8’ Infinity, Inc.

Policies and Guidance

Purchasing
 Request of goods

When goods are needed by a department, a staff of the requesting department should make purchase requisition that
will list all of the request of the department. The same should be signed by the requesting staff as and its department
head as approver. This should be sent to the purchasing specialist for the the preparation of purchase order.

 Preparation of purchase order

After determining the quantity and quality needed by the Company, the Purchasing Specialist should prepare the
purchase order (P.O) that will state the quantity to be ordered, as well the unit price for the specific materials needed
and the suppliers name accompanied by its unique supplier’s code. The Company should provide unique vendor code
for each of its suppliers (for accounting purposes). The said P.O. should be reviewed by Purchasing Officer and
approved by the Department Head of the requesting department. This P.O will now be sent to the supplier for the
delivery of the supplies ordered.

 Receipt of Goods

Upon arrival of the ordered items which should be accompanied by sales invoice for the goods ordered, the staff from
the requesting department will count the items while the Purchasing Specialist inspects the quality. If discrepancies
were noted, the items should be sent back to the supplier for further checking. If no discrepancies noted and the
received goods are in good order and condition, the check requisition should be signed by the Purchasing Specialist,
Purchasing Officer and Department Head as prepared, reviewer and approver, respectively and should endorse it,
together with delivery receipt and billing invoice, to the Accounting Specialist for the preparation of purchase invoice
and settlement to the supplier.

 Preparation of Invoice

Before the preparation of the purchase invoice, the Accounting Specialist should conduct first a three-way matching.
Details such as number of units, unit price and total amount in the PO, delivery receipt and billing invoice were
matched accordingly. This is to ensure that the amounts and details to be inputted in the purchase invoice are in order.
Purchase invoices should be pre-numbered. Pre-numbering of invoice prevents multiple preparation of checks and
double posting of entries.

 Preparation of Check Voucher

Upon completion of the invoice, the Accounting Specialist should prepare the check voucher for the settlement of the
payables. The said check voucher should be signed, reviewed and approved by the Accounting Specialist, Tax
Head/Supervisor (If applicable), and Controller(If applicable), respectively.

Once check voucher is approved, the Accounting Specialist should proceed to the preparation of the checks. Before
checks are released to the respective payees, the Accounting Specialist first obtains the signature of any two of the
authorized persons based on the Company’s approval matrix. For payment to suppliers, the checks are available for
pick-up every (day of the week) from 3:00-5:00 PM. The receiver of the check will sign the check voucher to signify the
receipt of check.
Inventory Count
Inventory counts should be regularly performed, especially at the end of the fiscal year, to ensure completeness and existence of
the inventory of the Company. The following guidelines should be followed whenever inventory count is performed.

 Counts should be performed by persons other than those normally responsible for the physical custody of the inventory.

(Tip: If the answer is “no”, then this can be mitigated if counter is partnered with a checker who is not normally
responsible for the physical custody of the inventory.)

 Counters should be sufficiently knowledgeable about inventory items to:

(a) verify an accurate count; and

(b) identify obsolete or damaged items. (Briefly describe below entity procedure for identifying obsolete and
damaged items during course of count.)
 Entity personnel should compare count results with the perpetual records and investigate differences.

 Counts should be checked or items recounted by persons other than those making the original counts.

 Counters and checkers should be adequately supervised.

 Count procedures should ensured that inventory items were not missed or double counted. (State briefly below method
used.)

Checks should be made for incompletely packed cases and “hollow squares”.

 All quantities should be determined by actual physical count. (If not, describe method used for estimating quantities
below.)

 Subsequent additions to/withdrawals from the physical inventory of items which were counted prior to our observation
should be effectively controlled. Should be described the extent and nature of additions and withdrawals and the
procedures used by the entity to control the movements effectively.

 Proper numerical control was exercised over pre-numbered tags/sheets. (If tags/sheets were not used, describe below
how the entity determined that all items counted were listed.)

 Tags/sheets clearly identified (Or any tag to identify the product):

a) Location;
b) Quantity;
c) Description of item;
d) Unit of measurement; and
e) Status of item (e.g., good condition, obsolete, damaged).

 Changes to tags/sheets were properly approved.

Sales

 Receipt of order from customer

The dealers/customer will submit an order form, which should be properly signed by the authorized signatories of the
dealers/customer. The order form should be reviewed by the sales specialist of the Company

The Company accepts order until 4:30 pm. All orders received beyond 4:30 pm will be processed the next day (or any
time applicable based on historical experience).

Cancellation of order is allowed, subject to the approval of Sales specialist, until 4:30 pm. After 4:30 pm, cancellation
of orders sent during that day will not be allowed. (or any time applicable based on historical experience)

The Company’s payment terms are: cash, n/30. Dealers/customers have no credit limit and their capacity to pay is
reviewed by the Company annually.

After 4:30 pm, Sales specialist should prepare a consolidation report – a listing of all the orders of the
dealers/customers during the day. The report will be reviewed by the Sales Manager.

Upon completion of the consolidation report, it will be sent to warehouse controller. His job is to check whether there
are still available stocks to accommodate the order. After which, he will issue a report that designates the location of
the goods for easy access. The goods will be hand-picked by the warehouse specialist (a Company employee) in the
warehouse and will be prepared for delivery.

The Company is using First In, First Out (FIFO) as the Inventory method for the issuance.

 Invoicing and releasing of goods

Before releasing the items in the warehouse, there should be a Sales Invoice and Delivery Receipt (DR).

Company employee shall prepare the sales invoice (SI) and delivery receipt (DR), both in three copies (if applicable).

For the DR, One copy goes to the accounting department, another copy to warehouse, and the original copy goes to the
dealer/customer. Once the documents are ready, it will serve as accompaniment of the delivery.

For the SI, The copy is given to the Sales Department and another will be sent to the Accounting Department, all for the
purpose of safekeeping and lastly, to the dealer/customer
The Company should maintain a monitoring of the goods sold and inventory in an excel file. The file contains serial
codes of the items and the dealer/customer (for sold goods). This is to properly monitor the movements in the inventory
during the day/period

Sales specialist should prepare its own recording of the Company’s goods sold during the day. Sales monitoring is
given to the Company’s accounting department and warehouse department every day.

From the sales report prepared by Sales Specialist, the warehouse of the Company will verify the report and performs
daily reconciliations of the records, for any discrepancies. If there is a discrepancy, the Company should identify the
cause of the discrepancy and adjusts the records as necessary.

The Company accounting department records the sales every day through a journal voucher.

Hard copies of the invoices will be sent to the Company’s accounting staff every Mondays of the week. SI, delivery
receipts, and sales monitoring shall be the basis for the preparation of the statement of accounts (SOA) given to the
dealers/customers.

The Company shoulders the delivery charge of the goods. For rushed orders, the ordering dealer/customers can
request to pick-up the orders in the warehouse subject to approval of warehouse specialist.

Delivery of the orders depend on the availability of the item. If the item is available, it will be delivered the day after the
order was sent to the Company.

The preparation of SOA signifies that the sale shall be recorded as accounts receivable and the Company has a
receivable from the dealer/customer.