SUBSECTION 3.1.2.3
PHYSICAL INVENTORY PROCEDURES

3.1.2.3.1

Responsibilities

Effective Date:

July 1, 1998

The physical inventory or count of inventories is to be performed by a person or persons with no direct responsibility (custody and receipt/issue authority) for the inventory. If use of such personnel is not feasible for any part of the inventory, those parts are, at least, to be tested and verified by a person with no direct responsibility for the stock.

3.1.2.3.2

Instructions

Effective Date:

July 1, 1998

Inventory instructions are to be documented and distributed to those personnel involved in the physical count. They are to be specific and anticipate as many questions as possible considering the circumstances of the inventory.

3.1.2.3.3

Reconciliations

Effective Date:

July 1, 1998

3.1.2.3.3.a

When the physical count is complete, the inventory officer is to reconcile the physical count with the perpetual inventory records. Differences are to be investigated and explained, corrective action instituted when deemed necessary, and the accounting records adjusted as per Subsection 2.2.4.4.

3.1.2.3.3.b

When perpetual inventory records are not maintained, the reconciliation process is not required because there are no records with which to reconcile. After the count is complete, the process is one of calculation rather than reconciliation. In this situation, the inventory units are to be assigned a cost according to the method selected, the total cost of the inventory is to be calculated, and the appropriate accounting adjustments are to be made as per Subsection 2.2.4.4.

3.1.2.3.4

Filing

Effective Date:

July 1, 1998

When the inventory is reconciled and certified, it is to be retained by the agency as documentary support for its inventory. This is to be retained in accordance with agency approved records retention schedules.