Valuation of Inventories in the Defense Logistics Agency Standard Automated Materiel Management System

We performed this audit in response to the Chief Financial Officers Act of 1990, as amended by the Federal Financial Management Act of 1994. Inventory and inventory-related transactions represent major portions of the total assets, obligations, revenue, and expenses reported on the DoD financial statements. Underlying the financial statements are management assertions on the valuation, ownership, existence, completeness, and presentation of inventories. Assertions regarding inventory valuation deal with whether inventories had been included in the financial statements at the appropriate dollar amounts and whether the basis of valuation is appropriate, properly applied, and consistent with previous periods. Inventory valuation data for many of the DoD consumable spare parts, medical supplies, and clothing and textile items are maintained in the Defense Logistics Agency (DLA) Standard Automated Materiel Management System (SAMMS). At the end of FY 2000, DLA reported inventories of approximately $8.3 billion in SAMMS. The original document contains color images.