Warranties and Guarantees (Alberta Council)
From SJA
This is a draft document.
Contents |
The Need
A formal warranty or guarantee represents a statement that the company stands behind its products and services, and is an important element of customer service as well as a statement about the company's culture.
A standard policy helps ensure that employees and customers understand the policy, and that it is administered consistently and fairly.
Policy
The company guarantees the quality of its products. The company will not release products not meeting quality standards and will replace or repair products that are defective.
The company's products are guaranteed to be free of defects for a period of 90 days and will be repaired or replaced if claims are made for failure within that period.
The company shall not accept responsibility or direct liability for warranties provided by suppliers.
Purpose
The purpose of this Statement of Policy and Procedure is to provide guidance to employees on warranties and the principles associated with providing quality products to its customers.
Scope
This policy applies to all St. John Ambulance Alberta Council employees.
Responsibilities
The Finance Department is responsible for ensuring that:
- Appropriate, evidence-based provisions for warranty expenses are made
- The provision for warranty costs are reviewed and adjusted from time to time
The Stores Departments are responsible for ensuring that:
- Substandard products are not distributed to customers, and are returned to Provincial Stores who will be in contact with the supplier
- Appropriate action is taken to replace or repair the product
Definitions
None.
References and Related Statements of Policy and Procedure
None.
Procedures
Guarantees and Warranties
- The company guarantees the quality of its products. Products not meeting guarantee-level quality shall not be distributed to customers.
- To the extent that a sub-standard product does get distributed to a customer, the product will be replaced when identified.
- The company's products are guaranteed to be free of defects for a period of 90 days and will be repaired or replaced if claims are made for failure within that period.
- Warranty claims that do not meet the company's policy will be reviewed on a case-by-case basis by the Finance Manager who is authorized to take action that is appropriate in the circumstances.
Accounting for Guarantees and Warranties
- At the time of sale, provision shall be made for warranty costs in the financial accounts and recorded as warranty expense. The offsetting entry is to a liability, provision for warranty costs.
- Warranty expense shall be set at the beginning of the year as a fixed percentage of sales, based upon expected total annual warranty costs. This percentage is adjusted based upon points five and six below.
- Actual expenses incurred to service warranties shall be charged against the provision for warranty costs.
- At the end of the year, the balance in the provision for warranty costs shall be analyzed. Any excess reserve is reduced by a corresponding reduction to warranty expense. Any deficiency is increased by a corresponding increase to warranty expense.
- If at any time during the year, the balance in the provision for warranty costs appears to be significantly higher or lower than the expected pattern of warranty claims, then an appropriate adjustment should be made as set out in point four above.
- The company shall not accept direct liability for warranties provided by suppliers.
Product and Information Flow
- All substandard products will be sent to Provincial Stores who will be in contact with the supplier for replacement products. Substandard products will only be returned to the supplier by the Provincial Stores Coordinator if requested by the supplier.
- Information about all products returned under the company's guarantee will be tracked and analyzed, and the appropriate department shall be informed and take corrective measures.
Attachments
None.
