Discrepancies between your Stock Status reports and General Ledger (GL) Inventory figures within an Enterprise Resource Planning (ERP) system can be a significant source of confusion and financial inaccuracy. Understanding the root causes of these mismatches is crucial for maintaining accurate inventory valuation and reliable financial reporting. This article explores common reasons for these discrepancies and provides insights into how to address them, ensuring your “Stock Compare” processes yield consistent and trustworthy results.
1. Date Sensitivity: Ensuring Accurate Transaction Timeframes
One of the most fundamental aspects of accurate inventory reporting is verifying the date parameters used across all relevant reports. When conducting a “stock compare,” it’s imperative to confirm that the “As of Date” or date ranges are identical across all reports being compared. Any transactions that fall outside of these specified date ranges, whether occurring before or after, may not be included in the totals, leading to discrepancies.
For instance, if a Stock Status report is run as of July 31st, but the GL Inventory report covers August 1st to August 31st, any transactions dated in August will only appear in the GL report, creating an imbalance when you “stock compare” the two. To mitigate this, meticulously check and align date parameters. Proactively setting date ranges extending into the future can also be a useful technique to identify and rectify transactions with potentially incorrect dates that could skew your “stock compare” analysis. Ensuring the accuracy and timeliness of labor and material transactions against jobs is also paramount for report integrity.
2. Database Synchronization: Utilizing Utilities for Data Integrity
ERP systems are complex databases, and occasional data synchronization issues can arise. Running database conversion utilities, specifically the 6430 utility in some systems, can be instrumental in synchronizing tables and ensuring all transactions are accurately reflected in your reports. This process can also help resolve underlying data corruption issues that might be contributing to “stock compare” discrepancies.
It is critical to emphasize that the execution of such utilities should always be performed first in a TEST environment, mirroring your PRODUCTION environment. This precautionary step is essential because these utilities may, in some cases, reset reserved quantities to zero. Replicating your PRODUCTION environment to TEST allows for a thorough understanding and validation of the utility’s impact before implementing it in your live PRODUCTION system. Rigorous review in a non-production environment is indispensable to prevent unintended consequences and ensure a successful “stock compare” outcome after synchronization.
3. Costing Methodologies and Transaction Timing: Impact on Inventory Valuation
Variances in “stock compare” results can frequently stem from the intricacies of parts costing methods, costing changes, and the timing of transactions. Each costing method (e.g., Standard Cost, Average Cost) reacts differently to changes and transaction timing, directly impacting inventory valuation.
Standard cost changes applied to parts while jobs are in process, or jobs released without complete costs, can introduce variances. Similarly, in average cost systems, delayed transaction processing can lead to mismatches. If dollar amount discrepancies are observed during a “stock compare,” it’s worth investigating whether part master costs have been altered. Costing changes should be managed carefully to minimize excessive fluctuations.
Job costing accuracy is also paramount. The estimated cost associated with a job at its creation needs to be as precise as possible. If a job is initiated with incomplete cost information (e.g., only 85% of costs loaded on the Method of Manufacturing – MOM), subsequent cost revisions will create discrepancies between Estimated (EST) and Actual (ACT) costs. This also affects the expected standard cost, particularly when standard cost rolls occur at different times relative to material movement off a job. This scenario is common in standard cost environments employing skeleton MOM structures and job releases. (MOM encompasses both the Bill of Material [BOM] and Bill of Operations [BOO]).
Coordination is key: managing updates to standard costs and updating the Job/MOM configuration are interdependent processes. In complex, multi-level product structures with sub-assemblies, incomplete definition of sub-assemblies at the top-level job creation can lead to zero-cost absorption of sub-assembly or component costs at higher levels. Later, when sub-assemblies are fully costed, if standard cost rolls and job updates are not properly managed, further “stock compare” issues arise.
Purchased parts, especially new ones lacking a prior “last cost,” can also understate standard costs when rolled up. Parts may be procured, received, and issued with cost, but if the part moved off a job is processed at an outdated standard cost, discrepancies emerge. This highlights the impact of timing and process dissociation. Transactions recorded in GL Inventory accounts reflect the cost at the transaction time, which may differ from the current part master cost used for Stock Status Report valuation. A crucial point to remember: performing a standard cost roll after shipment but before processing Capture Cost of Sales (COS)/Work in Progress (WIP) is a common pitfall that can skew “stock compare” results.
4. GL Account Setup and Associations: Correcting Account Mismatches
Incorrect General Ledger (GL) account associations or setups, particularly at the part or part class level, are another frequent source of “stock compare” problems. For certain part master items, the GL control setup might mistakenly or historically use a Part Class with the Inventory Account directed to an expense account rather than a true Inventory account. Consequently, when capture and posting to the GL occur, this expense account is updated instead of the intended Inventory account. This misdirection leads to discrepancies when reconciling GL Inventory Account balances against the Stock Status Report value.
Furthermore, Purchase to Stock (PUR-STK) transactions, designed to update Stock Status and other inventory reports, might inadvertently post to expense accounts in the GL instead of designated GL Inventory accounts. Even if account mappings appear correct currently, historical mismatches may persist if these mappings were inaccurate in the past.
5. Part Class and Control Account Audits: Ensuring Proper GL Mapping
In scenarios where parts lack a defined part class, ERP systems typically default to searching for accounts within the Control Accounts defined in the company configuration. These master GL Controls, therefore, require careful auditing. It’s essential to verify that within these controls, the Inventory account is correctly set to an Inventory account type and not erroneously pointed to an expense account or another non-inventory related account. Incorrect mappings at this level will directly impact the accuracy of your “stock compare” efforts.
6. Stock Status Report Limitations: Understanding Report Scope
It’s vital to understand the inherent limitations of the Stock Status Report itself when performing a “stock compare.” The Stock Status Report, by design, typically excludes several categories of inventory:
- Non-nettable bin inventory: Inventory in bins not designated as nettable for planning purposes.
- Inspection inventory: Items currently undergoing quality inspection.
- DMR (Discrepant Material Report) inventory: Materials flagged as discrepant or non-conforming.
- RMA (Return Material Authorization) Inventory: Items returned by customers and awaiting processing.
These exclusions are based on the business processes executed within the ERP platform. Furthermore, if the system setting “MOVE COSTS TO DMR” is enabled, the costs associated with discrepant materials will not be reflected in the Work in Progress (WIP) report, further impacting “stock compare” analyses if these categories are not considered separately. As previously highlighted, standard cost processing and the timing of transaction processing significantly influence inventory valuation and can contribute to discrepancies revealed in a “stock compare.”
By systematically investigating these potential causes – from date ranges and database integrity to costing methods, GL account setups, and report limitations – businesses can effectively troubleshoot and resolve discrepancies between Stock Status reports and GL Inventory figures. A thorough “stock compare” process, informed by these insights, is essential for maintaining accurate inventory data, reliable financial reporting, and informed decision-making.
