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INVENTORY

INVENTORY. INVENTORY. UN system organizations with a supply component for programming or that sell goods to raise funds, may hold inventory . Inventories are materials that are: Consumed or distributed in the course of programming Held for sale; or

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INVENTORY

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  1. INVENTORY

  2. INVENTORY • UN system organizations with a supply component for programming or that sell goods to raise funds, may hold inventory. • Inventories are materials that are: • Consumed or distributed in the course of programming • Held for sale; or • Are held or are in the production process for sale or distribution UNICEF/NYHQ2008-0699/Volpe UNICEF/NYHQ2007-1911/Noorani UNICEF/NYHQ2009-0884/Sokol

  3. Inventory or Expense? Inventory can be recorded as an asset or an expense • Record as INVENTORY • When a UN organisation “controls” the goods • Example: Programme supplies have been received from a supplier and are held for future humanitarian aid where the UN organisation controls the decisions around the use and release of the supplies. • Example: paper and printing supplies held for production • Record as EXPENSE • When control is transferred (e.g. decision making is transferred to a government or implementing partner, supplies are distributed, or supplies are sold) • When supplies become damaged or obsolete (e.g. perishable supplies)

  4. Valuing Inventory Recorded at lower of cost, net realizable value or fair value COST For programme supplies distributed for free or at a nominal charge - All costs of purchase and transportation to current location For supplies consumed in the production process – include also the cost of production (conversion) NET REALIZABLE VALUE Where supplies are damaged or obsolete or selling price has declined COST is reduced to: - For supplies to be distributed for free: replacement cost - For supplies to be used in production: amount that may be recovered through sale FAIR VALUE Where supplies are donated to a UN organisation free of charge - Amount that the goods could be exchanged for if transacting with a third party - As at date supplies are acquired by the UN organisation

  5. Differences: UNSAS to IPSAS UNSAS IPSAS • Presentation. UNSAS does not specifically reference how inventory should be presented • Recognition: inventory is recognised when it is “owned by” an organisation. • Derecognitionis not defined but is presumed to be required when inventory is no longer “owned by” an organisation • Measurement: Standard method of measurement is cost – however the specifics of what is included in cost is not defined. • Presentation: Inventory is included on the face of the Statement of Financial Position. Information is presented in the notes. • Recognition. Inventory is recognized as an asset – at the date acquired - where a UN Organisation “controls” the inventory • Derecognition.Inventory is expensed when consumed, or when control is passed onwards, such as distribution or sale of supplies • Measurement. Supplies to be distributed or sold are reported at the lower of “cost”, replacement cost or recoverable cost. Supplies donated to a UN organisation are recorded at fair value

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