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difference between inventory valuation and g/l balance

nostrannostran Member Posts: 106
edited 2004-12-21 in NAV/Navision Classic Client
hi guys,

i've got a client who has huge differences between the inventory valuation report and the balance reported in the general ledger. The costing method used is average cost. The automatic cost posting is activated.

there are no direct postings in the general ledger account. ajust cost- item entries, post inventory cost to G/L are run on a daily basis.

i've process multiple purchase order, sales order, inventory adjustment but i can't simulate the problem, i.e. obtain that difference between inventory valuation amount and g/l balance.

any suggestions as to what may cause the differences.
thanks :)


pretty desperate :shock:

Comments

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    craigbarbscraigbarbs Member Posts: 60
    In the ledger entries for the inventory account(s), apply the following filter: <>INVTPCOST&<>INVTADJMT&<>COMPRGL

    If you find any entries, navigate on these to find out where they come from. To my knowledge, no other source codes should appear in these accounts.

    Make sure that none of the accounts specified in the General Posting Setup point to the Inventory Accounts.

    System Created Entries can go to the wrong account if the setup is incorrect.
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    chaswinchaswin Member Posts: 54
    Is the Inventory posting setup correct and has it always been that way?

    Besides checking for the correct source codes in the inventory account(s), check for those source codes outside the inventory account(s). Stuff may have been incorrectly posted in the past and not rectified.
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    nostrannostran Member Posts: 106
    hi craig and chaswin,

    i've checked the g/l account for entries that have sources other than the ones you mentionned but there are none...

    as for the inventory setup, i've checked and it seems to be all right.
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    chaswinchaswin Member Posts: 54
    It's a bit of a long shot, but I did have one customer who had put the inventory account number into the Purchase Account column of the General Posting setup table. This caused chaos!

    Have a look at all the General Posting setup table entries and see if any of the inventory accounts make an appearance.
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    nostrannostran Member Posts: 106
    hi,

    i am wondering whether the number of decimal places could be the cause. it seems that when calculating avg cost, the systems takes into account up to six decimal places? am i right there! and the number of decimal places is set by the setting in the general ledger setup.

    could anyone please share his experience

    thanks
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    chaswinchaswin Member Posts: 54
    Quite correct. But the more decimal places, the more accurate the average cost!

    Do you do any foreign currency transaction in Inventory?
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    nostrannostran Member Posts: 106
    hi chaswin,

    yes there are some inventory goods that are purchased in foreign currencies and that have additional cost. the additional costs are applied to the corresponding transaction line.
    any way to tackle with it?

    i've increased the decimal places in the g/l setup to 6 decimal places and the unit cost and the average cost seem to match perfectly now. monitoring the thing on a daily basis now.

    thanks
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    chaswinchaswin Member Posts: 54
    There could have been currency issues, although finding them may be something else.

    I think the best bet is to do a daily balance (when all users are off and after the daily periodic runs). Balance from 010101 to "today". Incidentally, ensure that you don't have any filters on the periodic runs as that can really cause some confusion!
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    nostrannostran Member Posts: 106
    hi chaswin,

    would it be possible without customisation (or very very little) to actually get the system to let's say use only three decimal places on the average cost calculation and the unit cost as well.

    despite doing item revaluation several times and running adjust cost, there are couple of items that have those two costs differing, well only 0.001 etc, but still

    one thing though, quantity sold of these items are in decimals, so just make things worst.

    regards
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    chaswinchaswin Member Posts: 54
    In general, the unit cost doesn't have the significance it used to have. You will find that most postings will default the unit cost into a journal but will actually post at average cost! So a minute difference between the two shouldn't matter.

    You can adjust the decimal places in the GL setup. Customisation should not be necessary.
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    nostrannostran Member Posts: 106
    well seem its not the decimal places that's causing the problem. when they are processing transactions, i.e. positive adjustments, negative adjustements, customer invoices, supplier invoices etc, at some stage its causing differences between the gl and inventory valuation to crop up and its huge e.g 200,000 and all the transactions were in the local currencies.
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    mccizmt2mccizmt2 Member Posts: 21
    I have seen this too.

    In our business we wanted to run take financial information off the item table and it is completely different to that on the actual ledgers.
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    chaswinchaswin Member Posts: 54
    I can assure you that the interfacing does work!

    Check your posting setup table and your inventory posting groups.

    Ensure that you have ticked "Automatic Cost Posting" in the Inventory setup.

    If you have ticked "Expected Cost Posting to G?L" then you may find some values in the interim accounts.

    Run the adjust cost and post cost to GL periodic updates.

    Always run the Inventory Valuation report with "Expected Cost Posting" ticked and for absolute certainty in balancing with a date from of 01/01/01 and a date to of 31/12/9999. (People sometimes post into the future).

    Ensure that the system has no users when you balance and ensure that you balance to the closing balance of the inventory accounts and not to a specific date.

    If you do all that then you should get close!
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    RabeRabe Member Posts: 27
    Hi Nostran,

    I would suggest the following to try and pinpoint which items are causing the differences between the G/L and the Item Ledger.

    Run Inventory Valuation Report with Expected Cost Selected.

    Create a new report which will group a specific G/L Account by Item. This can be accomplished by using the Value Entry No. on the G/L Entry. This report will then provide you with the ability to balance per item back to the Inventory Valuation Report.

    I suggest running the Inventory Valuation Report for 1 inventory posting group at a time and then run the new report for the related Inventory control account.

    The two reports should tie up. If any differences are found they can be traced using the following method.

    Create another report based on the value entries. Group the report by Item as well and for each Value Entry find the Corresponding G/L Entry using the Value Entry No. in the G/L. (Suggest creating a new key “Value Entry No.” on G/L Entries). This report will reflect all G/L Entries generated by the Sub Ledger and should highlight where differences occurred. For example G/L Postings for 1 Item might have occurred against multiple inventory control accounts due to development or user error.

    Hope it helps

    Best regards,
    Rabe
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