Hubbell Policies

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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