Hubbell Policies

• Second counts are required on all items with large variances, the threshold for this should be determined based upon the overall size of the inventory being counted. For $10M plus size inventories all variances above $2k should be resolved with second counts. For inventorieswith $5M to $9.999M of inventory all variances above $1k should be resolved with second counts. For inventories with $1 to $4.999M of inventory all variances above $500 should be resolved with second counts.

E. Coordination with Public Accountants

The independent public accountants employed by the Company will be on hand at principal locations to observe procedures used in taking the physical inventory. They will make such tests of the physical inventory, as they deem necessary to assure themselves of the accuracy of physical quantities reported. Arrangements shall be made with the public accountant in charge at each location to assure that they have sufficient time and information to complete their observation and that they concur in procedures for releasing areas.

F. Release of Area

When any department completes the inventory and all tags have been written within an area, the Foreman or Area Supervisor prepares an inventory release form indicating date and time of release.

The Business Unit Controller or his representative initials the release form when satisfied that the inventory is complete within the area and all corrections have been made as required.

Upon release of an area, all tags are pulled. Tags for each area are kept separate for retention purposes.

Foremen then deliver all inventory tags and release forms for areas released to the individual responsible for accountability of tags. Tags will be checked to determine that all those issued have been returned. If all tags have been returned, the release form will be signed and delivered to the area General Foreman.

Final release of the plant upon completion of accounting for all inventory tags is the responsibility of the Controller.

VALUATION OF PHYSICAL INVENTORY

After completion of the Physical Inventory Count, the Count Inventory is loaded into the perpetual records of the company and a new perpetual inventory listing is ran post count to insure it ties out to the inventory as counted. Once Operations/Finance has completed this reconciliation then the Business Unit Controller can release the departments for business transactions as the inventory has been fully verified against the count results. The physical inventory counted is valued at standard cost except for those items of job shop inventories, which are priced at job order costs. Standard costs and job order costs used in pricing the inventory are in accordance with HAPP 314.7 Inventory Valuation.

Once the Physical Inventory Count is valued the Controller will complete the form from the Inventory Policy.

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