Dlr-08 SN Inventory Sample Policy

See Below or Attached

Find attached: Orchid FFLPP Dlr-08 SN Inventory Sample Policy

Version: 1 2021.07.20

Dealer-08

Sample Policy

Serial Number Inventory

a.     Overview

·       A full serial number inventory for each license will be conducted on a quarterly basis. The count shall include any firearms on Temporary Assignment with employees and any firearms stored at an off-site storage location.  

·       A reconciliation of Company’s National Firearms Registration and Transfer Record (“NFRTR”) shall be conducted at least two times per year. 

·       The serial number inventory is to be performed on a bi-directional basis.  The counters will not be provided a copy of the A&D Book before recording the serial number of each firearm (a) on premises, (b) with employees on Temporary Assignment, and (c) located at any off-site storage location. 

·       One time per year the inventory shall include a comparison of all firearm markings to the information recorded in the A&D Book. 

·       Inventory dates will be chosen in advance and will be communicated in the weeks leading up to the event. 

·       Serialized transactions are to stop during the inventory event until [employee or department tbd by company] releases the hold and authorizes firearms activity.

·       Inventory results shall be documented and provided to management and ownership. 

·       Discrepancies shall be investigated immediately and reconciled within 24 hours. 

·       Any missing or incorrect A&D Book entries shall be performed upon conclusion of the inventory.  

·       Any employee found purposely hiding a regulated transaction error may be disciplined in accordance with Company policy, including termination. 

b.     Applicable Regulations and Forms

·       The Gun Control Act

·       The National Firearms Act

·       A&D Book

·       NFRTR Listing

a.     Inventory Tools and Reports 

·       ***Operations will provide the count team with Pre-Count Sheets

·       Completed and signed Pre-Count Sheets (See Appendix A)

·       Area Scan / Count Report (See Appendix B)

·       Full Inventory Reconciliation Report (See Appendix C)

·       List of serial number records to be corrected in the Book of Acquisition and Disposition

·       ATF Form 3310.11 Federal Firearms Licensee Firearms Inventory Theft / Loss Report

·       ATF Form 3310.11A Federal Firearms Licensee Theft/Loss Report Continuation Sheet

·       Management Report of Identified Issues and Trends

b.     Preparation

·       Prior to counting or scanning any inventory, all Serial Number transactions should stop and, if using an electronic A&D Book those serial numbers with “open dispositions” in the Company Book of Acquisition and Disposition should be downloaded or saved in a new file.

·       Divide the facility into a manageable number of “Areas.” Logical areas might include any of the following but should be standardized from inventory to inventory:

-   Division by physical location in store (e.g., Sales Counter, NFA Safe, back office safe, etc.)

-   Division by product line (e.g., Pistols, Rifles, NFA, etc.)

·       Document the assigned areas in this policy document in the following table and assign them with short-hand codes. An example has been provided.  If extra rows are required, use the “insert row” function to add new rows. 

·       Break down the number of firearms in each area to a manageable number.  Generally, an area should contain quantities of no more than 50 firearms. If the established area is greater than 200 firearms, create multiple sub-areas. For example, in the Sales Counter area, they would be denoted as SC1, SC2, SC3 and so forth.

·       Clearly segregate locations to minimize confusion as to where one location ends and the next location begins. This will minimize possible duplicate scans. 

·       During the pre-count, take the opportunity to spot check box markings, product markings or any other anomalies that may exist. 

·       End preparation. 

c.     Pre-Count - Manual

·       Obtain the designated Pre-Count sheet for the area.

·       Count the serialized items and enter the quantity onto the designated Pre-Count Sheet for that area. Sign the pre-count sheet.

·       End Pre-Count.

d.     Pre-Count - Electronic

·       Create an electronic Pre-Count Sheet in a spreadsheet program (e.g., Microsoft Excel®) or using inventory-supporting technology.

·       Record the name of the area to be counted.

·       Count the serialized items and enter the quantity onto the designated Pre-Count Sheet for that location. Save the pre-count sheet.

·       End Pre-Count.

e.     Serial Number Recording – Option A: Manual Serial Number Identification (Utilizing hand-written sheets) (Not recommended)

·       Create a new Count Report (Appendix B) to capture serial numbers on the printed form.

·       Identify the serial number on the firearm and record that number into the Count Report.  Continue until all serial numbers are entered into the Count Report. 

-   At least once per year the firearm markings (manufacturer, importer, model, caliber), and type shall also be recorded.

·       Have a second employee validate the entry of each serial number entered into the Count Report. 

·       If the serial numbers do not agree, review the location and serial numbers identified to determine the discrepancy. This process can save significant amounts of time at the end of the inventory during the reconciliation process.

·       If the serial numbers entered into the Count Report agree, then match the quantity of serial numbers entered to the Pre-Count Sheet quantity. If they agree, proceed. If not, the count should be re-performed until both agree. DO NOT PROCEED unless they agree.

·       If the Counter cannot reconcile the Count Report to the Pre-Count Sheet as well as the inventory physically in the area, the Counter and Pre-Counter shall meet with the Inventory Leader to discuss and bring the discrepancy to conclusion. 

·       End Serial Number Recording.

f.      Serial Number Recording – Option B: Manual Serial Number Identification (With the aid a spreadsheet program)

·       Create a new Count Report (Appendix B) to capture serial numbers utilizing a spreadsheet program.

·       Identify the serial number on the firearm and hand key that number into the Count Report. Continue until all serial numbers are entered into the spreadsheet.

-   At least once per year the firearm markings (manufacturer, importer, model, caliber), and type shall also be recorded.

·       Have a second employee validate the entry of each serial number entered into the Count Report. 

·       If the serial numbers do not agree, review the location and serial numbers identified to determine the discrepancy. This process can save significant amounts of time at the end of the inventory during the reconciliation process.

·       If the serial numbers keyed into the Count Report agree, then match the quantity of serial numbers entered to the Pre-Count Sheet quantity. If they agree, proceed. If not, the count should be re-performed until both agree. DO NOT PROCEED unless they agree.

·       If the Counter cannot reconcile the Count Report to the Pre-Count Sheet as well as the inventory physically in the area, the Counter and Pre-Counter shall meet with the Inventory Leader to discuss and bring the discrepancy to conclusion. 

·       End Serial Number Recording.

g.     Serial Number Recording – Option C: Scanned Serial Number Identification (With the aid of a spreadsheet program) 

·       Create a new Count Report (Appendix B) to capture serial numbers utilizing a spreadsheet program..

·       Identify the serial number on the firearm and scan that number into the Count Report. Continue until all serial numbers are entered into the spreadsheet.

-   At least once per year the firearm markings (manufacturer, importer, model, caliber), and type shall also be recorded.

·       Match the quantity of serial numbers entered to the Pre-Count Sheet quantity. If they agree, proceed. If not, the count should be re-performed until both agree. DO NOT PROCEED unless they agree.

·       If the Counter cannot reconcile the Count Report to the Pre-Count Sheet as well as the inventory physically in the area, the Counter and Pre-Counter shall meet with the Inventory Leader to discuss and bring the discrepancy to conclusion.

·       End Serial Number Recording.

h.     Post-Count from Option A – Data in Handwritten Sheets

·       Aggregate the Count Reports for all locations.  

·       Compare each area’s Count Report to the open dispositions in the A&D Book.  As each serial number in the Count Report is identified in the A&D Book as being an open disposition, highlight or strike-through that serial number (in the Count Report!) identifying it as located. 

·       Segregate any serial number discrepancies and determine if additional research is needed during the day of the Serial Number inventory. For example, if it appears that two Serial Numbers were missing from a location that can be determined, the area should be fully reviewed prior to resuming any serialized movement.

·       End Post-Scan.

i.      Post-Scan From Options B or C – Data in Spreadsheet

·       Aggregate the Count Reports for all locations.  

·       Aggregate each individual area’s Count Report into one master Count Report. The result should contain a continuous stream of serial numbers in one column, annotated with the name of the area or sub-area in the second column.

·       Obtain the data file of Serial Numbers that were determined to be “open dispositions” from before the inventory began and add them to the third column of the spreadsheet. Use the spreadsheet program’s VLookup or COUNTIF functionality to determine:

-   Serial numbers in column 1 that are not in column 2; and

-   Serial numbers in column 2 that are not in column 1

·       Segregate any serial number discrepancies and determine if additional research is needed during the day of the Serial Number inventory. For example, if it appears that two Serial Numbers were missing from a location that can be determined, the area should be fully reviewed prior to resuming any serialized movement.

·       End Post-Scan.

j.      Exception Reporting and Reconciliation Process

·       All reports are to be reviewed by the Inventory Leader and management. 

·       An Inventory Reconciliation Report (Appendix C) should be prepared and used as the basis for the reconciliation. It should include the entire listing of the perceived exceptions (valid or not) from any reports created during the inventory.

·       The Inventory Leader is responsible for managing the aggregated exception list and providing enough detail to adequately capture the source of the error, trend errors in the future, recommend corrective actions and process serial number record corrections.

·       As appropriate, the reconciliation process should continue until all available resources have been exhausted.

k.     A&D Records Modifications

·       [employee or department tbd by company] is the only authorized resource permitted to correct the A&D records (acquire or dispose) and they must be corrected in accordance with ATF Ruling 2016-1 if utilizing an electronic A&D Book program (ref. Policy Dlr-01). 

l.      Post-Inventory Reporting

·       Immediately after the serial number count, the Inventory Leader should deliver written or verbal communications to ownership on the status of the reconciliation. 

·       Upon conclusion of the reconciliation process, the Inventory Leader will present a summary of the inventory, root causes, and corrective actions to the team.  At a minimum the presentation should include the following:

-   Total count

-   Discrepancies needing investigation

-   Corrections to A&D records

-   Final Theft/Loss report quantity

-   Root cause and corrective action summary:

o   Root causes and corrective actions of discrepancies needing investigation

o   Root causes and corrective actions of the final Theft/Loss report

m.   NFRTR Reconciliation (Twice Per Year)

·       [employee or department tbd by company] shall obtain the NFRTR listing from the ATF via one of the following means:

-   Logging into ATF’s eForms system and accessing the NFRTR listing.  From the system it shall be copied and pasted into a spreadsheet program and saved with a file name of: “Company’s eForms NFRTR Listing MM/DD/YYYY”.

-   Submitting an email request to ATF’s NFA Division requesting a listing of the NFRTR inventory 

·       [employee or department tbd by company] shall compare the NFRTR listing to the A&D Book.  

-   If the listing and the A&D Book align it shall be recorded in the final inventory report provided to management and ownership.  

-   If the listing and the A&D Book do not align, the Inventory Leader shall investigate the discrepancy.  [employee or department tbd by company] shall contact NFA Division to resolve any discrepancies discovered, if needed.  Any necessary Theft / Loss Reports shall be filed by [employee or department tbd by company]. 

·       Inventory Leader – [employee or department tbd by company]

·       Pre-Count and Scan – [employee or department tbd by company]

·       Independent Validation of Pre-Count and Scan – [employee or department tbd by company]

·       Review Area Scan Reports – [employee or department tbd by company]

·       Independent Reconciliation and Management Reporting – [employee or department tbd by company]

·       Corrections to the Book of Acquisition and Disposition (ref. Policy Dlr-01) – [employee or department tbd by company]

·       Theft/Loss Filing (ref. Policy Dlr-03) – [employee or department tbd by company]