1006 Inventories of Materials and Supplies
Subject Area: Accounting
Responsible Office: Financial Services
Sponsor: Associate Vice President for Finance
Originally Issued: October 1992
Revised: January 2010
Refer Questions To: Casey Campbell, 773-702-3695
Purpose: Certain materials and supplies are held in inventory by the University and used for instruction, research and service related activities; for production; and for resale.
- Financial Services is responsible for accounting for inventory at the University. This responsibility is delegated to those departments maintaining inventories.
- Departments with inventories will be responsible for maintaining detailed inventory records. These records must be reconciled monthly to the University's Financial Accounting System.
- A physical inventory must be conducted and reconciled to the detailed inventory records at least annually by departments maintaining inventories. All adjustments resulting from a physical inventory must be recorded in the accounting system immediately.
- Departments are responsible for identifying obsolete inventory which must be written-off when identified.
- Inventories will be valued at the lower of cost or market with cost being determined by the Average Cost or First-in-First-Out (FIFO) method unless otherwise approved by Financial Services.
- Purchase of inventory items will be made in accordance with University policy for the procurement of goods and services (See Financial Policy No. 1201).
- Materials and supplies issued to University departments for instruction, research and service related activities shall be valued at cost as determined by the Average Cost or FIFO method unless otherwise approved by Financial Services.
- Inventory items shall be maintained at levels which reflect prudent business practice.