This Inventory Cycle Count Policy is designed to help organizations achieve exceptional inventory accuracy and operational efficiency. By implementing the principles outlined in this tool, companies can reduce raw material shortages, minimize obsolete inventory and improve customer satisfaction through timely order fulfillment. This resource highlights the advantages of adopting a robust cycle counting program, offering insights into maintaining accurate perpetual inventory records and avoiding costly errors. Perfect for organizations aiming to optimize their inventory management processes, this tool provides actionable strategies to enhance control and compliance while reducing dependency on annual physical inventories.

This tool includes two detailed samples that guide users through effective inventory management practices. Sample 1 focuses on the objectives and policies of a cycle counting program, emphasizing continuous inventory audits to identify discrepancies, maintain record accuracy and ensure proper asset balance reporting. It also outlines the criteria for exemptions from annual physical inventories, including minimum accuracy standards and documentation requirements. Sample 2 addresses the mandatory annual physical inventory process, specifying timelines for different regions and detailing the conditions under which units may qualify for exemptions. It provides procedural guidelines, assigns responsibilities and underscores the importance of collaboration with Audit Services. Together, these samples deliver a framework for achieving inventory accuracy and operational excellence.

Sample procedures include:

• Negative perpetual record balances should trigger a high-priority cycle count request since they represent known problems.
• Establish that all inventory-related transactions (receipts, issuances, transfers, shipments, etc.) are processed prior to the cycle count for selected parts and that no additional transactions are generated during the cycle count.
• Cycle counts should be performed by personnel other than those directly responsible for perpetual record maintenance.
• Physical inventory guidelines are provided by Audit Services and included in the company's Financial Procedures Manual.