Hello everyone,Here is another learning from my side. Well , most of us might be well ware of the Inventory reconciliation issues and the approach to troubleshoot them in Microsoft dynamics Axapta , In my post below, i will try to explain the way i understood and worked on it.
What is Inventory reconciliation ?
In very simple words ,the process of identifying the discrepancies between sub-ledger(E.g – Inventory sub ledger AP/AR sub ledger..) and the general Ledger values and taking suitable actions to correct these discrepancies can be called as the inventory reconciliation. By the end of the fiscal year , the balances from the sub ledgers are reconciled with the general ledger values to ensure that the sub-ledger and the general ledger are in sync. It is one of the painful issues for organizations on Dynamics Axapta.
When we perform inventory reconciliation , we validate that the transactions from the inventory and the general ledger agree with the parameter settings in Accounts payable , Accounts receivable , Production and Inventory.
What may cause the Inventory not to Reconcile ?
There are several parameters that can cause the Inventory not to match with the GL. Below are some of the points.
- Incorrect setup of posting profiles.
- Improper setup of the item groups and ledger accounts in them.
- Service type item may have been setup to get posted to inventory accounts.
- Date of financial transaction update.
- Item groups may have been changed on items by users(May be by mistake)
- Posting of manual journals into inventory accounts.
Steps for Inventory reconciliation – An approach:
You may perform the below steps to identify the possible discrepancies between the inventory sub ledger and the general ledger posting values and take suitable actions to correct them.
- Perform inventory closing for the period you are reconciling your inventory.(If not already closed)
- Run the trial balance report for Inventory accounts at GL > Reports > Transactions > Periodic > Trial balance. This can be helpful in ensuring that the opening value of the inventory should be in sync with GL.
- Run the Posting by Account report at GL > Reports > Reconciliation > Inventory – Item posting by account and review the transaction by the posting types. This will help in determining the transaction types posted to the inventory accounts and you can ensure that wrong transactions got posted to inventory accounts if any.
- You can also run the Ledger transaction list report at GL > Reports > Transactions > Ledger transactions list to get a list of all transactions that may not have been captured by the Item posting by account report. This will help in analyzing if any unwanted transactions(Service item transactions , manual entries etc) got posted to inventory accounts.
- Run the Inventory value report by item group at Inventory management > Reports > Status > Inventory value report by item group and match the financial values of each item group with the trial balance report.
- Analyze the variances and take suitable actions for the wrong transaction entires. If incorrect ledger account setups are found , correct them. If manual transaction entires are found , create appropriate reversing entires for them.If service item transactions are found , double-check the setup for the service items.
Other important reports in Dynamics AX that will hep in Inventory reconciliation :
- Inventory management > Setup > Inventory value reports
- Inventory management > Reports > Status > Inventory value > Inventory value report.
- Inventory management > Reports > Status > Inventory value > Potential conflicts – Inventory and General ledger
- General Ledger > Reports > All reports under Inventory folder. Please refer to the screenshots below.
From the above mentioned reports , the Potential conflicts report can be found very useful in the inventory recon. process. and these set of inventory value reports are included in hotfix roll up 5 for dynamics AX 2009 service pack 1(Dynamics AX 2009 SP1 RU 5).
So , above steps and information about inventory reconciliation are one of the approaches that one may follow to reconcile inventory and there may exist other better approaches.
Thanks, Keep DAXING🙂