9.5 Physical Inventory
1. About the Physical Inventory
Stanford's physical inventory cycle takes 2 years to complete. A team of inventory specialists from PMO scan tagged assets on campus and at our offsite facilities. They also identify capital equipment that may not have been tagged.
The purpose of the physical inventory is to: verify the existence, location, status, and condition of assets, and to verify the accuracy of records.
The physical inventory process is a mechanism by which Stanford is able to check the effectiveness of its property management systems and procedures. Inventory results of equipment on sponsored projects must be reconciled and reported by project to the sponsor. If items are not found, the sponsor may require Stanford to pay for them. A pattern of continuing losses could result in additional audit scrutiny, as well as liability for asset replacement. Additionally, the approval rating of Stanford’s property system can be placed in jeopardy.
There are various methods by which an inventory is conducted. For example, wall-to-wall inventories in which every asset in the department is scanned, or stratified inventories where a sampling of assets is inventoried.