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About This FAM

Responsible Agency: Office of the Comptroller General
Issued: May 1989
Last Updated: May 1989

1. Introduction

The Department of Public Works and Services (PW&S) is responsible to warehouse common use inventory and surplus goods for Government departments. It warehouses commonly used commodities in a revolving fund inventory, from which departments purchase in bulk quantities. Purchases are charged to departmental appropriations on a user-pay basis. Departments may independently warehouse goods that are unique to their own programs.
 

2. Policy

2.1 The Department of Public Works and Services (PW&S) shall be responsible for Government warehousing, except that a department may warehouse goods that are unique to its own program.
2.2 In accordance with the Board of Survey requirements of the Financial Administration Act, Government inventories must be reviewed regularly to identify public property for disposal and public property that is obsolete, surplus, or uneconomical to retain.
 

3. Directives

3.1

The Department of Public Works and Services shall:

  1. maintain stocks at acceptable service levels;
  2. maintain the revolving fund inventory control system (a subsidiary accounting system) in accordance with the Financial Administration Act;
  3. ensure that the revolving fund inventory control system is supported by proper warehousing practices;
  4. reconcile the revolving fund inventory control system with the General Ledger of the Government on a monthly basis;
  5. conduct an annual stock taking, reconcile to the General Ledger of the Government, and adjust perpetual inventory records; and
  6. manage the disposal and write-off of surplus stock.
3.2 The annual stock-taking must be observed by an independent observer appointed by the Comptroller General or his delegate.
3.3 Recording Inventories of Materials
3.3.1 The Government shall operate a perpetual inventory system for all common usage warehousing operations.
3.3.2 All entries in the perpetual inventory system are recorded in a control account in the General Ledger. These entries include the costs of all goods receipted and issued, the quantity shortages or overages identified through physical stock counts, and the deletions of obsolete, damaged or excess stocks.
3.3.3 Annual stock counts ensure that no serious lapses have occurred in either the physical custody or the accounting controls over inventories. Stock counts are verified with inventory records by the record-keepers, who are independent of the inventory custodians, wherever practicable.
3.4 Valuation of Inventories of Materials
3.4.1 The cost of purchases (excluding freight) will be charged against the appropriate account.
3.4.2

Stock issues must be:

  1. priced by the moving average method;
  2. charged back to user departments; and
  3. credited to the appropriate account.
3.5 Inventory Shortage and Overage
3.5.1

Adjustments to inventory for shortages or overages must identify the type of discrepancy as:

  1. physical count differences; and/or
  2. pricing and extension differences.
3.5.2 Shortages shall be charged to an appropriation and overages credited to a revenue account.
3.5.3

Inventory adjustment transactions must have the following approvals:

  1. Up to $20,000 approved by the Department Head; and
  2. $20,000 or more approved by the Financial Management Board.
3.6

Obtaining Materials from Revolving Fund Stores

Users may obtain materials from stores by a requisition for supplies, or by a shop work order. (For more detail on requisitioning supplies refer to the Supply Services Operational Manual and the Supply Services User Manual.)
 

5. Consequences from Failure to Comply

Failure to comply with policies and directives of the Financial Administration Manual may result in actions under Part X of the Financial Administration Act. The Government of the Northwest Territories may seek legal remedy in the Territorial Courts.