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SPA Process User’s Guide – Chapter 2 – General Policies

Inventory Verification Methods

Policy

The following inventory methods do not represent all acceptable practices for conducting physical inventories. They are meant to be guidelines to help agencies develop of their own annual physical inventory plans. Other methods may be used as long as they follow SPA policies and procedures.

Property inventories should be conducted by individuals (verifiers) who are not responsible for the property being inventoried nor for accounting for it on a day-to-day basis.

The annual requirement to determine the condition of each property item may be performed during this process.

Independent Manual Method

This annual physical inventory method should be conducted by one or more verifiers. They should work independently and report their findings either directly to the agency property manager or indirectly through individual departments, divisions, sections or unit heads. The annual requirement to determine the condition of each property item may be performed during this process.

Each verifier should have a unique list of the property items to be inventoried. Each verifier and person responsible for the property signs and dates the list to certify the accuracy and completeness of the inventory. The property lists are unique and do not require double verification by a second verifier. The combined lists used by verifiers must represent all of the agency’s property.

Tandem Manual Method

This annual physical inventory method should be conducted by two or more verifiers. Verifiers work in tandem so that the same property number is being physically observed by both individuals either at the same time or independently of each other. They report their findings either directly to the agency’s property manager or through the their departments, divisions, sections or unit heads.

Each verifier and person responsible for the property must sign and date the property lists to certify the accuracy and completeness of the inventory. The combined lists of property used by the verifiers must represent all of the agency’s property.

Bar Code or Optical Scanning Method

This annual physical inventory method should be conducted by one or more verifiers. The electronic verification method should allow for a scanning device to record date, time, location, operator identifier and manually keyed input. The annual requirement to determine the condition of each property item may be performed during this process.

Each verifier and person responsible for the property signs the electronic verification process report to certify the accuracy and completeness of the electronic verification.

Summary

It is preferable that two or more persons conduct an agency’s annual physical inventory; however, agency resources and logistics may dictate using only one person. Agency discretion prevails in these circumstances. Each agency should develop a physical inventory plan that minimizes the risk of misreporting assets and reasonably ensures that all trust, capitalized and controlled assets are located no less than once annually. Compensating controls should be developed to ensure these objectives are met.

Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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