Visualize Success 2011

Alan ChorneyProfessional Services

Visual South, Inc.

Troubleshooting Costing

Visualize Success 2012

Auditing Inventory Costs

• Cost Flow Inheritance• Exception Auditing• Inventory/Work In Process Reconciliation• Audit Tools

– Costing Tools– Reports– Correction Utilities

PUR Receipts

FG ReceiptsWIP Issues

SLS Shipments

ADJ Adjustments

Inventory

<<<

2. P

urch

ase

Retu

rns

1. Purchase Receipts >>>

<<< 6. Receipt Return >>>11. Transfers <<<

5. FG Receipts >>>

10. Adjust In >>>9. A

djus

t Out

>>>

3. Issue >>>

<<<4. Issue-Return

7. Shipments >>>

<<< 8. Ship-Return

Cost Flow - Inheritance

Purchase Receipts

Inventory

<<<

Purc

hase

Ret

urn

PUR Receipt >>>

•Purchase Receipts get their value from settings chosen in Application Global Maintenance

–Standard Costing – Part Maintenance–Actual Costing - Source of Raw Materials

•Purchase Order•A/P Voucher

•Purchase Returns get their value from:–Receipt value of the FIFO Layers for the Part that was Received–Vouching Purchase Returns for a different value will create a Purchase Return Expense

Inventory

<< Issue Return

Issue (to WIP) -->>

W.I.P. Issues•Inv. Trans. Issues take their value from the next available FIFO Layer•Linked PO Purchase Receipts are AutoIssued to WIP and inherit Purchase Costing

•Issue Returns get their value from the issue layer for the Part that was Issued to WIP

Inve

ntor

y

FG Receipts >>

Receipt Returns >

>

FG Receipts

•FG Receipt Returns reinstate WIP Costs based on the prorated value of the original receipt

•FG Receipts take–Standard Costing

•Part Standard –Actual Costing

•Projected Value•Actual Value

Shipments

Inventory

Shipment Return >>

Shipments >>

•Shipments take their value from the next available FIFO Layer•Linked Work Orders Shipments are AutoReceived to FG and inherit WIP Costing

•Shipment Returns get their value from the Weighted Average of the FIFO Layers for the Part that was Shipped on the Customer Order.

•Linked Ship Returns Reinstate W.I.P.

Inventory

Adjust In >>

Adju

st O

ut >

>

Adjustments

•Adjust Outs take their value from the next available FIFO Layer

•Adjust Ins take their value from

•Part Maintenance

•Inventory Transaction Value Override during data entry

Adjust Outs do not reverse Adjust Ins

Chart of Accounts Guidelines for Exception Auditing

• Exception Auditing must be Designed into the chart of accounts

• Total Inventory comprises only and all inventory control accounts

• Product Codes supply the Sub-ordinate detail to the Total Inventory

• Transaction Lines support the Product Code Summaries

• All Interface Accounts, Product Codes and Overrides are VISUAL Control Accounts

Exception Auditing

Work In Process Balance Report By Product Code

Report Totals and Summary Parent Accounts synchronize to create a One-Look Bottom-Line Reconciliation

Report Sub-Totals and Subordinate Parent Accounts synchronize to expose supporting Detail to the Transaction Level

Proper Period End Closing Summary(Manufacturing Activity)

• 1. All Data entry for the period is complete• 2. Run Costing until no updates are found and

Prepare Manufacturing Journals for the Period• 3. Post Manufacturing Journals for the Period• 4. Run Costing Tools for exceptions• 5. Correct any exceptions not due to future

periods• 6. Repeat 3, 4, & 5 until exceptions are clear

Auditing Inventory Costs (Inventory Reconciliation)

•Print the Inventory Balance Report and compare to Account Balance•Verify all MFG Journals are Posted•Verify all Inventory Account Batches are PUR, WIP, FG, SLS or ADJ - Correct all other batch type balances•Correct PUR, FG, or ADJ Credits and WIP or SLS Debits•Correct PUR Debits that are from expense purchases•Print the final Inventory Balance Report and compare to Account Balance

Print the Inventory Balance Report and Compare to Account Balance.

GL=130,179.23Inv.Bal=153,366.23

Verify all MFG Journals are Posted

• Test for Unposted Transactions

Verify all Inventory Account Batches are PUR, WIP, FG, SLS or ADJ

• Use the Accounting Window to Inspect Accounts• Watch for Self Reversing Transactions

Sub-Ledger detail

maintains Transactional

Logic

Print the General Journal by Batch Type

Correct PUR, FG, or ADJ Credits and WIP or SLS Debits.

• Note the Credit Adjustment

Self-Reversing

Transactions

Correct PUR Debits That are From Expense Purchases

• Expect to see Debits from PUR, so watch for the Inventory Control Accounts being used on a line

Think in terms of

Transactional Logic -

No Part_ID means No Inventory

Transaction

WIP - Work In Process• Four Work In Process (WIP) reports provide

corroboration for G/L Balances– Ledger/Post MFG Journals/Reports/WIP

Balance Report– Eng/Mfg/Work In Process Report– Eng/Mfg/Work Order Master Cost Report -

Comparative with Breakdown– Manufacturing Window Info Costs

WIP – WIP Balance Report

WIP – Work In Process Report

WIP Report Corroboration

Correct Exceptions Using Audit Tools

• Check Exceptions using Costing Tools - Set Posting Candidate and Prep Journals

• Check Cost Distribution Analysis– Recalculate Distributions/Force FIFO

• Compare Inventory Reports for Qty & Value– VMFixWRK - Resummarize Work Order– VMFixOHQ - Fix Part table to Match Inv. Trans Table– VMFixIPB - Create Transactions to Match Part Location

Table

• Consists of three major areas of functionality:

– Costing Tools

– Analytical Reports

– Recalculation Functions

Costing Tools

• Costing Tools is an enhanced version of the Print Preparation Analysis Report

– Only Posting Candidates of “N” will come across as exceptions– Ability to set individual Posting candidates– Preparation of Journals– Detail tables added– WIP Balance check added

• The design of the window is to identify possible costing exceptions. The exceptions do not directly point out G/L items. Each exception would need to be investigated to determine what correction, if any, needs to be performed.

Costing Tools

Types of Costs to check include:PurchasesWIPFinished GoodsShipmentsAdjustmentsIndirect LaborWIP Balances

Costs can be checkedby ID or leave blank to check all items in thecategory.

The posting date refers to the Total Posted column. This will show what hasbeen posted up to thatposting date.

Filtering Optionsallow items to beviewed by Total Transactionsand Total TransactionDetail.

Exception Processingallows items to be viewed that show adifference between the Total Transaction amount and the TotalPosted amount.

Costing Tools

Total Transactions andTotal Posted amounts areCompared to determineIf items need to beRe-evaluated.

Note: A journal can beprepared without running CostingUtilities.

Costing Tools

• The Recalculation functions in Costing Tools include the following:

– Recalculate Distributions

– Recalculate Distributions W/Force FIFO

– Recalculate WIP and Inventory Balances

– Recalculate Standards (used as part of the process to reset standard part costs)

Recalculation Functions

• Used to re-evaluate manufacturing activity distributions to the general ledger

– Uses existing in transactions to update out transactions

– Does not break linked transactions

– Generally used when inventory transactions have been back dated

Recalculate Distributions

\ADMIN\COSTING TOOLS \ FILE \ RECALCULATE DISTRIBUTIONS

Distributions can be recalculated for a rangeof parts or for all partsby leaving the range blank.

Distributions can also berecalculated for non-parttransactions.

By indicating a date toProcess transactions onor after, RecalculateDistributions will onlyprocess transactionsafter that date.

Recalculate Distributions

Recalculation Methods are based on the following three procedures:

NOTE: All of the above procedures can create Distributions to the General Ledger.

Recalculate Distributions

COSTED POSTINGTRANSACTION_IDPART_ID WORKORDER_BASE_IDTYPE CLASS QTY QTY CANDIDATE MATERIAL LABOR BURDEN SERVICE============================================================================== ===== ============================================================================================================

11 MMC-FM0001 I A 3 3 N 166.05 91.71 180 92.2512 MMC-FM0001 I A 10 2 N 553.5 305.72 600.02 307.513 MMC-FM0001 I A 4 0 N 221.4 122.28 240 123

104 MMC-FM0001 O I 5 5 N 276.75 152.85 300 153.75124 MMC-FM0001 O I 5 5 N 150 195.5 211.38 0

Recalculate Distributions

COSTED POSTINGTRANSACTION_IDPART_ID WORKORDER_BASE_IDTYPE CLASS QTY QTY CANDIDATE MATERIAL LABOR BURDEN SERVICE============================================================================== ===== ============================================================================================================

11 MMC-FM0001 I A 3 3 N 166.05 91.71 180 92.2512 MMC-FM0001 I A 10 7 N 553.5 305.72 600.02 307.513 MMC-FM0001 I A 4 0 N 221.4 122.28 240 123

104 MMC-FM0001 O I 5 5 N 276.75 152.85 300 153.75124 MMC-FM0001 O I 5 5 N 276.75 152.86 300.01 153.75

IN_TRANS_ID OUT_TRANS DIST_QTY MATERIAL LABOR BURDEN SERVICE=========== =========================================================================================================================

12 124 5 276.75 152.86 300.01 153.75

Recalculate Distributions

• Should only be run on a part-by-part basis

• Breaks all links and re-builds them assigning costs based on transaction date– Out transactions may be re-valued based on back-

dated transactions

Recalculate Distributions – With Force FIFO Re-evaluation

• Designed to re-populate Balance tables

• Should be run after performing Recalculate Distributions to update the Balance table

• Can be used for a range of parts or for all parts

• Can be restricted to a specific posting date

Recalculate Balances – WIP & Inventory

Recalculate Balances – WIP & Inventory

• Inventory Valuation Reports– Inventory Balance– Inventory Valuation– Inventory Transactions

• Costing Tools Reports (Used for reconciling inventory costs)– Cost Distribution– FIFO Distribution

Reports – Inventory Analysis

Inventory Valuation Reports The Four Inventory Reports:• Ledger/Post MFG Journals / File - Inventory Balance

Report– Uses the Persistent Transaction Detail Tables to

Balance to the General Ledger• Reports/Inventory Valuation Report

– Posted Value Traces back through the Distribution Tables for In and Out Values

– Cost Layer Detail shows Inventory Transaction Valuation by Costed Quantity vs. Quantity

• Tools/Inventory Transaction Entry/Print...– Shows the Transaction Value of each Inventory

movement as it is right now

Cost Distribution AnalysisCompares Transaction against Posted Values

This report shows the Demand/Supply

relationship. Out layer cost (Shipment - out of inventory) with the IN

layers that are “Costed” against the Out

transaction.

Any difference between the Out Amt. and the In

Amt. indicates a cost layer corruption that will require the Distributions

to be recalculated.

Costing Tools : FIFO AnalysisReveals Source & Use instead of Demand & Supply IN layer cost (Cost layers in inventory) with the OUT layer information

Corrective Utilities• The following utilities are available to correct

exceptions in addition to the Recalculate functions:

– VMFIXWRK – Re-summarizes work order information– VMFIXIPB – Corrects imported part balances– VMFIXOHQ - Re-sets on-hand quantity information

Thank You

• alan.chorney@visualsouth.com