WAREHOUSE INVENTORY ACCOUNTING VS. COMMODITY FINANCIAL ACCOUNTING - Food Resources Manual

Warehouse inventory accounting tracks units of food, such as bags of grain or cartons of oil. Each warehouse keeps records that show stock movements, losses and balances at the warehouse. Regional and country offices maintain summary warehouse inventory records that show total warehouse inventory balances.

Commodity financial accounting also tracks food by units, but also assigns a monetary value to the units. While warehouse accounting is the inventory system for the individual warehouse, commodity financial accounting is the inventory system of the overall organization. Commodity accounting acts as a check on the warehouse inventory system, and places a total dollar value on all food program assets in inventory in a country.

Given the high monetary value of food programmed by CARE and the need to use sound commercial practices in managing this asset, it is important to keep commodity financial accounting separate from warehouse inventory accounting. Having two separate entities with opposing interests makes collusion more difficult and sets up a system of checks and balances. Just as a bank account holder maintains a check register and compares his own balance with the balance shown on the bank statement, the commodity financial accountant compares commodity inventory records with the warehouse inventory records to detect errors and discrepancies.

Each location where CARE, a port authority or counterpart holds food is equivalent to a bank where “cash” is kept. For example, food is deposited in the first “bank account” when it is received at port. It then is transferred from the port bank account to a second bank account, usually a primary warehouse. The food may then be transferred to a third bank account, which may be a secondary warehouse, and then finally to a store at a distribution site.

Certain properly authorized documents are required to receive or dispatch food from a warehouse. Just as banks keep records that reflect all deposits and withdrawals as well as the account balance, warehouses must keep similar records.

Comparison of Banking and Warehouse Accounting Terms

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