POLICY:

Inventory may be adjusted on Great Plains in the following circumstances:

· Annual Physical Inventory Count
· Cycle Counts or Periodical Physical counts of specific products
· Product lost during delivery
· Damaged or Broken Product
· Obsolete Product
· Adjustments for miss-filled orders or other unusual gains or losses

A warehouse supervisor, financial manager or senior accountant may authorize inventory adjustments. The MDS/SWAP general manager must give final approval before any items are written off.

Inventory adjustments will be documented and reviewed periodically.

PROCEDURE:

1. MDS/SWAP Manager

· Approve write-offs, additions and any adjustments to inventory.

2. Warehouse Supervisor, Financial Manager or Senior Accountant

· Research the problem.
· Take a physical count of the product in question.
· Write the physical count on a physical inventory form.
· Verify that the product should be adjusted.
· Write a detailed explanation of why the inventory item should be adjusted. Sign the adjustment form.
· Forward the form to the lead financial specialist in accounting.

3. Lead Financial Specialist

· Review information on the form including Great Plains book inventory.
· Assure that all documentation is included.
· Verify the quantity to be adjusted.
· Determine the proper general ledger account to be adjusted.
· Forward the form and documentation to the MDS General Manager for approval.
· Adjust inventory in Great Plains.
· Attach a note to the Great Plains transaction explaining the adjustment
· Maintain a file to document inventory adjustments.

4. Financial Specialist

Prepare report for manager review.

5. MDS General Manager, Financial Manager and Senior Accountant

· Meet every two weeks to review inventory adjustments.
· Follow up on any recurring problems.