Easing Reconciling Oracle Inventory and General Ledger with Simplified Procedures
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The document discusses procedures for reconciling Oracle inventory and general ledger values through simplified steps. It covers reconciling receiving, in-transit, and work-in-progress inventory values by running reconciliation reports, distributing accounting transactions, and comparing report values. Tips are provided for identifying reconciliation differences through detailed analysis of transaction distributions and journal entries.
![Tips and tricks of Inventory Reconciliation - Reco Process
Make use of drilldown from GL to view Inventory/WIP transactions
Always reconcile on period end date and not in between periods
Proceed to close the INV periods only when the reconciliation tallies
Incase of differences reconcile individual ORGS/SUB INV separately
Create a log of Reconciliation findings for future references
Ensure there are no INV transactions…
created but not interfaced to GL
created and interfaced to GL but not imported for posting
un-posted in GL
Always refer Metalink Notes for smooth reconciliations
Costing Reports and Reconciliation [ID 291005.1]
11i/R12 - Resolving Period Close Pending Transaction [ID 242927.1]
Resolving Period Close Pending Transaction R12 [ID 1069492.1]”
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Easing Reconciling Oracle Inventory and General Ledger with Simplified Procedures
- 1. Easing reconciling Oracle Inventory & General Ledger with simplified procedures GIRISH K PALEKAR PRINCIPAL SOLUTION ARCHITECT KPIT CUMMINS INFOSYSTEMS LIMITED [email protected] Session ID: 8984 1
- 3. • Girish Palekar is Principal Solution Architect at KPIT Cummins Infosystems, India and currently leads a team of Oracle Apps Subject Matter Experts (SME). • Girish is a fellow Chartered Accountant (CPA equivalent) and he is into Oracle Apps for last 10 years. • Finance &SCM are his area of special interests and he has been instrumental in designing a number of Oracle Apps utilities and RICE components in the Finance and SCM area. 3
- 4. Agenda What is Inventory Reconciliation? How to perform Inventory Reconciliation? How to perform Receiving Inventory Reconciliation? How to perform Intransit Inventory Reconciliation? Inventory Reconciliation in Multi inv org scenario What causes reconciliation gaps? How to find out reconciliation differences? Important reports useful in Inventory Reconciliation Tips and tricks of Inventory Reconciliation Q&A 4
- 5. What is Inventory Reconciliation? Material Work In Progress Transactions Transactions Outside Processing Material Overheads Overheads Inventory Material Value Resources Cost Material Transaction Move Transaction Manager Manager Manager General Ledger 5
- 6. What is Inventory Reconciliation? When Material or WIP transaction is Inventory - Cost processed the on-hand quantity & elements and average cost is updated Material On-hand quantity multiplied by the Distributions item cost = Inventory value WIP - Cost elements MATERIAL and WIP Distributions MATERIAL OVERHEAD OUTSIDE PROCESSING PRODUCTION OVERHEAD Accounted in General Ledger RESOURCE General Ledger Inventory INV-GL Account Value Reco Balance 6
- 7. Transactions affecting Material Valuation Receiving Deliver Receiving transactions occur in the PO module Material transactions Material WIP occur in the INV module Mfg Transactions occur Supplier Return to in the WIP module Intransit Shipment Vendor Material Supplier Shipments Back-Flush Intransit Receipts Item Cost update Transaction Receipt from Production Customer Returns Misc. Issue/Receipt Issue to Production Inter-Org Transfers Inventory Adjustments Subinventory Transfers Return to Vendor 7
- 8. How to perform Inventory Reconciliation? Complete all inventory transactions Check interfaces for errors Close all pending shipments Run Create Accounting program Open Next Inventory Period Close current inventory period Run related reports Period Close Reconciliation Report Inventory Value Report Material Account Distribution Detail Report WIP Account Distribution Report 8
- 9. How to perform Inventory Reconciliation? • Running the Period Close Reconciliation report for summarizing inventory transaction records • It displays differences between accounted value (SLA) and inventory value (INV) • This report creates a baseline for inventory calculation for the next period 9
- 10. How to perform Inventory Reconciliation? 1 In Material Distribution Form sum of all the lines with “Inv Valuation” as the parameter for a given period = value as per ‘Inventory Value Report’ for that period? 2 Current period’s inventory value report - last period’s inventory value report= “Inv Valuation” material distributions 10
- 11. How to perform Receiving Inventory Reconciliation? RECEIVE RETURN RETURN TO PO RECEIPTS VENDOR RECEIPT CORRECTION RECEIVING DELIVER RETURN INVENTORY 11
- 12. How to perform Receiving Inventory Reconciliation? • Run Receiving Valuation Report to get month-end balance Shows item quantity, valuation and detailed receipt information TIP: Use the Detail report option, the reportwill displays details of the quantity in Receiving Inspection for each receiving shipment. 12
- 13. How to perform Receiving Inventory Reconciliation? • Run Receiving Account Distribution Report to view the accounting distributions for your receiving transactions for the period This report supports the distributions created for TIP: Tally the distributions in Purchase Order Receipts || Purchase Order Receipt this report with the Adjustments || Purchase Order Returns to Supplier || Deliver to Expense Destinations || Return to Receiving Account Analysis report from Expense Destinations etc. (GL) 13
- 14. How to perform Receiving Inventory Reconciliation? Material Account Distribution Report Summary Detail If you detect unusual accounts or amounts, use the Detail report 14
- 15. How to perform Intransit Inventory Reconciliation? • Run the Intransit Value Report * FOB terms decides ownership * TIP: Set option “Only Display Inventory You Own” to Yes Tally the Distributions in Material Distribution Report for Transaction Type ‘Intransit Receipt/Shipment’ with the Account Analysis report (GL) 15
- 16. How to perform WIP Reconciliation? • Run the WIP Value Report to get the details for the work in process inventory for a particular accounting period. TIP: You must close all open periods before the one you are running this report for. Tally the Distributions in WIP Distribution Report with the Account Analysis report (GL) 16
- 17. Inventory accounting • Run ‘Journal Entries Report - Cost Management’ to summarize the accounting entries in SLA by Organization and accounting class (Inventory Valuation, Receiving Inspection, WIP Valuation, etc.) . Note: Compare the summarized account balance at the organization level with the reports listed below Report Name Use Material Account Distributions (Detail and View the accounts charged for inventory transactions Summary) Receiving Account Distributions View accounting distributions for receiving transactions Intransit Value Report View intransit inventory transactions 17
- 18. Inventory accounting Receiving Transactions Inventory Transactions DR. CR. DR. CR. Material Received at Material delivered to Material delivered to Material returned to Gate Stores Stores Receiving Material Received Material Returned to Material received Material released to from Stores Vendor from Shop-Floor Shop-Floor Receipt Corrections Receipt Corrections RMA Receipts Material shipped to Customer Miscellaneous Miscellaneous Issue Receipt Sub INV /Inter-Org Sub INV /Inter-Org Transfer Receipt Transfer Issue INV Adjustments INV Adjustments 18
- 19. Inventory Reconciliation in multi-inventory organization scenario? 19
- 20. Inventory Reconciliation in multi inventory organization scenario? Business Natural Account Hierarchy Group XYZ 1200 Inventory Roll-up 1300 Material Value Parent 1301/2/3…50 Material Account Child Ledger A 1351/2/3…99 Intransit Inventory Account Child 1501/2/3…50 Receiving Inventory Account Child Operating 1400 WIP Value Parent Unit 1 2 1401/2/3…50 Outside Processing Account Child 1451/2/3…99 Overhead Account Child 1601/2/3…50 Resource Account Child Inventory Organizations M1 D1 Material Value 1300 Material Valuation Account M1 01…1301… M2 + Material Valuation Account M2 02…1302… + Material Valuation Account D1 03…1303… Inventory Organization M1 + Receiving Inventory Account M1 01…1501… Material Valuation Account 01.000.1301.00.000 + Receiving Inventory Account M2 02…1502… Receiving Inventory Account 01.000.1501.00.000 + Receiving Inventory Account D1 03…1503… Intransit Inventory Account 01.000.1351.00.000 + Intransit Inventory Account M1 01…1351… Inventory Organization M2 + Intransit Inventory Account M2 02…1352… Material Valuation Account 02.000.1302.00.000 + Intransit Inventory Account D1 03…1353… Receiving Inventory Account 02.000.1502.00.000 Intransit Inventory Account 02.000.1352.00.000 Inventory Organization D1 Material Valuation Account 03.000.1303.00.000 Inventory Value 1200 Receiving Inventory Account 03.000.1503.00.000 Material Value 1300 Intransit Inventory Account 03.000.1353.00.000 + WIP Value 1400 20
- 21. What causes reconciliation gaps? General Ledger Account Balance Material Inventory Value 21
- 22. What causes reconciliation gaps? • Receiving Inventory account same as INV Valuation SETUPS • Material account is used for non-INV setup • Setup change during the month • Entering valuation accounts in Misc Transactions TRANSACTIONS • Using material A/c for offsetting Avg. Cost update • Manual Journal entries in GL • Incorrect reports due to Data corruption REPORTS • Back-dated transactions • Report cut-off issues at month/period end • Interface transactions not cleared in time RECO PROCESS • Uncosted/Un-accounted inventory transactions • In-Correct INV-GL Reconciliation process 22
- 23. How to find out reconciliation differences? General Material Ledger Inventory Account Value Balance 1 2 3 4 5 Identify the Separate out Within the Run relevant Compare the correct balances for organization Distribution Distribution difference by each segregate reports for reports with running the inventory differences by each of the the GL reports Period Close organization transactional transactional reconciliation areas areas report. (Receiving, Material, Intransit, etc.) 23
- 24. Important reports useful in Inventory Reconciliation Various reports available in Oracle Inventory and Oracle General Ledger : Period Close Reconciliation Report Period Close Value Summary Report Material Account Distribution Summary Report Inventory Value Report Material Account Distribution Detail Report WIP Account Distribution Report Account Analysis - (180 Char) Journals - (180 Char) 24
- 25. Tips and tricks of Inventory Reconciliation 25
- 26. Tips and tricks of Inventory Reconciliation – Set Ups In GL carefully design Parent-Child relationship for INV accts Ensure only “Asset” sub inventories are considered for grouping in GL Enable Reconciliation flag while defining Segment values Define Cross-validation rules to prevent unwanted combinations Define Security rules to prevent use of wrong combinations All Cost elements to have different GL valuation accts Ensure “Transfer to GL” is set to “Yes” under Costing Information Subinventory level accounts to be different from Org level accts Different Receiving account for each INV ORG Do not check “Allow Negative Balances” unless highly necessary 26
- 27. Tips and tricks of Inventory Reconciliation - Transactions Ideally only one inventory period to be kept open so that no back- dated transactions are performed Do not use Valuation accts while processing Miscellaneous transactions Use single acct for all Cost Update transactions for that INV ORG Prevent use of valuation accts while processing Physical Inventory and Cycle Count adjustments Do not use Material Valuation accts while processing non-inventory transactions such as Manual JV, AP/AR/FA Transactions, etc. 27
- 28. Tips and tricks of Inventory Reconciliation - Reports Maintain a list of all reports required for Reconciliation so that critical reports are not missed out Schedule all the transactional reports you require for INV Reconciliation Run reports after all transactions are costed and not before Cut-off date for reports must be the period end date Incase of high transaction volumes run ‘Create Accounting – Cost Management’ program on a daily basis 28
- 29. Tips and tricks of Inventory Reconciliation - Reco Process Make use of drilldown from GL to view Inventory/WIP transactions Always reconcile on period end date and not in between periods Proceed to close the INV periods only when the reconciliation tallies Incase of differences reconcile individual ORGS/SUB INV separately Create a log of Reconciliation findings for future references Ensure there are no INV transactions… created but not interfaced to GL created and interfaced to GL but not imported for posting un-posted in GL Always refer Metalink Notes for smooth reconciliations Costing Reports and Reconciliation [ID 291005.1] 11i/R12 - Resolving Period Close Pending Transaction [ID 242927.1] Resolving Period Close Pending Transaction R12 [ID 1069492.1]” 29
- 30. Thanks For Attending The Session !!! Please write to Girish K Palekar for any queries or questions that you may have Email : [email protected] Phone : Desk Phone: +91 20 6652 5127 Cell Phone: +91 9850572160 30