to   investigating   differences   between   the   bulk storeroom  count  and  the  actual  card  balances. Extending and Summarizing the  Inventories The office recordskeeper must now extend the inventory at cost and retail (where applicable) on the  working  (yellow)  copy  of  the  NAVSUP  238. The  original  (white  copy)  will  be  extended  by another qualified person. Neither the responsible custodian  whose  space  is  being  inventoried  nor the  recordskeeper  can  be  designated  to  extend  the original  inventory.  Using  the  original  inventory, the ship’s store officer (or the designated person) will verify the extensions on the working copy for accuracy.  Using  the  same  reconciliation  pro- cedures  mentioned  earlier  in  this  chapter,  the ship’s  store  officer  will  reconcile  any  differences and  will  make  all  the  necessary  changes. MID-ACCOUNTING   PERIOD INVENTORY Most  type  commanders  require  taking  surprise mid-accounting   period   inventories.   This   pro- cedure is highly recommended for all ship’s store divisions  regardless  of  requirements.  The  mid- accounting  period  inventory  allows  an  interim cheek to be performed on the store operation. The stock position of the store can then be reviewed. More  importantly,  however,  the  financial  condi- tion of the store can be determined. Is the store operator accurately caring for stocks entrusted to him  or  her  by  producing  money  or  material  for the full value? The element of surprise is the most important   aspect   of   this   type   of   inventory. Precautions should be taken so the store operator is completely unaware of any preparations for a mid-accounting   period   inventory. AUDITING   TECHNIQUES Auditing  is  one  the  most  important  and  fre- quently  neglected  functions  of  ship’s  store  supervi- sion.  Proper  records  are  absolutely  essential  to  an effective   ship’s   store   operation.   As   a   leading Ship’s Serviceman, you will very likely have some responsibility  for  auditing  ship’s  store  records  and returns. Auditing is the regular systematic checking of the stock and financial records in a ship’s store. The  main  purpose  of  an  audit  is  to  discover  errors and  irregularities.  Discovery  of  these  errors  should lead   to   correction   of   all   the   affected   records. Ultimately, discovery of errors should lead to the prevention  of  their  reoccurrence. As  mentioned  frequently  in  this  training manual,  it  is  wise  for  you  to  perform  the  audit steps periodically rather than to wait until the end of the accounting period. In this way, errors are generally restricted to shorter periods. Also, more time for auditing is available if auditing is done throughout the accounting period. Errors can be detected  earlier  and  stopped  promptly.  Also,  by detecting  these  errors  early,  you  can  make  cor- rections  and  adjustments  to  personnel  and  to  pro- cedures at the time. Consequently, you can avoid the  detailed  investigations  that  become  necessary when errors are discovered at the end of the ac- counting  period.  Finally,  you  can  complete  the closeout of the records and the preparation of the returns in less time. In  each  of  the  chapters  on  procurement, receipts,  and  expenditures,  a  section  has  been included on auditing procedures. Now, suggested procedures  will  be  described  for  the  auditing  of closeout  and  the  preparation  of  returns. AUDITING   CLOSEOUT The  ship’s  store  records  are  not  difficult  to close  out.  No  magic  is  required  for  you  to  com- plete  this  job.  However,  closing  out  the  ship’s store records is a necessary task you must perform to obtain the information you need to prepare the returns  required  by  your  appropriate  fleet  ac- counting  and  disbursing  center  (FAADC). Closeout  should  follow  this  sequence  of  events: 1.  Stock  Record 2.   Ship’s   Store   Afloat   Financial   Control Record 3.  Journal  of  Receipts 4.  Journal  of  Expenditures Why  is  this  order  important?  As  mentioned earlier, by closing out the Stock Record first, you can compare the quantities inventoried with the card  balances,  and  you  can  correct  any  errors. Second, the Ship’s Store Afloat Financial Control Record should be closed out, as the store can be reopened once a satisfactory balance is obtained. Third,  the  Journal  of  Receipts  must  be  closed  out. Last, you must close out the Journal of Expendi- tures. You will need information from the Ship’s Store  Afloat  Financial  Control  Record  and  the Journal of Receipts before you can close out the Journal  of  Expenditures.  The  audit  procedures for  each  of  these  areas  will  now  be  discussed. Stock Record Cards First, you must check over the information on the  stock  record  cards.  See  figure  7-1.  Throughout 7-6