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PMM 2.5 Accounting for Materials on Government Contracts

Last Revised Date:
July 1, 2026
Responsible Unit(s):
Property Management
Responsible Unit Email(s):
FNSV-PropertyManagement@arizona.edu
Manual:
Property Management Manual
Status:
Active

Purpose and Summary

To provide direction to university departments on the accounting for Federal Government-owned materials furnished by the government and/or purchased by a Department as a direct charge to a Government contract administered by Sponsored Projects Services.

Scope

This policy applies to all University locations and units, including all University extensions, satellite locations, and off-site campus units, both domestic and international.

Policy

  1. The activity on a government contract may involve the stocking of government–furnished materials, and/or material titled to the Government acquired with government contract funds for use in the fabrication of deliverables or contract activities.
  2. When a Department establishes stocks of Government-owned materials for future use on current or follow-on contracts, the Department is responsible for establishing and maintaining their own accounting procedures that are in compliance with the terms and conditions of the Government contract.
  3. Departments are directly responsible and accountable for the control, protection, preservation, use and documentation of all Government-owned materials in stock. Departments shall identify all Government-owned materials in stock as Government Property.
  4. Departments are directly responsible and accountable to maintain and make available the records and information required by the Government on the stocking, use and inventory of Government-owned materials.
  5. Departments are directly responsible for loss, shortages, and damages or destruction of Government-owned materials, non-contract use of Government-owned materials, and consumption that unreasonably exceeds the allowances provided by the Government.
  6. Departmental records of stocked materials are the Government’s and University’s official records of Government-owned materials for the contract.
  7. At a minimum, Departments shall maintain the following records for Government-owned materials in stock: shipping documents, University purchase documents or other evidence of acquisition, and evidence supporting receipt and usage.
  8. Disposition of residual materials must be authorized by the Government in writing.

Procedures

ResponsibilityAction
Responsible Department
  1. When a department decides to establish stocks of Government-owned materials for the performance of their government awards, the department shall notify the Sponsored Projects Services Property Administrator of the Government Contracts applicable to their stocking action.
  2. Prepare written departmental procedures and maintain stocking records pursuant to the terms and conditions of the applicable government award, which at a minimum shall include basic descriptive information on every item of Government-owned materials, purchase documents, receiving documentation, accounting, storing, identification, protecting and issuing Government-owned materials from stock. These procedures shall ensure that Government-owned materials will be used for the purposes authorized in the funding contract.
  3. All Government-owned materials shall be identified as Government property. Government material shall be kept physically separate from University-owned materials.
  4. Perform and document at least annually and at closeout, inventories of stocked materials to determine shortages, losses, damage or destruction of Government-owned materials. Report any and all losses to the SPS Property Administrator.
  5. Maintain stock issuing receipts that includes the Government contract number, UA account number, quantities and date issued, the individual receiving item(s), and signature.
  6. Submit timely stock materials inventory valuation reports to the SPS Property Administrator when requested for required monthly, quarterly, annual and closeout reports to the government.
  7. Make available and provide all records for purchasing, accounting, receiving, issuing and inventories of Government-owned materials when requested by Federal, State and University Auditors, Financial Services, and Sponsored Projects Services. Maintain these records for 6 years after the contract end date.
SPS Property Administrator
  1. For Government contracts with stocking materials, the SPS Property Administrator will inform department of when to submit stock valuation reports (monthly, quarterly, annual, and final).
  2. Submit stock valuation reports as required by the sponsor.
  3. At contract closeout, request disposition instructions from the Government for contract materials remaining on hand and not used based on the valuation provided by the Responsible Department.
Responsible Department
  1. The responsible department shall follow the Government disposition instructions on excess materials and shall not utilize any residual government-owned materials after the completion, expiration or termination of the government contract, for any reason, unless authorized in writing by the government.

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