Mary Brettmann, CPA

Vickie Brennan, Investigator, TTB

Managing Your Inventory**And Production to Ensure Financial Success

WelcomeWe will be covering a lot of ground in this seminar.

Our goals:

Understand the basics of inventory

Know where to get started

Showcase cool tools for inventory and

production

Huge Benefit, Huge Hassle

Backbone of materials handling and forecasting

Give everyone the same playbook

Cost of mistakes grow with the company

Inventory

Keep track of everything that goes into the process

Raw Materials

Work in Process

Finished Goods

Keep track of what is sold

Finished Goods

Merchandise

What is Inventory?

Average Cost

FIFO – First in, first out

LIFO – Last in, first out

Actual Cost

Standard Cost

How is inventory valued?

Physical count – worksheets, excel file

Periodic accrual – Journal Entry balance based upon PI

Perpetual accrual – System keeps its own balance

How do you do inventory?

Possible obeer ipad count screen

Standards are important

Regular electronic backups

Proper sign off on the count worksheets

Important Internal Controls

TTB

Definition of Inventory

Requirements for Inventory

Must be taken at least once each calendar month and

must include:

Data Taken

Quantity of beer and cereal beverage on hand

Losses, gains and shortages

Signature, under penalties of perjury of the brewer or

person taking the inventory (as defined at 27 CFR 25.11

Executed under penalties of perjury).

Retain on premises, made available for inspection by TTB

officer

TTB Inventory RequirementsBrewery – 27 CFR 25.294

Production and Storage Accounts and Processing Account

(wines and bulk spirits) 27 CFR 19.312, 19.333, and 19.371. Must

be taken at the close of each calendar quarter and must include:

Date Taken

The identity of the container(s)

The Kind and Quantity of spirits, denatured spirits and wines

Losses, gains, and shortages

Signature, under penalties of perjury of the proprietor or person

taking the inventory (as described at 27 CFR 19.45 Execution

under penalties of perjury).

Retain on premises, made available for inspection by TTB

officer

TTB Inventory RequirementsDistilled Spirits Plant – 27 CFR 19.623

Processing Account (bottled and packaged spirits) 27 CFR 19.372: Must be taken at the return periods ending June 30 and December 31. 5 business days’ notice must be provided to TTB designating the date and time of inventory. The inventory record must include:

Date Taken

The Identify of the container(s)

The Kind and Quantity of spirits, denatured spirits, and wines

Losses, gains, and shortages

Signature, under penalties of perjury of the proprietor or person taking the inventory (as described at 27 CFR 19.45 Execution under penalties of perjury).

Retain on premises, made available for inspection by TTB officer

TTB Inventory RequirementsDistilled Spirits Plant – 27 CFR 19.623

Must be taken annually, typically June 30.

Monthly report of operations filers may select another

annual inventory period upon notice to TTB

Quarterly report of operations filers must select an

annual inventory period that begins on the first day of

a calendar quarter and notice must be filed with TTB.

Annual report of operations filers must take their

annual inventory as of December 31.

TTB Inventory RequirementsWinery - 27 CFR 24.313

The inventory record must include:

Description of wine and spirits, including anticipated marketing

identifiers such as vintage, varietal, or geographical designation

Type of wine (if other than grape), i.e., orange, apple, honey, etc.

Tank numbers. Barrels, puncheons, etc., containing the same

kind of wine may be summarized by type unless marketing

identifiers are noted.

Cases, bottles and other similar containers – the total volume

of one kind of wine may be entered as one item and

appropriately identified.

TTB Inventory RequirementsWinery - 27 CFR 24.313

The inventory record must include (con’t):

Summary: The volume of bulk and bottled or packed wine must

be totaled separately in wine gallons or in liters, by tax class, and

reported (in wine gallons) on the next required Report of Wine

Premises Operations, in addition to any spirits on hand.

Signature on the last, consecutively numbered page, under

penalties of perjury as described in 27 CFR 24.313€.

Retain on premises, along with the Report of Operations for the

period in which the inventory is taken, and make available for

inspection by TTB officer. Losses or gains must be reported any

time an inventory is taken and reported.

TTB Inventory RequirementsWinery - 27 CFR 24.313

What basic info can the system give me?

Reorder Points

Tank Utilization

Once you trust your system,

The Next Step is for it to Talk Back to You.

Tools for Inventory and ProductionPhase I reports

Reorder Point Alerts

What is the reality according to the system?

Inventory Stock Status Report

FUTURE Inventory Stock Status Report

Tools for Inventory and ProductionPhase II Reports

Tell me what will happen based upon a forecasted reality

MRP Module

Use it for Purchase Order Generation

High Level Forecasting

Forecast a shortage AND a solution

Tools for Inventory and ProductionPhase III Reports

Count Early and Often

Appoint Someone “Inventory Czar”

Consistency is Key

Be Curious

Make Changes and Count Again

Pointers for Taking the Next Step

Common Compliance and Audit Issues:

https://www.ttb.gov/beer/beer-

tutorial.shtml#_Production_and_Inventory

https://www.ttb.gov/spirits/common_compliance_tax_issues-during-

audits-ds.shtml#_B.1_Inventory_Issue

https://www.ttb.gov/wine/common_compliance_tax_issues.shtml#inv_1

TTB Resources – https://www.ttb.gov (Tools/Tutorials, Virtual Seminars and Online Training)

Beer Regulations: 27 CFR Part 25

Distilled Spirits Regulations: 27 CFR Part 19Wine Regulations: 27 CFR Part 24

Questions?

Thoughts?

Thank You

Vickie Brennan, Investigator

Alcohol & Tobacco Tax & Trade Bureau

Vickie.Brennan@ttb.gov

(513) 684 - 2473

Mary Brettmann, CPA

Beverage Business Builders

mary@bevbizbuilders.com

(714) 227-1443