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C7. CHAPTER 7
INVENTORY ADJUSTMENT TRANSACTIONS

C7.1. GENERAL

C7.1.1. Adjustment/Change Procedures. This chapter provides procedures relating to the following types of adjustment and change actions:

C7.1.1.1. Adjustments caused by catalog change actions.

C7.1.1.2. Reidentification of improperly identified material.

C7.1.1.3. Offsetting adjustments to purpose andcondition codes.

C7.1.1.4. Discrepancies disclosed by physical inventory.

C7.1.1.5. Ownership gains and losses applicable to Single Manger for Conventional Ammunition (SMCA).

C7.1.1.6. Accounting for material during maintenance.

C7.1.2. Adjustment Actions. Two methods are provided for effecting adjustments—single or dual actions.

C7.1.2.1. Single Adjustment. The singleadjustment method accommodates processing techniques that use individual increase or decrease adjustment actions against the accountable and owner records. DS to Federal IC 947I, Warehouse Inventory Adjustment Advice, is used for these actions.

C7.1.2.2. Dual Adjustment. The dual adjustment method provides for offsetting adjustments to condition or purpose code in a single adjustmenttransaction. This is possible by using the FROM and TO in the N1 segments in DS 947I.

C7.1.2.3. Single Transaction Prescribed. When the DoD Component practice prescribes the use of single transactions of DS 947I internally for condition or purpose transfer, make provisions for acceptance and processing from other DoD Components.

C7.1.3. Ownership/Purpose Code Changes. Changes betweenownership codes, from purpose code to ownership code, or from ownership code to purpose code, shall not be made by an adjustment action. Process appropriate issue and receipt transactions to make the necessary accounting actions. An exception to this rule is the use of the ownership change and inventory adjustment, DS 947I, and corresponding

single adjustments to accomplish ownership gain/lossunder the SMCA concept (see section C7.3., below).

C7.1.4. Project Code Changes. Do changes in project or distribution codes using individual increase or decrease material adjustment transactions with DS 947I.

C7.1.5. Clerical/Automated Accounting Errors. Submit inventory adjustments, resulting from clerical or automated information system errors but which cannot be corrected by reversingthe original transaction, or from reconciliation between the storage activity and the owner, using a DS 947I with Quantity or Status Adjustment Reason Code AB (Accounting Error).

C7.1.6. Nonspecific Inventory Adjustments. Use DS 947I, with Quantity or Status Adjustment Reason Code AH (Other), to accomplish an adjustment increase or decrease when a quantity or status adjustment reason code isnot otherwise provided. (The DoD Components shall maintain detailed backup information as to use and requirement for the transaction.)

C7.1.7. Specific Inventory Adjustments. DS 947I with Quantity or Status Adjustment Reason Code AJ (Survey) shall be used to report inventory adjustments resulting from shrinkage, theft, contamination, deterioration, and expired shelf-life. Losses resultingfrom major disasters, fire, enemy action, acts of God, etc., will be identified by Quantity or Status Adjustment Report Code AI (Disaster).

C7.2. CHANGES IN CONDITION OF MATERIAL

C7.2.1. Condition Reclassification of Assets in Storage

C7.2.1.1. Reporting Classification Variance to Owners. When inspection of stocks on hand reveals that a condition reclassification is required,storage activities shall report the variance to the owner within 3 calendar days using DS 947I with Quantity or Status Adjustment Reason Code AC (Condition Change) and Inventory Transaction Type Code AD (Inventory Adjustment - Decrease) and AJ (Inventory Adjustment - Increase) for the affected condition codes.

C7.2.1.2. Changing Condition Code to J. When immediate reclassification of suspect...