Procedures for Completing Physical Inventories of Capital, Sensitive, and Non-Capital Equipment.

The purpose of this appendix to the UMBC Inventory Control procedures is to define the procedures for completing the physical inventories for capital, non-capital, and sensitive equipment.

Capital, Non-Capital, and Sensitive Equipment

Overview

The physical inventory of capital equipment is completed by the Comptroller's Office Inventory Control Section. By University policy, the physical inventory for capital equipment is to be completed every two years.

To accomplish this objective, the Inventory Section prepares a "Physical Inventory Schedule." The schedule is a listing of all campus departments by department name and number. The Schedule includes columns for reporting dates the departments were advised of the planned departmental physical inventory, inventory start date, date the listing of missing equipment was sent to department, date department resolved discrepancies, date Inventory Section verified resolution, and date Inventory Section updated the University's inventory control records.

The non-capital and sensitive physical inventories are to be completed once every three years by departments.

Each operational department has an assigned inventory custodian. The custodian is responsible for assisting in safeguarding departmental equipment and ensuring the accuracy of the related inventory records. Custodians are designated by the heads of departments and trained by the University's Inventory Control Section.

The custodian is responsible for all correspondence with the Accounting Office concerning inventory issues and, knowing the whereabouts of all departmental equipment. The custodian is also responsible for assisting the Inventory Control Section in conducting the physical inventory of capital equipment as well as conducting the department's physical inventories for non-capital and sensitive equipment.

Steps in completing the Physical inventories:

Capital equipment

Capital inventory is any equipment item greater than $5,000 per unit.

Steps:

• A tentative schedule is prepared by the Inventory Control Section of areas to be inventoried.
• Announcements regarding the upcoming inventory will be sent out via campus mail and will be placed on the UMBC's web site.
• Inventory Control will send a letter to the chairperson of the scheduled department or if a small operational unit/department, with less than 20 capital items, notifies them by phone.
• Departments are informed that the physical inventory will take place and that the department's inventory custodian needs to be available to assist with the inventory.
• To complete the inventory, a report is requested from University Computing of all capital equipment for the scheduled department.
• The Inventory Control Section's team then goes to the scheduled department to assist with the completion of the physical inventory. The team will verify the location, description, property tag number, and manufacturer's serial number.
• The Inventory Control team will also record and research any capital equipment that does not contain a UMBC tag number, and accordingly, take the appropriate action.
• Inventory Control personnel return the adjusted inventory report, used in the field when taking the physical inventory, to the Manager of Plant Fund Accounting and Inventory Control.
• The Manager reviews and analyzes the report and sends a missing equipment and other inventory deficiency list to the operational unit/department head allowing 14 days fo an adequate response.
• If items remain unresolved or missing, a memorandum with a list of missing or unresolved items is sent to the President to sign off. These items would then be written off by the Comptroller's Office. That is the items would be removed from the inventory records as lsot and the write off expense will be charged to the fund balance.
• Once written off, a memorandum is sent to the operational unit/department chairperson outlining all deficiencies and needed corrective action. (See attached)
• The inventory database is then updated to reflect the physical inventory results. This means that a reconciliation has taken place between the perpetual and physical inventory records.
• Inventory Control section has an individual that goes back and test ten percent of the items once the physical inventory has been completed.
• Once completed, the inventory schedule is then updated.
• The related documentation will be retained for audit purposes.

• To accomplish the physical inventory of non-capital and sensitive equipment, a report is requested from University Computing of all equipment meeting the non-capital or sensitive criteria. The Inventory Control Section separates the reports by department and forwards them with a cover memorandum explaining the department's responisbility for completing the physical inventory.
• The completed repsort is returned to the Inventory Section for updating to the University's computerized inventory control system.
• Inventories Control will test the department's completed reports and reconcile the physical inventory to the perpetual, computerized records. Differences will be investigated.
• Department heads must account for missing equipment.
• If departments can not locate the missing equipment, a listing of the missing equipment is sent to the President for approval and signature.
• The perpetual inventory records would then be adjusted to reflect the physical count