No. FA 1.6 Page 1 of 6 Effective Date: 08/31/15

Transcription

1 TEXAS STATE TECHNICAL COLLEGE STATEWIDE OPERATING STANDARD No. FA 1.6 Page 1 of 6 Effective Date: 08/31/15 DIVISION: SUBJECT: Fiscal Affairs Taking of Consumable Inventories AUTHORITY: Minute Order #07-95 PROPOSED BY: TITLE: RECOMMENDED BY: TITLE: APPROVED BY: Original Signed by Jonathan Hoekstra Vice Chancellor & Chief Financial Officer Original Signed by Jonathan Hoekstra Vice Chancellor & Chief Financial Officer Original Signed by Mike Reeser Date: 08/31/15 Date: 08/31/15 TITLE: Chancellor Date: 08/31/15 STATUS: Approved by VCs 07/28/15 HISTORICAL STATUS: Reviewed/Revised 06/2015 Approved by BOR 01/24/95 Revised 10/07/94 MC File #FA-JTP dated 07/17/80 MC File #FA-06-JTP-8/9 dated 09/21/78 MC File #FA-45-JTP-8/8 dated 12/13/77 POLICY It is the policy of Texas State Technical College to describe and maintain proper policies and procedures for the purpose of inventory control and maintenance. The use of inventory policies and procedures will aid in providing reliable information for reporting purposes and an organized method of maintaining merchandise on hand. PERTINENT INFORMATION Internal control of consumable inventory is extremely important. Accurate physical taking of inventory reduces the possibility of unauthorized use of consumable inventory. Also, an accurate physical inventory is necessary for an accurate financial report.

2 DELEGATION OF AUTHORITY The Chief Financial Officer or designee is assigned the responsibility for defining policies and procedures necessary for adequate control of inventories. The Chief Financial Officer or designee is responsible for implementation of these policies and procedures and assessing the overall effectiveness of the inventory and related activities at the respective campuses. OPERATING REQUIREMENTS Inventories will be taken as close to August 31 as possible. Realizing that all inventories cannot be taken at one time, inventory counts may be made prior to August 31 provided adjustments for sales or receipt of goods subsequent to the inventory count are made. Special attention to inventory items which are payables should be given to insure that such items are included in inventory and as payables to prevent distortion of accounts. Those responsible for accounts that have inventories on hand at August 31 must conduct a physical inventory and submit the inventory to the Chief Financial Officer or designee. Common accounts that most often have inventory balances at August 31 are Building Maintenance, Custodial Services, Grounds Maintenance, Golf Course, Print Shop, Food Service, and Bookstore.. Each Campus is responsible for seeing that all inventories have been received and if not received, the reason therefor. They should also see that the inventory forms are filled out correctly and that extensions and footings agree with the balances reported. The designated campus executive is responsible for seeing that the inventory has been submitted to the Accounting and Reporting designee no later than the specific deadline for reporting requirements. The official inventory forms that should be used are generated by each department using their inventory system. For nomenclature, a description of the item should be given instead of an identification or perpetual inventory card number. Units should reflect the actual cost of the merchandise using the First-In-First Out Inventory Valuation method instead of an estimation. The supervisor/steward of the department should verify that the inventory figure is correct and that the physical inventory was properly taken. Listed below is a detailed guideline for the Physical Taking of Inventories: PLANNING PHASE 1. Review TSTC Inventory Policies and Procedures. 2. Establish date inventory is to be physically taken and notify appropriate personnel of inventory dates. 3. A layout or diagram should be prepared including all fixtures, displays, and racks to be inventoried including storage rooms as well. 4. Each fixture should be assigned an identifying number.

3 5. Determine number of personnel that will be needed to conduct physical inventory and make arrangements to secure additional help from other departments if necessary. 6. Arrange inventory in a neat and orderly manner where practical. Like items should be grouped together and arranged so that they can be easily counted. 7. Inventory count sheets should be numbered consecutively before inventory is taken. 8. Assign the number of inventory count sheets needed to each fixture. List the fixture number that the sheet is assigned to on the inventory control sheet. 9. Place the inventory sheets face up on the upper left of the fixture to which they are assigned. 10. Prior to the actual taking of the inventory, all personnel involved should be given specific instructions as to how the count will be conducted and how the inventory should be listed on the count sheets. The following items should be included in the instructions: a. Review Inventory count sheet Fixture Number - Fixture Count Sheet is assigned. Recorded by - Person doing listing of inventory on form. Called by - Person calling description and quantity of each item. Verified by - Person doing second count of inventory items. Account Number - Inventory Account Number. Cost by - Person determining actual cost by FIFO Method. Extension by - Person multiplying number of units by unit cost. Footed by - Person adding Value Column to obtain page total. Nomenclature - An adequate description of the item being inventoried. Number of Units - Actual Count. Unit Cost - Actual cost determined by FIFO Inventory Method. Cost Extension - Dollar value of Number of Units multiplied by unit cost. Retail Cost - The selling price b. Form should be completed legibly in ink.

4 c. In case of error, a line should be drawn through the incorrect data and initialed by person making correction. d. To list the inventory, begin top left and list in the same order as the items are on the shelf. List from left to right, top to bottom. e. It should be impressed upon each person to correctly count and accurately list all items. f. Inventory Count teams should be assigned to specific areas. TAKING INVENTORY 1. Two person teams work well. One person functions as caller and the other writer. For example, the caller calls "Screwdriver, Snap-on #2607". While the writer is recording this, the caller is counting the screwdrivers. When counted the caller calls "19 each" and then the writer records the quantity. 2. If additional inventory sheets are needed to complete a fixture, obtain additional prenumbered sheets and record the sheet numbers on the inventory sheet control list. 3. When the inventory count of each fixture is completed, the inventory sheets are placed face down in the upper left of the fixture to which they are assigned. 4. A second inventory count should be conducted by a verifier to determine that all items were correctly counted and accurately listed. 5. After inventory is complete and while inventory sheets are still in place the person in charge reviews to assure all fixtures are inventoried, descriptions are adequate, etc. 6. If auditors are observing inventory, this is an excellent time for test check. 7. The inventory sheets are then collected and placed in numerical order, including unused sheets, to assure all pre-numbered sheets are accounted for. 8. All inventory sheets should be X'd out as to unused lines or portions. VALUATIONS AND TOTALS 1. The unit cost for each item is determined from invoice or purchase order number using the FIFO Method and listed on the inventory count sheet. If Purchase Order Number and Cost Code were included on merchandise price tag, this information could be obtained while listing the inventory. 2. Number of Units should then be multiplied by the unit cost to determine value.

5 3. The value column should then be added and a total entered. 4. All individual page numbers and totals should then be listed on the Recapitulation of Inventory Sheet, then the recap sheet is totaled and checked. 5. The Identification and Approval Sheet should be completed. 6. The completed inventory should be forwarded to the Accounting and Reporting designee. 7. The campus designee is responsible for seeing that the inventory has been submitted to the Accounting and Reporting designee no later than the set deadline for reporting requirements. ADDITIONAL INFORMATION 1. Perpetual inventory balances at August 31 may be used instead of an actual physical count at August 31 in some cases. A test check of perpetual records and an actual count of certain items should be made to determine the reliability of the perpetual records. If this test check indicates the records are reliable and if all items were physically inventoried at least once during the fiscal year with appropriate adjustments made to the perpetual records then the perpetual inventory balances may be used. However, a physical count should be made of all bulk storage inventories such as gasoline, oil, etc. With the perpetual system, it is also imperative that inventory adjustments have been made throughout the year on the perpetual inventory stock cards. 2. All merchandise for resale received on or before August 31, 20XX must be included in the actual physical count. If this merchandise has been received after the actual physical count, then inventory adjustments should be made to the count sheets. 3. The College will account for inventory using the First-In, First-Out (FIFO) methodology for determining inventory on hand. 4. The Campus departments with consumables inventory prepare a list of merchandise payables as of August 31, 20XX. The payables are for goods received on or prior to August 31 that check has not been issued for as of August 31. Inventory department must coordinate with Accounting & Reporting designee to determine that the proper merchandise payables are accrued as of fiscal year end. 5. Merchandise returned to the vendor for credit that is in transit should be listed in the inventory on a separate count sheet titled "Returned Merchandise in Transit-Credit Memo Not Received". This sheet should be added to the inventory dollar figure and included under Total Inventory Value. 6. Unused Credit Memos should be listed on a separate sheet as an additional attachment to the inventory package. This sheet should contain the following information:

6 Credit Memo Number and Date Vendor Name Credit Dollar Amount The total Credit Memo dollar amount should be recorded under "Total Credit Memos". It is recommended that all credit memos be used before inventory date if possible. If this is not possible, letters should be sent to all vendors with credit memos requesting they issue a check for the Credit Memo amount. 7. By keeping like items together, grouping similar items together, and keeping inventory items orderly and easily accessible is beneficial for general inventory control as well as taking physical inventory. Reorder quantities are more easily determined, items are likely to be available when needed and easily located without keeping excessive inventory on hand. PERFORMANCE STANDARDS 1. Accuracy and reliability of yearend physical inventory 2. Physical inventory is completed and submitted. Accounting and Reporting Designee by required deadline 3. Number of audit findings relating yearend physical inventory.