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How to Reconcile Your Manufacturing Month-End Close. Douglas A. Volz Sharon L. Widmer October 1998. Update for May 2007. 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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how to reconcile your manufacturing month end close

How to Reconcile Your Manufacturing Month-End Close

Douglas A. Volz

Sharon L. Widmer

October 1998

update for may 2007
Update for May 2007
  • 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.
  • Starting in Release 11.5.10 (or 11.5.9 plus patches), the period close processes will “snapshot” your month-end inventory balances.
  • However, even with this new functionality the snapshot does not consider receiving inventory, nor does it provide useful month-end inventory valuation reporting. The only new report is a period close reconciliation report, automatically generated when you close your inventory accounting period.
  • 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.
reconciliation agenda
Reconciliation Agenda
  • General Reconciliation Principles
  • Receiving Valuation Accounts
  • Inventory Valuation Accounts
  • Work In Process Valuation Accounts
general reconciliation principles
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
more reconciliation principles inv receiving and wip
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!!
how to balance the receiving valuation accounts
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
how to balance the inventory stores valuation accounts
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
what to check if the inventory accounts do not balance
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”
how to balance the intransit valuation accounts
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
how to balance the wip valuation accounts
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
report drill down to the general ledger
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
list of month end close reports
List of Month-End Close Reports
  • 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
month end close reports cont d
Month-End Close Reports (Cont’d)
  • 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
common problems
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
common problems cont d
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)
desired enhancements
Desired Enhancements
  • Add a close date parameter to the Discrete Job Value Report, to facilitate running the report for all closed jobs at month-end
  • Create a system balancing/comparison report to do this work for you
desired enhancements cont d
Desired Enhancements (Cont’d)
  • Add Oracle G/L inquiry drill-down capability for Inventory and WIP
  • Add a standard report or alert to find the miscellaneous inventory transactions that are causing an out-of-balance
  • Simplify, make more robust, or eliminate the interfaces needed in Oracle
send email address to get the following scripts papers
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.)
thank you for your attendance and participation

Thank You for Your Attendance and Participation

Douglas A. Volz

Sharon L. Widmer

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