This Physical Inventory Policy is designed to help organizations tighten control over their inventory, improve accuracy and ensure compliance with financial standards. With practical guidance and proven strategies, this resource empowers businesses to strengthen their inventory processes, minimize discrepancies and stay audit ready. This tool aids in maintaining precise inventory records and prepares organizations for audits, making it an essential resource for organizations looking to optimize their operational efficiency.

This document contains three samples, each tackling a key aspect of inventory management. Sample 1 details the entire physical inventory process, including when and how to conduct regular counts. Sample 2 introduces perpetual cycle counting, providing clear steps for classifying and verifying inventory throughout the year. Sample 3 covers the requirements for a complete annual inventory, highlighting best practices for thorough and accurate assessments. Together, these samples provide a foundation for mastering inventory management, offering practical solutions to common challenges.

Sample procedures include:

• Inventory should be maintained in a manner that facilitates physical counting and should be conducted by personnel familiar with the inventory being counted.
• The corporate controller should be advised of differences that result in adjustments to the inventory values in the business unit’s books.
• All inventory adjustments/write-offs must be submitted to finance for approval.
• Formal written physical inventory procedures relating to each unit inventory location must be completed.