Hubbell Policies

CONTINGENCES AND RESERVES POLICY

English

Owner : Vice President, Controller

Last Review: 2014.12.19

FIN - 12

Department: Finance

POLICY

Advance approval of the Corporate Controller or Assistant Controller is required to record or adjust any liability associated with a loss contingency or reserve in an amount greater than $250,000. Advance approval is not required for routine and recurring adjustments to an existing liability or reserve that has been accrued pursuant to a standard formula or methodology that has been approved by the Corporate Controller or Assistant Controller and Group VPF.

SCOPE

This policy applies to all Hubbell business units.

PURPOSE

To clarify the approval that is required before a contingency or reserve can be recognized or adjusted in the company’s general ledger.

PROCEDURE

For clarity, below is an example of when advance approval is required.

1. Advance approval is required to establish a separate reserve for a specific warranty issue >$250,000. On the other hand, advance approval will not be required when the recurring quarterly update of the warranty liability based on the standard methodology results in an adjustment to the accrual >$250,000. 2. Environmental and legal exposures: Liabilities for environmental or legal exposures by their nature are not routine or recurring adjustments based on standard methodologies, therefore advance approval by the VP, Corporate Controller or Assistant Controller and the Director of Environmental Health and Safety (EH&S) is required to establish or adjust any environmental liability. Advance approval by the VP, Corporate Controller or Assistant Controller and the Group Legal Counsel is required to establish or adjust any legal liability. Further, advance approval is required to include the General Counsel and Group VPF to establish or adjust any legal or environmental liability in an amount >$250,000. Note that adjusting a liability does not include application of cash payments to approved vendors against the liability balance (i.e., approved spending vs the liability).

3. A gain contingency, in any amount, may not be recognized without advance written approval of the Corporate Controller or Assistant Controller.

In addition to the approval that may be required by this policy, specific procedures exist and must be followed for recognizing or adjusting liabilities or reserves for warranties, restructuring costs (including severance), environmental exposures, E&O reserves, reserves for doubtful accounts, returns, and credit allowances and cash discounts.

ADMINISTRATION

Roles and Responsibilities. None

Monitoring, Evaluation and Review. None

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