Does your unit have inventory for resale which is sold as a part of a self-supporting operation? If so, see below for a few tips to keep in mind to ensure compliance with policies, procedures, and good business practices:
- To ensure accurate financial reporting, the value of any inventory for resale on hand as of June 30 needs to be accurately reflected in Banner prior to the year-end close.
- This value must be recorded at the lower of historical cost or current fair market value.
- The value of the inventory for resale on hand as of June 30 is calculated by taking the number of items on hand as of June 30 multiplied by the lower of cost or market value.
- Thus, to be able to complete this calculation, all units with inventory for resale are required to conduct an annual physical count as of June 30.
- To ensure proper controls and safeguarding of the items which are being counted, and to prevent audit risk, it is strongly recommended to assign a team of two or more employees to perform the physical count together.
- To avoid double counting or missing items during the physical count, we recommend apply tags to items that have officially been counted. This provides a clean audit trail showing which items have been counted and which have not yet been counted.
- The calculated inventory for resale value will then need to be compared to the current inventory for resale balance in Banner. If the current balance in Banner needs adjusted (either up or down), then an appropriate adjusting entry needs to be recorded. This can be done in one of two ways:
- The applicable information can simply be reported to UAFR as a part of the annual Year-End Fact Sheet reporting process, so that UAFR can update the Banner balances accordingly on your behalf (this is the preferred method for most units); or
- The adjusting entry can be updated manually in Banner via a unit-generated journal voucher (this is typically only done by units who track and maintain their inventory for resale balance on a regular basis throughout the year).
- While the count itself does not necessarily need to be performed on June 30, the value of the inventory for resale reported on the Year-End Fact Sheet must reflect the reconciled value as of the close of business on June 30.
- For example, if a physical count is not able to be performed at the close of business on June 30, then any purchases of additional inventory for resale and/or any sales activity from the date of the physical inventory count through the close of business on June 30 must be tracked and reconciled. This will enable you to arrive at a reconciled balance which properly represents the ending balance of inventory for resale on hand as of June 30.
Contact
For further guidance, reach out to the applicable subject matter experts within UAFR’s Who to Ask. Simply type “Fact Sheets” into the Search box in the upper right-hand corner to find UAFR staff who can assist you.
