Saturday, March 7, 2009

Purchase accrual month end reconciliation

During month end, usually there is a need to reconcile between the total purchase accrual for the month with the Inventory module. Purchase accrual GL account (Packing slip offset) is the GL account that records the total value for all the goods received but not yet invoiced (GRNI) for the month.

To reconcile this GL account with Inventory module, you can use the standard Item transactions report (Item management> Reports> Transactions> Item transactions). But usually the common assumption for retrieving the GRNI value is to filter the report for all items with the Receipt status as Received. This is incorrect if you back date print the report for prior month, where the stock that has been received (but not yet invoiced) in prior month has been invoiced now. Eg. Current month is Feb, you want to print all GRNI for Jan, and some stock that are received in Jan has been invoiced now in Feb. This is because Receive status for the Invent transactions have been changed to Invoice status now in Feb, and there is no way to retrieve back the original status on Jan.

There are two possible ways to solve this issue. Firstly, completely avoid this situation to happen by make it a business practice to have all the stock that received this month, are invoiced on the same month before the month end closing. This is the ideal situation.

In the not so ideal situation, there is possible to retrieve the correct GRNI value by tweaking the filtering criteria on the Item transaction report. We need to create the filter criteria so that the Item transaction report shows all purchase received transactions for current period that is either NOT yet invoiced, OR received in current month but invoiced after the current month. The report needs filter criteria as below:-

  • Physical date – Start and end date of current period (Eg. 01/01/2009..31/01/2009)
  • Financial date – Empty (indicates not yet invoiced) OR invoiced after the current period. (Eg. ‘ ‘, >31/01/2009)

Physical date indicates the Receive date for the item transaction, where Financial date is the Invoice date for the transaction. In this case, the Physical cost amount in the report should be tally with the Packing slip offset GL account.

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