Recognition of inventory
10 WHO recognizes medicines, vaccines and humanitarian supplies held for distribution to third parties; and publications held for sale.
20 Any inventory items donated and not yet distributed, exchanged or sold during the fiscal period are recognized as WHO inventory at the end of the fiscal period.
Measurement of inventory
30 Inventories are measured at the lower of cost and net realizable value. If the determination of the net realizable value is too costly or impracticable the inventories are measured at cost. The net realizable value is the estimated selling price in the ordinary course of operations less the estimated costs of completion (if applicable) and the estimated costs necessary to make the sale, exchange or distribution.
40 Where inventories have been acquired through a non-exchange transaction (i.e. they were donated as an in-kind contribution) their cost is measured at their fair value as at the date of the agreement.
50 In cases where WHO does not hold title of the goods (e.g. inventory remains the property of the contributor), revenue for the in-kind donation is only booked when the transfer of the inventory is made to WHO.
60 The initial carrying cost of inventories comprises (a) the purchase price and (b) transport, handling and other costs directly attributable to the acquisition of materials and supplies. Cost is determined on the weighted average basis for all inventory. Only those costs, which are material and can be reasonably calculated, are included in the carrying amount.
70 When inventories are sold, exchanged or distributed, their carrying amount is recognized as an expense. The amount of any write-down of inventories due to expiry or losses of inventories is recognized as an expense in the financial period the write-down or loss occurs. Write-downs of inventory are authorized and approved as per SOP.OSS.SOP.XIII.001 on Inventory Management and reporting. Distribution is defined as the point of the hand-over of custody of the supplies to co-operating partners or, if distributed directly by WHO, when it is handed-over to the beneficiary.
80 For WHO, the recognition of the expense occurs when the quarterly inventory reports are received and entered into the accounting system.
