Accounting Department routes Property Disposition Form to Facilities and Maintenance Operations to pick-up surplus item.
Facilities and Maintenance Operations picks up the item from the department and takes to the holding area.
Dependent on condition and the type of surplus, item is redistributed, recycled, sold, discarded, or disposed of according to State guidelines (KRS 45A.425). For instance, E-Scrap vendor is a State vendor used for electronic/computer equipment; additionally, a bid process is used for the disposal of larger items, i.e. vehicles.
The University is initiating a process to dispose of all items in the holding area annually in March and October. Items in the holding area may also be disposed of on an ad-hoc basis, if necessary.
The physical inventory process took significantly longer than expected due to a number of factors:
Many items were out of place and difficult to locate.
Not all items that should have been tagged, were tagged.
A beginning inventory list did not exist, forcing the inventory teams to visit each location and record each item at that location.
There was no list of complete values to associate with the inventory.
External assistance was engaged to work with the accounting team to verify the physical count and to tie the physical count to the accounting records. During the inventory, all items in the accounting system valued over $50,000 were located and verified by visual inspection.
Through the physical inventory process, it was determined that items listed at a combined value of approximately $6MM were either missing or fully depreciated and unusable. An adjusting entry of $6MM was prepared and that entry will be reflected in the 2014-2015 audited financial statements of the University.
While the adjustment insures that the financial statements are correct, the related items will also be removed from the fixed asset system within the next few months. This will complete the adjustments necessary as a result of the physical inventory.
Going forward, a good base point has been established from which to begin. A current listing of items and values and a procedure to take inventory on a regular schedule has been established.
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