Question: Why doesn't the Inventory WIP Report Values match the Accounting Ledger Values?
When considering the Accounting value of the WIP account in comparison with the Inventory & WIP Value report, there are three major considerations:
1. All inventory transactions MUST have been released and posted to the GL and the GL accounts recalculated.
2. The results from the INVENTORY report are calculated real-time, based on the condition of the work order and material kitted to the work order. If there are any inventory transactions completed after the closing of all GL transactions, the results will not be the same.
3. As the GL values are carried over from month to month, any previous errors to the accounting process will be included in the WIP account value (or any account value, for that matter). So it could be because the beginning WIP account value may have NOT been accurate because of numerous journal entries to the account in preceding periods.
Recommendations: (these steps can be used to get the values in sync - as much as possible, and are not intended to be a routine monthly practice)
1. Make sure you have fully released and closed ALL previous periods, and the previous year before any further transactions, and retain a copy of the database.
2. Run the Inventory Valuation report at the end of the last day of the period, and retain it.
3. Compare this value with the GL WIP account, and adjust the GL WIP account by the difference, so they match.
4. The following period end, repeat Steps 1 thru 3.
5. If after Step 4, there is a difference between the accounts, provide the database from each period ending and both valuation reports to ManEx.
Also, check your Warehouse setup:
1. Could be due to the Warehouse Setup not having the WIP and MRB setup to have unique GL account numbers.
For Example: If the MRB whse and the WIP whse used to be assigned the same GL Account number, the Inventory and WIP Valuation report is coded to only considered WIP and would not account for the MRB values. But due to the way the whse was setup your account would be accounting for both the WIP and MRB transactions. Therefore the Inventory valuation report and GL account balances would never come close to matching. We have modified Warehouse setup so WIP and MRP GL numbers now have to be unique. User is not allowed to enter WIP & MRP GL numbers that have been used by other warehouse and other warehouses can not use the same GL numbers that are used by WIP and MRP warehouses.
2. Could be due to the Warehouse Setup not having the WO-WIP and WIP setup to have unique GL account numbers. It is VERY important that the account number for WO-WIP is NOT the same as the WIP account number, in Warehouse Setup.
For Example: WO-WIP (Work Order-Work in Process) is a term we use to describe inventory issues to a work order, but which exceed the needed quantity of the work order. An example would be the issue to of a reel of components containing 2000 parts, but only 1600 components are actually needed for the work order. Because it may not be feasible to portion out exactly the 1600 components, the complete reel is issued to the work order. Then from a data standpoint, there are 1600 actually issued to the work order(WIP) and 400 issued to WO-WIP.
So WO-WIP is actually inventory, NOT WIP. We identify it as WO-WIP to make it wasier to understand that it is not in a normal warehouse, and to idenify the work order where these extra parts are currently held.
Doing this procedure allow us to identify the extra parts issued to a work order as being available to meed any demand requirements in MRP. Without the visibility of these WO-WIP parts, MRP would not know they were available and generate orders to obtain more parts, with the result being a likely duplication of the requirements.
At the end of the work order (or any time before it) the extra parts should be returned to the stockroom, and the kit adjusted to reflect the return. If it is not done, then when closing the kits, these parts may be absorbed by the work order, resulting in an unfavorable mfgr variance.
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