Proven Solutions

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System Field Examinations
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Proven Solutions, Inc. requires an on-site visit to retailer’s headquarters to prepare the System Examination.

The exact scope of the examination varies based upon the Lender’s specific requests.

I. Company Information

  • Description of business and type of product sold.
  • Description of sales venues (full price store, outlet stores, internet, catalogue, warehouse sales)

II. Information and Operating Systems

  • Description of In-store systems and limitations.
  • Description of Merchandise system, integration to Financial systems, and limitations
  • Description of Finance systems and limitations
  • Description of Warehouse system and limitations
  • Description of Other systems used.

III. Merchandising System

  • Type of Product (fashion, basic), Sourced (domestic, import, product development)
  • Purchase Order item definition – level of detail tracking – definition of unit cost, impact of terms and discounts
  • Purchase Order Control – Open-to-Buy
  • Automated replenishment system
  • Key unit and dollar management reports (aged inventory, gross margin reporting)
  • Price change policy – (POS versus Permanent markdowns, frequency, based upon need, OTB limitations, end-of-season)
  • Receipt control – warehouse & store
  • Timing of receipts into inventory
  • In-transit control – carton control
  • Inter-store transfer control – merchandise system and stock ledger
  • Return-to-Vendor process
  • Physical inventory techniques
  • Ad hoc reporting capabilities

IV. Sales Audit

  • Frequency in processing sales data from stores
  • Integrity of daily sales processing
  • Pre and post audit procedures
  • Cash and sales reconciliation
  • Loss Prevention techniques
  • Customer marketing techniques – how discounts accounted for (G/L or stock ledger)
  • Timing of sales data relieving inventory in merchandise and finance systems.
  • Timing of layaway sales relieving inventory in merchandise and finance systems.

V. Merchandise Accounts Payable

  • 3 way match process (Purchase Order, receipt, invoice).
  • Reconciliation of invoice and DC discrepancies to Stock ledger
  • Integration to Stock Ledger.
  • Integration to General Ledger

VI. Stock Ledger

  • Detail method of inventory valuation (average cost, retail method)
  • Describe level of detail (merchandise hierarchy, store detail)
  • Does stock ledger isolate the following: Damaged merchandise, Leased Departments, Packaway merchandise, Consigned merchandise, Vendor serviced merchandise)?
  • Describe Cost/Retail components in stock ledger (markdowns, shrink)
  • Detail Components of cost (invoice cost only, freight, discounts, etc)
  • Detail frequency of stock ledger update
  • Describe integration to General Ledger.
  • How client will roll forward inventory for Borrowing Base calculations.
  • How client will reconcile stock ledger inventory to G/L Balance Sheet