PhysicalInventoryofCurrentAssets.docVIP

Physical Inventory of Current Assets 1 Introduction This guideline explains the scope and procedures for physical inventory of stocks. A physical inventory has to be conducted for all stocks of the BHC Group. Thus, to comply with this directive, a physical inventory has to be delivered for *? raw materials, *? packaging materials, *? goods purchased for re-sale, *? semi-finished and finished goods and *? supplies. During planning, executing, monitoring and analyzing the physical inventory it has to be ensured that the physical inventory is *? complete, *? correct in terms of item and amount and *? as performed on single batch item level. Also, it has to be ensured that the results of the physical inventory can be validated, thus the method chosen and the results have to be documented and archived, giving a third party an appropriate and complete overview of the physical inventories of the company. The standard and allowable alternative methods for conducting physical inventory are described in general in the subsequent sections. 2 Physical Inventory Procedures There are several physical inventory procedures, which are applicable under certain circumstances. One physical inventory procedure has to be applied consistently for one defined and enclosed storage location. 2.1 Annual Inventory An annual inventory conducted as per a defined date effective is the standard inventory procedure. It is the safest, but also in most cases the most time consuming physical inventory method. It is performed at balance sheet (annual) or another fixed key date close to this date (extended annual). The annual inventory is mandatory where *? inventory amounts are based – at least partially – on estimations or retrograde calculations or *? high fluctuation lead to larger inventory differences, as experienced in the past. In these cases, none of the simplification methods described below are allowed to be utilized.  Physical Inventory of Current Assets 2.2 Ph