TE_CA_03-14 _IMCOM_PR_G9_IC_SOP_-_Resale_Inventory_Updated_11.09.15.docx

Chapter 15

Resale Inventory

RESALE INVENTORY

REFERENCES:

a. AR 215-1, Military Morale, Welfare, and Recreation Programs and Non-appropriated Fund Instrumentalities

b. DFAS 37-1, Chapter 32 “Accounting Procedures for Army Non-appropriated Fund Instrumentality”

c. DoD 7000.14-R Financial Management Regulation Volume 13, Chapter 3

1. DEFINITIONS:

a. Resale Inventory: Inventory is merchandise or supplies on hand or in transit at a particular point in time. Inventory held for sale or resale consists of goods to be sold in the normal course of business. A value is assigned which represents the cost of acquisition. When the goods are sold, the value assigned is used to determine profit for the accounting period as shown on the income statement and to properly report assets on the balance sheet at the end of the accounting period.

b. Inventory Warehouse/Storeroom: This general ledger account consists of the value of the bulk, volume, or secured storage of resale and/or supplies inventory. The GLACS used for this inventory would be GLAC 151 (Prepaid Supplies/Equipment) and GLAC 401 (Purchases).

c. Ending Inventory: This general ledger account consists of the value of resale merchandise on hand at the end of the accounting period in the facilities. The GLACS used for this inventory would be GLAC 401 (Purchases) and GLAC 655 (Warehouse/Storeroom Spoilage).

d. Inventory In-Transit: This general ledger account consists of inventory where title has passed to the NAFI, but the inventory has not been received at a NAFI warehouse.

e. FoodTrak: The inventory system used to record resale merchandise and supplies in a warehouse or storeroom. It requires a complete description of the merchandise and all pertinent information regarding receipt and issue.

f. Spoilage, Breakage, Obsolete Material, Customer Complaint or Reject Items: Immaterial losses of inventory resulting from spoilage, breakage, obsolescence, rejection, or constant customer complaint items are absorbed in cost of goods. Material losses are recorded in a Spoilage and Breakage expense account for the applicable operation and transfer out using a DA 4080. The GLACS that are applicable for the losses are GLAC 453 (Cost of Goods Sold, Customer Rejected Goods) – Expense GLAC 653 (Customer Rejected Goods Expense) or GLAC 454 (COG Sold, Resale Merchandise, Spoilage, Breakage) – Expense GLAC 654 ( Resale Merchandise, Spoilage, Breakage, and Obsolescence Expense).

15-1

g. Consigned Merchandise and Tickets: Merchandise held on consignment is maintained and accounted for by the consignor. NAFIs only maintain inventory of consigned merchandise for accountability purposes. These items are physically inventoried monthly or at the end of an event for tickets (whichever comes first). This inventory is not recorded in the general ledger.

2. PROCEDURES

1. Physical Counts of Inventory: Inventories are required to have 2 people physically count together. The following are policies related to physical inventories of merchandise.

a. The inventory list is printed in the same sequence in which the merchandise is stored or arranged for display or in stock record number sequence.

b. A cutoff date is established for sales, issues, returns, adjustments, and transfers so inventory quantities and related accounting entries can be recorded.

c. Merchandise received during the inventory count is not counted unless the payable or payment will be recorded in the general ledger as of the inventory cutoff date.

d. Merchandise sold during the physical count is included in the inventory count. The merchandise is not included in the count if the related sale and receivable or cash received will be recorded in the general ledger after the inventory cutoff date.

e. Physical inventory is conducted separately for each department.

f. Inventories of merchandise held on consignment are separate from NAFI owned merchandise. Inventory lists are prepared for each owner of the goods.

g. At the conclusion of the inventory count, any discrepancies are provided to the NAFI custodian for resolution. The general ledger is then adjusted to match the physical count that was observed by the observation team.

2. Physical Inventory Observation:

a. Prepaid and resale inventories will be done monthly. This inventory will include losses and spoilage reports. On the last business day of each month, a complete inventory of all prepaid and resale items will be conducted. If holiday or leave interfere with the monthly inventory schedule, the inventory will be conducted prior to leave being taken.

b. All documentation will be submitted to NAF Financial no later than the second business day of the month. Should documentation not be sent in a timely manner, the documents will be faxed to NAF Financial and reported to the FMD.

15-2

c. Spot checks will be conducted by the FMD to assure compliance with the management internal control program.

3. RESALE GOODS/MERCHANDISING PURCHASING AND INVENTORY PROCESS

a. Purchases: Once invoice is received, charges are either:

(1). If purchased by Government Purchas Card (GPC), items/charges are allocated and matched via https://access.usbank.com.

(2). If purchased under Blanket Purchase Agreement (BPA), items are added according to appropriate allocations by program, location, department and Government Ledger Accounting Code (GLAC) (ie: LE-3X-25-401, KM-5A-26-401, KM-5E-26-726, etc). Program codes may not be required.

a. Once allocated, allocation totals are compared to invoice total, if they are equal, invoice is signed as received and dated.

b. All BPA invoices are recorded on the appropriate BPA call records.

c. Invoices are grouped together, payables transmittal letter (TL) Encl-2 is completed and attached to invoice packet.

d. Copy packet and submit original to NAF Financial Services (NFS) for processing, accounting, and payment.

(3). Invoiced resale items are recorded in FoodTrak/RecTrac (depending on which is used by installation/facility for inventory program). This purpose of this program is to record inventory levels and compare against sales, ideally informing the user how much inventory they should have on hand based on automated comparison reports.

(4). Each invoice is entered separately, item by item. Each item should be linked to an Item Number.

(5). Items are entered and purchase prices/quantities are updated.

(6). Invoice total should match the invoice record being created in FoodTrak/RecTrac.

(7). Print FoodTrak/RecTrac invoice report upon completion of each invoice.

(8). BPA call records are continued throughout the month for each vendor.

(9). At the end of each month, the BPA call records must be signed and submitted to NFS. This is done only after all invoices have been allocated and recorded on the appropriate BPA call records and attached to a TL. BPA call records should be attached to a TL separate from any invoices, signed by an authorized caller for facility (usually the manager or assistant manager), and dated.

15-3

b. Inventories:

(1). Inventory form will be created in the designated system at the beginning of each month.

(2). Invoices will be reviewed for new items and all new items must be added to the inventory form.

(3). Updated Inventory Input Form will be printed prior to the inventory count.

(4). At the end of each month a full resale inventory is conducted on the final business day of the month. It is recommended that the inventory counts be performed starting at the close of business, however some facilities with a larger resale inventories may choose to begin main stock areas prior to close of business. It is important to note that no sales may occur after the inventory is started for that inventory location. (ie: once the bar count has started, no further sales will be conducted in that area). Once the count has begun in an inventory location, no stock may be pulled from that area.

(5). Inventories are conducted in two (2) person teams consisting of one (1) caller and one (1) writer (multiple teams may be assigned, as long as they follow this guideline).

(6). Inventories are to be recorded in blue or black ink only.

(7). Count is to be performed working by physical shelf order, left to right, and top to bottom.

(8). Inventory is recorded, signed by inventory team, and entered into the system.

(9). Once entered and saved, Inventory Extension is printed, totals verified, signed by Facility Manager/Division Chief, attached to a receivables TL, than submitted to NFS.

(10). Once per year a disinterested inventory is conducted by either a Soldier detail or personnel from outside facilities. All standard inventory procedures are followed with additional guidance which is briefed to all participating staff and managers no less than two (2) weeks prior to the inventory count.

4. ANNUAL DISINTERESTED INVENTORY: At least annually, the physical inventory counts are observed by at least one person who is independent of the NAFI Activity conducting the physical count. The objective of the count is to verify the inventory to determine the accuracy of the accounting records. Since it is frequently impractical to observe all physical inventories at one time, the observations may be staggered throughout the year.

15-4

a. BRIEFING INSTRUCTIONS PERTAINING TO DISINTERESTED INVENTORY (1). Attached is the schedule Encl 1, each member of the detail is assigned a Team #, Each Team is assigned to a location. The schedule includes date, time, location address, POC, and phone #. It is imperative that the schedule is followed exactly as written. There will be no switching or substituting of assignments. Feel free to bring snacks and beverages for your break times.

(2). Resale and prepaid inventory. Storage areas should be arranged to make the disinterested inventory easy to conduct. Items should already be entered on your inventory form in the general order in which they are stored. Accuracy is key in this process.

(a). Items received by the activity during the period of actual inventory will be counted. If there is any doubt about the date of receipt of an item, the Team Lead should check the invoice or receiving report.

(b). Retail activities must be inventoried in the same manner as the storage areas except items not may not be displayed in the same order as they appear on the inventory sheets. Again, you must ensure that everything is counted.

(3). Reconciliation: Upon completion of the physical count, inventories are reconciled against the facilities computer generated inventory statements.

(a)The actual posting of the inventory adjustments to the inventory statement should be done immediately upon completion of the physical inventory.

(b). Upon completion of reconciliation with inventory statements, the physical count inventory forms must be extended to reflect total value. If an error is made in extension, the error will be lined through with a single line, the proper figure entered in ink above it, and the team members will initial in the margin by the line entry.

(c). Facilities will use their specific Property/Merchandise Inventory sheets that will be annotated with the unit price from the inventory statements, and the extension made by the facility manager. Upon completion of pricing, the team and facility manager will reconcile dollar values with the control accounts and prepare inventory statement.

(4). Upon completion of your inventory assignment, and prior to release form the activity, all required documents will be verified and signed by all persons involved in the specific areas inventory. All team members will remain on call through the duration of the inventory period and will meet at the FMB, Bldg 1317, at 1400 hrs on 1 Sep 15, unless otherwise directed by Financial Management Division (FMD).

15-5

(5). DOCUMENTS SUBMITTED WITH DISINTERESTED INVENTORY

15. Briefing Acknowledgement and Sign–In

b. Independent Observers

c. Briefing Statement

d. Merchandise and Supplies Inventory Statement

15-6

Encl-1

Encl-2

20 August 15

Briefing Acknowledgement and Sign-In (Detail and Activity Leader)

We, the undersigned, certify that the inventory team members and the observer(s) were briefed on their responsibilities and procedures for conducting and/or observing an independent physical inventory.

INVENTORY LOCATION: FORT IRWIN

PRINT SIGNATURE PHONE LOCATION

Briefing conducted by Brian Contreras, Budget Analyst, and Nicole Beckum, Budget Assistant.

IMNT-MWN 20 Aug 2015

MEMORANDUM FOR Mrs. Sonia Bonet, Director of Family and Morale, Welfare and Recreation, Fort Irwin, CA 92310-5094

SUBJECT: Independent Observers

Effective 31 Aug 2015, the following individuals will act as independent observers to count and verify the end-of-month inventories for the DFMWR.

NAME SIGNATURE INITIALS PHONE

2. Authority: DFAS 37-1, paragraph A040303

3. Purpose: To act as independent observers to count and verify the end-of-month inventories for the Fort Irwin DFMWR.

4. Period: 31 Aug 2015 through 01 Sep 2015.

5. Special Instructions: I, the undersigned, certify that the inventory team members and the observer(s) were briefed on their responsibilities and procedures for conducting and/or observing an independent physical inventory.

Brian Contreras Budget Analyst

BRJEFING STATEMENT

LOCATION(S) DEPARTMENT __

We, the undersigned , certify that the inventory team members and the observer(s) were briefed on their responsibilities and procedures for conducting and/or observing an independent physical inventory:

BRIEFING OFFICER

TEAM LEADER

Signature

Date

TEAM MEMBER(S)

INVENTORY OBSERVERS

Signature Date

(NOTE: Attach appointment orders and submit with inventory list)

Merchandise and Supplies Inventory Statement

INSTALLATION: Fort Irwin FUND: DFMWR__

LOCATION(s): ________ _______ DEPARTMENT(s): ___ _____

We, the undersigned, certify that to the best of our knowledge, a complete and accurate end-of-month independent physical inventory was taken.

All known discrepancies between actual inventory counts and dollar values and the accounting records have been reconciled and corrections made when necessary.

The attached inventory list accurately shows the value of the Fund’s (or activities) inventory as of ___31 August 2015_ (Date).

The following adjustments were required:

Physical Inventory Quantity _______________________Value __________________

Accounting Record Quantity ______________________ Value __________________

Variance Over (short) Quantity ____________________ Value _________________

Summary of individual adjustments:

Quantity: _____________________

Value: ________________________

List any adjustments to the accounting records inventory value.

image4.png image5.emf image6.jpeg image1.jpeg image2.png image3.jpeg