From State Fiscal Procedures Manual, Chapter 3, Section 13, Consumable Inventories:
All departments should record on their balance sheet on the last business day of June significant supplies or other consumable inventories. Significant for this purpose is defined as inventories totaling $100,000 or more per location.
Departments may record inventories under $100,000 at their discretion. However, departments should be aware that increasing the threshold from a lower number to $100,000 requires expensing the difference against current budget. All inventories recorded on the balance sheet must be physically inventoried regardless of dollar amount (see inventory requirements below).
If inventories under $100,000 are not included on the balance sheet, the OSC does not require them to be inventoried. However, the department (in this case CU) may decide to conduct a physical inventory count for management purposes. In all cases, internal policies and procedures related to consumable inventories should be consistently applied from year to year, and the recorded balances of such inventories are subject to verification and audit.
Inventories greater than $100,000 per location must be inventoried annually.
Recorded inventories less than $100,000 per location must be inventoried at least biennially. Estimates of changes in value should be booked in the year a physical count is not taken.
All inventories should be taken at year-end. However, if time or resources do not permit the taking of a physical inventory at year-end, it is permissible to take the inventory at the end of periods 9 (March), 10 (April), or 11 (May) and adjust for additions and withdrawals occurring from the date of the physical inventory until June 30.
If inventory value drops below $100,000 in the normal course of business until it is restocked, it continues to be classified as inventory on the books. However, if a decision is made to permanently reduce the inventory below $100,000 contact CCO to determine the next step.
In order to minimize the year-end workload, inventories of less than $100,000 will typically not be booked in the general ledger inventory codes. These smaller inventories should be expensed to cost of goods sold as they are purchased. As a valid internal control function, departments should develop a proper tracking system to verify and control quantities on hand. However, these smaller inventory amounts should not be booked by the department to the Finance System.
A department may request to use the general ledger inventory codes for inventories less than $100,000 with prior approval from the Campus Controller’s Office. The Campus Controller’s Office may perform spot audits on any size inventory if inventory control irregularities occur; e.g. parts inventories cannot parse out funding sources, origination or estimated value.
