INVENTORY MANAGEMENT POLICY Approved March 14, 2017

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1 Heritage Bay Golf & Country Club POL-FIN-07-R0 INVENTORY MANAGEMENT POLICY Approved March 14, 2017 Reviewed by: Approved by:

2 Inventory Management Policy 2 TABLE OF CONTENTS 1. Overview 2. Regulations 3. Procedures 4. Internal Controls 1. Overview Heritage Bay Golf and Country Club management team implements regulations for the preservation of the Club s property. This includes responsibility for taking a comprehensive inventory. In addition the management is responsible for implementing policies and procedures to manage and account for equipment, merchandise and food and beverage supplies and materials. This policy outlines exactly what equipment, supplies or materials must be inventoried, how often, by whom and by what method. Inventory records that are up-to-date and accurate can guide management in ordering new materials, maximizing the use of club resources and in minimizing loss. 2. Regulations a) Responsibility for inventory records. The primary responsibility for maintaining inventory records rests with the respective department manager. Golf Course Superintendent: Golf Course Maintenance department property and equipment. Director of Golf: Golf Course Merchandise and Golf Property and Equipment. Tennis Pro: Tennis Merchandise and Tennis Property and Equipment. Director of F&B: Bar and Chickee Inventory and Bar and Chickee property and Equipment. Fitness and Spa Manager: Fitness Merchandise and Fitness Property and Equipment. Executive Chef: Food inventory and Kitchen Property and Equipment. Clubhouse manager: Clubhouse Property and Equipment. b) Important Dates. Annual Inventory of Heritage Bay property and equipment (physical count) is required to be completed by the end of the month of January each year after year end, as the exact date is to be announced in advance. Within one week of completing the inventory the accounting department shall record the results and update the Club s asset and depreciation schedule.

3 Inventory Management Policy 3 Monthly Inventory. Golf, Tennis and Fitness Merchandise and Food and Beverage inventories are required to be completed at the end of each month as the exact date is subject to change due to availability of staff and Club s activities schedule, but it must not be later than two business days from the end of the inventory period. Within two days of completing the inventory the accounting department shall record the results, investigate and report any discrepancies to the General Manager and update the Club s General Ledger. Periodic physical counts of property and equipment, merchandise and food and beverage goods and supplies shall be taken if there is a change in management positions for the department managers responsible to maintaining the Club s inventory. Within two days of completing the inventory the accounting department shall update the results, inform General Manager of any discrepancies with the count and update the Club s general ledger accordingly. c) Method of inventory. Property and equipment: Periodic physical count comparing the Club s asset inventory schedule to actual count on hand of property and equipment. Inventory of property and equipment must be completed annually. Merchandise (Golf Pro Shop, Tennis and Fitness) The Club utilizes Perpetual methods of inventory. This is an active inventory and results are due to quantity received and recorded on hand, sales for the inventory period and actual physical count. Results are analyzed, discrepancies are investigated and inventory on hand is adjusted to the actual count. Food and Beverage Goods and Supplies (Kitchen, Bar, Chickee) Heritage bay utilizes a manual count method for the Food and Beverage inventories. The control aspect of manual counts include identifying and removing broken, spoiled items, as well as determining if any internal theft has occurred. 3. Procedures a) Inventory for Property and Equipment. Heritage Bay is utilizing Fixed Assets CS software. The Club s property and equipment is recorded in the inventory system using the following categories: - Description; - Original Cost; - Acquisition Date; - Useful Life; - Account to which equipment is assigned; - Location;

4 Inventory Management Policy 4 - Inventory tag # assigned by the equipment manager. b) Inventory for Golf and Tennis Merchandise. The Club s is utilizing an inventory module through the POS system. After completing the daily sales, the responsible manager closes the day and issue a Count on Hand report. The Count on Hand report is compared to the actual count and variances are investigated. After the completion of the inventory a valuation report is generated and submitted to management and accounting. c) Food and Beverage Inventory process at Heritage Bay utilizes a manual count method. The responsible manager generates a manual inventory sheet in excel. The Inventory sheet includes the following fields: - Item Description; - Location; - Count; - Units; - Price per unit; - Total extension; - Blind sheets without quantities must be used for all Pro Shop Merchandise and F&B Inventories. The inventory sheets are updated regularly by the responsible manager. The total extension is compared to the previous month inventory count. The difference is recorded to the general ledger by Heritage Bay accounting department as adjustment to actual count. During the count manager checks the expiration dates on the relevant products to ensure that they are still within a legal use period. The expired products are removed as inventory waste. A waste report is prepared and submitted to accounting. d) Disposition of property and equipment. Obsolete, expired, redundant and damaged inventory must be identified and cleared on annual basis. A written form is required for all disposed items. The form shall be prepared by the responsible department manager and approved by Heritage Bay General Manager (see attached disposition form.) Heritage Bay accounting department records the disposition based on submitted and approved disposition form. e) Adjusting inventory to actual count. All adjustments to the inventory count must be approved by General Manager and submitted to accounting for processing.

5 Inventory Management Policy 5 4. Internal Controls Heritage Bay Club Controller should periodically spot-check inventory records to see if appropriate inventory control procedures are being observed at each department. Differences between records and physical counts should be investigated and reported to the General Manager. Inventory storage rooms should be under the supervision of the responsible department manager. All of the inventory items should be safeguarded as they are valuable assets of the Club. Heritage Bay Finance Advisory Committee members may observe the annual Heritage Bay property and equipment, Golf Merchandise and F&B inventories to assure that the inventories are properly taken and to assure that the actual year end count is correct prior to the beginning of the Club s annual audit.