Financial Administration

FAP - Accountability for Capital Equipment (F33) - Attachment C

FINANCIAL AND ADMINISTRATIVE POLICIES

ACCOUNTABILITY FOR CAPITAL EQUIPMENT   (F33) - ATTACHMENT C


PHYSICAL INVENTORY REQUIREMENTS

A physical inventory of capital equipment shall be performed every two years in order to verify that the capital equipment listed on the inventory records can be located and is in use. The physical inventory should be performed by the institution's internal auditors or by other personnel who are trained in statistical sampling and who have no direct responsibility for managing the capital equipment being sampled (unless that responsibility is on an institution-wide basis).

It is recommended that, before the physical inventory, each department be asked to verify, to the extent practical, that all capital equipment for which it is responsible, including that used by employes at home or off the UW premises, can be located and is in use. Inventory records should be updated accordingly in order to minimize the number of errors in the subsequent statistical sample physical inventory.

Unless an alternative sampling plan is approved in advance by System Administration Internal Audit, property should be selected for physical inventory on the following stratified basis:

Book Value or Acquisition Cost

Book Value or Acquisition Cost

   

Items over $100,000 and all
federally titled equipment

 

100%

Items between $50,000 and $99,999

 

75%

Items between $10,000 and $49,999

 

50%

Items less than $10,000

 

Attribute sample randomly chosen to ensure that the true error rate does not exceed 8% at the 90% confidence level. This means that if the expected error rate is 5%, the sample size should be chosen using a reliability factor of +/- 3%. To meet the statistical test, the error rate in the sample may not exceed 5%. (An error means an item cannot be located.)

 

Any difference between quantities determined by the physical inspection and those shown in the inventory records shall be investigated to determine the causes of the difference. Items should be selected in accordance with the above plan based on current book value (cost less accumulated depreciation) unless the sample is more readily selected based on acquisition cost.


FAP - Accountability for Capital Equipment (F33) | Financial and Administrative Policy Index | Financial Administration


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Last Edited: 08/24/2001