The inventory setup in Dynamics NAV is very straight foward. However, if the implementor is not careful on what he or she's doing, it can go very wrong very fast. The proper setup of NAV inventory posting to the general ledger can be found in the financials manual. I understand the manual gives a lot, sometimes too much, information for what you're trying to accomplish. But that's why you need to find a good partner to properly separate what's useful for your company and what's not necessary.
When the inventory is not setup properly, the inventory valuation report that are ran and what's being reported in the G/L will not match. This causes additional questions and uncertainty from auditors/management/owners etc. Basically, all will start wondering what information should they trust when they've spent a lot of resource on a new ERP system.
This is when the end user start to get creative to match up their report and the G/L. To avoid the fuss, most of the time they would create general journal entries or export the data to Excel to do their own calculation.
While it's the responsbility of the owners of the system to decide what they want to do to get past their financial audit (internal or external), my feelings is that there are enough things to do during the work day. Whatever will save me the most time, I will naturally gravitate towards; even if it will require me to put in extra effort in the beginning.
Dynamics NAV inventory works beautifully. Most, if not all, of the inventory reconciliation problems are caused by human. So in order for Dynamics NAV to start doing its job, we have to remove the human element from the equation, in addition, we have to do our run the processes that are required in Navision.
Here are the steps to properly reconcile your inventory valuation to G/L ledger. These steps will match up the inventory to G/L in MOST cases. If these steps does not match up your inventory value with the G/L, you will need to check to see if your solution made any changes to the core costing engine or if there are any hot fixes released by Microsoft that was not applied.
The steps are:1. Run adjust cost2. check source code on G/L entry3. check abnormal posting date4. Run Inventory to G/L reconcile report
Here are the steps in Detail:1. Run the Adjust Cost - Item Entries processThis is the mother of all inventory process in Dynamics NAV. This absolutely has to be ran in order to reconcile your inventory to G/L. In short, this process updates any related outbound item costs based on any fluctuations in the inbound item cost. There is an extensive writeup of what this process does when you push Help in the Dynamics NAV application. In short short, just run it.
2. Check and reverse any entries on your Inventory G/L account with Source Code that is not INVTPCOSTAny entries posted using Dynamics NAV to the inventory account should be INVTPCOST. Any entries that are not, are not suppose to be there. If you're posting manual entries into this account, or have any other transactions that are not INVTPCOST, you will be sabatoging your inventory value to G/L.
3. Check the Abnormal Posting DateWhat is the Abnormal Posting Date? Check this article I wrote a while back:http://www.dynamicsnavconsultant.com/2007/11/abnormal-posting-dates-2/
Basically, if the posting date on the purchase receipt is earlier than the posting date on the purchase invoice, you have abnormal posting dates. Don't ask me how it can happen. It happens.
4. Run the Inventory to G/L Reconcile report (Report 10138)After the above transactions are done, check the Inventory Value Posted to G/L column. This column, combined with the report you can on #3, should match, to the penny, to your G/L.
ConclusionAfter you match your inventory value to G/L, ensure that no further manual postings are done to your inventory accounts. In addition, implement some control on the dates on when you post your receipt/'shipment and invoices. Not to mention you should frequently update the Allow Posting From field on the General Ledger Setup.
Again, the goal of this is so you can use the system as it's intended to save you time so you don't have to spend a whole lot of time closing every month.
I'm using NAV version DE 3.60(5.0 SP1) so there don't have Inventory to G/L Reconcile report (Report 10138). Please tell what report should I run at the last steps?