60 Inventory Orgs? 6 Ledgers? No Worries,
Reconcile Your Inventory With Ease!
OAUG NorCal Training Day
January 13, 2011
Douglas Volz
Douglas Volz Consulting
doug@volzconsulting.com
Reconciliation Agenda
 Background
 General Reconciliation Principles
 Receiving Valuation Accounts
 Inventory Valuation Accounts
 Work In Process Valuation Accounts
 Common Reconciliation Challenges
 Custom Solutions for Multiple Organizations
Slide 2
Summary Background
 Inventory to G/L reconciliation can be difficult
 This presentation includes the standard Oracle techniques
 Plus additional ideas and solutions that exceed standard tools
 Doug has helped Oracle clients with Cost Accounting since 1990
 Doug also leads the OAUG Cost Management SIG
Slide 3
Sample Financial Structure to Reconcile
Corporate
Consolidated
Ledger
Corporate Consolidated Ledger
(USD)
Secondary
Ledger
Switzerland
(CHE)
Swiss PL
(USD)
European PL
(USD)
Asia-Pac
LEs
Swiss LE
Other
European
LEs
Asia-Pac
OUs
Switzerland
OU
Other
European
OUs
US OU
Asia-Pac
Dist. Centers
Swiss Dist.
Center
Europe
LSP Orgs
US LSP
Orgs
Switzerland
Org
Europe Dist.
Centers
US Dist.
Centers
Korea
(KRW)
Asia-Pac
LEs
Legal Entity
Korea LE
Operating
Unit
Korea OU
Primary
Ledger
Inventory
Orgs
ORG
Korea
Item
Master
(ZZZ)
European
LSP’s
SLs
LSP’s
Slide 4
USA PL
(USD)
CORP
LE
Other
LEs
There Has to be an Easier Way !!
Slide 5
General Reconciliation Principles
 Use the following formula:
Prior cum. balance + monthly accounting activity =
month-end cumulative G/L balance
 Also compare above formula to cumulative perpetual
report balances
 If you do not balance, check for manual G/L journal
entries and entries from other subledgers
Slide 6
Sample Reconciliation Worksheet
Slide 7
More Reconciliation Principles
 Ignore minor rounding differences:
 When the unit cost precision is higher than the currency decimal
precision, you may have minor rounding differences between the
valuation reports and cumulative accounting totals
 Release 11i: Watch out for transaction & reporting cutoffs issues
 Release 12: All Inventory and Receiving Value Reports
have an “As of Date”
Slide 8
How to Balance the Receiving Valuation Accounts
 Use the Receiving Valuation Reports to get the monthend balances
 Use the Receiving Account Distribution Report for
monthly increases to the Receiving Valuation Account
 Use the Material Distribution Summary Report for
monthly decreases to the Receiving Valuation Account
Slide 9
Receiving Value Report
Slide 10
Receiving Account Distribution Report
Slide 11
How to Balance the Inventory Valuation Accounts
 Use the Inventory Valuation Reports to get the month-end balances
 Or, use the Period Close Reconciliation Report
 You can also use the Transaction Historical Summary Report
 Transaction Historical Summary Report – Standard Costing
 Transaction Historical Summary Report – Average Costing
 Also use the Period Close Value Summary Report
 And for monthly totals use the Material Distribution Summary
Report
Slide 12
Material Account Distribution Summary
Slide 13
All Inventories Value Report
Slide 14
Inventory
Value
Report
Slide 15
If the Inventory Accounts Do Not Balance
 Check for miscellaneous inventory transactions, where the offset
account is the same as the subinventory or organization valuation
account
Account Alias Issue Example
DR Inventory Account
(from the Account Alias)
Inventory
Acct Line Type
10
Account
10
CR Inventory Account
Inv valuation
 Use the Material Distribution Inquiry to find these, query for entries
that hit your subinventory valuation accounts (Std) or organization
valuation accounts (Avg), where the Accounting Line Type is
“Account”
Slide 16
If the Inventory Accounts Do Not Balance
Slide 17
How to Balance the Intransit Valuation Accounts
 Use the Intransit Valuation Reports to get the monthend balances
 Choose Yes for the option “Only Display Inventory You Own”
 Use the Material Distribution Summary Report for
monthly totals
Slide 18
Intransit Value Report
Slide 19
How to Balance the WIP Valuation Accounts
 Use the WIP Valuation Report to get the month-end
balances (No cut-off issues)
 Choose the option to include closed jobs
 Use the WIP Account Summary and Material
Distribution Summary Reports for monthly totals
Slide 20
WIP Value Report
Slide 21
WIP Account Summary Report
Slide 22
R12: Journal Entries Report – Cost Management
Process Category:
 Inventory
 Receiving
 Work in Process
 Manual / Third Party Merge
Slide 23
Journal Entries Report – Cost Management
Slide 24
Journal Entries Report – Cost Management
Slide 25
Journal Entries Report – Cost Management
Slide 26
Drill-Down From the General Ledger
 Release 11i: The Inventory/WIP GL batch numbers are visible in the
G/L, as part of the journal entry batch name
 Release 11i: You can run the Material and WIP Distribution Reports
by this G/L batch number and compare to the General Ledger
 Release 12: You cannot see the organization code or G/L batch
number on the G/L journal entry batch name unless you customize
your SLA rules
 Release 12: You can drill down from your G/L to the Subledger
Accounting Entries to the material, receiving and WIP transactions
 Release 12: You can run the Subledger Journal Entries, Account
Balances or Account Analysis Reports (with setup required)
Slide 27
Oracle Release 10 to 11i Inventory/WIP
Integration to the GL
COLUMN NAME
----------REFERENCE1
DATA TO INSERT
-----------------------------GL_BATCH_ID, ORGANIZATION_CODE
DESTINATION
WHERE THE DATA SHOWS UP
---------------------------- -----------------------------JE_BATCH NAME
Post Journals Form
REFERENCE2
Insert GL_BATCH_DATE, ORGANIZATION_CODE,
ORG_GL_BATCHES.DESCRIPTION, JE_BATCH DESCRIPTION
REFERENCE3
DO NOT POPULATE
Use unknown
REFERENCE4
DO NOT POPULATE
JE_HEADER NAME
Note:
Post Journals Form
Account Analysis Report,
Account Inquiry
Journal Import will append JE_CATEGORY_NAME, CURRENCY_CODE
REFERENCE5
Same as REFERENCE2
JE_HEADER DESCRIPTION
REFERENCE6
DO NOT POPULATE
JE_HEADER external_reference
REFERENCE7
DO NOT POPULATE
Used for JE_HEADER ACCRUAL_REV_FLAG
REFERENCE8
DO NOT POPULATE
Used for JE_HEADER ACCRUAL_REV_PERIOD_NAME
REFERENCE9
DO NOT POPULATE
Used for JE_HEADER ACCRUAL_REV_CHANGE_SIGN_FLAG
REFERENCE10
Same as REFERENCE2
JE_LINES DESCRIPTION
General Ledger Report,
Journal Entry Inquiry
REFERENCE21
Insert GL_Batch_ID
GL_JE_LINES.REFERENCE1
Not Displayed
REFERENCE22
Insert ORGANIZATION_CODE
GL_JE_LINES.REFERENCE2
Not Displayed
REFERENCE23
Insert TRANSACTION_ID
GL_JE_LINES.REFERENCE3
Not Displayed
Slide 28
Account Inquiry
List of Month-End Close Reports
 Material Distribution Detail/Summary Reports
 WIP Account Detail/Summary Reports
 Receiving Account Distribution Report
 Purchase Price Variance Report
 Invoice Price Variance Report
 Discrete Job Value
 Repetitive Value Report
 Expense Job Value Report
 Margin Analysis Report
Slide 29
Month-End Close Reports (Cont’d)
 Inventory Value Reports
 Elemental Inventory Value Reports
 Intransit Value Report
 Subinventory Account Value Report
(disabled in Release 12)
 All Inventories Value Reports
 Receiving Value Report
 Receiving Value by Destination Report
(disabled in Release 12 – unable to view the perpetual expense balances)
 WIP Value Report
 Period Close Value Summary Report
 Period Close Reconciliation Report (11.5.10 and 12)
Slide 30
Common Reconciliation Challenges
 Release 11i only: report cut-off issues at month-end or running multiple
periods at a time
 Account alias or miscellaneous inventory transactions using same accounts
 Disabling a code combination during the month
 Subledger miscodings
 Manual G/L journal entries
 Back-dated transactions from external system feeds
 Miscoded purchase orders
 Delivering goods to a closed work order
Slide 31
Common Reconciliation Challenges (Cont’d)
 Sharing System Accounts:









Expense and Inventory Accrual Accounts
Receiving Valuation Accounts
Organization Level Accounts (Average, FIFO, LIFO Costing)
Subinventory Accounts (Standard Costing)
Cost Group Accounts (Project Mfg, WMS)
WIP Accounting Classes
Inventory Account Aliases
Order Types and COGS
Release 12 Subledger Accounting Rules causing you to share accounts
 Release 11i: wrong initial subinventory summary balances
 Initial legacy GL balances to do not match Oracle perpetual
Slide 32
R12 Improvements Period Close Diagnostics
 Forms Drilldown
• Using the same Inventory Accounting Periods form you can drilldown
to associated forms to view the problem transactions
 New workflow to notify of failing transactions
 Period Close Pending Transactions Report
• Report the transactions holding up the inventory accounting period
• Only by inventory organization and only by transaction error
Slide 33
Reconciliation Improvements in R12
The following reports can now be run with an As-of Date:








Inventory Value Report – By Subinventory
Inventory Value Report – By Cost Group
Elemental Inventory Value Report – By Subinventory
Elemental Inventory Value Report – By Cost Group
All Inventories Value Report
All Inventories Value Report – By Cost Group
Intransit Value Report
Receiving Value Report
Many of these reports are also available in R12 as XML reports
Slide 34
R12 Challenges – Inventory Reconciliation
 Inventory Reconciliation
 May have more inventory reconciliation issues in R12
 Issues Common to Release 12 and 11i
 The differences between the perpetual and accounted-for
inventory balances are trapped in a table the users don’t see
 Limited use for the Period Close Reconciliation Report
• Most users and analysts don’t know about it
• Limited to a single warehouse
• Shows zero quantity items – which is not efficient
 Need a Multi-Org Perpetual vs. Accounted-For Report
Slide 35
R12 Challenges – Inventory Reconciliation
 Sample Period Close Variances Report
 From the CST_PERIOD_CLOSE_SUMMARY table
You can also use this information to get your month-end perpetual
quantities and values for intransit and subinventories
Slide 36
New Reconciliation Challenges in R12
Subledger Accounting and Inventory Reconciliation
 Which accounts represent inventory and WIP valuation?
 Harder to reconcile manually with no valuation accounts on the
Inventory Value or Receiving Value Reports
 Receiving Value by Destination Account Report is disabled
Release 12 dropped the valuation accounts on most inventory reports
Slide 37
R12 Material and WIP Distribution Inquiries and Reports
 Release 12 mat’l and WIP distribution inquiries & reports do not
reflect the SLA results
 SLA Journal Reports do not show operational information
 Release 12 records the material accounting and WIP accounting
entries by cost element – rendering these inquiries and reports
more difficult to use, especially for Standard Costing.
Release 12 forces Standard Costing to record WIP & Material
entries by Cost Element / you can summarize in SLA but you
don’t have the same detail reporting in SLA
Slide 38
Basic Table Structure for SLA
Enter Transaction(s)
Accounting
Processor
Transaction
Accounting Tables
Receiving
Material
WIP
Create
Accounting
Module
Specific
Transaction
Accounting
Tables
One Common
Accounting
Subledger
Table
SLA Accounting Tables
G/L Tables
XLA_EVENTS
GL_LEDGERS
XLA_AE_HEADERS
GL_
INTERFACE
GL_JE_BATCHES
XLA_AE_LINES
GL_JE_HEADERS
XLA_DISTRIBUTION
_LINKS
GL_JE_LINES
Slide 39
Custom Solutions for Multiple Organizations
 Common Custom Reports and Desired Enhancements









Multi-Org Material Account Summary Report
Multi-Org Receiving Account Summary Report
Multi-Org WIP Account Summary Report
Multi-Org All Inventories Value Report
Multi-Org Inventory Value Report
Multi-Org Receiving Value Report
Multi-Org Expense Value Report
Multi-Org WIP Value Report
Multi-Org G/L to Inventory Reconciliation Report
Slide 40
Desired Enhancements (Cont’d)
 Eliminate the two layers of accounting entries in R12
 Put the Inventory and Receiving Valuation Accounts
back on the valuation reports
 Add a standard report or alert to find the miscellaneous
inventory transactions that are causing an out-of-balance
 Simplify, make more robust, or eliminate the interfaces
needed in Oracle (especially the Receiving Interface)
Slide 41
Desired Enhancement:
G/L to Inventory Reconciliation Script
Just think how much time this would save …
Slide 42
Sample G/L to Inventory Reconciliation Script
 Selects and compares:
 Selects the cumulative G/L balances by journal source
 Selects the cumulative Inventory (stores) and Intransit perpetual
balances from the month-end snapshot
 Selects the cumulative WIP balances
 Compares the three above balances and reports differences
 Runs in under 2 minutes for 6 ledgers with 60 inventory orgs
 R11i, change GL_LEDGERS to GL_SETS_OF_BOOKS
Slide 43
Sample Reconciliation Script (Cont’d)
 Automatically Compares:
 G/L to Inventory Perpetual
 G/L to Intransit Perpetual
 G/L to WIP Period-End Balances
 Caveats:
 Tested for Standard Costing (should work for Avg, FIFO, LIFO)
 Assumes using product line or product group segment from your
item master COGS account
 Does not consider Cost Groups
 Assumes using one valuation account per subinventory or org
 Your Release 12 Subledger Accounting Rules may be different
Slide 44
G/L to Inventory Reconciliation Data Flow
LEGEND
Costing & WIP tables
General Ledger tables
Period End Cost Snapshot Tables
CST_PERIOD_CLOSE_SUMMARY
WIP_PERIOD_BALANCES
Compare Balances
by Full Account
General Ledger Tables
GL_LEDGERS
(R11i: GL_SETS_OF_BOOKS)
GL_BALANCES
GL_JE_HEADERS
GL_JE_LINES
GL_CODE_COMBINATIONS
Slide 45
Report
Output
G/L to Inventory Reconciliation Lookup
 Uses a lookup type to identify the inventory reconciliation accounts
Slide 46
G/L to Inventory Reconciliation Report
These concepts work for AVG and STD Costing, for both
Release 11i and 12
Slide 47
Summary
 Release 12 solves many of the report cut-off issues
 Still have multi-org reporting issues with account distribution
and valuation reports
 Release 12 Subledger Accounting can complicate reconciliation
 Investments in custom reporting can save significant amounts of
time at month-end
Slide 48
Send Email Address to Get the Following:
 Mention which release, costing method, and if using
separate accounts by cost element
 Sample reconciliation excel spreadsheet
 Comparison Script between the G/L and Inventory
Perpetual Values
 doug@volzconsulting.com
 Informal workshops can be arranged
Slide 49
Acknowledgements
 Oracle Cost Development
 Partners in crime at my many clients
Slide 50
Douglas Volz (doug@volzconsulting.com)
Professional Background
Doug Volz is a Senior Architect and Advisor for Oracle Application projects, with a particular interest in
Cost and Project Management. He has 30 years accumulated experience, including 5 years in Oracle
Development (co-designing Oracle Cost Management) and 12 years in industry in Cost and Accounting
Management positions. His Manufacturing and Cost systems experience covers project management,
software design/development, delivery and consulting services, for both Oracle Corporation, and
multiple international consulting firms. Prior to his systems career, Mr. Volz also held numerous
management accounting positions for telecommunications, defense, and electronics companies.
In his consulting roles Doug has served over 100 clients. Many of these were multi-org, multi-currency
with global footprints. Countries include US, Mexico, UK, Netherlands, Belgium, Taiwan, P.R.O.C.,
Norway, Japan, Italy, Switzerland and Germany.
Doug leads the OAUG Cost Management Special Interest Group. He also advises and participates on
the Oracle Customer Advisory Board for Fusion Costing.
Core Expertise
Experience
 Multi-organization, Multi-currency ERP
Implementations
 Project Management and Senior Project Advisor
 Core manufacturing processes
 Cost Management
 Inventory
 Bills of Material
 WIP
 Systems Integration and Data Conversions
 Sample of clients served:
 Beckman Coulter (US)
 Matsushita (UK, Mexico)
 NTL (UK, now Virgin Media)
 Logitech (US, Taiwan, P.R.C.)
 Celgene Corporation (US, Switzerland)
 NTL (UK, now Virgin Media)
 TCI International (US)
 Onninen AS (Norway)
Slide 51
Thank You for Your Attendance and Participation
Slide 52