UMZIMVUBU LOCAL MUNICIPALITY

Transcription

1 UMZIMVUBU LOCAL MUNICIPALITY INVENTORY / STOCK MANAGEMENT POLICY 1

2 DESCRIPTIONS PAGE 1. BACKGROUND 3 2. PURPOSE 3 3. OBJECTIVES 3 4. LEGISLATIVE FRAMEWORK 3 5. DEFINITIONS 4 6. REPLENISHMENT OF STOCK 5 7. INVENTORY LEVELS 5 8. RECEIPT OF INVENTORY 5 9. ISSUING OF INVENTORY STORAGE OF INVENTORY SAFEGUARDING, NEATNESS, SAFETY AND OPTIMAL LAYOUT OF THE STORES 8 9 OBSOLETE INVENTORY 8 10 STOCK COUNT 9 11 STOCK DISPOSAL INVENTORY RECORDS REPORTING INTERPRETATION OF THIS POLICY PERMANENT / TEMPORARY WAIVER OF THIS POLICY COMPLIANCE AND ENFORCEMENT AMENDMENT AND / ABOLITION OF THIS POLICY 12 2

3 1. BACKGROUND The Umzimvubu Lcal Municipality, Budget and Treasury ffice is respnsible fr the implementatin f inventry Management Plicy thrughut the Municipality. This plicy is aligned t the Inventry Management Framewrk and adherence t the Municipal Finance Management Act, Act 56 f 2003 as amended. 2. PURPOSE The purpse f the Inventry Management is t lay dwn prcedures and prcesses fr the prcurement management and cntrl ver inventry (stck) items in accrdance with all relevant regulatins and legislatins and ther plicies and directives. The envisaged utcme is an efficient and effective cntrl and inventry management tl fr the Municipality. 3. OBJECTIVES The plicy aims t achieve the fllwing bjectives which are t:- a) Prvide guidelines that emplyees f the Municipality must fllw in the management and cntrl f inventry, including safeguarding and dispsal f inventry. b) Prcure inventry in line with the established prcurement principles cntained in the Municipality s Supply Chain Management Plicy. c) Eliminate any ptential misuse f inventry and pssible theft. 3. LEGISLATIVE FRAMEWORK In terms f the MFMA, the Accunting Officer fr a municipality must: a) Be respnsible fr the effective, efficient, ecnmical and transparent use f the resurces f the municipality as per sectin 62 (1) (a); b) Take all reasnable steps t prevent unauthrised, irregular and fruitless and wasteful expenditure and ther lsses as per sectin 62(1)(d); c) Be respnsible fr the management, including the safeguarding and the maintenance f the assets, and fr the management f the liabilities, f the municipality as per sectin 63 (1) (a) and In terms f the fllwing paragraph f GRAP 12: Inventries shall be recgnized as an asset if, and nly if, a) it is prbable that future ecnmic benefits r service ptential assciated with the item will flw t the entity,and b) the cst f the inventries can be measured reliably MEASUREMENT AT RECOGNITION Inventries that qualify fr recgnitin as assets shall initially be measured at cst Where inventries are acquired at n cst, r fr nminal cnsideratin, their csts shall be their fair value as at the date f acquisitin MEASUREMENT AFTER RECOGNITION Inventries shall be measured at the lwer f cst and net realizatin value Inventries shall be measures at the lwer f cst and current replacement cst where they are held fr: a) distributin at n charge r fr a nminal charge,r 3

4 b) cnsumptin in the prductin prcess f gds t be distributed at n charge r fr a nminal charge. RECOGNITION AS AN EXPENSE When inventries are sld, exchanged r distributed the carrying amunt f thse inventries shall be recgnized as an expense in the perid in which the related revenue is recgnized. If there is n related revenue, the expense is recgnized when the gds are distributed, r related service is rendered. The amunt f any write-dwn f inventries t net realizable value and all lsses f inventries shall be recgnized as an expense in the perid the write-dwn r lss ccurs. The amunt f any reversal f any write dwn f inventries,arising frm an increase in net realizable value, shall be recgnized as a reductin in the amunt f inventries recgnized as an expense in the perid in which the reversal ccurs. Sme inventries may be allcated t ther assets accunts, fr example, inventry used as a cmpnent f self-cnstructed POLICY ATTRIBUTES Respnsibility fr Inventry Management states as fllws: The Accunting Officer f the an Institutin must take full respnsibility and ensure that prper cntrl systems exist fr inventry and that- Preventative mechanisms are in place t eliminate theft, lsses, wastage and misuse and Stck levels are at an ptimum and ecnmical level. The Accunting Officer f an institutin must ensure that prcesses (whether manual r electrnic) and prcedures are in place fr effective, efficient, ecnmical and transparent use f the institutin's inventry. 4. DEFINITIONS In this Plicy, unless the cntext indicates therwise, the fllwing definitins are applied:- Accunting Officer CFO Cst Delegated authrity Gd received nte means the Municipal Manager fr the Municipality as cntemplated in sectin 60 f the Lcal Gvernment: Municipal Finance Management Act, 56 f 2003 means the Chief Financial Officer designated in terms f sectin 80(2) (a) f the Lcal Gvernment: Municipal Finance Management Act,56 f 2003 shall cmprise csts f purchase, csts cnversin and ther csts incurred in bringing the inventries t their present lcatin and cnditin means the fficial wh is given the authrity fr relevant functins in terms f the municipality s written delegatins; means an electrnic number which is created n the system t acknwledge the receipt f gds in gd cnditin and crrect quantities 4

5 Inventries Net Realisable value Obslete inventry Re-rder level Requisitin frm Respnsible manager Stre Stres Officer are assets In the frm f material r supplies t be cnsumed in the prductin prcess, In the frm f materials r supplies t be cnsumed r distributed in the rendering f services Held fr sale r distributin in the rdinary curse f peratins, r In the prcess f prductin fr sale r distributin Is the estimated selling price in the rdinary curse f peratins less the estimated csts f cmpletin and estimated csts necessary t make the sale exchange r distributin. means items that have expired, are redundant r damaged; means the level f inventry at which inventry is re-rdered; means a written request t the Inventry Supervisr t supply specified inventry; means the fficial respnsible fr the budget f a department means a place where inventry is stred and reserved fr future use, means the fficial respnsible fr the requisitin, receipt, issue, recrding, safeguarding f inventry and cst-effective and efficient management f inventry. 5. REPLENISHMENT OF STOCK Budget and Treasury department shuld identify inventry items that need t be rdered fr all departments. Items identified may either be items due fr replenishment due t nrmal usage r specific requests received fr specific prjects r tasks. The fllwing may be used as methds/ tls t assist with the prcess f determining items t be replenished: 5.1 INVENTORY PROCEDURES The prcedures fr inventry must be fllwed t ensure that: a) Inventry is safeguarded at all times; b) There are accurate recrds f quantities n hand at all times; c) Optimum inventry levels are maintained t meet the needs f users; d) Only authrised issues f inventry are made t users; and e) Items placed in stre are secured and nly used fr the purpse fr which they were purchased APPOINTMENT OF RESPONSIBLE OFFICIALS The Accunting Officer must appint, in writing, fficials t perfrm the duties f a Stres Officer in terms f this Plicy Adequate segregatin f duties between the requisitin, receipt, recrding, strage and safekeeping f inventry and the management and cntrl theref must be maintained t avid the ptential ccurrence f errrs and fraud. 5.3 ORDERING OF INVENTORY Budget and treasury ffice must set Inventry rerder levels fr all items. The inventry levels must indicate the minimum and maximum inventry that can be maintained. Due diligence and care shall be exercised in identifying lw value and high value items f inventry 5

6 Minimum inventry level f high value items shall be rdered, any maximum rder shall be based n specific requirement/need in rder t avid large amunt f cash tied up n inventry. A rerder listing shuld be printed by Stres Officer and reviewed weekly by Assistant Manager Supply Chain 6. INVENTORY LEVELS (MAXIMUM & LEVELS) A system is maintained fr ensuring that inventry items have been allcated with minimum and maximum levels, where pssible. The primary bjective f the inventry system is t ensure that Umzimvubu Lcal Municipality, never run ut f stck, especially critical stck items. The system will als ensure that stck levels are kept at a satisfactry level. Minimum and maximum levels will be used as an "early warning system" t cntrl stck and ensure that stck replenishments are dne regularly and timeusly (with due cnsideratin t rder and delivery n times) The stck level is als an imprtant factr t keep in mind when deciding hw much stck shuld be rdered at a specific pint in time. The minimum level f stck depends n the average usage f the stck and the time it takes t deliver the rdered stck. 7. RECEIPT OF INVENTORY The quantity and quality f the inventry received frm suppliers must be accrding t specificatins and infrmatin n the rder frm. The Stres Officer must cmpare the delivery nte t the purchase rder befre accepting the gds. The invice r delivery nte must match the supplier name and rder number. The Stres Officer must ensure that: a) All delivery ntes and r invices are signed by him/her and the supplier b) All incrrect delivery items are rejected and clearly identified n bth cpies f the delivery nte and r invice; and c) The supplier signs all amendments The inventry received must then be stred t the municipal stre by the Stres Officer and the gds receive number and quantities captured n the bin card by the Stres Officer. The inventries must be stred in their respective sectins nce they have been received. The inventry mdule n financial system must be updated n the day the gds are received, by the Stres Officer and authrized n the system by the Assistant Manager Supply Chain 6

7 8. ISSUING OF INVENTORY Only Stres Officer is authrised t issue inventry frm the strerm. Stck will be issued every Wednesdays nly frm 09:00 t 12:00 Stck will nly be issued upn cmpleting stck requisitin frm by the requester and requisitin frm must be apprved by departmental head f department. All requisitin frms must be ruled ff immediately belw the last item t prevent items being added nce the requisitin is authrised by the respnsible manager. The Stres Officer must update the bin card when stck items t be issued have been picked up frm the shelves with the requisitin number and quantities The fficial receiving the inventry must acknwledge the receipt f stck items requested, by signing n the requisitin fr gds received. Inventries must be issued and used fr fficial purpses nly. The Stres Officer must capture the requisitin n the system and then it must be authrized by Assistant Manager Supply Chain. 9. STORAGE OF INVENTORY Inventry must be stred in a secured, exclusive use area, under lck and key, furthermre the inventry must be insured in terms f the Risk Management Plicy f the municipality. The area must be used exclusively fr the strage f inventry, with limited authrised access nly. Inventry must be psitined t facilitate efficient handling and checking. All items must be stred separately, with prper segregatin. Inventry must be clearly labeled fr easy identificatin. Inventry tag/bin cards r inventry labels may be used t identify each item and t aid in the physical verificatin f the items. Details n bin cards shuld include the fllwing: a) Order number; b) Quantity received; c) Date f receipt; d) Quantity issued; e) Date f issue; f) Maximum stck level; g) Re-rder level; h) Re-rder quantity; i) Clsing stck; and j) Any ther relevant infrmatin. Where pssible, all items f the same type and reference must be stred tgether as per the descriptin n the inventry recrds. Due diligence and care must be exercised t prevent damage f, r deteriratin f inventry. Due regard must be given t any safety standards which may apply t the strage f certain inventries. Steps must be taken t ensure safe custdy f items, including precautins against lss r theft. The Stre Officer r Delegated Official respnsible fr the custdy and care f inventry must ensure that in his/her absence, such items, where applicable, are securely stred. 7

8 The respnsibility fr the custdy f the strerm keys must be allcated by the delegated authrity t an fficial wh is accuntable fr its use. N unauthrised persns/fficials shall btain entry t premises where inventry is kept, unless accmpanied by the respnsible fficial. Whenever a change in the Stres Officer ccurs, an inventry cunt must be cnducted. An independent fficial shall be nminated in writing by the delegated authrity t assist the fficial handing and taking ver with the checking f the inventry and any discrepancies. Shuld the abve nt be cmplied with, the fficial taking ver shall be liable fr any discrepancies. A handing-ver certificate must be cmpleted by the handing and taking ver fficials and a cpy retained fr recrd purpses. The fllwing fire prtectin precautins must be adhered t: a) Inventries f an inflammable r dangerus nature shall be stred and handled in such a manner that persns r prperty are nt endangered and in cmpliance with the requirements f any lcal authrity; b) The area must be clearly signpsted; and c) Fire extinguishing equipment must be placed in the area where inventries are held and must be serviced regularly. 10. SAFEGUARDING, NEATNESS, SAFETY AND OPTIMAL LAYOUT OF THE STORES All stre items shuld be safeguarded and lcked up at all times. The Stre will be kept safe and neat at all times. The layut f the stre must supprt the safety f emplyees at all times, i.e. clear passages fr mvement and packing. The layut will als ensure clear and easy access, as well as ptimum flws fr mvement. Items will nt be stacked s high that they cnstitute a safety risk. When gds are mved frm ne pint t anther, it will be dne safely and with maximum care. Care will als be taken t ensure that emplyees are nt injured whilst mving heavy items. 11. OBSOLETE INVENTORY The preparatry wrk fr the dispsal f bslete inventry must be undertaken by the Stres Officer and verified by the Assistant Manager Supply Chain. The Accunting Officer r delegated authrity must apprve the dispsal f bslete inventry. The delegated authrity may apprve the write-ff f inventry, if satisfied that: - a) The inventry has expired and is redundant; b) The inventry is f a specialised nature and has becme utdated due t the intrductin f upgraded and mre effective prducts; c) The inventry cannt be used fr the purpse fr which it was riginally intended; d) The inventry has been damaged and is rendered useless. All dispsed items must be updated in the financial system fr the purpses f prper management and cntrl. 8

9 12. STOCKTAKING / COUNTS The municipality shuld perfrm bth Mid- year and year end Stck Cunts The Inventry Supervisr/ Manager will ensure that the stck cunt takes place n half yearly basis Internal Auditrs will be invited t witness the stck take / cunt during the year end stck cunt. External Auditrs will be invited t witness the stck take/ cunt at year-end All stck items cunted shuld be recrded n the stck cunt sheet. Cunted quantities must be indicated n the stck cunt sheet in ink. The physical items cunted must be marked as cunted. At the end f the stck take, the Inventry Supervisr must ensure that all stcks are accunted fr (hence the marking ff f the cunted stck) The apprpriate disciplinary actin must be instituted where applicable fr stck discrepancies. The inventry register and financial system must be updated accrdingly Discrepancies between theretical stck (per stck register) and physical stck (cunted) must be recrded, fllwed up and cleared / crrected. Crrectins must be apprved by Assistant Manager: Supply Chain Management. Final stck sheets must be signed and filed. 9

10 13. DISPOSAL OF INVENTORY ITEMS Obslete, expired, redundant and damaged inventry must be identified and cleared n an annual basis i.e. at year end. The nly inventry remaining in the stres at the yearend stck take/ cunt, must be useful items which are frequently requested by fficials. All items t be dispsed f must be identified and listed. A write-ff mem giving reasns fr dispsal must be cmpleted and submitted t the Asset Manager: Supply Chain Management and Chief Financial Officer fr apprval. Inventry Management will cnsider the fllwing analysis when cnsidering the methd f dispsal. ptential market value r ther intrinsic values the lcatin and vlume f the inventry t be dispsed f the ability t supprt ther gvernment prgrams, and the cst f the dispsal methds. Different methds will be used fr different types f inventry. It is imprtant t ensure accuntability and transparency, as well as due cnsideratin f cst cnsideratins when chsing a methd f dispsal. Dispsal ptins/ methds include transfer fr alternate use, rental, sale and demlitin. All inventry items must be dispsed f and written ff with the prper authrizatin and recrds need t be kept f these items. Inventry recrds need t be updated t reflect the actual quantity n hand after the dispsal. 14. INVENTORY RECORDS An inventry register must be maintained fr all inventry items, either manually and / r electrnically. All relevant infrmatin must be included fr the prper management and cntrl f all inventry items. It is recmmended that details include but are nt limited t: a) Opening/clsing balance; b) Item descriptin; c) Quantity and value f stck n hand;

11 d) Quantity and value f stck received; e) Quantity and value f stck issued; f) Re-rder level; g) Quantity and value f bslete stck; and An inventry register/database must be printed mnthly and the hard cpy filed in a chrnlgical rder t maintain a prper audit trail. 14. REPORTING A reprt must be submitted at each stck cunt t the Chief Financial Officer and/r the Respnsible Manager detailing the fllwing: a) Any inventry shrtages r surpluses and the reasns fr such; b) Any inventry deficits prpsed t be written-ff; and c) Any bslete inventry items. Inventries n hand at 30 June must be disclsed at cst in the statement f financial psitin in the Annual Financial Statements. In terms f GRAP 12 the financial statements shall disclse: a) the accunting plicies adpted in measuring inventries, including the cst frmula used, b) the ttal carrying amunt f inventries and the carrying amunt in classificatins apprpriate t the entity, c) the carrying amunt f inventries carried at fair value less csts t sell, d) the amunt f inventries recgnized as an expense during the perid, e) the amunt f any write-dwn f inventries recgnized as an expense in the perid f) the amunt f any reversal f any write-dwn that is recgnized as a reductin in the amunt f inventries recgnized as an expense in the perid g) the circumstances r events that led t the reversal f a write-dwn f inventries h) the carrying amunt f inventries pledged as security fr liabilities. 15. INTERPRETATION OF THIS POLICY All wrds cntained in this plicy shall have an rdinary meaning attached theret, unless the definitin r cntext indicates therwise. The dispute n interpretatin f this plicy shall be declared in writing by any party cncerned The Office f the Municipal Manager shall give a final interpretatin f this plicy in case f written dispute. If the party cncerned is nt satisfied with the interpretatin, a dispute may then be pursued with the Suth African Lcal Gvernment Bargaining Cuncil.

12 16. PERMANENT/TEMPORARY WAIVER OR SUSPENSION OF THIS POLICY This plicy may be partly r whlly waived r suspended by the Municipal Cuncil n temprary r permanent basis. Municipal Manager may under circumstances f emergency temprarily waive this plicy subject t reprting f such waiver r suspensin t Cuncil. 17. COMPLIANCE AND ENFORCEMENT Vilatin f r nn-cmpliance with this plicy will give a just cause fr disciplinary steps t be taken. It will be the respnsibility f Cuncil t enfrce cmpliance with this plicy. 18. AMENDMENT AND/OR ABOLITION OF THIS POLICY This plicy may be amended r repealed by Cuncil as it may deem necessary. Date f Apprval : Cuncil reslutin n.: