By Andrew Needham
Tuesday, July 8, 2013
Reconcile Inventory Workshop
Closing Inventory Control Period
What is an Inventory Control Period?
An Inventory Control Period is the length of time which inventory transactions
can occur without interruption.
What are Analysis Reports?
Analysis reports are various inventory calculations that you can print and
review at the close of an Inventory Control period. The Inventory Control
application uses the end period dates to calculate analysis reports.
Why do I need to Release Unreleased Documents?
Before you close the Inventory Control period, you need to release all the
unreleased documents. The reason for this is so that the Inventory Control
period can accurately capture period end balances and calculate the average
stock-on-hand quantity for each item location. If any unreleased documents
remain, the Inventory Control application will not allow you to close the
period.
Note: In transit documents can remain open during period end processing.
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Closing the Inventory Control Period
Closing the Inventory Control period is a process that enables the Inventory
Control application to share transaction and account information with the
General Ledger application. This process is necessary to keep accounts across
all Lawson applications in balance. The following procedure explains the
process of closing the Inventory Control period. After you close the Inventory
Control period, close the General Ledger period.
Steps to print a list of unreleased documents:
1. Access Unreleased Documents (IC222).
2. Add a job name and description.
3. Define the parameters that determine how you want the job to run. Consider
the following fields.
Document Type
Document
Select a value to limit the report to
only one type of inventory
document.
Document types include
adjustments, bin transfers, intransit
receivings, issues, transfer issues,
and receipts.
Type a document code to limit this
report to transactions that were
created exclusively for the
document you specified.
4. Submit the job to create the list of unreleased documents.
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Steps to release unreleased documents
1.
2.
3.
4.
5.
6.
Access Document Release (IC25.1).
Select company.
Select the location.
Select the document type.
Select the unreleased documents you want to release.
Choose the Change form action.
Steps to update General Ledger transactions
1. Access General Ledger Interface (IC130).
2. Add a job name and description.
3. Select the parameters that determine how to run the report.
IMPORTANT Select No in the Update field to run the report in Report Only
mode the first time you run it. This enables you to review the General
Ledger transactions before you update them.
4. Submit the job.
5. (Optional) Standard cost companies can run Standard Cost Calculation (PO139)
to create reversing entries for the difference between purchase order cost and
standard cost for matched not received and received not invoiced accounts.
Steps to close the Inventory Control period
1.
2.
3.
4.
Access Closing (IC190).
Add a job name and description.
Select the company for which you are closing the Inventory Control period.
If you are closing the last period of the year, define the period end dates for the
new year.
5. Add the job.
6. Submit the job to close the period.
7. (Optional) Print analysis reports to review period end balances.
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To
List items by gross margin return on
investment (GMROI) percentages.
This report suggests movement
classes based on these
percentages
Print
Movement Analysis – GMROI
(IC152)
List GMROI percentage for items in
descending order
Gross Margin Return on Investment
(IC224)
Print inventory turnover based on
item sales if you use Order Entry
Inventory Turnover (IC134)
Print inventory turnover based on
item issues if you do not use Order
Entry
Inventory Turnover by Issue Report
(IC135)
Print a report of inventory valuation
Inventory Valuation (IC233)
Valuate inventory as of a specific
date
Period End Valuation (IC234)
List inventory item material cost,
overhead cost, and average unit
add-on cost
Lower of Cost or Market Valuation
(IC235)
Audit posted transactions by period
for a specific accounting unit and
account
Departmental Procurement
Expense Inquiry Selection (MM80)
List general ledger postings broken
down by accounting unit and
account
Departmental Procurement
Expense Report (MM280)
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Closing an Inventory Control Period under System Control
If your company uses system control with General Ledger, you need to follow
a special procedure that alerts the application when you have ended the
closing cycle for the Inventory Control application. After you have closed the
Inventory Control period using Closing (IC190), use the following procedure to
end the closing cycle.
1.
2.
3.
4.
5.
Access Subsystem Close (IC199) to end the closing cycle.
Add a job name and description.
Select the parameters needed to complete subsystem close procedures.
Choose the change form action.
Submit the job.
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Resolution:
This document was created to help you reconcile your inventory report and the general
ledger account. Balancing inventory to the general ledger has frequently been an area
of concern for clients, although a common goal for clients is achieving a clean cut-off at
the end of each period. If all applications can be closed on the last day of the period,
this reconciliation process is relatively easy. However, most Lawson clients cannot
close all of their applications on the last day of the period because they still have a
large volume of transactions for the period that still need to be processed. This "catch
up" processing can adversely affect your end-of-the-month balancing.
In order to insure an accurate inventory, Lawson recommends conducting frequent
physical inventories (i.e. cycle counts, month-end counts, and year-end counts). These
physical inventories enable you to capture data on inventory shrinkage, damage,
inaccurate receivings, missing items, returns, theft, etc..
SUGGESTION 1:
When you first begin using Lawson's IC system, we recommend balancing on a daily
or weekly basis. This will help you see the transactions as they occur and understand
the posting that takes place. (It is always easier to find errors/discrepancies in a day’s
or a week’s worth of transactions than it is to find discrepancies in a month's worth of
transactions.)
You can run the following programs on a nightly basis to send transactions to the
General Ledger interface file (MMDIST).
IC130 (General Ledger
Interface)
Posts inventory transactions that occurred in the IC and
Purchase Order (PO) systems.
AP175 (Invoice
Distribution Closing)
Posts any variances in unit cost that occurred in PO.
BL123 (Sub-System
Update)
Posts inventory shipments from the Order Entry (OE)
system that were invoiced to Billing (BL).
GL190 (Journal Posting) Posts the GLITRANS to the GL system.
After you have run these programs in Update mode, you should run IC233 (Inventory
Valuation). IC233 shows you the inventory balance that will appear in GL90
(Transaction Analysis) for your inventory account. IC233 lists the inventory valuation
as of the date and time the IC233 program was run.
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At this point, there should be no "released" transactions that have not been posted to
GL; if there are "released" transactions that haven't been posted to GL, then GL90 will
not match. Transactions are included in the inventory valuation at the time they are
released, "delivered" in Requisitions (RQ), or "shipped" in OE. Transactions are
included in the GL valuation based on the GL posting date and whether or not the GL
create/posting programs have been run.
Example :
My beginning inventory balance in GL90.1 for Period 1 was $50,000. After a week of
transactions, I ran IC130, AP175, BL123, and GL190. IC130 posted $20,000 to
inventory from IC transactions and $50,000 to inventory from PO transactions. AP175
posted $2,000 to inventory, and BL123 posted $60,000 to inventory. My ending
inventory balance in GL90.1 for Period 1 is $62,000.00. If I run IC233 right after
posting, my inventory report will show $62,000.
Balancing your inventory on a daily or weekly basis will help you understand the
postings that are created, and will help you smooth out the End of Month balancing.
Once you are familiar with the posting process, you can extend out and balance on a
monthly basis.
Keep in mind that if your beginning inventory valuation matches the GL valuation for
the inventory account, you are reconciling are the transactions for the month. If at the
end of a time-frame the two balances are out of sync, GL190 will display the system
and date of the transaction posted. This allows you to trace a transaction back to
IC130 for a date.
SUGGESTION 2:
On the last day of the period, you need to "clean up" all your monthly transactions and
run the following programs:
BL123
IC130
AP175
GL190
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After you have run these programs in Update mode, you should run IC233. When GL
closes, you should be able to tie your inventory report to your inventory account. No
transactions for this period will be entered after you have run BL123, IC130, AP175,
and GL190--any transactions that have not been run will fall into the next period. (In
other words, do not post or future date the transaction (for PO) or GL date (for IC) or
ship and deliver date (OE/RQ) or invoice (OE) date.
SUGGESTION 3:
If you aren't able to finish all your transactions for the current period (as mentioned in
Suggestion 2) because of "catch up" transactions, you will need to follow these steps:
1. On the last day of the period, run BL123, IC130, and AP175 in Update mode.
2. Run IC233.
Once you completed these steps, you will have an "as of" inventory valuation. You
may then process your "catch up" transactions. After you have cleaned up the
transactions for the period, you will need to run BL123, IC130, and AP175 again and
save the reports.
Next, take the IC233 report you ran and add in the transactions that were posted by
BL123, IC130, and AP175. (By doing this, you are effectively adding in the amounts
that were posted to GL.) By saving the reports and IC233, you will have an audit of
how you balanced your inventory to your GL inventory account.
Summary :
This scenario allows you to take your time processing transactions that need to go into
the period you are closing. This also gives you an accurate account of what will post to
GL, and keeps you from having transactions entered in the Lawson inventory that may
be posted to a different period. (Please see Suggestion 4 for more information on how
Lawson handles inventory transaction dates and GL posting dates.)
SUGGESTION 4:
Lawson has a period-end inventory valuation report called IC234 (Period End
Valuation). IC234 captures your inventory with an "as of" date, which can be run by
Update date or Transaction date. IC234 is ideal if you will always have a transaction
date, update date, and GL posting date in the month you're currently closing.
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Transaction date = the date that is entered on the transaction. (This date will default
from the system date, but it can be overridden.) For RQ, this is the delivery date. For
OE, this is the ship date or the invoice override date.
Update date = the date the transaction is released (IC/PO), delivered (RQ), or shipped
(OE).
General Ledger posting date = the date that the transaction is put into GL. (This date
will default from the system date, but it can be overridden.) IC transaction screens
have a GL date that can be entered. In PO, this is the transaction date. In RQ, this is
the delivery date. In OE, this is the ship date (unless it is overridden with an invoice
date.) We highly recommend leaving these dates blank and letting the system
default the dates in. You will encounter problems if these dates fluctuate. Here are a
couple of examples:
1. You may enter and release an inventory transaction on September 1, but put a
GL posting date of August 31 on the transaction. Let's say that this transaction
is for $100,000. The result: your GL inventory account for August 31 will have
$100,000 more in inventory than is shown on your inventory report.
2. You may enter and release a transaction on August 31 with a GL posting date
of September 30. This will cause your inventory report to be higher than GL
inventory account.
3. You may enter a transaction on August 31 with a GL posting date of August 31,
but you may not release the transaction until September 1. If you run IC234 by
UPDATE date for August 31, this report will not show the transaction
mentioned, but the transaction will show up in your GL totals. However, if you
run IC234 by TRANSACTION date, the transaction mentioned above will show
on both your inventory report and your GL account.
GL90 shows General Ledger transactions that have posted and a beginning/ending
valuation for the inventory account.
IC233 shows inventory valuation as of the date and time the program was run. It uses
the stock-on-hand multiplied by the unit cost for the quantity (which is based on your
company’s costing method). Any released transaction will show up here as affecting
valuation.
IC234, when run by update date , tries to find the first transaction after the cutoff date.
If it cannot find the transaction, the system uses the current stock on hand and its unit
cost. If we find a transaction, however, we use the stock-on-hand and the unit cost
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valuation (which is captured at transaction release time and is the stock-on-hand
before the transaction took place). (In other words, we basically grab the stock-onhand at the end of the day for the cut-off date.)
IC234, when run by transaction date, starts with the current stock-on-hand and the
unit cost for that quantity (based on your costing method). Then we back out the
necessary transactions by transaction date using the transaction quantity and unit cost
to the first transaction after the cut-off date.
Additional Information:
Keywords:
IC130 IC234 IC233 GL190 AP175