Lost/Stolen Firearms

One of the biggest fears of all gun dealers is recognizing that some of their firearm inventory has been lost or stolen, and the subsequent phone and email blasts that go out from the ATF afterwards.

The retired ATF agent I hired to bless this application was an actual field agent, responsible for conducting FFL audits. To ensure full compliance was built into FFLAssist, he told me a war story of an audit he conducted on a long-time FFL. The dealer hadn’t taken a physical inventory in close to 30 years. So, when the audit was conducted, many firearms that should have been in stock weren’t, and appeared in his A&D records as “acquired” but never “disposed.” This dealer had never experienced any thefts, so all missing firearms were attributed to the dealer’s failure to record the disposition in the A&D book when they were sold.

But this brings up three important points. First, lost or stolen firearms have been disposed of, obviously, but not in the usual way through completion of a 4473 and a subsequent sale. Second, they must still be recorded as dispositions in the A&D book. And third, they must be removed from the computerized inventory.

FFLAssist dramatically reduces the headaches associated with reporting lost or stolen firearms.  Here’s how:

1. To remove the lost or stolen firearm from inventory, dealers execute a small function to remove the firearm from the computerized inventory (and also remove the cost of the firearm from the balance sheet).
2. This function causes the lost or stolen firearm to appear on the dealers’ A&D book, but printed in red on the report.
3. This function deletes the lost or stolen firearm from appearing on the list of firearms available for sale, so none of the dealer’s staff can sell it.
4. The A&D book can be filtered to show just those firearms that have been reported as lost or stolen. The firearms appear as normal entries, but each entry prints in red, and the phrase “Lost or Stolen Items Appear in Red” appears at the top of the report
5. The application has native functionality to permit dealers to perform physical inventories and cycle counts. (For those unfamiliar with cycle counts, dealers use their knowledge of how quickly firearm items move [turn over] through their business and assign each firearm a code of “A”, “B” or “C”, where “A” items move, or turn over, quickly, such as popular gun models, “B” items move a little slower, and “C” items hardly move at all.) The concept of “cycle counts” is used to avoid dealers having to take a full physical inventory every month or so, which reduces the available time the dealer can spend managing other aspects of their business.
6. The application has great physical inventory reports, which show all items in inventory with their respective stock levels. When the report is printed, it can be printed to show what the application has as the quantity on hand, or it can be printed as a “blind” count, where the quantity on hand does not print, and the person(s) doing the counting cannot be biased as to the quantities, as this forces the items to be physically counted.

However, as great as these features are within FFLAssist, dealers must do their due diligence to prevent or mitigate the loss or theft of firearms.

1. Perform frequent cycle counts. Those items marked as “A” items are usually counted six (6) times per year, but each dealer determines the frequency which works for them.
2. Conduct cycle counts on your big-ticket items, regardless of cycle count identification. This is the accountant in me coming out. The more a firearm costs, the larger the reported loss value will be on your income statement.
3. Depending on your store’s volume, conduct a physical inventory at regular intervals, say every three (3) months, six (6) months, but definitely, annually. This will prevent the situation mentioned above of the dealer who never took a physical inventory.
4. If your business is large enough to warrant bringing in temporary personnel to help count stock, run the Physical Inventory report “blind”. This prevents these temporary workers from saying “the report shows three Glock-43s in stock, so there must be three, and I don’t need to crawl up on that shelf to count them.”

To discuss what FFLAssist can do for your business, click here.

To schedule a no-obligation 1-hour demo, click here and select which date/time works best for you.