Inventory subledger different from GL account balance

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Posted on by Alvaro Rodríguez Ochoa

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Hi all, it has come to our attention that if I add all inventory on hand and compare to the inventory balance on GL are way off, why could be causing this difference? is there an easy way to concile this? we are on GP 10.

Thanks all for your answers and ideas.

Regards.

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RE: Inventory subledger different from GL account balance

I have been asked to do this on various occassions. GP does not allow the user to do it, and I've often wondered why. If there is no inventory, why can't it be changed on the front-end? I'm usually asked to go from Sales Inventory to Service, as I assume someone setup the item incorrectly.

Joe Erickson

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Alvaro Rodríguez Ochoa 2,395 on at

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RE: Inventory subledger different from GL account balance

Hi richard, thanks on the reply about "Cost adjustment" but I don't get you reply on the ODBC connection, I think you replied on a wrong post.

Regards.

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Richard Wheeler 75,848 Moderator on at

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RE: Inventory subledger different from GL account balance

www.ehow.com/how_4642566_setup-odbc-database-connection.html

Here is onen clue. You can also do an internet search on "How to setup and ODBC connection" and you will find many useful hints.

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Richard Wheeler 75,848 Moderator on at

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RE: Inventory subledger different from GL account balance

If you cust purchase orders and do a shipment receipt at one cost and an involce match at another cost, this can cause cost adjustments. Plus if you run Tools->Utilities->Inventory->Adjust Unit cost this can also cause cost adjustments.

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Mahmoud Saadi 32,738 on at

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RE: Inventory subledger different from GL account balance

Let me consider this scenario, suppose you receive 100 piece of Item (A) with a unit cost (5). A new cost layer is created with [ IV10200 ] , that will be later on consumed.

Item Number QuantityReceived UnitCost ExtCost AdjUnitCost

A 100 5 500 5

Note:

As long as there is no change in unit cost, The (AdjuCost) and (UnitCost) fields will be identical. Once a change in the unit cost is made, AdjUnitCost will save the (Old Cost) while the unit cost field will be updated to hold the new cost.

Now, let me proceed with the scenario above. Suppose you withdraw quantities from the cost layer shown above through several transactions, such as transfers, sales documents or adjustments out. After on, the invoice of the shipment is entered with a different unit cost (5.5). Now the cost layer above will be updated to reflect this change.

On the other hand, GP follows all the transactions that withdraws the cost layer above, to apply the unit cost changes in the purchase receipt details [ IV10201 ]. and the proper cost adjustment document will be throws in [ SEE30303 ]. Although, there are several limitation to applying the changes on the purchase receipt details.

All in all, several cost differences that must have been applied on purchase receipt details [ IV10201 ] couldn't be applied. In turn, cost variances arise first between IV10200 and SEE30303 from one side. SEE30303 and GL20000 on the other side.

This is a very complicated issue that need in depth analysis and diagnostic to figure out the effects of "cost adjustment" documents on your IV-GL balance.I hope this is a valid explanation to help you understand cost-adjustment effect on inventory and IV-GL balance.

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Alvaro Rodríguez Ochoa 2,395 on at

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RE: Inventory subledger different from GL account balance

Thanks for the reply Mahmoud, yes we have some "cost adjustment" transactions on several items, wich im not sure why they are there.

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Mahmoud Saadi 32,738 on at

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RE: Inventory subledger different from GL account balance

I do agree; as all of you, that posting a journal entry on the inventory account directly from GL, or posting a document in Inventory with no "post to GL" will absolutely result with an imbalance IV versus GL. Although, this is a business case and need to be considered through policies and procedures in order to prevent doing so, and the system supports such rules (by locking the IV account from GL not to allow account entry but from modules).

On the other hand, what should be taken into consideration is other scenarios that might generate variances. I do believe that one of the main reasons that primarily causes a difference between Inventory and GL is the "Cost Adjustment ". There are several cases in which the cost adjustment document that is created in Inventory doesn't result with 100% accurate IV-GL balance.

The good news is that GP 2013 provided a very elegant tool that could provide you with a detailed report for IV-GL variances. Although, understanding the root causes behind these variances is a must in order to eliminate any further potential variances.

I would be definitely happy to discuss further details on this issue, in case your GP has "Cost-Adjustments" scenario that might be "partially" the root cause beneath your variances.

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Alvaro Rodríguez Ochoa 2,395 on at

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RE: Inventory subledger different from GL account balance

No, all our inventory items are sales inventory.

Thanks again all for your help.

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Richard Wheeler 75,848 Moderator on at

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RE: Inventory subledger different from GL account balance

There have been no items where someone changed it behind the scenes from Sales Inventory to Service and back again, are there?

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Richard Whaley 25,195 on at

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RE: Inventory subledger different from GL account balance

FIFO Perpetual and Average will always cause differences between GL and Inventory. If you sell something while the quantity on hand is 0 or less, it sells at the old cost, then the new cost is received and you are off.

If it has been a while since you reconciled the accounts, simply JE the GL to match, turn off posting to the IV control accounts (transactions can post but you cannot enter manual transactions to botch things up), and make it a policy to process PO and manufacturing receipts before you post sales invoices.

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