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Administrative Procedure 8.540 Administrative Procedure 8.540



Title

Physical Inventory

Header

Administrative Procedure Chapter 8, Business and Finance
Administrative Procedure AP 8.540, Physical Inventory
Effective Date:  August 2016
Prior Dates Amended:  March 2016    
Responsible Office: Office of the Vice President for Budget and Finance/Chief Financial Officer
Governing Board and/or Executive Policy: EP 1.102, Authority to Manage and Control the Operations of the Campus
Review Date:  August 2018

I. Purpose

To prescribe the responsibilities and general procedures for conducting the annual physical inventory of equipment and controlled property.

II. Definitions

No policy specific or unique definitions apply.

III. Administrative Procedure

A.  General

    In accordance with Federal Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, State of Hawaiʻi and University Policies, the University of Hawaiʻi (University) performs a physical inventory of equipment and controlled property and reconciles results to inventory records on an annual basis.

B.  Responsibilities

    1.  Property and Fund Management Office (PFMO)

        a.  Plans, schedules, records and reports the results of the annual physical inventory. 

        b.  Provides the Annual Inventory Verification Report to systemwide fiscal administrators for distribution to the custodial departments and asset representatives.

        c.  Reports results of federally-owned property to the federal property administrator within thirty days after the completion of the annual physical inventory that includes the following:

            (1)  A listing that identifies all discrepancies disclosed on the annual physical inventory;

            (2)  A statement that the physical inventory was completed on a given date and the official property records were found to be in agreement except for discrepancies noted.

    2.  Fiscal Administrative Office

        a.  Coordinates the annual inventory process for the programs/departments under their purview.

            (1)  Ensures each asset representative receives a copy of the annual inventory verification report for their information and review.

            (2)  Ensures the custodial department receives a copy of the annual inventory verification report and the detailed instructions to conduct the physical inventory.

            (3)  Ensures the custodial department assigns personnel other than the asset representative to conduct the physical inventory to provide adequate safeguards as part of the University’s inventory control process.  Under no circumstances should the asset representative conduct the physical inventory for their own property nor should the asset representative certify the annual report.
 
            (4)  Ensures timely certification of the annual inventory reports.

            (5)  Ensures that the annual inventory report is appropriately certified by the individual who conducted the physical inventory.

        b.  Reviews and submits the certified annual inventory reports to PFMO.

        c.  Ensures that discrepancies noted on the annual inventory reports by the individuals who conducted the physical inventory are corrected in the Kuali Financial System (KFS) by authorized administrative personnel in a timely manner.

    3.  Asset Representative

        a.  Reviews the list of property under their control received from the fiscal administrative office.

        b.  Reports any custodial discrepancies to the fiscal administrative office.

C.  Conducting and Certifying the Accuracy of the Physical Inventory

    1.  The physical inventory ensures that property in the use, control, or possession of an asset representative is accurately described, that the property’s location is correct, and that all items of property no longer usable or needed are transferred or retired.

    2.  Personnel who perform the physical inventory shall not be the same individuals who maintain the property records or have custody of the property. The custodial department shall assign personnel other than the asset representative or principal investigator to conduct the physical inventory.

    3.  Accountability

        a.  When performing the physical inventory, each item of property (including component parts) listed on the Annual Inventory Verification Report, shall be located and examined.  The physical inventory must be performed systematically by a wall to wall, floor to floor inspection.  Property transactions paid after June 30th of the fiscal year of the physical inventory are not reflected on the Annual Inventory Verification Report.

        b.  If an item cannot be found, an investigation and thorough search shall be conducted.  All property which cannot be located during the physical inventory must be reported as missing by processing an asset retirement e-Doc in KFS with appropriate supporting documentation such as the Form RMP-001, State of Hawaiʻi Report of Loss or Damage of State Property.

        c.  The custodial department shall report to PFMO all unrecorded found property meeting the capitalization criteria for equipment and controlled property. The request to add an asset shall include a complete description of the item, its value, location, and account number.  The request shall also include the circumstances surrounding the discovery and an approximate date that the asset was placed into service.

    4.  Accuracy

        a.  At the time of the physical inventory, the information contained in the Annual Inventory Verification Report shall be checked for accuracy. 

        b.  Any errors in the asset description, manufacturer, model number, serial number, asset representative’s name and location shall be corrected by processing the appropriate asset maintenance e-Doc in KFS by authorized administrative personnel.

    5.  Asset Tag

        a. All equipment and controlled property in KFS are identified by an asset tag with a unique University of Hawaiʻi control number thereon. The asset representative or custodial department is responsible for physically affixing the asset tag to the acquisition promptly. The property shall remain so identified by such asset tag as long as it is in the custody, possession or control of the University.

        b.  In those situations where asset tags are impracticable to place onto the property or no longer adhere to the property because of age or physical exposure, alternate methods or alternate records shall be maintained by the asset representative, custodial department, or fiscal administrator to indicate location and description of the property.

        c. If an asset tag is missing, a replacement tag shall be generated by the asset representative, custodial department or fiscal administrator and affixed to the property.  The replacement tag shall indicate “University of Hawaiʻi” as well as the asset tag number.  PFMO does not issue replacement asset tags.

    6.  Federally-Owned Property Decal

        a.  In addition to the University asset tag, federally-owned property is identified with a red inventory decal with the statement “Property of U.S. Government.”  The red inventory decal shall be physically affixed to the property next to or near the University asset tag.  The property remains so identified as long as it remains in the custody, possession or control of the University. 

        b.  If the University acquires title to the property, the red federal inventory decal shall be removed.

    7. Transfers and Retirements

        a.  Items of property that are damaged beyond economic repair, no longer usable or needed, or obsolete shall be transferred or retired. For property vesting with the sponsor, approval shall be obtained from the sponsor prior to transfer or retirement.

        b.  To transfer property to another organization within the University, an asset transfer e-Doc shall be processed in KFS by authorized administrative personnel.  Custodial departments shall follow University procedures for transferring equipment and controlled property in KFS. 

        c.  To retire property, an asset retirement e-Doc shall be processed in KFS by authorized administrative personnel.  Custodial departments shall follow University procedures for retiring equipment and controlled property in KFS.

        d.  Asset representatives or custodial departments shall coordinate the processing of asset transfers and retirements with their authorized administrative personnel or fiscal administrative office, as needed.

    8.  Certification of the Annual Physical Inventory

        a.  After completion of the physical inventory, the certification statement at the end of the report shall be signed by the individual performing the physical inventory.

        b. Signing the certification statement certifies that:

            (1)  The physical inventory was completed;

            (2)  All equipment is accounted for, in use, usable and needed unless otherwise noted on the report;

            (3)  Property records are in agreement with the physical inventory except for noted discrepancies;

            (4)  Appropriate asset maintenance e-Docs shall be promptly processed by the authorized administrative personnel to correct any noted discrepancies.

D.  Special Requirements for Library Collections

    Additions to library collections are based on acquisitions during the fiscal year.  To assist departments that make library collections purchases, PFMO will send out a listing with all acquisitions for the month.  The fiscal administrator and the department are required to review their monthly listing of acquisitions for accuracy.  The department shall complete the appropriate correcting entries for incorrectly coded items.  The review by the fiscal administrator will serve as verification that the acquisition costs are accurate for the current fiscal year.  On June 30, PFMO will calculate the library book depreciation for the current fiscal year by chart code.

IV. Delegation of Authority

There is no administrative specific delegation of authority.

V. Contact Information

Property & Fund Management Office, 956-8735, or pfmo@hawaii.edu             
Website:  http://www.fmo.hawaii.edu/capital_assets/index.html

VI. References

    A. Link to superseded Executive Policies in old format https://www.hawaii.edu/policy/archives/ep/
    B. Link to Administrative Procedures in old format https://www.hawaii.edu/policy/archives/apm/sysap.php

VII. Exhibits and Appendices

Attachment 1:  RMP-001, Report of Loss or Damage of State Property

Approved

    Signed    
    Kalbert Young    
    August 01, 2016    
    Date    
    Vice President for Budget and Finance/Chief Financial Officer

Topics

physical inventory; annual inventory

Attachments