Inventory Policy

This tool contains two sample policies that outline guidelines and accounting policies to ensure that inventory is properly controlled and valued and that losses or shortages are prevented. It applies to all inventory items, including raw materials/parts, work-in-progress, and finished goods and consigned inventory. The procedures focus on inventory valuation, slow-moving and excess inventory/reserves, reconciliation of perpetual inventory, physical inventory, consigned inventory, scrap, intercompany transfers, and capitalized costs.

The valuation method for each item of inventory shall remain consistent from one accounting period to the next accounting period.