Inventory review
The counted-versus-perpetual item split, the standard posting and re-review timing, and the COO-driven count-scope expansion.
Inventory entries are generated from two Restaurant365 exports each period: the period-end inventory count and the full inventory item listing.
Source: Rackson_RRS_RCY_Review_Process.docx sections 17 and 27.1. Prepared by: Maureen (RRS) / Betsy and Cade Kohlmeier (RCY).
The counted-versus-perpetual split
Certain items are intentionally excluded from the physical count and are instead carried at a static, perpetual value maintained directly in the workbook. Only the items that are actually counted flow through the monthly inventory journal entry.
This approach — booking the perpetual items once and leaving them on the balance sheet rather than re-valuing them every month — was implemented roughly three years ago and has worked well operationally.
On the RRS side this includes roughly 100 legacy items frozen at end-of-2023 values, with the "Hartford store method" governing which stores get fresh counted values versus carried-forward historical values.
Standard timing
After the actual-vs-theoretical (AvT) review.
The second weekend after close.
Adjustments are made at the second review — not by reopening the original entry.
Routine practice during the interim is light-touch. PBI does not perform a deep independent test of every inventory line each period, but will dig into and call out anything that looks unusual when noticed.
The count-scope change in flight
The client's new COO (Steve) wants to expand which items are physically counted — raised on RCY (Dave's) first, and potentially RRS as well.
This is an active, unresolved change. Confirm current status before assuming either the old or new scope applies.
What the transition requires
Which items are currently carried at a static/perpetual value in the workbook.
Illustrative estimate discussed: a balance in the range of $180,000–$182,000 for one grouping of these items.
Against the list Mike/Steve provide of what will now be counted.
A different — and not yet fully documented — logic was historically used to determine which specific items were pulled into the perpetual bucket. This is why the cross-reference matters.
A change in what is counted can surface U/M setup issues that were previously invisible because the item was never counted. Any resulting variance must be discussed directly with the client rather than absorbed silently.
A documented work paper is needed showing exactly which items are excluded and the logic behind the exclusion, so that as items move to counted status the workbook can be updated cleanly rather than reconstructed from memory. Tracked on Open items.
Step-by-step checklist
The period-end inventory count export and the full inventory item listing.
And that it matches the documented work paper.
Post the entry the Tuesday after period close.
Correct at that point rather than reopening the original entry.
Update the perpetual-items list, quantify the balance moving to counted status, and coordinate the transition and any unit-of-measure cleanup with the client.
RCY (Dave's) — same process
Same R365-based process as RRS: pull the period inventory export and the full inventory item listing, exclude non-counted items carried at a static perpetual value, and post only the counted items through the monthly entry.
The COO-driven initiative to count more items was raised specifically in the context of Dave's/RCY first, with the expectation that a similar conversation may follow for RRS.
Downstream dependency
The COS % Audit Report must be run only after the inventory workpaper is posted — the report's current period COS % will not be accurate until the inventory adjustment is in the GL. This is the single most common cause of a misleading COS audit result.
On the close checklist, Inventory Adjustments Posted is a WD3 task.
Related
- RRS inventory and prepaids workpapers — the 13000 BK ending inventory steps
- RCY inventory and cash workpapers — the 50100–50500 DHC steps and the 71-item count categories
- Weekly reporting services — the weekly inventory management service
- COS % audit report — the downstream check