Process notes for inventory management and accounting
There are 21 Inventory holding departments totalling £1.9 million of stock. These departments use a variety of systems, such as Excel or Electronic Point of Sale (EPOS) to manage and record their Inventory.
The type of stock held is as diverse as the departments within the University. Some hold external trading stock such as publications, jewellery, and pottery which are sold through shops like those at the Bodleian Library and the Ashmolean Museum. Other departments hold a store for internally consumed items used within teaching and research, such as chemicals, laboratory consumables and safety equipment.
All Inventory holding departments have the responsibility to manage risk and economic benefit by ensuring optimal stock holdings are held to support operations.
They must also regularly check stock levels to safeguard against over-inflated or inaccurate stock valuations being recorded in the University's accounts. To ensure this happens, there is a Stock Provision, Write Off, and Disposals Policy, which must be adhered to by all stock holding departments.
Staff responsible for stock locations must ensure that:
- Stock is adequately protected against loss, misuse or obsolescence
- Procedures are in place to account for all stock movements
- Best value is obtained for the sale of any goods to external bodies or to staff
Stocks and stores of a hazardous nature must be subject to the appropriate security checks and Health and Safety procedures.
As per the University Accounting Policies Guide, stocks held are stated at the lower of cost and selling price less costs to sell.
Each Head of Department is responsible for ensuring that physical stock and inventory checks are carried out on an annual basis and shall arrange for the completion of an annual stock taking record in respect of all stocks and stores under the Department's control as at 31 July each year, certifying that the particulars shown are correct. Where the value exceeds £10,000 in total, the Head of Department must forward the record to the Fixed Asset Team.
There are two accepted approaches for counting stock:
A full stock count known as physical inventory, carried out on an annual basis as at 31 July each year, is where a department physically counts its entire inventory and reconciles the actual count to their inventory records.
A cycle count is an alternative to physical inventory and may be less disruptive. It is a perpetual counting system where a small subset of the inventory, is counted periodically and reconciled to the Departments inventory records. For example 1/12th of the entire inventory is counted on a monthly basis. This ensures the entire inventory is counted on an annual basis.
Whichever stocktaking method is chosen, stocktaking will allow a department to:
- Make informed decisions
- Measure how well a product is performing against others
- Identify and develop an optimal ordering process
- Uncover and eliminate theft and to identify damaged stock
- Monitor perishable and seasonal stock within a timely manner
- Ensure the correct stock value is accounted for
To ensure the reliability and accuracy of the reported stock valuation within the annual financial statements, all inventory holding departments must provide the Fixed Asset Accountant with the following as part of their financial year end process:
- Closing stock balances as at 31st July of the current year
- A detailed stock listing by item, showing cost and number of units held in an excel format
- A review of any stock write off provisions (see Stock Provision, Write Off, and Disposals Policy)
: Financial Reporting Team
University of Oxford
23-38 Hythe Bridge Street