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ANNUAL PHYSICAL INVENTORY FACT SHEET

Basis in laws and regulations

The Federal Property and Administrative Services Act (FPAS)addresses some of the purposes for inventories within its requirements for executive agencies (40 USC 483(b)). The law requires that an Agency ’Äú(1) maintain adequate inventory controls and accountability systems for the property under its control, (2) continuously survey property under its control to determine which is excess property, and promptly report such property to the Administrator’Äù.

Department of Commerce Personal Property Management Manual

(4.807) Physical Inventories.

Physical inventories of accountable personal property are scheduled by the PMO [Property Management Officer] for each Operating Unit.

Physical inventories must be completed at regular intervals, generally at least once a year or a cycle commensurate with the value of the personal property and the complexity of operations of the Operating Unit.

The Purpose of the Physical Inventory

The primary purpose of a physical inventory is to determine if the Property Custodial Officer/Asset Center Representative (PCO/ACR) can account for all items of property on the Custodial Area's inventory list so the organization can:

  Reconcile the physical property with the property records.

  Reconcile the physical property with the financial records.

An organization's ability to reconcile its property records and its financial records is critical to:

  Fulfilling its accountability obligations under law

  Obtaining a clean audit opinion of its financial statements as required by law

  Maintaining the public's trust.

How to conduct an inventory

Because the purpose of an inventory is to reconcile what accountable property actually exists in a Custodial area with the property records, the first step in conducting an inventory is to determine what actually exists within the Custodial area. The explanation of what must be accounted for is found on the NOAA Personal Property Web Site ( http://www.pps.noaa.gov/acctobj.htm). Property is identified in the property records by means of a unique identifier called the Property Identification Number or PIN. This number appears on a label that is usually attached to the accountable property. This label may be read by a barcode scanner. With a clear understanding of the physical boundaries of the Custodial area, the person or persons conducting the inventory will record all property found within the area by recording the PINs either on paper or with the scanner.

A list must next be obtained from the property system of the accountable property assigned in the system to the Custodial area being inventoried. Next the differences between what was found and the inventory listing are analyzed. Items that were not found, must be located or reported as missing. Items that were not on the listing must be added to the property system. Any changes to the location of the asset, etc., must be updated in the property system.

When do I need to conduct my inventory?

Physical inventories of all accountable property are inventoried at least once a year according to a schedule established at the beginning of the year by the Property Office Representatives in consultation with the Line and Staff Offices. The current year's schedule is published on the NOAA Personal Property Web Site. ( http://www.pps.noaa.gov/invensch.htm).

Inventories should also be conducted when responsibility for the property is transferred from one person to another.

Special inventories may be conducted at any time at the direction of the NOAA Property Management Officer.

Where can I find more information?

Instructions about recording the results of an inventory using the NOAA Personal Property Web Site can be found at: http://www.pps.noaa.gov/HTML_user_guide.htm#RR.