1. Using Supply Chain Cost Management
  2. Reconciling Inventory Value in Costing Subledger with General Ledger

Reconciling Inventory Value in Costing Subledger with General Ledger

You must reconcile the inventory value in the costing subledger with General Ledger on a periodic basis after the period is closed. This helps in load balancing because each month only the incremental data and balances need to be substantiated and reconciled.

The Review Inventory Valuation page and the period valuation reports match the period activity with the period costed value and period accounted value to certify the amounts. By using the General Ledger reports, you must validate the period accounted value with the corresponding value in the General Ledger.

  • If the period activity doesn't match the period costed value, then resolve all negative inventory at the item valuation unit level, resolve intravaluation unit in-transit transfers, and ensure that all the transactions are costed.

  • Identify the exact items, if any, on the Inventory Value by Item page of the Review Inventory Valuation UI where period Activity doesn't match the period costed value and take corrective action.

  • If the period costed value doesn't match the period accounted value, make sure that all transactions are accounted. On the Inventory Value by Item page, when you click the warning icon next to the mismatched period accounted value, the Transaction Details dialog box is displayed. This dialog box lists all the unaccounted transactions for the item and valuation unit and the transactions that are costed and accounted in different periods, if any.

  • If the period costed value matches the period accounted value but the period accounted value doesn't match the balance in General Ledger, ensure that:

    • Subledger accounting setup is configured to use inventory valuation account only for inventory items and only receipt and issue events hit inventory valuation account.

    • No manual journal entries are created in inventory valuation account without documentation and approval. Such manual journal entries, if any, should be treated as reconciling items.

    • Use inventory valuation account only for entries from costing subledger to ensure a hassle free reconciliation.

    • Use General Ledger tools such as Account Analysis report to flag activity not coming from cost accounting journal source and take corrective action.