Transcript How to Setup, Use and Balance Your A/P Accrual Accounts

How to Reconcile Your
Manufacturing Month-End Close
Douglas A. Volz
Sharon L. Widmer
October 1998
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Update for May 2007
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While at KPMG, Doug first wrote this in 1998. This version is
from a co-presentation with Sharon Widmer, a valued friend and
co-worker from KPMG/Bearingpoint.
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Starting in Release 11.5.10 (or 11.5.9 plus patches), the period
close processes will “snapshot” your month-end inventory
balances.
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However, even with this new functionality the snapshot does not
consider receiving inventory, nor does it provide useful monthend inventory valuation reporting. The only new report is a
period close reconciliation report, automatically generated when
you close your inventory accounting period.
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Doug has helped over 40 clients with reconciliation challenges,
from detailed diagnoses, training sessions, custom reconciliation
reports and assistance with streamlining month-end close
processes. His reconciliation experience started with early
Oracle clients in Release 9 and continues up to present
versions.
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Reconciliation Agenda
General Reconciliation Principles
 Receiving Valuation Accounts
 Inventory Valuation Accounts
 Work In Process Valuation Accounts
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There Has to be an Easier Way !!
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General Reconciliation
Principles
Use the following formula:
Prior cum. balance + monthly
accounting activity = month-end
cumulative G/L balance
 Also compare above formula to
cumulative report balances
 If you do not balance, check for manual
G/L journal entries and entries from
other subledgers
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More Reconciliation Principles:
INV, Receiving, and WIP
Ignore minor rounding differences:
• When the unit cost precision is higher
than the currency decimal precision,
you may have minor rounding
differences between the valuation
reports and cumulative accounting
totals
 Watch out for transaction and reporting
cut-offs!!
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How to Balance the Receiving
Valuation Accounts
Use the Receiving Valuation Reports to
get the month-end balances
 Use the Receiving Account Distribution
Report for monthly increases to the
Receiving Valuation Account
 Use the Material Distribution Summary
Report for monthly decreases to the
Receiving Valuation Account
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How to Balance the Inventory
(Stores)Valuation Accounts
Use the Inventory Valuation Reports to
get the month-end balances
 You can also use the Transaction
Historical Summary Report
 Also use the Period Close Value
Summary Report, for a double check
 Use the Material Distribution Summary
Report for monthly totals
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What to Check If the Inventory
Accounts Do Not Balance
Check for miscellaneous inventory
transactions, where the offset account is
the same as the subinventory valuation
account
 Use the Transaction Distribution Inquiry
to find these, query for entries that hit
your subinventory valuation accounts,
but the Accounting Line Type is
“Account”
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How to Balance the Intransit
Valuation Accounts
Use the Intransit Valuation Reports to
get the month-end balances
• Choose Yes for the option “Only
Display Inventory You Own”
 Use the Material Distribution Summary
Report for monthly totals
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How to Balance the WIP
Valuation Accounts
Use the WIP Valuation Report to get the
month-end balances (No cut-off
issues!!)
• Choose the option to include closed
jobs
 Use the WIP Account Summary and
Material Distribution Summary Reports
for monthly totals
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Report Drill-Down to the
General Ledger
The Inventory/WIP GL batch numbers
are visible in the G/L, as part of the
journal entry batch name
 You can run the Material and WIP
Distribution Reports by this G/L batch
number and compare to the General
Ledger
 In R10.7 GUI you can drill down by GL
Batch in the Inv. GL Transfers Screen
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List of Month-End Close Reports
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Material Distribution Detail/Summary Reports
WIP Account Detail/Summary Reports
Receiving Account Distribution Report
Purchase Price Variance Report
Invoice Price Variance Report
Discrete Job Value
Repetitive Value Report
Expense Job Value Report
Margin Analysis Report
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Month-End Close Reports
(Cont’d)
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Inventory Value Report
Intransit Value Report
Subinventory Account Value Report
All Inventories Value Report
Receiving Value Report
Receiving Value by Destination Report
WIP Value Report
Period Close Value Summary Report
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Common Problems
Uncosted material transactions in
MTL_MATERIAL_TRANSACTIONS
 WIP labor/overhead transactions stuck
in WIP_TRANSACTIONS
 Stuck PO receipts in
RCV_TRANSACTIONS_INTERFACE
 Report cut-off issues at month-end
 Running multiple periods at a time, and
back-dating transactions
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Common Problems (Cont’d)
For GUI, Wrong System Account for
“Receiving Accrual Account” field
 Not correctly initializing the subinventory
summary balances for first period close
 Not reclassifying the initial legacy GL
balances to match Oracle system
 Release 10.7 Period Close Bug #667196 (usually for Average Costing)
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Desired Enhancements
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Add a close date parameter to the
Discrete Job Value Report, to facilitate
running the report for all closed jobs at
month-end
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Create a system balancing/comparison
report to do this work for you
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Desired Enhancements (Cont’d)
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Add Oracle G/L inquiry drill-down
capability for Inventory and WIP
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Add a standard report or alert to find the
miscellaneous inventory transactions
that are causing an out-of-balance
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Simplify, make more robust, or eliminate
the interfaces needed in Oracle
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Send Email Address to Get the
Following Scripts/Papers
Interface script - review interface tables
 Uncosted transactions instructions
 SQL script to list entries in the
RCV_TRANSACTIONS_INTERFACE
table
 Latest paper on the AP Accruals
(updated from 1996/97 OAUG conf.)
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Thank You for Your Attendance
and Participation
Douglas A. Volz
Sharon L. Widmer
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