Discrepancies between stock status reports and General Ledger (GL) inventory balances can be a source of significant concern for businesses. Ensuring these reports align is crucial for accurate financial reporting, effective inventory management, and informed decision-making. Several factors can contribute to these discrepancies, and understanding them is the first step towards resolution. This article explores common reasons for mismatches when you Compare Stock data with your GL, offering insights into maintaining data integrity across your systems.
One of the primary areas to scrutinize when comparing stock reports is the date and time parameters. It is imperative to verify that the “As of Date” or date ranges are identical across all reports being compared. Any transaction that falls outside the specified date range will naturally not be included, leading to discrepancies. For instance, transactions dated after the report’s cut-off or before its start date will skew the totals if not accounted for. A proactive approach involves setting date parameters well into the future when generating reports. This can act as a safety net, capturing any transactions erroneously dated in the future, highlighting potential data entry errors that could otherwise go unnoticed and impact your stock comparison. Ensuring the accuracy and timeliness of recording both labor and material transactions against jobs is also fundamental to improving report reliability and comparability.
Database integrity also plays a vital role in accurate stock comparison. Running a utility like database conversion tools can be instrumental in synchronizing tables and ensuring all transactions are properly reflected in your reports. This process can resolve underlying data corruption issues that may lead to inconsistencies. However, it’s crucial to exercise caution. Executing such utilities, especially those that may zero out reserved quantities, should always be performed in a test environment first. Replicating your production environment to a test environment allows for a thorough evaluation of the utility’s impact. This pre-emptive testing ensures that the results are fully understood and acceptable before implementing any changes in your live production system. Proper review in a non-production environment is not just recommended—it is an essential step to prevent unintended data alterations and ensure a reliable stock comparison.
Parts costing methods and their inherent complexities are another significant source of variance when you compare stock figures. The costing method applied to each part, along with any cost changes, and the timing of transactions, can all contribute to comparative variance between the GL and Stock Status reports. For example, standard cost changes applied to a part while jobs are in progress, or jobs released without fully loaded costs, can create discrepancies. Similarly, for parts using average costing, delays in processing transactions will also result in variances. If you encounter dollar amount mismatches, investigate whether part master costs have been altered. Managing costing changes meticulously is paramount to avoid excessive variances. In job processing and costing, the estimated cost assigned to a job at its creation must be as accurate as possible. If a job is initiated with incomplete cost information, subsequent revisions will lead to discrepancies between estimated and actual costs, as well as deviations from expected standard costs, especially when standard cost rolls occur at different times relative to material movements off a job. This issue is often prevalent in standard-cost environments employing skeleton MOM (Method of Manufacture) structures when jobs are released. Coordination between updates to standard costs and the timely updating of job/MOM configurations is crucial. In complex product structures with sub-assemblies, costs can be further skewed. If sub-assemblies are not fully defined cost-wise when a top-level job is created, costs may be absorbed into upper levels at zero cost. Later, when sub-assembly costing is finalized, discrepancies arise if standard cost rolls and job updates are not properly managed. Purchased parts, especially new ones without a last cost at the time of standard cost roll-up, can also understate standard costs initially. The timing and potential disconnect between transaction recording and cost updates can lead to inventory transactions being recorded in GL inventory accounts at costs that differ from the current part master cost used for stock status valuation. It’s also critical to note the timing of standard cost roll-ups relative to shipment and cost of sales (COS)/Work in Progress (WIP) capture. A standard cost roll performed after shipment but before processing Capture COS/WIP will undoubtedly cause valuation discrepancies.
Incorrect General Ledger (GL) account associations or setups at the part or part class level represent another potential pitfall. For certain parts, the GL control setup might incorrectly assign an expense account instead of an inventory account within the Part Class settings. Consequently, when transactions are captured and posted to the GL, these expense accounts are inadvertently updated, leading to discrepancies when comparing GL inventory account balances against the Stock Status Report. PUR-STK transactions, intended to update Stock Status and inventory reports, might mistakenly post to expense accounts in the GL instead of designated GL Inventory accounts. Even if account mappings appear correct currently, historical mismatches might have occurred if these settings were not consistently accurate over time.
Furthermore, it’s worth investigating if parts lack a designated part class. In such instances, the system typically defaults to the Control Accounts defined in the company configuration, where master GL controls reside. Auditing these master GL controls is essential, as the Inventory account specified there might also be incorrectly set to an expense account or an account outside of inventory classifications.
It’s important to recognize the limitations of the Stock Status Report itself. This report typically excludes certain inventory categories from its displayed values. Specifically, non-nettable bin inventory, inventory in inspection, DMR (Discrepant Material Report) inventory, and RMA (Return Material Authorization) inventory are often not reflected in standard Stock Status Reports. This exclusion is based on the operational business processes within the ERP system. If your system settings include an option like “MOVE COSTS TO DMR,” the associated costs will not appear on the WIP report, further contributing to potential discrepancies when comparing to GL. As previously highlighted, standard cost processing timing and out-of-sequence transaction processing significantly impact inventory valuation and can lead to mismatches when you compare stock and GL data.
By carefully considering these factors—date ranges, database integrity, costing methods, GL account setups, and the scope of your stock status reports—businesses can more effectively identify and resolve discrepancies when comparing stock status reports with General Ledger balances. This diligent approach ensures greater accuracy in inventory accounting and overall financial reporting.
