Controlled Substances: Security and Reconciliation


Legislative References:

A fact sheet summarizes relevant legislation in one place and is not intended to be legal or practice advice. Registrants are reminded to refer to legislation for full context.

Additional References:

College Contact: Pharmacy Practice


Canada’s Controlled Drugs and Substances Act (CDSA) provides a legislative framework aimed at controlling access to substances that can alter mental processes and produce harm to the health of an individual and/or society when diverted or misused.

Pharmacists and hospitals are required to comply with the Narcotic Control Regulations (NCR), the Benzodiazepines and Other Targeted Substances Regulations (BOTSR) made under the CDSA and Part G of the Food and Drug Regulations (FDR-G) made under the Food and Drugs Act governing controlled substances.

The Standards of Operation expect that controlled substances are stored and managed according to national guidelines and provincial requirements. In community pharmacies, Designated Managers have additional responsibilities set out by the College’s Policy – Medication Procurement and Inventory Management.


Controlled substance: A drug named in the federal Controlled Drug and Substances Act (CDSA), Schedules I, II, III, IV, V. These drugs are also listed in the schedules to the regulations as narcotics, controlled drugs, benzodiazepines and other targeted substances. (CDSA)

Diversion: The transfer of a controlled substance from the licit to illicit market (i.e., a lawful to an unlawful use), such as through theft. (HC)

Loss: The physical disappearance of controlled substances or precursors that is not the result of a theft, and/or is unexplained at the time of discovery. (CS-GD-005)

Theft: The removal of any quantity of controlled substances or precursors under the custody of a regulated party without its legitimate consent. (CS-GD-005)


Federal regulations expect that pharmacists and persons in charge of a hospital take all reasonable steps that are necessary to ensure the security of controlled substances in their possession (i.e., on their premises).

Narcotic Control Regulations

43. A pharmacist shall take all reasonable steps that are necessary to protect narcotics on his premises or under his control against loss or theft.

63. A person who is in charge of a hospital shall…(c) take all necessary steps to protect narcotics in the hospital against loss or theft (…)

Food and Drug Regulations

G.03.012 A pharmacist shall take all reasonable steps that are necessary to protect controlled drugs on his premises or under his control against loss or theft.

G.05.004 A person who is in charge of a hospital shall take all steps necessary to protect controlled drugs in the hospital against loss or theft (…)

Benzodiazepine and Other Targeted Substances Regulations

72 (1) The following persons must take any measures that are necessary to ensure the security of any targeted substance in their possession: (a) a pharmacist; (…) (c) the person in charge of a hospital;

The regulations do not define what is considered reasonable or necessary to ensure the security of controlled substances nor establish specific storage requirements. To safeguard drugs from diversion, a combination of methods is required, such as (but not limited to) physical security measures, inventory management (i.e., physical counts, accurate record-keeping), operational processes, audits, and reconciliations.


Inventory reconciliation is an important process to fulfill the legislated requirement to protect controlled substances from loss or theft and provides evidence of taking reasonable or necessary steps to keep controlled substances secure.

  • College Policy requires the Designated Manager (DM) to direct that a physical count and reconciliation of all narcotics, controlled drugs and targeted substances is conducted regularly, at least once every six months, and that the results of the inventory count are retained in the pharmacy’s records for a two-year period in a readily retrievable format.
  • The purpose of performing reconciliation on controlled substances is to detect, investigate, resolve and document any differences between the actual amount of physical inventory counted (“on-hand”) with the expected amount of inventory that should be on-hand (derived from purchase and sale records).

Potential opportunities for security lapses or diversion to occur should be addressed considering the inventory management process as a whole, including purchasing/ordering, receiving, dispensing, removing unserviceable stock, handling post-consumer returns, etc. There is also the potential for loss through damages and miscounts. Proper record-keeping and regular reconciliations can identify underlying issues, and, for continuous quality improvement, what further security measures are needed.

It is important that a physical count AND reconciliation occurs. Simply counting the controlled substances provides a record of the amount of the inventory that is present on-hand at a moment in time. Accurate on-hand amounts are important for managing inventory levels, however, for the count to be useful as a security measure, it must be used as a starting point to conduct a reconciliation. Note that “on-hand” amounts from a perpetual inventory management system cannot be used in place of an actual physical count for the purposes of reconciliation, as the potential for human and/or data entry errors still exists.

Routine reconciliations should be used in conjunction with random audits on drugs have a high risk of diversion, and as described in the Health Canada Guidance and CSHP Guidelines. Sales/dispensing records or similar reports should be reviewed frequently and regularly, cross-referencing against the actual prescription orders to determine, for example:

  • all prescriptions/orders are accounted for, i.e., no prescriptions or prescription numbers are missing
  • the prescriptions are valid and meet the requirements of the relevant legislation
  • any unusual names, drugs, quantities or patterns are identified and investigated

The frequency of review should be appropriate for the pharmacy environment. For instance, recent or frequent staff turnover; temporary, relief or casual staff; high volume of controlled substances dispensed; history of past discrepancies identified; etc.

Reconciliation Process 

The process of reconciliation validates that the controlled substance inventory amount on hand is in agreement with what is expected based on the purchases (inventory IN) and sales (inventory OUT) over a specific time period. In cases where these amounts are not in agreement, discrepancies need to be investigated to pinpoint the underlying issue(s).

Problem Solving Discrepancies (Shortages or Overages)

Apparent shortages or overages can often be accounted for, such as when they are the result of human error in prescription processing or software errors in record-keeping.

  • Ensure all purchases received (including emergency orders from other pharmacies) are accounted for and up-to date in any perpetual systems;
  • Ensure any software interfaces have been functioning properly (e.g. check for missing or duplicated records)
  • Determine whether the shortage is a result of a “balance owing” or prescriptions processed through the pharmacy and inventory software systems but waiting for stock to arrive
  • Determine whether there is an error in record keeping when dispensing, i.e. interchangeable brand dispensed, without a corresponding change in the dispensing record in the computer;
  • Check that completed prescriptions were not picked up and returned to stock have been properly reflected by an adjustment to the dispensing record
  • Ensure that all inventory credits, returns, or drugs awaiting destruction are accounted for;
  • Account for all inventory, including:
    • drugs used in compounds;
    • inventory in compliance packaging or automated dispensing machines that has not been processed through the software system
    • prescriptions where more than one pack size (UPC or SKU) of a drug was dispensed

When these differences can be explained, and ideally corrected, they may not need to be reported to Health Canada, however internal documentation must still be retained.

Shortages that cannot be explained indicate potential internal theft or diversion. In these situations, depending on the level of access an employee has to physical records and to edit electronic records, it is important to be aware these can be manipulated or falsified to conceal unauthorized activity. From a loss prevention perspective, regularly reviewing all systems and procedures related to managing controlled substance is advised.

Published: August 2012
Version #: 3.00
College Contact: Pharmacy Practice

Revision History
Version # Date Action
1 August 2012 Published as “Narcotic Reconciliation and Security”
2 October 2021 Title changed to Controlled Substances: Security, Reconciliation and Reporting Loss or Theft to include all controlled substances and hospitals; minor updates to content and references
2.1 September 2022 Revised Additional References; minor reformatting
3.0 March 2023 Updated to include time-delayed safes and link to revised Health Canada guidance