Hubbell Policies

SHIPPING CUTOFF POLICY

English

Owner : Vice President, Controller

Last Review: 2015.07.24

FIN – 45

Department: Finance

POLICY This policy describes the requirements for shipping cutoff at the end of a period, including the procedures and documentation requirements. To meet this objective each business is required to comply with the below procedure on shipping cutoff and only with written approval from the Corporate Controllers office, shall be allowed an exemption from any of the procedures. SCOPE This policy applies to all business units that have revenue shipments. PURPOSE The purpose of this policy and the related procedure is to set a standard for the process and documentation required for shipping cutoff at period end. PROCEDURE The Company requires revenue to be recognized in accordance with the terms and conditions with the customer regarding the transfer of title for goods sold. The terms and conditions with the customer may specify that title transfers when the product is shipped to the customer (i.e., incoterms of FOB shipping point). According to those terms, if Hubbell has not physically shipped a product by 11:59 pm on the last day of the month, and properly evidenced shipment, then it should remain within inventory and a sale is not recognized. Conversely, if Hubbell holds title to such shipments until the product reaches the destination (i.e., the incoterms are FOB destination), then such shipments should remain in inventory, and a sale is not recognized until the shipment is received at the destination (or is deemed received based on reasonable assumptions supported by the business unit). This document covers the required steps that all locations that ship product to customers should perform as part of month-end shipping cut-off procedures. These procedures must be performed at all Hubbell shipping locations and do not apply to shipments of inventory held by third parties (e.g. Consigned Inventory, Freight forwarders and brokers, etc.). These steps represent the minimum procedures; additional steps may be required for certain locations. The minimum steps described below are required to be completed on the last shipping day of each month. In addition, for quarter ending months, these steps must be documented on the Shipping Cut-Off Checklist and retained as audit evidence. The entire checklist and review must be documented and completed by Business Day 5. Shipping locations that are small (1-5 people) and / or less than $5M in annual third-party trade shipments may request an exemption from completing the Shipping Cut-Off Checklist from the Corporate Controller’s group. Confirm System Status Ensure all finalized shipments have been posted as "shipped" in the system. Audit the last 10 sequentially numbered shipments of the month and the first 10 of the subsequent months to ensure that Bills of Lading are signed and dated and match invoice dating to reflect proper passage of title / revenue recognition in accordance with specified incoterms. The review of the first 10 shipments of the month is subject to only shipments that have been shipped by Business Day 2. Therefore, it is acceptable to audit less than 10 shipments if the business has not had 10 shipments by Business Day 2. Retain evidence of review.

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