BOP Program Statement 8331.03 § 11

In addition to cycle counts, monthly shop stock counts, and the establishment of control groups, if

required, the AW/SOI at each location ensures that annual physical inventories are conducted for:

■ Raw materials.

■ Sub assemblies.

■ Finished goods.

■ Work in process.

■ Fixed Assets.

The following procedures apply to annual wall-to wall inventories:

a. I nventory Plan. The AW/SOI develops a written plan for conducting the individual

inventories associated with the annual wall-to wall inventory. The plan is submitted to the FFA at

least 30 days before the inventory. A copy is kept on file with the inventory documentat ion.

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The plan includes sections for:

■ Preparation.

■ Logistics.

■ Use of Inventory Count “identifiers.”

■ Count sheet information to include the exclusive use of staff only count teams.

■ Summarization.

■ Reconciliation.

b. T iming of Wall-to-Wall Inventories. The AW/SOI ensures that physical inventories are

conducted at times that least interfere with production. Periods when stock levels are low are

most appropriate.

Note: Work in process inventories must be done during August each fiscal year.

c. C rew Supervisor. The AW/SOI appoints a crew supervisor for conducting each

wall-to-wall physical inventory. The crew supervisor can be the prime business manager,

operational accountant, or the warehouse supervisor. The crew supervisor provides verbal and

written instructions for:

■ Taking counts and ensuring that annual inventories are conducted using staff-only count

teams.

■ Issuing and controlling count identifiers.

■ Issuing and controlling inventory count documentation slips.

■ Recording count data.

■ Ensuring that all items are counted.

The crew supervisor is responsible for:

■ Ensuring that count identifiers are affixed to all materials being counted.

■ Performing spot counts to ensure that proper counting and item identification occurs.

■ Ensuring that the list of differences, or other pre-adjustment report(s), are generated for items

inventoried using the financial information system. The crew supervisor reviews the report(s)

carefully to ensure that actual physical inventory counts were entered accurately.

■ With the assistance of the operational accountant, or the prime business manager, preparing a

written synopsis of the inventory, including the value of the inventory adjustment and the

inventory accuracy rate. The synopsis is forwarded to the AW/SOI, who reviews the

adjustments to inventory resulting from the actual physical inventory.

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■ Determining promptly which items require recounting. Receipt or issue of materials does not

resume until the recount is completed. The crew supervisor assigns new counters to recount

the required items to avoid prejudicial counts.

■ With the assistance of the operational accountant, or prime business manager, reconciling the

physical inventory of work in process with the financial information system WIP calculation

report.

■ Reviewing and analyzing variances in the physical inventory to identify the root cause of

differences. The crew supervisor may make recommendations for procedural compliance or

other changes to avoid similar problems in the future.

■ Preparing a separate memorandum to address specific problems noted by inventory teams that

need to be corrected for general improvement of the inventory control system.

■ After the review of inventory differences is completed, preparing a memorandum detailing the

causes for differences and corrective actions taken to prevent future differences. The

memorandum is distributed through the AW/SOI to the prime business manager and FFA.

d. Conducting Annual Inventories. A warehouse staff member creates the inventory

document(s) in the financial information system.

Counts are performed using two-staff-member count teams. To ensure timely completion, a

sufficient number of staff should be used. All selected items are physically counted. The count

sheets are signed by the two staff performing the physical counts. Count sheets cannot be signed

by a person entering or posting the counts in the financial information system.

Note: The requirement for staff-only count teams performing annual inventories cannot be

waived.

Inventory recounts are performed for all significant deviations between physical counts and

financial information system record balances.

A warehouse staff member enters the final counts into the financial information system inventory

document(s).

Physical inventory items must be reconciled with financial information system subsidiary records.

The AW/SOI reviews adjustments after reconciliation. As part of the reconciliation, review, and

analysis process, the AW/SOI addresses corrective actions for significant or recurring differences.

The AW/SOI signs the system-generated inventory report if any adjustments were

required.

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A financial management staff member posts the count into the inventory document.

The prime business manager, or operational accountant prints the physical inventory list or list of

differences from the financial information system for the inventory, and completes a memorandum

detailing the differences, which is submitted to the FFA upon completion of the inventory.

e. Work in Process Inventory. The prime business manager, remote operational accountant,

or remote accountant issues inventory count sheets to identify the job number, item number,

quantity, and operation number, and prepares a manual journal entry for the overage/shortage prior

to August 31.

The WIP valuation report is adjusted by this manual journal entry to reconcile to the general ledger

at month-end for any production orders that remain open. The prime business manager, remote

operational accountant, or remote accountant reverses this manual journal entry in September and

re-enters it for production orders that remain open at the end of September. This entry continues

each month until all production orders affected by the count are closed.

f. Annual Inventory Files. The AW/SOI ensures that an inventory file is created for each

annual physical inventory. At a minimum, the file contain s:

■ The written inventory plan.

■ Completed inventory count slips signed by staff members.

■ The completed physical inventory document(s) from the financial information system.

■ The physical inventory list or list of differences from the financial information system.

■ A synopsis of the inventory, including the value of inventory differences and the inventory

accuracy rate.

■ The memorandum addressing specific problems noted by the physical inventory teams, if

applicable.

The list of differences from the financial information system for the inventory and the synopsis of

the inventory are submitted to the FFA upon completion of the inventory process.