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This document provides |
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a step-by-step guide for physical inventories that allows us to |
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verify the existence and ownership of inventories. FRA ensures that plant physical inventory procedure is updated every year, |
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that physical count coverage complies with group rules and that auditors can supervise physical inventory organized during Q4 |
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Physical inventory counts objective is to check the existence and ownership of inventories. This procedure applies to all |
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companies included in the consolidation under full integration. It is recommendation for "joint operation", joint venture and where Syensqo is considered as "associate" and to all warehouses within and out of production sites. For each new acquisitions the integration management office will determine when that procedure becomes compulsory. The procedure deals with the inventory count of |
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- 31000100 Raw material
- 31000160 Consumable supplies inventory
- 31000200 Raw material-industrial supplies
- 31000300 Raw material-packing material
- 37000100 Finished products
- 37000200 Goods for resale
- 37000400 Semi-finished products
The procedure is effective from the publication date.
c. Responsibilities
Finance responsible assigned (FRA)
- Determines the annual schedule in conjunction with the inventory manager and ensures schedule adherence,
- Prepares a site inventory procedure,
- Validates the inventory discrepancies analyzed by the inventory manager,
- Prepares and sends inventory reports.
Inventory manager or his representative (PIM)
- Participates in the preparation of the physical inventory and in the inventory counts,
- Analyses and justifies any significant discrepancies.
Inventory count team
all materials from a site where the inventory is taking place. The procedure deals with the inventory count associated with BFC heading STOT-A300 inventories. |
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The procedure is effective from the publication date |
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A physical inventory count of inventories and work-in-progress is performed on an at least once by reference period in accordance with the Syensqo Group's accounting standards. Reference period starts on December 1st and ends on November 30th of the following year.
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Annual inventory planningAnnually, at the start of Q1, the Physical Inventory Manager (PIM) defines the physical inventory count program for the year for raw materials, semi-finished goods, finished goods. For plants which follow cycle counts, the plan includes a stratification/ classification following the Cycle Count policy. The data used for the analysis is based on SAP G/L detail for the prior year-end and forward-looking material resource projections. It is then reviewed and approved by the GBU Finance Responsible Assigned (FRA). For Cycle Counts: The plan outlines the stratification classification & count requirements for each following the guidelines stated in the Cycle Count policy. The FRA reviews the count plan which is then transferred/uploaded to the Company's database to feed with the ERP to enable cycle count execution. A reconciliation is performed by PIM and reviewed by FRA to confirm the count plan has been posted in the appropriate AODOCS document repository. Independent of the methodologies applicable for the physical inventory count, it is mandatory that each individual item is counted at least once a year, and the count is registered in the ERP and documented in the memorandum of inventory. Any inventory location is under the responsibility of a Physical Inventory Manager (role) and supervised by Finance Responsible Assigned (role)
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==> Responsibilities can be adapted for each plant according to the segregation of duties, but any modification should be written in a procedure |
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To accomplish the segregation of duties, it is mandatory to not overlap the roles of each actor of the process into the tasks. - Physical inventory count – Performed by PIM and/or correspondents team members. It is the execution of the counting program, by the cycle count, or monthly / quarterly count or yet the stock physical annual full count, in accordance with the planning program, as defined in local procedure In this process, prior to the physical count, the PIM generates in SAP the inventory documents considering the physical count to happen and prints the sheets with the materials and storage locations, to support the counting. These sheets may be manually filled, with the volumes found in each location, for each material number and batch (if applicable). If any difference is questionable, a physical recount can be performed, to ensure no mistake has happened. Once the differences are considered appropriate, they can be approved by the FRA in SAP, in a specific transaction, which generates a financial posting. To ensure the segregation of duties, the access and role of differences approval must be due to the FRA only, or higher level in hierarchy in case of unavailability, medical leave, annual leave, etc. - Memorandum of inventory – Performed by PIM and/or correspondents team members. It is the document that details how, when, who and what materials and storage locations are being physically counted. Need to mention the methodology used for the counting and keep attached the digitalized version of counting sheets fulfilled with the quantities found. - Mail of validation from GCCO – Performed by FRA The communication between the FRA and the GCCO explaining and obtaining the approval of the process and the differences found. Once approved, FRA must perform in SAP the posting of the inventory differences, under the appropriated transaction |
d. Segregation of duties
Segregation of duties (SOD) reduces risk of error and fraud so that no single individual can adversely affect the accuracy and integrity of the count.
Segregation is based on separation of the three following process
- Business process : Purchase/ Procurement, Shipment, Consumption in production
- Physical custody of assets process: counting, recording of movements
- Accounting process: invoice validation, adjustment resulting from inventory count
Respect for SOD rules means that:
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