To provide guidelines with regard to university inventories to ensure compliance with GASB, Office of the State Controller and university requirements.

Scope

Responsibilities

Departments meeting the scope of this policy shall conduct an annual physical count of the inventories on hand and report the value (as of June 30) to Internal Audit.  Departments shall perform this physical inventory and calculate the June 30 value, in accordance with instructions provided by Internal Audit.

Internal Audit will schedule the appropriate dates/deadlines, spot check the inventory during the counting process, and review calculations used to value the inventory.

Departments Previously Not Required to Perform Inventory Counts

Any department that meets the scope of this procedure but has not been requested to perform a physical inventory in previous years should contact the Director of Internal Audit by the end of the first week in May. Internal Audit will then include the department when scheduling appropriate dates/deadlines for performing the physical count.

To help ensure university compliance, Internal Audit will contact Vice Chancellors annually requesting them to identify any possible new areas that may have inventory meeting the annual inventory requirement.

Questions

Any questions on whether a department should prepare for, or be excluded from, a physical inventory should be directed to the Director of Internal Audit, who will resolve such questions with the Controller.

n addition, any questions concerning the performance of a physical count or related procedures should be directed to Internal Audit.

Inventory Valuation

The university utilizes the First-In, First-Out (FIFO) method for inventory purposes.  FIFO is an inventory cost flow whereby the first goods purchased are assumed to be the first goods sold so that the ending inventory consists of the most recently purchased goods. This is the method to be used when pricing the inventory items.  No other method should be utilized.

Computerized Inventory Systems

It is suggested that any inventory system purchased allow for a cost valuation method consistent with policy statement D. Assistance is available from Internal Audit to ensure that the systems under consideration allow for this valuation method. If the system chosen does not allow for inventory valuation per university policy, the department must determine how they will convert the system-generated inventory value at fiscal year-end.