Purpose

To provide customer guidelines for post-audit deductions.

Post-Audit Deduction Definition

A deduction taken by a customer after a review by the customer’s internal audit department or a third-party auditing firm.

Post-Audit Deduction Timeline Requirements

Johnsonville Sausage will honor post-audit deductions that are taken within the following specifications:

• All documentation requirements submitted to Johnsonville will be subject to Johnsonville’s review in its reasonable satisfaction.
• The customer provides Johnsonville Sausage with written notice and actual back-up” documentation at least 60 days prior to taking the post-audit deduction, to allow ample time for research and validation. Examples will not be accepted.
• Claims are submitted in writing within two previous calendar years plus the current calendar year of the initial invoice or performance period. Claims outside this period are considered invalid and require repayment by the customer. (Johnsonville Sausage follows the GMA/FMI guidelines.)

Promotion-Related Post-Audit Deductions

The customer documentation required for a promotion-related post-audit deduction includes, but is not limited to, the following:

• A customer contract or deal sheet signed by an authorized Johnsonville representative.
• Proof of performance (ad, billback, scan, display, temporary price reduction [TPR] tag, distributor invoice, etc).
• Post-audit “back-up” documentation detailing the specific reason(s) for the deduction.

Non-Promotional Pricing-Related Post-Audit Deductions

The customer documentation required for a non-promotional pricing-related post-audit deduction (ie, pickup allowance) includes, but is not limited to, the following:

• Post audit “back-up” documentation or customer invoice detailing the specific reason(s) for the deduction.
• Supporting pricing documentation.

Shipping Post-Audit Deductions

The documentation that must be provided by customers for post-audit shipping-related claims such as inventory, quality issues or shipping allowances includes, but is not limited to, the following:

• A signed proof of delivery showing the seal number and indication of the condition of the seal (intact at the time of delivery).
• Written itemization of product Stock Keeping Units (SKUs), including quantity shipped over, short, or damaged on both:
  • The “back up” documentation supporting the deduction.
  • The proof of delivery or bill of lading (BOL) documentation.
• All discrepancies must be clearly noted on the BOL at the time of delivery, while the driver is still present.

IMPORTANT: International Chamber of Commerce (ICC) regulations require that shipping claims should be submitted to Johnsonville Sausage within six months of the original order shipment date, to allow adequate time for Johnsonville to investigate and file a claim against a carrier if necessary. If deductions resulting in carrier claims are taken more than six months after the order shipment date, they will be considered invalid by Johnsonville.

Compliance Policy

• Post-audit deductions will not be accepted if the deduction is taken without allowing Johnsonville at least 60 days advance notice for preliminary investigation, and without proper documentation. “Back-up” is defined as a customer deal sheet signed by an authorized Johnsonville Sausage representative and proof of performance such as ad copy, billback/scanback data, etc. Examples will not be accepted.
• Johnsonville reserves the right to contact customers or the customer’s third-party auditing firm directly to clarify the reasons for post-audit deductions. Resolution agreement will not be limited to discussing any deduction with third party auditors.

Johnsonville will pursue repayment of post-audit deductions under the following circumstances:

• The customer is unable to provide appropriate supporting documentation.
• The post-audit deduction is taken for claims that have not been submitted in writing within two previous calendar years plus the current calendar year of the initial invoice or performance period.

If a deduction is deemed invalid after thorough research by Sales or Customer Service, customers will be informed in writing that repayment of the deduction is due within 30 days of the date of the chargeback letter.

Johnsonville Sausage considers certain post-audit deductions invalid . These include, but are not limited to, the following:

• Anticipation (deductions related to compensation for invoices paid prior to due date).
• Promotional deals on commodity product (ribs, loins, etc.).
• Promotional deals on dates other than previously agreed upon promotional periods.
• Customer re-slotting warehouse fees
• A duplicate deduction. Example: Johnsonville gave off invoice allowance, and customer is deducting too.
• Nuisance fees (such as documentation processing fees, late trucks or detention charges not related to a CPU, bad pallet charges, etc.).
• Coupon-redemption charges (such as shipping, handling, foreign coupons, value shortage, expired coupons, variances in coupon count, process fees that exceed the clearing house authorized rate, etc.).
• Shipping claims involving transportation documentation that is more than nine months old. (These must be filed within six months of order shipment.)

Note: Failure to follow Johnsonville’s post-audit deduction policy may result in penalties including, but not limited to:

• Interrupted customer shipments, pending resolution.
• Decrease in current promotional funding.
• Decrease in future promotional funding.
• Price increase.
• Failure to comply with the policy could result in termination of the relationship.