Three Ways To Update Or Audit Your Inventory Records

For many public entities, conducting an annual fixed asset inventory isn’t an option but rather a requirement. These assets represent a significant investment and include everything from desks and tools to computers, printers, and other equipment. There are several ways to go about conducting an annual inventory including wall-to-wall inventories, inventory by exception, and inventory by random sample.

Wall-to-Wall Inventory
A wall-to-wall inventory is an inventory of all items in a given location. It is a very systematic approach that essentially involves having a blueprint of the facility and methodically going through the building from one room to the next. While somewhat time consuming, a wall-to-wall inventory can be more accurate than other methods. It is not uncommon for an organization to hire a third party company to come in and complete this type of inventory for them.

Inventory by Exception
Unlike a wall-to-wall inventory, an inventory by exception counts items that have been “touched” recently as already inventoried. When implementing this type of inventory, it is extremely important to define what constitutes a touch. Is it maintenance or calibration? Does an asset transfer count?

One example where this type of inventory might be useful is if you are looking to inventory a subset of assets that were purchased as part of a particular grant. You could exclude assets that have been “touched” and simply go out in the field to identify the assets that are still “missing” at that point.

Inventory by Random Sample
An inventory by random sample is simply an inventory of a small subset of assets. This subset is identified by a statistically valid and random sample meaning it is representative of all of the items in your inventory. Upon completion of this type of inventory, you can conclude that if you found 95% of the items in your random sample, you would likely find about 95% of the items in your entire inventory. For this to be true, however, the sample must be statistically valid and random.

One example where this type of inventory might be useful is during a self-audit process.

Regardless of which type of inventory you choose to conduct or if you apply a combination of multiple types of inventory, always make sure it is in compliance with your auditor’s needs. Having an up-to-date inventory will not only please your auditor but could save your organization time and money in the long run.

2019-07-31T14:35:33-04:00Tags: , |