4.2 ERMUSR 08-10-2021______________________________________________________________________________
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UTILITIES COMMISSION MEETING
TO:
ERMU Commission
FROM:
Michelle Canterbury – Executive Administrative Manager
MEETING DATE:
August 10, 2021
AGENDA ITEM NUMBER:
4.2
SUBJECT:
Inventory Policy
ACTION REQUESTED:
• Approve the delegation of authority to management and move the Inventory Policy
from the Commission Policy Manual to the Management Policy Manual.
• Approved the revised G.4l Protection of Assets Policy.
BACKGROUND:
In 2017, the Commission worked with staff and a consulting firm to develop governance
policies based on the Carver Model of governance. In 2019, an initiative was created to develop
a migration plan for relevant old policies to become part of the new Commission Policy Manual,
confirm delegation of authority to management for old policies that are not governance, and
eliminate or remove documents that are not policy. At the October 8, 2019, commission
meeting, the Commission addressed the personnel section of the old policy manual and
approved moving nine personnel policies to the Commission Policy Manual, one of those being
the Inventory Policy.
DISCUSSION:
The final step of the policy manual initiative is the review of policies transferred over to the
Commission Policy Manual. The review process includes making any necessary updates,
formatting, and creating new policies that were identified. Any proposed changes or new
policies will be presented to the commission for consideration and approval.
After review of the G.4l2 Inventory Policy that was transferred over to nest under G.4l
Protection of Assets, we determined that the policy outlines our inventory management
procedures and controls. In addition, commission policy G.41 Protection of Assets sets the
expectation and states “the General Manager shall implement and maintain management
policies and procedures that establish effective and sufficient controls with appropriate checks
and balances, including separation of duties, which are regularly tested for adequacy and
compliance. Functions that require such management policies and procedures include, but are
not limited to designation of banking signatories and transactions, cash management,
accounting, and procurement of goods and services.” As the Inventory Policy contains
downstream policy and procedure required by the Commission’s Protection of Assets Policy it
should be classified as management policy.
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Based on our review, staff recommends moving the Inventory Policy from the Commission Policy
Manual to the Management Policy Manual as it addresses implementation of commission policy
by management. In addition, staff recommends strengthening the language in section three of the
Commission’s Protection of Assets Policy to include Inventory Management. Attached is the
revised policy.
ATTACHMENTS:
• ERMU Policy – G.4l2 – Inventory
• Revised ERMU Policy – G.4l – Protection of Assets
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COMMISSION POLICY
Section: Category:
Governance Delegation to Management Policies
Policy Reference: Policy Title:
G.4l2 Inventory
1.0 POLICY
ERMUThe Utility has supplies and equipment that is utilized for electric and water infrastructure
construction and maintenance. Inventory management is an important operational
componentissue because it affects capital requirements, costs, and customer service.
2.0 RECORDING INVENTORY USE
Employees that utilize inventory are required to accurately record its use as follows:
Determine/estimate items needed to perform the particular project/day’s work;
Remove required items from inventory stock;
Transfer items to vehicle being used to travel to the project/work site;
Upon completion of the project/day’s work, record inventory items used in the
barcoding software and update for authorization and record-keepingon the inventory
sheet to be turned in for record keeping; and
Return any unused items to inventory stock in a timely manner.
3.0 REGULAR COUNTS
On at least an annual basis, inventory counts are to be performed and a reconciliation of any
discrepancies completed to account for all inventory used and inventory still in stock.
Because there are inventory items that justify more careful planning and attention, such items
will be reviewed with higher frequency. Significant items (as identified by purchasing and
management) including items costing over $1,000 per piece or high- risk items (such as wire
with high salvage values) will be counted monthlyquarterly. A reconciliation will be performed
for any discrepancies to account for all inventory used and inventory still in stock.
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ERMU Commission Policy – G.4l2 Inventory
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4.0 EQUIPMENT
There is equipment that is not in inventory, but which is necessary for the completion of electric
and water infrastructure construction and maintenance. Items such as chain saws, power drills,
crimping tools, etc. are resource investments that need to be managed. A listing of these items,
with the quantity and location of each item, will be maintained and periodically reviewed for
accountability. Computers, specifically, are one of the items for which such an itemized list is to
be maintained and periodically reviewed. The minimum review period will be annuallyquarterly.
5.0 ENSURING ACCURACY
Employees are responsible for and must take steps to ensure the accuracy and completeness of
inventory reporting data. In addition, employees that utilize and transport inventory must take
necessary steps to safeguard such inventory from loss or theft. When an employee submits
inventory reporting data, he or she is attesting to the accuracy of the data. Knowingly submitting
or approving inaccurate inventory reporting data or careless reporting such data is a violation of
policy and may subject the person to appropriate disciplinary action.
POLICY HISTORY:
Adopted February 24, 2009December 22, 2009
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COMMISSION POLICY
Section: Category:
Governance Delegation to Management Policies
Policy Reference: Policy Title:
G.4l Protection of Assets
PURPOSE:
With this policy, the Commission sets forth its expectations for the General Manager concerning
the protection of ERMU’s assets.
POLICY:
The General Manager shall not allow ERMU’s assets to be unprotected, inappropriately used or
disposed of, inadequately maintained, or placed at undue risk.
Consistent with this general statement, the General Manager shall:
1. Maintain comprehensive security program, property insurance program and loss prevention
program which adequately protect ERMU from significant damage or loss to its corporate
assets including, but not limited to, physical assets, real property, rights-of-way, corporate
image or credibility, intellectual property, and information.
2. Not allow any investment of ERMU funds that violates State of Minnesota law, any
provision of ERMU’s bond indentures (as adopted and amended), or the provisions of any
present or future Commission-approved investment policy (See Investments Policy).
3. Implement and maintain management policies and procedures that establish effective and
sufficient controls with appropriate checks and balances, including separation of duties,
which are regularly tested for adequacy and compliance. Functions that require such
management policies and procedures include, but are not limited to designation of banking
signatories and transactions, cash management, accounting, and procurement of goods and
services, and inventory management.
4. Maintain a comprehensive physical asset inspection and proactive maintenance program
consistent with accepted utility industry practice.
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ERMU Commission Policy – G.4l Protection of Assets
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5. Maintain comprehensive operating procedures aimed at safeguarding equipment and
preventing improper wear and tear consistent with accepted utility industry practice.
6. Maintain a corporate records management program to safeguard paper and electronic files
from loss, significant damage, or improper disposition in accordance with applicable laws
and regulations (See Legal and Regulatory Compliance Policy).
7. Maintain competitive positions or business arrangements that safeguard’s the business purpose
and financial return of ERMU’s assets.
POLICY HISTORY:
Adopted September 12, 2017
Revised August 10, 2021
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