Physical Inventory Why?
Barbara A. Finnegan, CPPM CF
1
Physical Inventory Why?
Agenda
• Purpose of a Physical Inventory
• Value of a Physical Inventory
• Discuss Outcomes
• Methods
• Physical Inventory Plan
• Reconciliation
• Summary
•
Questions
Barbara A. Finnegan, CPPM CF
2
Physical Inventory Why?


Its the method by which an organization, corporation,
university etc test the accuracy of their property
records (Property Business System (PBS))
Accuracy of the PBS meets the following business
and legal requirements
 Financial
• Sarbanes-Oxley
• Government Account Standards Board (GASB)
• Federal Acquisition Regulations (FAR)
 Contract
 Corporate Policies and Procedures
 State and County Regulations (property taxes and income tax)
 Department of Transportation
 Insurance Reports
Barbara A. Finnegan, CPPM CF
3
Physical Inventory Why?

What is the value of a Physical Inventory
Its the best method of determining health measures
of the property management system/PBS:
 Significant discrepancies may indicate:
• Theft,
• Poor Security
• Inadequate documentation
 Locations errors may indicate:
• Movement issues
• Poor recording keeping
• Poor Training or communication
Barbara A. Finnegan, CPPM CF
4
Physical Inventory Why?

Value of a Physical Inventory (Continued)
 Identifying property not posted to the management property
system may indicate:
• Inadequate interfacing with procurement
• Failure to report acquiring property by the users
 Unlocated property at the conclusion of the inventory
reconciliation may indicate:
• Movement Issues
• Disposition Issues
• Lack of training or communication concern the care of
property
Barbara A. Finnegan, CPPM CF
5
Physical Inventory Why?

Value of a Physical Inventory (Continued)
 Outcomes from performing an inventory
• Verification of Property Management Property
Records
• Utilization ( is the asset being used)
• Maintenance ( verify calibration, proof loading
stickers)
• Organization can more confidently do contingency
or capacity planning
• Validation of computer system configuration
Barbara A. Finnegan, CPPM CF
6
Physical Inventory Why?

Value of a Physical Inventory (Continued)
 Note that the value gained from a well-managed
physical inventories conducted at the appropriate
intervals will usually far out weigh their cost and the
disruption caused
Barbara A. Finnegan, CPPM CF
7
Physical Inventory Why?

Inventory Frequency
Customer
and Capital
 Depends on type property
 Depends on regulations and contract
 Depends on Hazard and Security Requirements

Types of Frequencies of Inventory
 Periodic
 Continuous ( inventory by exception)
 Annual (calendar/or 12 Months (Fiscal))
Barbara A. Finnegan, CPPM CF
8
Physical Inventory Why?

Types of Frequencies of Inventory
Capital
 Periodic
 Continuous ( inventory by exception)
 Annual (calendar/or 12 Months (Fiscal))

Types of Inventory Methods
 Cyclical Inventories
 Contract Termination
 Wall-to-Wall
 ABC Inventories
 Statistical Samplings
Barbara A. Finnegan, CPPM CF
Customer
Property
9
Physical Inventory Why?
A detailed, specific plan is most critical to
a successful inventory. Without a
detailed plan with specific objectives the
inventory will probably not be successful.
Customer
and Capital
Barbara A. Finnegan, CPPM CF
10
Physical Inventory Why?

Inventory Plan
 Specific inventory objectives
 Specify type of property to be inventoried
 Inventory time frame, start and completion date.
 Method of performing the inventory
 Identify personnel performing the inventory and provide
the details of the plan.
 Identify the inventory strategy
 Identify the information to be collected during the
inventory
Customer
and
Capital
Barbara A. Finnegan, CPPM CF
11
Physical Inventory Why?

Inventory Plan (continued)
 Shall accommodate daily schedules
 Data load and upload strategy
 Controls to be put on items being inventory
 Shall a method to reconcile discrepancies
 Contingency plan to react to movement of property and
personnel; change in personnel etc.
 Strategy for assuring record update accuracy
 Inventory planners should arrange to meet with
coordinators and inventory takers, users in the and
supervisors as necessary during the inventory plan
process to get agree on the plan and schedule.
Barbara A. Finnegan, CPPM CF
12
Physical Inventory Why?



Inventory Plan (continued)
Conducting the inventory based on the Plan
Reconciliation
 Most important Phase
 Notification of the accountable organization and posting
of items not found
 Second attempted to locate the missing property
 An inventory is used as a corrective action tool.
 Report results of the inventory
Barbara A. Finnegan, CPPM CF
13
Physical Inventory Why?

In summary
 Is a necessary burden on the property manager
 A successful inventory is an accurate and, efficient
property management system.
 Purpose/Goal of a physical inventory is to ensure
that a the assets recorded in the property system
physically exist; identify unrecorded or improperly
record transactions; to identify excess; defective or
obsolete assets
Customer
and
Capital
Barbara A. Finnegan, CPPM CF
14
Physical Inventory Why?
Barbara A. Finnegan, CPPM CF
15