Hubbell Policies
POLICY PORTAL
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Table of Contents
Policy Approval Committee..................................................................................................................... 8
PAC-01 Policy on Policies........................................................................................................................................... 9
FINANCE .............................................................................................................................................. 13
FIN-01 Accrued Outbound Freight Policy .................................................................................................................14
FIN-02 Allowance for Doubtful Accounts Policy .......................................................................................................16
FIN-03 Asset Impairments Policy ..............................................................................................................................18
FIN-04 Authority for Expenditure Policy...................................................................................................................21
FIN-05 Balance Sheet Account Reconciliations Policy ..............................................................................................24
FIN-06 Bank and Investment Account Management Policy .....................................................................................28
FIN-07 Capitalization of Property, Plant and Equipment Policy ...............................................................................30
FIN-08 Capitalized Software Costs Policy .................................................................................................................33
FIN-09 Cash Discount Reserves Policy ......................................................................................................................37
FIN-10 Consigned Inventory-Consignor Policy .........................................................................................................39
FIN-11 Construction in Process Policy ......................................................................................................................42
FIN-12 Contingencies and Reserves Policy ...............................................................................................................44
FIN-13 Professional Services – Price Waterhouse Coopers (PWC) Policy ...............................................................46
FIN-14 Credit and Collection Policy ...........................................................................................................................49
FIN-15 Credit Memo and Sales Allowance Reserves Policy.......................................................................................52
FIN-16 Critical Spreadsheets Policy ...........................................................................................................................54
FIN-17 Domestic Cross-Company Transactions Policy ..............................................................................................57
FIN-18 Cycle Count Reserves Policy...........................................................................................................................60
FIN-19 Cycle Count and Perpetual Inventory Accuracy Policy ..................................................................................62
FIN-20 Depreciation of Property, Plant and Equipment Policy .................................................................................73
FIN-21 Derivatives and Hedging Policy ......................................................................................................................76
FIN-22 Employee Loans Policy ...................................................................................................................................82
FIN-23 Excess and Obsolete Inventory Policy............................................................................................................84
FIN-24 Financial Statement Translation Policy .........................................................................................................89
FIN-25 Foreign Currency Exchange Policy .................................................................................................................91
FIN-26 Goodwill and Intangible Assets Policy ...........................................................................................................93
FIN-27 OneStream System Modifications Policy .......................................................................................................95
FIN-28 HFM User Access Policy .................................................................................................................................97
Any non-sequential policy numbers are because a prior Hubbell policy was either retired or transferred .
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FIN-29 Hyperion Financial Management Policy ........................................................................................................99
FIN-30 In-Transit Inventory Policy ...........................................................................................................................101
FIN-31 Invoice Matching Policy ...............................................................................................................................103
FIN-32 Journal Entry Policy ......................................................................................................................................112
FIN-33 Petty Cash Policy ..........................................................................................................................................115
FIN-34 Physical Inventory Policy..............................................................................................................................117
FIN-35 Disposition of Property, Plant and Equipment Policy ..................................................................................127
FIN-36 Property, Plant and Equipment Policy .........................................................................................................130
FIN-37 Prepaid Expense Policy ................................................................................................................................132
FIN-38 Procurement Card Policy .............................................................................................................................134
FIN-39 Property Protection Policy ...........................................................................................................................139
FIN-40 Purchase Accounting Policy .........................................................................................................................142
FIN-41 Re-Measurement of Foreign Currency Transactions Policy........................................................................144
FIN-42 Reserve for Physical Inventory Policy ..........................................................................................................148
FIN-43 Restructuring and Related Costs Policy .......................................................................................................150
FIN-44 Revenue Recognition (ASC 606) Policy ........................................................................................................153
FIN-45 Shipping Cutoff Policy ..................................................................................................................................169
FIN-46 Standard Cost of Inventory Policy................................................................................................................172
FIN-47 State Tax Withholding for High Travel Employees Policy ............................................................................180
FIN-48 Tax Accounting Policy ..................................................................................................................................184
FIN-49 Travel and Expense Policy ............................................................................................................................186
FIN-50 Excess and Obsolete (E&O) Workbook Changes Policy.............................................................................. 199
FIN-51 Shipment Date Modification Policy……………………………………………………………………………………………………… ..201
FIN-52 Gift Card Purchase and Issuance Policy...................................................................................................... 203
FIN-53 Scrap Revenue Policy.................................................................................................................................. 205
FIN- 54 Lease Accounting Policy………………………………………………………………………………………………………………………… 207
HUMAN RESOURCES ...........................................................................................................................211
HR-01 Access to Personnel Records Policy..............................................................................................................212
HR-02 Anti-Harassment, Discrimination and Retaliation Policy..............................................................................214
HR-03 Bereavement Leave Policy ............................................................................................................................225
HR-04 Break-In Service Policy..................................................................................................................................227
HR-05 Building Communication Policy ....................................................................................................................229
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HR-08 Education Reimbursement Policy .................................................................................................................231
HR-09 Employee Purchase of Company Products Policy.........................................................................................235
HR-10 Employment at Will Policy ............................................................................................................................237
HR-11 Employment of Relatives and Employees in a Romantic Relationship Policy ..............................................239
HR-12 Equal Employment Opportunity Policy.........................................................................................................241
HR-13 External Communications Policy ..................................................................................................................243
HR-14 Family Medical Leave Policy .........................................................................................................................245
HR-15 Patent and Invention Awards Policy .............................................................................................................286
HR-16 Personal Leave of Absence Policy.................................................................................................................288
HR-17 Personnel Data Privacy and Security Policy..................................................................................................290
HR-18 Short-Term Incentive Policy..........................................................................................................................293
HR-19 Smoke-Free Workplace Policy ......................................................................................................................296
HR-20 Temporary Staffing Policy.............................................................................................................................298
HR-21 U.S. Background Check Policy.......................................................................................................................300
HR-22 U.S. Jury Duty Policy .....................................................................................................................................305
HR-23 U.S. Employee Referral Payment Policy .......................................................................................................313
HR-24 U.S. Salaried Job Posting and Application Policy ..........................................................................................315
HR-25 US Vacation Policy for Non-Exempt and Hourly Employees ......................................................................319
HR-26 Violence-Free Workplace Policy ...................................................................................................................326
HR-27 U.S. Work Rules Policy ..................................................................................................................................328
HR-28 Workplace Inspection Policy.........................................................................................................................331
HR-29 Paid Parental Leave Policy ............................................................................................................................333
HR-30 Flexible Work Arrangements Policy............................................................................................................ 337
HR-31 Hybrid and Remote Work Arrangements Policy......................................................................................... 341
HR-32 COVID-19 Emergency Leave Policy............................................................................................................. 346
HR-33 Volunteer Paid Time Off.............................................................................................................................. 350
HR-34 Reasonable Accommodation Policy ........................................................................................................... 353
HR-35 Military Leave Policy ................................................................................................................................... 364
HR-36 Paid Sick Time Policy .................................................................................................................................. 372
HR-37 US Drug and Alcohol-Free Workplace Policy (NON-DOT) .......................................................................... 393
HR-38 Dress for Your Day Policy ........................................................................................................................... 403
HR-39 US Flexible Vacation Policy for Exempt Employees ................................................................................... 405
INFORMATION TECHNOLOGY..............................................................................................................408
Any non-sequential policy numbers are because a prior Hubbell policy was either retired or transferred .
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IT-03 Application Change Control and Development Policy ...................................................................................409
IT-05 Asset Management Policy ..............................................................................................................................413
IT-06 Cellular Phone Management Policy ...............................................................................................................416
IT-07 Change Management Policy ...........................................................................................................................418
IT-08 Computer Equipment Disposal Policy ............................................................................................................421
IT-09 Data Backup Policy .........................................................................................................................................423
IT-10 Disaster Recovery Planning Policy ..................................................................................................................426
IT-12 Electronic Communication and Use of IT Computing Assets Policy ...............................................................429
IT-13 Firewall Management Policy ..........................................................................................................................436
IT-14 Incident Management Policy..........................................................................................................................438
IT-16 Mobile Device Usage Policy............................................................................................................................440
IT-17 Infrastructure Operations Policy ....................................................................................................................444
IT-18 PC, Cellular and Network Procurement Policy ...............................................................................................447
IT-20 Information Technology Project Procurement Policy ....................................................................................449
IT-22 Server/PC Patch Management Policy .............................................................................................................452
IT-25 System Activity Monitoring Policy..................................................................................................................454
IT-31 Privileged SAP Access Policy......................................................................................................................... 456
IT-32 IT Wireless Standards Policy......................................................................................................................... 462
IT-34 SOX System Control Policy ........................................................................................................................... 465
LEGAL .................................................................................................................................................468
LEG-01 Code of Business Conduct and Ethics Policy............................................................................................ 469
LEG-02 Aircraft Usage Policy...................................................................................................................................471
LEG-03 Anticorruption Policy..................................................................................................................................474
LEG-04 Compensation Recovery Policy ..................................................................................................................477
LEG-05 Conflict Minerals Policy ..............................................................................................................................483
LEG-06 Data Protection by Design & By Default and Data Impact Assessment Policy...........................................485
LEG-07 E.U. Data Subject Rights Policy...................................................................................................................496
LEG-08 Global Internal Privacy Program Framework Policy ...................................................................................503
LEG-09 Insider Trading Policy .................................................................................................................................506
LEG-10 Records Management Policy ......................................................................................................................510
LEG-11 Stock Ownership and Retention Policy ......................................................................................................522
LEG-12 Restricted Party Transactions Policy ..........................................................................................................526
LEG-13 Evaluating Red Flag Situation Policy............................................................................................................529
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LEG-14 Requesting & Recording End User Use and End User Information Policy ..................................................532
LEG-15 Destination Control Statement Policy .........................................................................................................539
LEG-16 Import/Export Recordkeeping Policy ..........................................................................................................541
LEG-17 Imports-Overage Shortage Policy ...............................................................................................................544
LEG-18 Commercial Invoice Preparation Policy ......................................................................................................546
LEG-19 Embargo/Sanctioned Destinations Policy ...................................................................................................548
LEG-20 Approval Authority Policy …… .......... ………………………………………………………………………………… . …….……… ..... 551
LEG-21 Global Human Rights Policy ……………………………………………………………………………………………… . …………… .. … 555
LEG-22 Political Contributions Policy…………………………………………………………………………………………… . …………………. 557
LEG-23 Contract Review and Approval Policy........................................................................................................ 559
LEG-24 Outside Legal Counsel and Litigation Policy.............................................................................................. 563
LEG-25 Parent Company Guaranty Policy.............................................................................................................. 565
LEG-26 End Point Protection Policy....................................................................................................................... 568
LEG-27 Domain Name Policy................................................................................................................................. 571
LEG-28 Service Provider Compliance Review Policy.............................................................................................. 574
LEG-29 System Access and Maintenance Policy.................................................................................................... 578
LEG-30 Cyber Supply Chain Risk Management and Security Policy...................................................................... 583
LEG-31 User Access Review Policy......................................................................................................................... 593
LEG-32 User Authentication and Monitoring Policy.............................................................................................. 596
LEG-33 Data Classification Policy........................................................................................................................... 599
LEG-34 Vulnerability Management Policy.............................................................................................................. 604
LEG-35 Antiboycott Policy...................................................................................................................................... 614
LEG-36 ESG and Sustainability Disclosures Policy.................................................................................................. 619
LEG-37 Corporate Cybersecurity Operations Policy .............................................................................................. 622
LEG-38 Open Source Software Policy ................................................................................................................... 627
LEG-39 Product Security Policy ............................................................................................................................. 631
LEG-40 Cloud Security Policy ................................................................................................................................. 640
LEG-41 Cloud Logging and Monitoring Policy ....................................................................................................... 646
LEG-42 Merger Request Form (MRF) Policy ......................................................................................................... 652
OPERATIONS.......................................................................................................................................654
OPS-01 Business Continuity Planning Policy...........................................................................................................655
OPS-02 Disruption of Supply Notification Policy ....................................................................................................657
OPS-04 Purchase Order Placement & Execution Policy ....................................................................................... 660
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OPS-05 Supplier Insurance Policy. ....................................................................................................................... 667
OPS-06 Vendor Master Administration Policy ..................................................................................................... 670
OPS-07 Environmental, Health and Safety Polic y… . ……………………………………………………………………………………... ... 673
OPS-08 Authorization to Sign Procurement Contracts Policy................................................................................ 675
Any non-sequential policy numbers are because a prior Hubbell policy was either retired or transferred .
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POLICY APPROVAL COMMITTEE
POLICIES
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POLICY ON POLICIES
English
Last Review: 2022.06.28
PAC - 01
Owner : POLICY APPROVAL COMMITTEE
POLICY
Hubbell Incorporated and its subsidiaries and affiliates (hereinafter, “Hubbell” or the “Company”) shall promulgate enterprise-wide policies via a consistent process and format to create, implement, monitor and enforce the policies of the Company and to further the Company’s foundational pillar to Operate with Discipline. All policies of the Company must be submitted to, reviewed by and approved by the PAC to be an enterprise Policy.
SCOPE
Any enterprise, segment or business unit Policy of the Company. Any purported policy of a business unit or segment must also be submitted to the PAC for review prior to issuance, or, to the extent already issued, resubmitted to the PAC for review and approval.
PURPOSE
To ensure Hubbell’s employees understand the Policy creation, review and monitoring process.
PROCEDURE
If a Hubbell department, function, business unit or segment believes there is a need for a new or revised Policy, then such group shall work with their functional or segment lead to draft a new or revised policy that complies with the format requirements o f the Policy Template (the “Proposed Policy”) attached hereto. A Proposed Policy must be submitted to the PAC via PAC@hubbell.com for potential review and consideration by the PAC at least one full week (7 days) prior to a PAC meeting. Inquiries about PAC meeting dates may be sent to pac@hubbell.com.
Proposed Policy Submission Requirements. Any Proposed Policy submission to PAC@hubbell.com must include the following:
(i) a Word version of the Proposed Policy and, to the extent it is an amendment to an existing Policy, also a marked version of the Proposed Policy marked against the existing Policy; (ii) a brief description of the reason such proposed Policy is required; (iii) confirmation that the Proposed Policy has already been reviewed by at least the applicable function or segment lead or subject matter expert and any other stakeholders, as applicable; and (iv) details about to whom this Policy specifically applies and your plan for communicating to those people. Review by PAC. At the applicable PAC meeting, the function or segment lead or subject matter expert shall participate in the presentation of the Proposed Policy to the PAC. The PAC may submit questions or revisions regarding a Proposed Policy either before, during or after a PAC meeting, as applicable.
Issuance of Policies. Once a Proposed Policy is approved by the PAC, the PAC Support Team shall add the Policy to the Policy Portal.
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ADMINISTRATION
Roles and Responsibilities. The PAC is responsible for oversight of all policies of the Company.
Monitoring, Evaluation and Review. The PAC shall review this Policy periodically, as needed. Policy owners must review PAC approved Policies and related documents annually and submit any required revisions to the PAC for approval.
Exceptions. Any exceptions will be subject to the approval of the PAC.
ACCOUNTING AND DISCLOSURE
Not applicable.
REPORTING
Not applicable.
DEFINITIONS
PAC – the Policy Approval Committee, which consists of the following officers of Hubbell Incorporated: (i) Chief Human Resources Officer; (ii) SVP, General Counsel and Secretary; and (iii) VP, Controller.
Policies or Policy – a PAC approved document that is applicable to the Hubbell enterprise, subject to local laws and regulations. A Policy must: (i) be enforceable and auditable; (ii) be required by law, define Company values or address major business needs; (iii) be mandatory to ensure consistent application across the enterprise; and (iv) be approved by the PAC. Policy Portal shall mean the electronic catalogue of Policies maintained by the Policy Support Team on Hubbell’s intranet site, “Harvey”. Any purported policy document not contained within the Policy Portal is not a PAC approved Policy and should be brought to the attention of the PAC immediately.
Policy Support Team shall mean members of the Company’s Legal Department who support the PAC and the Policy Portal.
Policy Template shall mean that form of draft policy that is submitted to the PAC for review. The Policy Template is for Policies only and should not be replicated or repurposed for any non-PAC approved policies.
RELATED DOCUMENTS (Policies, Guidelines, Standards)
Policy Template Form
•
VERSION
Version
Approval
Effective
Changes
1 2
J. Capozzoli, A. Hsieh, S. Mais J. Capozzoli, K. Lane, S. Mais
2014
Original Issue
2020.12.17
Revised to reflect new template and current PAC processes. Revised to incorporate submission requirement of 7 days’ prior to a PAC meeting.
3
J. Del Nero, A. Flynn, K. Lane
2022.06.28
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POLICY TEMPLATE 1
XXXXXXXXX POLICY
English
Owner : Title [ list title of Corporate function head ]
Last Review: [date]
XXX - 01
Department: [department] [ list Corporate function ]
POLICY
[Note to Draft Policy Template (“NTD”) : this section is to explain what this Policy is for and why it is required]
XXXXXX
SCOPE [NTD : the “Scope” is to explain to whom and what the Policy does or does not apply]
XXXXX
PURPOSE [NTD: the Purpose is where to include the business objective/purpose of this Policy]
XXXXX
PROCEDURE [NTD: this section details how a Policy is implemented, followed and reviewed ]
XXXXX
ADMINISTRATION
Roles and Responsibilities. XXXXX
Monitoring, Evaluation and Review. XXXXX
Exceptions. XXXX
[NTD: this may be “Not Applicable” or this is where to include whether exceptions are permitted and how those could
be granted]
ACCOUNTING AND DISCLOSURE
XXXXX
[NTD: does this Policy trigger any specific accounting or public disclosure requirements]
REPORTING
XXXXX [NTD: does this Policy trigger any specific internal reporting obligations]
DEFINITIONS [NTD: any capitalized terms and acronyms must be included in the Definitions section and appropriately defined. All definitions should be listed in alphabetical order]
XXXXX XXXXX.
XXXXX XXXXX.
XXXXX XXXXX.
1 Formatting requirements: Calibri font, 11 point; one inch margins/borders; justified paragraphs; no page #s
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RELATED DOCUMENTS (Policies, Guidelines, Standards)
XXXX NTD: list any related exhibits, annexes and other referenced documents for the Policy here and include a copy of such document in your submission to pac@hubbell.com. You should also list any cross-referenced Hubbell policy hereto.
VERSION
Version
Approval
Effective
Changes
1
J. Del Nero, A. Flynn, K. Lane
[date]
[Original Issue] OR [Insert bullets/brief summary explaining changes to existing Policy]
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FINANCE POLICIES
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ACCRUED OUTBOUND FREIGHT POLICY
English
Owner : Vice President, Controller
Last Review: 2015.09.11
FIN - 01
Department: Finance
POLICY This policy required that a business maintain an accrual for outbound freight. To meet this objective each business is required to comply with the below procedure on accrued outbound freight and only with written approval from the Corporate Controllers office, shall be allowed an exemption from any of the procedures and from using the standard corporate template. SCOPE This policy applies to all business units that incur out freight. PURPOSE The purpose of this policy and the related procedure for accrued outbound freight is to set the standard and provide a corporate template to calculate the outbound freight accrual. PROCEDURE This procedure requires that any business unit that incurs outbound freight expense have an accrual established to reserve for freight costs that have been incurred and have not been paid or the invoice has not been received and recorded in Accounts Payable. The outbound freight accrual must be reviewed monthly and adjusted, at a minimum, in the last month of every quarter. The accrual must be calculated in accordance with the Corporate Standard Outbound Freight Template. The Business Unit Controller is responsible for ensuring the review of the assumptions in the template are reasonable on at least a quarterly basis. The review should include but is not limited to the following: • Freight expense as a percentage of sales appears reasonable and consistent with past analyses • Freight billing completion percentage appears reasonable and consistent with past analyses • The Required Reserve per the Corporate Standard Outbound Template appears reasonable and there is no need to adjust any of the assumptions or inputs in the calculation (i.e. There are no sales that need to be included/excluded from the monthly sales figures used in the analysis, no adjustment to freight expense is necessary, no adjustments to the CASS data used in determining the completion percentage, etc.). Any adjustments must be clearly documented and explained within the analysis. • Ensure any one-time material adjustments are accounted for (i.e. large air shipment at quarter-end) • Data obtained from CASS and used in the analysis is complete and accurate (i.e. the data in the analysis agrees to a report from CASS or CASS files) Any modifications or adjustments to the assumptions embedded in the Corporate Standard Outbound Freight Template must be approved by the Corporate Controller or Corporate Assistant Controller. ADMINISTRATION
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Roles and Responsibilities. The Business Unit Controller is responsible for ensuring the accrual on the General Ledger agrees to the Required Reserve in the most recent Corporate Standard Outbound Freight Template. Monitoring, Evaluation and Review. An analysis and updated calculation of Accrued Freight must be performed monthly and the accrual adjusted at least quarterly. Exceptions. In order to obtain an exception to this procedure a written request must be submitted to the Vice President, Corporate Controller that contains a compelling business reason why the Procedure cannot be adhered to. ACCOUNTING AND DISCLOSURE None REPORTING None DEFINITIONS Outbound Freight shall mean Freight incurred as a result of shipping inventory as part of a sale to a third-party (i.e. not a Hubbell affiliate). Corporate Standard Outbound Freight Template shall mean Template created by the Corporate Controller’s Group included in the Related Documents section below. RELATED DOCUMENTS (Policies, Guidelines, Standards)
• FIN-12 Policy for Contingencies and Reserves • Corporate Standard Outbound Freight Template VERSION Version Approval
Effective 2014.08.01 2019.08.15
Changes
1 2
J. Capozzoli, A. Hsieh, S. Mais J. Capozzoli, K. Lane, S. Mais
Original Issue
Conformed to new template
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ALLOWANCE FOR DOUBTFUL ACCOUNTS POLICY
English
Owner : Vice President, Controller
Last Review: 2023.03.31
FIN - 02
Department: Finance
POLICY
This Policy requires that a business maintain reserves for uncollectable accounts receivable and to ensure that the allowance for Doubtful Accounts is stated at management’s best estimate of the amount of accounts receivable that will not be paid by customers. To meet this objective each business is required to comply with this Allowance for Doubtful Accounts Policy and only with written approval from the Corporate Controllers office, shall be allowed an exemption from any of its procedures.
SCOPE
This Policy applies to all customer accounts receivables.
PURPOSE
The purpose of this Policy is to set the standard for preparation of an allowance for doubtful accounts calculation, minimum quarterly control procedures, balance sheet reconciliation documentation requirements, and electronic audit evidence requirements.
PROCEDURE
This Policy outlines the requirements for calculating and recording allowances for Doubtful Accounts.
An allowance for Doubtful Accounts is required for all customer accounts for which the collectability remains uncertain. The company approved methodology for calculating the allowance for Doubtful Accounts is as follows:
• A/R balances (excluding credits) aged less than 180 days must be reserved at 0.287%; • A/R balances (excluding credits) aged over 180 days must be reserved at 25%; and • A/R balances (excluding credits) aged over 365 days must be reserved at 100%.
In addition to the standard calculations noted above, each business unit must review their open accounts receivable portfolio to determine if any additional collection concerns exist (above those captured through the standard calculation above). These specific identification reserves should be separately captured and detailed out with sufficient explanation in the Allowance for Doubtful Accounts Template. The allowance for Doubtful Accounts calculation should be based upon data at the end of the 2nd month of the quarter (February, May, August and November). Any adjustment required to this reserve must be booked in the 3rd month of the quarter (March, June, September and December). In the event a significant customer collectability issue arises in the 3rd month of the quarter, this issue should be factored into the specific identification portion of the template and should include an explanation as to why it was included. The allowance for Doubtful Accounts should be recorded in OneStream account 1390 (equivalent SAP Account 129000). In addition, adjustments related to this reserve must be reflected in OneStream Custom 3 Account E5730 “Bad Debt Expense” (equivalent SAP Account 650085). Local general ledger account numbers may vary depending on ERP and the business unit controller is responsible to ensure the local general ledger accounts selected will properly
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map to these OneStream accounts.
Any departure from the approved methodology described above (either by use of a different calculation or a modification to the Allowance for Doubtful Accounts Template) must be approved in advance by the Corporate Controller’s office.
ADMINISTRATION
Roles and Responsibilities. The business unit is responsible for updating the allowance for Doubtful Accounts using the Allowance for Doubtful Accounts Template as described above.
Monitoring, Evaluation and Review. The segment controller will ensure the allowance for Doubtful Accounts is reviewed prior to close on a quarterly basis.
Exceptions. Any deviation from this Policy must be approved by the Vice President, Controller or Assistant Corporate Controller.
ACCOUNTING AND DISCLOSURE
None.
REPORTING
None.
DEFINITIONS
Doubtful Account shall mean a customer (debtor) balance that is at risk of being uncollectable.
RELATED DOCUMENTS (Policies, Guidelines, Standards)
• Allowance for Doubtful Accounts Template.
VERSION
Version
Approval
Effective 2014.08.01 2019.08.15 2023.03.31
Changes
1 2 3
J. Capozzoli, A. Hsieh, S. Mais J. Capozzoli, K. Lane, S. Mais J. Del Nero, A. Flynn, K. Lane
Original Issue.
Conformed to new template. Update of reserve methodology.
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ASSET IMPAIRMENTS POLICY
English
Owner : Vice President, Controller
Last Review: 2023.03.31
FIN - 03
Department: Finance
POLICY
This Policy requires all business units to evaluate tangible, definite-lived and Indefinite-Lived Intangible Assets for impairment in accordance with the procedures outlined below. All assets should be reviewed for impairment when an indicator is present. Indefinite-Lived Intangible Assets are required to be reviewed for impairment annually in the second quarter.
SCOPE
This Policy applies to PP&E and Intangible Assets (other than Goodwill), including the capitalized cost of internal use software.
This Policy does not apply to Goodwill.
PURPOSE
The purpose of this Policy is to define the responsibilities of Segment Controllers and the Corporate Controllers office with regards to monitoring PP&E and Intangible Assets for potential impairment indicators and the steps that should be take when an impairment indicator is identified.
PROCEDURE
Tangible and all Intangible Assets
PP&E and Intangible A ssets that are amortized, including the capitalized cost of internal use software (“long -lived assets”) should be reviewed for impairment whenever an impairment indicator is present. An impairment indicator is an event or change in circumstance indicating that that the carrying value of the asset (or group of assets) may not be recoverable. The Segment Controller is responsible for assessing whether impairment indicators are present and to inform the Corporate Controllers office on a timely basis when an impairment indicator is identified. The Corporate Controller’s office is responsible for guiding the Segment Controller through the appropriate analysis to determine whether an impairment exists.
An impairment loss should not be recognized in the general ledger without advance approval from the Corporate Controller’s office.
Impairment indicators include, but are not limited to the following
1. A significant decrease in the market price of the asset; 2. A significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition; 3. A significant adverse change in legal factors or in the business climate that could affect the value of a long lived asset, including an adverse action or assessment by a regulator; 4. An accumulation of costs significantly in excess of the amount originally expected for the acquisition or
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construction of an asset; 5. A significant time delay of the expected in use-date of a construction of an asset;
6. A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset; 7. A current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The term more likely than not refers to a level of likelihood that is more than 50 percent; 8. Consideration of restructuring activities; plant closures or relocations of manufacturing or administrative sites; and 9. The potential to discontinue or significantly curtail product lines or the use of trademarks and trade names. This list is not meant to be all inclusive and there may be other situations, including circumstances that are specific to an entity’s business or industry that are impairment indicators. The Segment Controller’s ongoing analysis and review of the entity and its operations should provide a basis for determining whether there are any indicators of impairment. Indefinite-Lived Intangible Assets are required to be reviewed for impairment at least annually, and also should be reviewed for impairment whenever an impairment indicator becomes present. The annual review of Indefinite-Lived Intangible Assets for impairment compares the fair value of the Intangible Asset to its carrying value. The fair value of the Intangible Asset is calculated using various inputs in order to determine the fair value of the Intangible Asset. Those inputs include, forecast sales growth and sales growth rates for multiple year periods, tax rates, royalty savings rates, and discount rates. The Segment Controller is responsible for monitoring forecast sales growth, multi-period growth rates and tax rates and to inform the Corporate Controllers office on a timely basis when there is a significant adverse change in any of these inputs. On an annual basis, in the second quarter of each year, Indefinite-Lived Intangible Assets will be formally tested for impairment by comparing the fair value of the Intangible Asset to its carrying value. The Corporate Controller’s office is responsible for the fair value estimates and segment Controllers are responsible for forecast sales growth, sales growth rates for multiple year periods and tax rates that are inputs to the fair value model. Intangible Assets that are not amortized (Indefinite-Lived Intangible Assets)
ADMINISTRATION
Roles and Responsibilities. None.
Monitoring, Evaluation and Review. None.
Exceptions. None.
ACCOUNTING AND DISCLOSURE
None.
REPORTING
None.
DEFINITIONS
Intangible Assets shall mean assets (not including financial assets) that lack physical substance. Intangible Assets can be acquired through a business combination, an asset acquisition, or may be internally generated. Certain Intangible Assets are individually identified and separately recognized in the financial statements under U.S. GAAP,
19
including Intangible Assets representing the value of customer lists, trademarks and trade names, and technology.
Indefinite-Lived Intangible Assets shall mean Intangible Assets that are deemed to have an indefinite useful life. Indefinite-Lived Intangible assets are not amortized.
Goodwill shall mean an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is not amortized under U.S. GAAP.
PP&E shall mean property, plant and equipment.
RELATED DOCUMENTS (Policies, Guidelines, Standards)
• FIN 08 - Capitalized Software Costs Policy.
VERSION
Version
Approval
Effective 2014.08.01 2019.08.15 2023.03.31
Changes
1 2 3
J. Capozzoli, A. Hsieh, S. Mais J. Capozzoli, K. Lane, S. Mais J. Del Nero, A. Flynn, K. Lane
Original Issue.
Conformed to new template.
Wording updates and changes to impairment review timing.
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AUTHORITY FOR EXPENDITURE POLICY
English
Owner : Vice President, Controller
Last Review: 2019.05.16
FIN - 04
Department: Finance
POLICY
All funding requests in excess of $5,000 for the following items must follow the Authority for Expenditures (AFE) Procedure:
• Property, Plant and Equipment (PP&E) items (inclusive of all expenses relating to installation or implementation of PP&E) • Software (initial purchase) • Leases (new & renewals) • Acquisition of a business
All expenditures of PP&E items less than $5,000 must adhere to the Signature Authority Matrix.
If the spend amount of a previously approved AFE is exceeded by 10% a supplemental AFE must be prepared for the revised total and is subject to the approval levels based on the revised total amount. The 10% threshold triggering the need for a supplemental AFE is measured separately for the Capital and Expense amounts of the previously approved AFE (i.e., If the spend associated with either Capital or Expense exceeds their previously approved amounts, then a supplemental AFE is required). Additionally, the amount Capital and Expense in an approved AFE may not be subsequently “reclassified” between those categories. (for example, a cost over -run in the Expense category of an approved AFE may not be reclassified to the Capital category, or vice versa).
Funding for restructuring activities will require an AFE and must be requested through a Special Charges AFE Template.
A link to the page containing the both the Standard AFE template and the Special Charges AFE Template can be found in the Related Documents section of this policy.
SCOPE
This policy applies to all Hubbell business units.
PURPOSE
To establish guidelines for when an AFE is required and set forth approvals and procedures to be followed prior to funds being committed or disbursed.
PROCEDURE
All requests for funding as defined in the Authority for Expenditure (AFE) Policy shall be entered into the AFE Electronic Routing System. All input fields in the AFE Electronic Routing System must be completed. The Hubbell Standard AFE Template is to be completed in its entirety and uploaded into the system. In addition to the Standard AFE Template, the Special Charges AFE Template must be used when requesting approval for restructuring costs and costs relating to strategic initiatives. A link to the page on the Wire where these templates can be found is in the Related Documents section of this procedure. Once submitted, the AFE electronic routing system will route the AFE to approvers as determined by the signature authority matrix (SAM). On a monthly basis, each Business Unit Controller or delegate is
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