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1
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Steps
ACQUISITION OF INVENTORIES Obtain Approval from Procurement Services Office (PSO)
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Responsible Party
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Template/Guideline
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Explanatory Notes
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2
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Steps
Process transaction in Quantum through UNDP’s procurement catalogue
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Responsible Party
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Template/Guideline
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Explanatory Notes
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3
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Steps
INVENTORY IN AND INVENTORY OUT INVENTORY IN Conduct an inventory inspection by comparing the shipment to the packing slip and approve purchase orders (POs) |
Responsible Party
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Template/Guideline
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Explanatory Notes
In COs where UNDP has to act as principal recipient of Global Fund, all medical supplies / equipment received must be inspected by UNDP pharmacists following guidelines established by WHO to ensure the quality of medical supplies / equipment.
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4
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Steps
Record all receipts in an inventory in note with reference to the approved PO number
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Responsible Party
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Template/Guideline
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Explanatory Notes
Inventory note should record the date, description & quantity of items received.
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5
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Steps
Inventory note singed by the receiving personnel and retain the duly signed copy in the office files.
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Responsible Party
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Template/Guideline
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Explanatory Notes
A copy of this note should be sent to the CO’s Finance unit for later matching with the vendor’s invoice and PO during the payment process. Some COs may currently use Good Receive-In Note (GRN) for inventory in process, which has a similar format and serves the same function as inventory in note. For COs where GRN is not currently in use, the inventory in note must be used for inventory in process.
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6
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Steps
Assign a sequential document number to the inventory in note (or GRN).
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Responsible Party
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Template/Guideline
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Explanatory Notes
The sequential number should start with operating unit ID and follow with sequential numbering. For example, In No.: JAM0005.
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7
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Steps
INVENTORY OUT Submit an inventory issuance form to UNDP and get an approval by the RR or designated official.
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Responsible Party
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Template/Guideline
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Explanatory Notes
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8
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Steps
Separate items from the inventories
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Responsible Party
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Template/Guideline
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Explanatory Notes
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9
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Steps
At the point of distribution, prepare an inventory out note (i.e. consumption record)
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Responsible Party
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Template/Guideline
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Explanatory Notes
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10
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Steps
Obtain acknowledgement/signature of the local recipient/receiving personnel upon distribution/issuance & keep a record of all signed inventory out notes.
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Responsible Party
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Template/Guideline
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Explanatory Notes
In some cases, UNDP acts as the principal recipient and procures Global Fund medical supplies, which are directly shipped to the central warehouses of sub-recipients (e.g. local governments). In this scenario, the control of the medical supplies is passed over to the sub-recipient only upon completion of quality inspections and inventory in process by UNDP staff. Therefore, in this scenario, UNDP staff are responsible for preparing both the inventory in note and the inventory out note
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11
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Steps
Assign a sequential document number to the issuance form and the inventory out note
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Responsible Party
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Template/Guideline
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Explanatory Notes
The sequential number should be starting with operating unit ID followed by sequential numbering. For example, Issuance Request NO.: JAM0026 and Out No.: JAM0001.
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12
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Steps
Update stock cards to track movement of inventories
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Responsible Party
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Template/Guideline
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Explanatory Notes
Maintaining stock cards and periodic physical verification process facilitate to determine the need for replenishments and monitor the movement of inventories.
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13
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Steps
PHYSICAL COUNT Conduct an inventory count exercise on a periodic basis for each storage location as per Financial Closure (minimum semi annual for Q2 and Q4) Instructions.
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Responsible Party
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Template/Guideline
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Explanatory Notes
COs may decide to perform a physical count at more frequent intervals (e.g. on monthly basis, or when a major shipment is received).
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14
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Steps
Obtain inventory count certification of the quantity and value of the inventories (including the impact of expiry, damage, obsolescence, etc.) reported by their offices from the Resident Representatives or designated officials.
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Responsible Party
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Template/Guideline
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Explanatory Notes
RRs shall appoint a focal point to oversee physical count of these inventories. In the absence of a formal guidance on how to carry out physical counts, please refer to the
Guidelines on Physical Count of Inventories.
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15
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Steps
Compile inventory control report for each project, which records beginning and closing balances of the inventories during semi-annual counts, and submit it through the SharePoint Financial Closure site together with the RR’s inventory certification to the HQ Accounts Division
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Responsible Party
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Template/Guideline
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Explanatory Notes
For COs that do not hold any inventory items on hand during semi-annual counts, the inventory control report with the RR’s inventory certification is still required, verifying that the balance of inventories is zero. The submission dates for the inventory control report and inventory certification are: 15th July and 15th January for the 2nd and 4th quarters respectively.
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16
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Steps
Review any variance between the stock cards and the physical inventory counts.
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Responsible Party
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Template/Guideline
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Explanatory Notes
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17
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Steps
The items with variances shall be recounted; variances shall be investigated and resolved by the physical count focal point.
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Responsible Party
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Template/Guideline
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Explanatory Notes
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18
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Steps
The RR should approve the outcome of the investigation.
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Responsible Party
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Template/Guideline
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Explanatory Notes
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19
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Steps
Once the accuracy of counted items and units is approved by the RR, the physical count focal point shall then record these variances as quarterly inventory adjustments in the respective quarters on stock cards and document a thorough explanation for the variance
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Responsible Party
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Template/Guideline
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Explanatory Notes
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20
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Steps
INVENTORY IN TRANSIT Review the respective incoterms for each open purchase order and confirm whether, although the physical receipt of such items has not yet happened, the inventory items have become UNDP’s property based on the incoterms.
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Responsible Party
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Template/Guideline
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Explanatory Notes
If goods are shipped through incoterms such as FOB shipping point, FAS, CIF, etc and are in transit at end of the 7 count period end, they must be recognized through the regular Receipting Process.
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21
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Steps
At every count period end, review and record the balance of inventory in transit items that have become UNDP’s property based on the incoterms on the inventory control report.
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Responsible Party
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Template/Guideline
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Explanatory Notes
Please refer to POPP Receipt of Goods, Services, Works for detailed policies and procedures on receipting for goods in transit.
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22
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Steps
VALUATION OF INVENTORIES Use the lower of cost and net realized value for inventory items that are held for sale
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Responsible Party
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Template/Guideline
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Explanatory Notes
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23
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Steps
Use the lower of cost and current replacement cost for inventory items held for distribution at no change or for a nominal charge
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Responsible Party
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Template/Guideline
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Explanatory Notes
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24
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Steps
While calculating the cost of inventories, the costs shall be assigned by using the first in, first out (FIFO) method.
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Responsible Party
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Template/Guideline
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Explanatory Notes
The FIFO method assumes that the items of inventory that were purchased first are sold first, and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced. As UNDP uses the periodic inventory method to account for inventories at end of the semi-annual periods, the latest invoice price (s) shall be used to value the balance of inventories.
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25
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Steps
For donated inventory items, fair value as at the date of donation should be used to determine cost. The fair value of a donated inventory item is normally based on what the item would cost if purchased (i.e. market purchase price). The quoted market prices or price bulletins in the active market will represent the best measure of fair value of donated inventory items.
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Responsible Party
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Template/Guideline
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Explanatory Notes
Net realizable value or current replacement cost shall be determined in the following manner: a) For inventories held for sale (e.g. UNDP publications held for sale), use the current selling price as the net realizable value; b) For inventories held for distribution at nominal or no charge (e.g. Global Fund medical supplies), use the current purchase price as the net realizable value.
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26
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Steps
ACCOUNTING & REPORTING The RR shall report on a semi-annual basis to HQ OFM/CFRA, through the SharePoint Financial Closure site, the quantity and value of inventories and inventory in transit at each count period by submitting certified inventory control reports.
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Responsible Party
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Template/Guideline
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Explanatory Notes
The certification must be submitted by 15th July and 15th January for the 2nd and 4th quarters respectively.
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27
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Steps
An accounting journal entry will be recorded by GSSU Inventory with approval from HQ Accounts/ at every count period end, to account for the value of inventories as assets and to reduce the corresponding periodic expense by the same amount.
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Responsible Party
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Template/Guideline
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Explanatory Notes
The accounting journal entry will be automatically reversed out in the following month. The accounting entries will be posted using the chart of accounts assigned to the inventories. The following accounting entry will be recorded for each semi-annual inventory count: DR. Inventories CR. Expense DR. Inventory in transit CR. Expense
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28
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Steps
HQ Accounts must complete the review of the reports and record the accounting journal entry for the inventories by 20th July and 20th January fo, 2nd and 4th quarters respectively
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Responsible Party
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Template/Guideline
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Explanatory Notes
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29
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Steps
REPORTING IMPACT GSSC will summarize the returns of inventory control reports and report the value of inventories as assets in the UNDP Financial Report
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Responsible Party
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Template/Guideline
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Explanatory Notes
The accounting journal entry of inventories adjustment does NOT impact available resources in the project budget balance. However, the adjustment will affect the Donor Report and the Combined Delivery Report (CDR) effective 1 January 2012 as follows:
a) The donor report will present the value of inventories as “future expenses” under the category of “un-depreciated assets and inventory”. The value of inventories reported represents the items to be distributed and expensed in the next reporting period.
b) In the CDR, the value of inventories will be reported under the “fund utilization” section on the second page by UNDP. The value of inventories reported represents items to be distributed and expensed for programmes / projects in the next reporting period.
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