AH-Chap09.pdf - DOE Financial Management Accounting...

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DOE Financial Management Accounting Handbook 5-4-2012 9-1 CHAPTER 9 ACCOUNTING FOR INVENTORY AND RELATED PROPERTY 1. INTRODUCTION. a. Purpose. This chapter establishes the DOE inventory and related property managerial accounting policies and general procedures defined by statutory requirements, FASAB, and other Federal guidance as required. b. Background. In the Department of Energy (DOE), th e term “inventory” has been used broadly to cover inventory, materials, and other related property. In this chapter the term is used as defined in the Statement of Federal Financial Accounting Standards No. 3 (SFFAS No. 3), Accounting for Inventory and Related Property ,” promulgated by the Office of Management and Budget (OMB) on October 27, 1993. In this context, inventory includes tangible personal property that is for sale or in production for sale. The primary elements of related property include crude oil held in the Strategic Petroleum Reserve and the Northeast Home Heating Oil Reserve, nuclear materials, operating materials and supplies. These categories include work-in-process, finished goods, production materials, raw materials, stock held for sale or use, and other subcategories. Excluded from inventory and related property are plant and capital equipment. When it is necessary to distinguish inventory for sale, operating materials, or stockpile materials and so forth, these terms have been us ed. The term “materials” is used when referring to operating materials and supplies, stockpile materials, or both. The financial inventory management and control procedures include those established by the Federal Accounting Standards Advisory Board (FASAB), the Comptroller General, OMB, and Federal statutes. The standards to be used in accounting for inventory and related property are contained in SFFAS No. 3. Attachment 9-1 contains a list of definitions relating to inventory. c. Applicability. The applicability of this chapter is specified in Chapter 1, “Accounting Overview,” of the DOE Accounting Handbook . d. Policy. (1) All DOE inventory and related property shall be controlled to ensure compliance with Federal requirements for prevention of waste, fraud, and mismanagement of resources.
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DOE Financial Management Accounting Handbook 05-04-2012 Chapter 9 Accounting for Inventory and Related Property 9-2 (2) Inventory and related property under financial control shall be recorded as assets in standard general ledger (SGL) accounts from the time of acquisition until issued for use, sold, consumed, or disposed of in the normal course of operations. (3) Inventory and related property controls shall include completion of physical counts at prescribed intervals and, when appropriate, control by use of perpetual records. Physical counts and quantity records shall be reconciled and adjusting entries prepared to bring physical and financial records into agreement. If products are too hazardous or inaccessible for a physical count, alternative means (such as perpetual records and measuring techniques) shall be used to establish quantities.
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