This document provides guidance on accounting for consumables and fixed assets. It defines consumables as goods that are used up like stationery, and fixed assets as goods with a useful life like land, buildings, and equipment. It describes the procurement process for both, including seeking approvals, obtaining quotations, and inspection upon delivery. Guidance is provided on receiving and recording goods, including bin cards for consumables and a fixed asset register. The document also covers accounting for fixed asset use and regular verification of assets.

1. PURCHASE AND ACCOUNTINGPURCHASE AND ACCOUNTING
OF CONSUMABLES AND FIXEDOF CONSUMABLES AND FIXEDOF CONSUMABLES AND FIXEDOF CONSUMABLES AND FIXED
ASSETS.ASSETS.
PRESENTED BY RACHEL KAIRU.PRESENTED BY RACHEL KAIRU.
--
WHAT ARE CONSUMABLES?WHAT ARE CONSUMABLES?
Consumables are goods which are used upConsumables are goods which are used up
and not returned once issued from stores.egand not returned once issued from stores.eg
stationery.stationery.
orororor
Goods which are incorporated into otherGoods which are incorporated into other
goods and loose their identity e.g. thegoods and loose their identity e.g. the
reagents used in the laboratories.reagents used in the laboratories.
WHY A PROPER RECORD FORWHY A PROPER RECORD FOR
CONSUMABLES?CONSUMABLES?
The main purpose of maintainingThe main purpose of maintaining
proper records or accounting forproper records or accounting for
consumables is to leave a trail on theconsumables is to leave a trail on the
usage in case a case to follow upusage in case a case to follow up
arises.arises.
usage in case a case to follow upusage in case a case to follow up
arises.arises.
--This trail is known as an Audit trailThis trail is known as an Audit trail
wherewhere
by an auditor traces the goods fromby an auditor traces the goods from
requisition point to the usagerequisition point to the usage
Procurement of consumables.Procurement of consumables.
Consumables are procured through theConsumables are procured through the
normal procurement process.normal procurement process.
In the university set up the user seeksIn the university set up the user seeks
authority to purchase from the DVC A&F orauthority to purchase from the DVC A&F orauthority to purchase from the DVC A&F orauthority to purchase from the DVC A&F or
College Principal in the college.College Principal in the college.
At this point the user is required to give theAt this point the user is required to give the
specs and seek approval for single sourcingspecs and seek approval for single sourcing
in case the item can be sourced from ain case the item can be sourced from a
specific supplier.specific supplier.

2. Procurement of consumablesProcurement of consumables
cont,cont,
Procurement section then requests the user to fillProcurement section then requests the user to fill
an authority to incur expenditure and commit thean authority to incur expenditure and commit the
funds.funds.
They source for quotations, do an analysis whichThey source for quotations, do an analysis whichThey source for quotations, do an analysis whichThey source for quotations, do an analysis which
is presented to the college/central procurementis presented to the college/central procurement
committee for approval.committee for approval.
Once approved the process of requisition, andOnce approved the process of requisition, and
LPO (local purchase order) commences whichLPO (local purchase order) commences which
after auditing and approval the LPO is released toafter auditing and approval the LPO is released to
the supplier for the supply of goods.the supplier for the supply of goods.
The supplier should supply the goods asThe supplier should supply the goods as
specified in the LPO and as per the specs.specified in the LPO and as per the specs.
All this together with the quality and quantityAll this together with the quality and quantity
is what the inspection and acceptanceis what the inspection and acceptanceis what the inspection and acceptanceis what the inspection and acceptance
committee checks before handing over thecommittee checks before handing over the
goods to the user.goods to the user.
The user is required to enter the goods in aThe user is required to enter the goods in a
store and fill the stores received note whichstore and fill the stores received note which
should be checked by the supervisor.should be checked by the supervisor.
Receiving of goods..cont,Receiving of goods..cont,
The total units received are entered in a binThe total units received are entered in a bin
card which is signed by every user whocard which is signed by every user who
receives the goods until the last unit isreceives the goods until the last unit is
issued.issued.issued.issued.
The balances on the bin card are recordedThe balances on the bin card are recorded
on a reducing balance method.on a reducing balance method.
Once in a while the supervisor shouldOnce in a while the supervisor should
randomly check the bin card balancesrandomly check the bin card balances
against the physical especially for high valueagainst the physical especially for high value
items.items.
Accounting for assetsAccounting for assets
Assets are goods which have a useful life andAssets are goods which have a useful life and
don’t get used up quickly. They have adon’t get used up quickly. They have a
material value or reasonable cost. They arematerial value or reasonable cost. They are
intended to be used by an organization forintended to be used by an organization forintended to be used by an organization forintended to be used by an organization for
more than one year to generate income ormore than one year to generate income or
to render a service.to render a service.
We have two categories of assets current andWe have two categories of assets current and
fixed.fixed.

3. Accounting for assets.. Cont,Accounting for assets.. Cont,
Current assets are the ones which canCurrent assets are the ones which can
be converted easily into cash e.g.be converted easily into cash e.g.
debtors inventories, investments, cashdebtors inventories, investments, cash
and bank balances etc.and bank balances etc.and bank balances etc.and bank balances etc.
Fixed assets are assets which are fixedFixed assets are assets which are fixed
like land and building and otherlike land and building and other
moveable ones like motor vehicles,moveable ones like motor vehicles,
fixtures and fittings and computers.fixtures and fittings and computers.
Procuring fixed assets.Procuring fixed assets.
The grant holder should. Provide a procurementThe grant holder should. Provide a procurement
plan for acquisition of assets which must be withinplan for acquisition of assets which must be within
the approved budgets, within a reasonable time.the approved budgets, within a reasonable time.
Plan for asset replacement, maintenance andPlan for asset replacement, maintenance and
operating costs in his/her budget to avoidoperating costs in his/her budget to avoid
inconveniences in the course of the research.inconveniences in the course of the research.
After the approval to procure is given, theAfter the approval to procure is given, the
procurement manager recommends any of theprocurement manager recommends any of theprocurement manager recommends any of theprocurement manager recommends any of the
following means to tender committee for approval.following means to tender committee for approval.
Procuring fixed assets.. Cont,Procuring fixed assets.. Cont,
The process of procuring fixed assets is the sameThe process of procuring fixed assets is the same
as for consumables except the value of fixedas for consumables except the value of fixed
assets in most cases is higher and requiresassets in most cases is higher and requires
another level of approval known as tenderanother level of approval known as tender
committee.committee.
The Central/College procurement committee has aThe Central/College procurement committee has a
mandate to approve up to ksh 500,000= Anythingmandate to approve up to ksh 500,000= Anything
above that is approved by the tender committee.above that is approved by the tender committee.
The procurement manager then recommends theThe procurement manager then recommends the
following three methods to the tender committee.following three methods to the tender committee.
Procuring fixed assets.. Cont,Procuring fixed assets.. Cont,
Open method where the advert is put in theOpen method where the advert is put in the
newspaper for any interested person tonewspaper for any interested person to
tender.tender.
Quotation method where quotations areQuotation method where quotations areQuotation method where quotations areQuotation method where quotations are
sought from different suppliers.sought from different suppliers.
Restricted suppliers method whereRestricted suppliers method where
quotations are sought from specificquotations are sought from specific
suppliers who supply specific items e.g. MFIsuppliers who supply specific items e.g. MFI
for computers.for computers.

4. Procuring Fixed Assets.. Cont,Procuring Fixed Assets.. Cont,
All the three methods require a committeeAll the three methods require a committee
comprised of Finance, Audit and Procurement tocomprised of Finance, Audit and Procurement to
open the tender/quotations.open the tender/quotations.
However in an open tender the suppliers areHowever in an open tender the suppliers areHowever in an open tender the suppliers areHowever in an open tender the suppliers are
allowed to send their representatives in the tenderallowed to send their representatives in the tender
opening.opening.
The analysis and minutes of the tender openingThe analysis and minutes of the tender opening
committee are sent to procurement manager whocommittee are sent to procurement manager who
recommends names of experts to technicallyrecommends names of experts to technically
evaluate the item to be bought ,to the viceevaluate the item to be bought ,to the vice
chancellor who appoints them.chancellor who appoints them.
Procuring Fixed Assets.. Cont,Procuring Fixed Assets.. Cont,
The report and recommendation of theThe report and recommendation of the
technical evaluation committee istechnical evaluation committee is
handed over to procurement managerhanded over to procurement manager
who tables them back to the tenderwho tables them back to the tenderwho tables them back to the tenderwho tables them back to the tender
committee for approval.committee for approval.
once approved the letters are issued toonce approved the letters are issued to
the successful supplier.the successful supplier.
Receiving and Accounting forReceiving and Accounting for
Fixed AssetsFixed Assets
The asset is then supplied and is inspectedThe asset is then supplied and is inspected
and once accepted the asset is handed overand once accepted the asset is handed over
to the user. There must be an expert in theto the user. There must be an expert in the
inspection committee e.g. ICT staff forinspection committee e.g. ICT staff forinspection committee e.g. ICT staff forinspection committee e.g. ICT staff for
computers and its accessories.computers and its accessories.
At the point of payment Finance section isAt the point of payment Finance section is
required to enter the assets in a fixed assetrequired to enter the assets in a fixed asset
register and that is where accountabilityregister and that is where accountability
starts.starts.
Receiving and Accounting forReceiving and Accounting for
Fixed AssetsFixed Assets
The information captured at this point include,The information captured at this point include,
Asset tag number.Asset tag number.
Asset serial numberAsset serial number
Asset physical locationAsset physical locationAsset physical locationAsset physical location
Name of the supplierName of the supplier
For motor vehicle ,registration number, engine andFor motor vehicle ,registration number, engine and
chassis number.chassis number.
Insurance value of the assetInsurance value of the asset
The status of the asset whether new or secondThe status of the asset whether new or second
hand.hand.

5. Accounting of Fixed AssetsAccounting of Fixed Assets
On a regular basis a physical verification ofOn a regular basis a physical verification of
all assets is necessary, Both Finance andall assets is necessary, Both Finance and
Audit can assist in this.Audit can assist in this.
At a glance the grant holder can verify theAt a glance the grant holder can verify theAt a glance the grant holder can verify theAt a glance the grant holder can verify the
departmental record to ensure they are indepartmental record to ensure they are in
line with the physical assets.line with the physical assets.
Asset use and condition should always beAsset use and condition should always be
reported to the grant holder.reported to the grant holder.
Accounting of Fixed Assets..Accounting of Fixed Assets..
cont,cont,
Hold the custodian of such assetsHold the custodian of such assets
responsible in case of misuse orresponsible in case of misuse or
malicious damage.malicious damage.malicious damage.malicious damage.
In case the custodian leavesIn case the custodian leaves
employment ensure he/she handsemployment ensure he/she hands
over the assets and their records.over the assets and their records.
Accounting for Fixed Assets cont,Accounting for Fixed Assets cont,
As a user all assets have different roles andAs a user all assets have different roles and
each category requires an account on itseach category requires an account on its
usage.usage.
For example a motor vehicle should beFor example a motor vehicle should beFor example a motor vehicle should beFor example a motor vehicle should be
subjected to the normal universitysubjected to the normal university
procedures of having a work ticket which isprocedures of having a work ticket which is
issued by Audit or Transport departments.issued by Audit or Transport departments.
Accounting for Fixed Assets..Accounting for Fixed Assets..
cont,cont,
All fuel and oils consumed should beAll fuel and oils consumed should be
recorded in it and all journeys shouldrecorded in it and all journeys should
be approved by a responsible officerbe approved by a responsible officer
and in this case the grant holder.and in this case the grant holder.and in this case the grant holder.and in this case the grant holder.
The driver should record the totalThe driver should record the total
mileage covered at the end of everymileage covered at the end of every
journey or at the close of the day.journey or at the close of the day.

6. Accounting for Fixed Assets cont,Accounting for Fixed Assets cont,
He /she should indicate mechanicalHe /she should indicate mechanical
problems if any at the back of the workproblems if any at the back of the work
ticket.ticket.
This helps in the reconciliation in case forThis helps in the reconciliation in case forThis helps in the reconciliation in case forThis helps in the reconciliation in case for
example the vehicle is consuming too muchexample the vehicle is consuming too much
fuel than it requires.fuel than it requires.
The blame can be the mechanical problem itThe blame can be the mechanical problem it
is having, but can be interpreted as misuse.is having, but can be interpreted as misuse.
It helps to resolves such conflicts.It helps to resolves such conflicts.
Accounting for Fixed Assets cont,Accounting for Fixed Assets cont,
Any mechanical problems should beAny mechanical problems should be
rectified within reasonable time, they shouldrectified within reasonable time, they should
be cost effective.be cost effective.
The repairs and service should beThe repairs and service should beThe repairs and service should beThe repairs and service should be
documented and this forms the basis of thedocumented and this forms the basis of the
history of the vehicle in case of disposal andhistory of the vehicle in case of disposal and
basis of identifying whether the maintenancebasis of identifying whether the maintenance
costs exceeds its value.costs exceeds its value.
Accounting for Fixed Assets cont,Accounting for Fixed Assets cont,
This information helps to makeThis information helps to make
decision as to whether procuring a newdecision as to whether procuring a new
one is more appropriate than repairing.one is more appropriate than repairing.
The generalThe general care,security,sparepartscare,security,spareparts
,toolbox and general cleanliness are all,toolbox and general cleanliness are all
areas of concern for a motor vehicle.areas of concern for a motor vehicle.
Computers.Computers.
These are assets which assist us in the dayThese are assets which assist us in the day
to day running of an office.to day running of an office.
They should be handled as per theThey should be handled as per the
guidelines or instructions from theguidelines or instructions from theguidelines or instructions from theguidelines or instructions from the
manufacturer.manufacturer.
they should be accounted beginning withthey should be accounted beginning with
entering them in the fixed asset register.entering them in the fixed asset register.
They should be coded and tagged to knowThey should be coded and tagged to know
which department /section they belong.which department /section they belong.

7. Computers.Computers.
There should be a register in the department withThere should be a register in the department with
records showing which office they are in.records showing which office they are in.
There should have a control on usage/access e.g.There should have a control on usage/access e.g.
use of password.use of password.use of password.use of password.
Proper record as to where about of such asset, beProper record as to where about of such asset, be
it a printer or computer which has been taken byit a printer or computer which has been taken by
ictict for repairs or borrowed by another office.for repairs or borrowed by another office.
In case of theft or damage the relevant sectionsIn case of theft or damage the relevant sections
,security ,finance among others should be,security ,finance among others should be
informed within reasonable time.informed within reasonable time.
WHO OWNS THE ASSETS ATWHO OWNS THE ASSETS AT
THE END OF THE PROJECT?THE END OF THE PROJECT?
The few known cases indicates any of theThe few known cases indicates any of the
following but not limited,following but not limited,
The asset are to be inherited by theThe asset are to be inherited by the
institution at the end of the project period.institution at the end of the project period.institution at the end of the project period.institution at the end of the project period.
Assets are valued at the end of project soldAssets are valued at the end of project sold
and money remitted to the donor.and money remitted to the donor.
Assets are donated to charitableAssets are donated to charitable
organizations.organizations.
The grant holders can tell us more.The grant holders can tell us more.
Disposal of Fixed assets.Disposal of Fixed assets.
Before any decision to dispose is agreed upon itBefore any decision to dispose is agreed upon it
must be clear whether the agreement between themust be clear whether the agreement between the
donor and grant holder stipulated transfer, sale ordonor and grant holder stipulated transfer, sale or
donation.donation.
In a case where the institution inherits the assetIn a case where the institution inherits the asset
then the need for disposal can be any of thethen the need for disposal can be any of the
following.following.
The user can declare whether it is obsolete or it isThe user can declare whether it is obsolete or it is
of no more use but can be transferred to anotherof no more use but can be transferred to another
section or department where it can be of value.section or department where it can be of value.
Disposal of FixedDisposal of Fixed Assets.contAssets.cont
In case of transfer the receiving section isIn case of transfer the receiving section is
responsible for transfer, duty and installationresponsible for transfer, duty and installation
costs.costs.
The asset register also requires changes ofThe asset register also requires changes ofThe asset register also requires changes ofThe asset register also requires changes of
location, condition and custodian.location, condition and custodian.
All documentation for the transfer must beAll documentation for the transfer must be
signed and retained by both parties.signed and retained by both parties.

8. Disposal cont,,Disposal cont,,
In the case of selling at market value and handingIn the case of selling at market value and handing
the funds to the donor,the funds to the donor,
Procurement manager may recommend on theProcurement manager may recommend on the
method of disposal in line with public procurementmethod of disposal in line with public procurementmethod of disposal in line with public procurementmethod of disposal in line with public procurement
and disposal act (2005) and public procurementand disposal act (2005) and public procurement
and disposal regulations (2006).and disposal regulations (2006).
Procurement together with the grant holder canProcurement together with the grant holder can
discuss and agree on the method of disposal bydiscuss and agree on the method of disposal by
donating to charitable organizations indonating to charitable organizations in
accordance with what the regulations stipulates.accordance with what the regulations stipulates.
THE ENDTHE END
THANK YOU.THANK YOU.