DEFENSE LOGISTICS AGENCY

 HEADQUARTERS

 8725 JOHN J. KINGMAN ROAD

 FORT BELVOIR, VIRGINIA 22060-6221

February 6, 2017 

MEMORANDUM FOR SUPPLY PROCESS REVIEW COMMITTEE (PRC) AND JOINT 

PHYSICAL INVENTORY WORKING GROUP (JPIWG) MEMBERS

SUBJECT: Approved Defense Logistics Management Standards (DLMS) Change (ADC) 1216,

Evidence Retention Responsibilities under DOD’s Physical Inventory Control 

Program (Inventory)

The attached approved change to DLM 4000.25, Defense Logistics Management 

Standards, and DLM 4000.25-2, Military Standard Transaction Reporting and Accountability 

Procedures (MILSTRAP) is available for immediate implementation. 

 Addressees may direct questions to Mr. Rafael Gonzalez, email: Rafael.Gonzalez@dla.mil; 

or Ms. Mary Jane Johnson, email: Mary.Jane.Johnson@dla.mil. Others may direct questions to 

their respective Service or Agency designated Supply PRC or JPIWG representative available at

http://www.dlmso.dla.mil/eLibrary/ServicePoints/allpoc.asp.

 

 

 

HEIDI M. DAVEREDE

Program Manager

Enterprise Business Process 

Standards Office 

Attachment

As stated 

cc: 

ODASD (SCI)
Attachment, ADC 1216

Page 1

Attachment to ADC 1216

Evidence Retention Responsibilities under 

DOD’s Physical Inventory Control Program

1. SERVICE/AGENCY AND POC INFORMATION:

a. Requesting Activity: Office of the Deputy Assistant Secretary of Defense Supply Chain 

Integration (ODASD(SCI))

b. Functional POC: Mr. Rafael Gonzalez, DOD Joint Physical Inventory Working Group 

(JPIWG) Chair, DLMS Program Office, email: Rafael.Gonzalez@dla.mil, (717) 770-6817; DSN 771-

6817

2. FUNCTIONAL AREA: Inventory

3. REFERENCES:

a. Defense Logistics Manual (DLM) 4000.25-2, Military Standard Transaction Reporting and 

Accountability Procedures (MILSTRAP).

b. DLM 4000.25, Defense Logistics Management Standards, Volume 2, Supply Standards and 

Procedures.

4. APPROVED CHANGE(S):

a. Brief Overview of Change:

(1) Revise the instructions for retaining accountable documentation under the physical 

inventory control procedures to clarify that the existing responsibilities apply to both the materiel 

owners and storage activities, as applicable. 

(2) Provide clarification regarding retention of research documentation applicable to 

accounting error inventory adjustments associated with the location reconciliation process.

b. Background: During a Financial Improvement and Audit Readiness (FIAR) review, the 

Air Force identified the need for further clarification of responsibilities for evidential matter as part of 

the location reconciliation process. DLM 4000.25-2, MILSTRAP (Reference 3.a.), and DLM 4000.25, 

DLMS, Volume 2 (Reference 3.b.), provide instructions for retention of accountable documentation in 

support of audit requirements. Current instructions apply to both the materiel owners and storage 

activities, as applicable. However, while this applicability is implicit, it was not explicit in the text.

The Air Force recommended a revision to MILSTRAP to address this concern, and clearly state that 

the responsibility for evidence retention applies to both the storage activities and the materiel owner.

c. Approved Change in Detail: Revise current procedures to clarify that the 

MILSTRAP/DLMS physical inventory control responsibilities for document retention apply to both 

the materiel owner and the storage activity, as applicable. It is the responsibility of both the storage 

activity and materiel owner to retain evidential matter to support inventory adjustments/corrections due 

to a discrepancy on inventory records between the storage activity and the owner. 
Attachment, ADC 1216

Page 2

d. Revisions to DLM 4000.25 Manuals:

(1) Revise DLM 4000.25-2, MILSTRAP, Chapter 7, Physical Inventory Control, 

paragraph C7.9., Retention of Accountable Documentation, as shown in the enclosure.

(2) Revise DLM 4000.25, DLMS Volume 2, Chapter 6, Physical Inventory Control, 

paragraph C6.9., Retention of Accountable Documentation, as shown in the enclosure.

5. REASON FOR CHANGE: Current physical inventory control procedures under MILSTRAP and 

DLMS would benefit from clarifying the responsibilities for evidential matter when the materiel owner 

or the storage activity identifies a discrepancy between the storage activity and the materiel owner

records. Furthermore, MILSTRAP retention of accountable documentation for inventory adjustments 

does not specify applicability to accounting error inventory adjustments (legacy DIC D8B/D9B); it 

only addresses physical inventory adjustments (legacy DIC D8A/D9A).

6. ADVANTAGES AND DISADVANTAGES:

a. Advantages: Updates to MILSTRAP and DLMS publications will clarify the 

responsibilities for accountable document retention under the physical inventory control procedures. 

b. Disadvantages: There are no known disadvantages.

7. ESTIMATED TIME LINE/IMPLEMENTATION TARGET: Effective immediately upon 

release of ADC. This revision clarifies the existing intent of the physical inventory control procedures 

for document retention to support audit requirements.

8. ESTIMATED SAVINGS/COST AVOIDANCE ASSOCIATED WITH IMPLEMENTATION 

OF THIS CHANGE: There are no direct cost savings identified. 

9. IMPACT:

a. New DLMS Data Elements: There are no new DLMS data elements.

b. Changes to DLMS Data Elements: There are no changes to existing DLMS data 

elements.

c. Automated Information Systems (AIS): Components will need to evaluate their systems 

to identify any potential impact and ensure compliance. DLM 4000.25 and DLM 4000.25-2 will 

clearly define the responsibility of evidence retention for storage activates and materiel owners, as 

applicable.

d. Defense Automatic Addressing System (DAAS): There are no changes to current 

transaction flows or mappings through DAAS.

e. Non-DLM 4000.25 Series Publications: DOD Components must review and update as 

appropriate any internal guidance to comply with procedures delineated in this DLMS change.
Enclosure, ADC 1216

Page 1

ENCLOSURE to ADC 1216

A. Revise DLM 4000.25-2, MILSTRAP, Chapter 7 as shown (changes are identified by bold, red 

italics or double strikethrough)

C7.9. RETENTION OF ACCOUNTABLE DOCUMENTATION. DOD requires that all

Components meet audit requirements Audit capability is required for a period of time following the 

processing of documents and data and completion of the research efforts. Owners and storage 

activities will maintain records and supporting documentation in accordance with DoDI 5015.02 

and DoD 7000.14-R, Financial Management Regulation, Volume 1 Chapter 9. The following 

retention criteria will business rules apply to storage activities and owners when retaining records for 

audit purposes:

C7.9.1. Source Documents. Retain original source documents or facsimiles in a readily 

accessible format. (e.g., microform (microfilm, microfiche), Compact Disk-Read Only Memory (CDROM)) for at least two years. Where sSource documents are produced, these include only 

accountability change documents such as receipts, issues, shipments, transfers, SCC changes, and 

inventory and financial adjustments. Retain source documents providing evidence of shipment to FMS 

recipients, in accordance with DoDI 5015.02 for two years (see DoD 5105.38-M, Security Assistance 

Management Manual) from the date of materiel shipment.

C7.9.2. Transaction Histories. Retain registers, records, files, tapes, and data for at least two 

years in a format useful for audit trail purposes. Automated inventory control systems will be designed 

to facilitate the printout output of transaction histories that indicate the date the last physical inventory 

was conducted for each item.

C7.9.3. Adjustment Research. Retain backup documentation that directly pertains to individual 

cases of physical inventory adjustment research efforts in a readily accessible format for at least two 

years (to include physical inventory and accounting error adjustments).

C7.9.4. Annual Statistical Sample. Retain the annual statistical sample inventory line item detail 

data in a readily accessible format for at least two years.
Enclosure, ADC 1216

Page 2

B. Revise DLMS, Volume 2, Chapter 6 as shown (changes are identified by bold, red italics or 

double strikethrough)

C6.9. RETENTION OF ACCOUNTABLE DOCUMENTATION. DoD requires that all 

Components meet audit requirements Audit capability is required for a period of time following the 

processing of documents and data and completion of the research efforts. Owners and storage 

activities will maintain records and supporting documentation in accordance with DoDI 5015.02 

and DoD 7000.14-R, Financial Management Regulation, Volume 1 Chapter 9. The following 

retention criteria will business rules apply to storage activities and owners when retaining records for 

audit purposes:

C6.9.1. Source Documents. Retain original source documents or facsimiles in a readily 

accessible format (e.g.,microform (microfilm, microfiche), Compact Disk-Read Only Memory (CDROM)) for at least two years. Where sSource documents are produced, these include only 

accountability change documents such as receipts, issues, shipments, transfers, SCC changes, and 

inventory and financial adjustments. Retain source documents providing evidence of shipment to FMS 

recipients in accordance with DoDI 5015.02 for two years (see DoD 5105.38-M, Security Assistance 

Management Manual) from the date of materiel shipment.

C6.9.2. Transaction Histories. Retain registers, records, files, tapes, and data for at least two 

years in a format useful for audit trail purposes. Automated inventory control systems will be designed 

to facilitate the printout output of transaction histories that indicate the date the last physical inventory 

was conducted for each item.

C6.9.3. Adjustment Research. Retain backup documentation that directly pertains to individual 

cases of physical inventory adjustment research efforts in a readily accessible format for at least two 

years (to include physical inventory and accounting error adjustments).

C6.9.4. Annual Statistical Sample. Retain the annual statistical sample inventory line item detail 

data in a readily accessible format for at least two years.