Annual Physical Inventory - Reconciliation and Offsetting
This memorandum provides guidance on how to reconcile physical and book inventories as part of the required annual physical inventory of distributing agency (DA) and subdistributing agency storage facilities, and provides guidance on offsetting inventory shortages and overages that are identified during the reconciliation process. Under section 250.14(c) of the Food Distribution Program regulations, all storage facilities at the DA level must be reviewed annually, and the DA must ensure that subdistributing agencies conduct annual reviews of their storage facilities.
Under section 250.14(e), DAs and subdistributing agencies must perform a physical inventory as part of the annual review, and the physical inventory must be reconciled to the book inventory. Finally, under section 250.16(a)(1), DAs and subdistributing agencies must maintain complete and accurate records with respect to the receipt, distribution/use and inventory of donated foods. (Note: a school food authority that is a subdistributing agency but that does not warehouse donated foods for another recipient agency is not subject to these requirements.)