LCBO Winery Audit Process Winery Audit Process Agenda

LCBO Winery Audit Process

Winery Audit Process - Agenda Planning Execution Validation Reporting Questions

Winery Audit Planning – Required Information ü Current and accurate inventory of packaged goods and offsite warehouse inventory (if applicable) ü Current and accurate inventory of bulk wine and tank records showing volume, variety and vintage ü Winery reports (aka “J 10 s”) for the audit period with the supporting ledgers used to prepare the reports (source documentation) for all sales channels ü Record of sales for the part-month up to the day of the audit ü Blending and bottling/packaging records (includes kegs) ü Production records including Grape Growers of Ontario Grower Summary report, weigh slips, and grading (brix) information ü VQAO transfer forms, invoices and supporting documentation (i. e. bill of lading) for all bulk sales and/or bulk purchases ü Documentation to support any loss or disposals of wine

Winery Audit Execution – 5 Step Approach • Setting the current inventory on hand (inventory to be provided by winery) • Recording inventory volume increases since the last audit (production/purchases) • Recording inventory volume decreases since the last audit (sales/disposals) 1 Reconcile Inventory 2 • Reviewing supporting sales documentation since last audit (ledgers, POS reports) • Recording part-month sales up to the current date of the audit (all sales) Reconcile • Reviewing the pricing of available products to ensure compliance with the LCA Sales 3 • Ensuring compliance with Wine Content and Labeling Act (WCLA) • Ensuring compliance with the Winery Retail Store Information Guide • Ensuring AGCO authorizations and licenses are appropriate and valid 4 AGCO Testing VQAO Testing 5 LCBO Testing • Ensuring compliance with certain aspects of the VQA Act (Reg. 405 and 406) • Reviewing VQA approvals and transfers to ensure they were accurately reported • Reviewing VQA sales to ensure they were accurately reported • Ensuring compliance with certain aspects of the Liquor Control Act • Ensuring accurate calculation and remittance of fees, deposits and levies • Ensuring LCBO authorizations (Direct Delivery and Offsite Warehouse) are valid

Winery Audit Validation – Review Results Investigate large or unusual inventory variances Verify the information from the prior audit to ensure accuracy Review compliance with AGCO and VQAO regulations Verify current on-hand offsite inventory figures Validation Verify new production, inventory purchases, sales and disposals

Winery Audit Reporting - Stakeholders AGCO Report VQAO Report LCBO Audit Winery Report LCBO Report

Winery Audit Contacts and Resources Jason Hackbush Audit Project Manager, Internal Audit Services, LCBO T: 416 -365 -5693 E: jason. hackbush@lcbo. com Peter Harris Auditor, Internal Audit Services, LCBO T: 289 -241 -4967 E: peter. harris@lcbo. com Doing Business with LCBO (Trade Resources Online) www. doingbusinesswithlcbo. com/tro/Corporate. Policy

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