write-off removes the remaining carrying value. Physical stock and disposal still require separate control.

Does obsolete inventory automatically have zero value

No. Confirm condition, demand, recovery options and qualified valuation before deciding the appropriate accounting and disposition treatment.

What evidence should support a stock write-off

Use identified stock, count or inspection evidence, ownership, condition, carrying-value source, recovery assessment, authority and final disposition records.

Can written-off inventory remain in the warehouse

It can remain physically pending disposition, but it should be protected in a controlled status and location and reconciled until its final outcome.

Keep the request specific

A financial write-off does not prove physical disposal

Accounting, tax, environmental, hazardous-material, privacy, donation, consumer-safety and destruction rules vary. Use qualified finance, legal, safety, security and environmental review. IAS 2 applies only within its scope and does not replace local accounting judgment. Never publish sensitive loss, serial, route or disposal details, and never dispose of goods merely because a draft request exists.

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Editorial method

How this guide was prepared

MINJI keeps four linked but separate records: physical stock evidence, valuation and recovery, delegated approval, and final disposition/posting. Closure requires the item population and carrying value to reconcile in both warehouse and finance systems.

IFRS Foundation — IAS 2 InventoriesPrimary standard overview for inventory cost, lower-of-cost-and-net-realisable-value measurement and recognition of write-downs and losses.
U.S. GAO — Property shipped to disposal was not properly controlledPrimary oversight report on visibility, discrepancy investigation and controls over inventory moving to disposal.
U.S. GAO — Inventory write-off identification controlPrimary oversight finding supporting item-level serial identification on disposal or write-off records.

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