Controller

Annual Physical Inventory Procedures

A physical count of all inventories should be made annually with an effective date of June 30, XXXX.

Operations should be suspended or significantly reduced. Counts made prior to the close of business June 30 should be adjusted for purchases, uses, and sales during and after the count. All merchandise must be counted, regardless of the payment date.

Printed inventory should give location of inventory; person responsible; method of valuation; and at least the minimum detail of item description, count, unit cost, extended cost, and grand total of all extensions.

Identify inventory held for others (Ex. consigned) and/or held by others (Ex. out on consignment). Inventory held for others should be counted but excluded from the inventory valuation.

Identify inventory returned for credit for which no credit memo has been received.

If applicable, identify any damaged or obsolete inventory not previously adjusted in your financial records. Obsolete items will be reported, removed for surplus sale, and excluded from the inventory.

Reconcile actual physical inventory quantities counted with the amounts per the perpetual inventory where applicable. Possible problems:

  • Items sold and shipped but not removed for the perpetual
  • Items physically unaccounted for through error, theft, etc.
  • Items scrapped but not removed from the perpetual
  • Items sold and removed from perpetual but not physically segregated and excluded from the physical inventory.
  • Items physically added to inventory but not reflected on the perpetual
  • Items held on consignment.

Notes:

  • The Bookstore should include new or used, market value, and publisher.
  • When measuring gasoline or fuel oil, a record should be made of gauge or stick readings and of the method used to convert readings to gallons with the exceptions of full tanks.
  • First-In-First-Out (FIFO) should be used for inventory valuation unless another method has been approved.
  • Broken packages (Ex. purchased in packages of 12) are not counted.

The completed inventory must be submitted to the Controller's Office as soon as possible following the count but no later than July 15.

Should there be questions, please call the Office of the Controller at 910.521.6689.