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P/O Reconciliation ProcessDifference between On-Line Receiving and Batch Receiving
Before we talk about the purpose of this feature, we have to understand the difference between On-Line and Batch receiving. The following table outlines the difference between these two receiving methods:
Application Overview
If you are using batch receiving in Purchase Order, posting PO receiving updates the General Ledger (via the GL Inventory Interface) by debiting inventory and crediting the receiving accrual account as a temporary liability account. Without enabling this feature, there are no sub-ledger detail reports that could be used reconcile the ending balance in the G/L receiving accrual account.
The purpose of this feature is to provide a means of reconciliation for the P/O receiving accrual account. For data accuracy and integrity, the Reconciliation Process should be done prior to your End of Month Reporting. As a bonus, this feature will also speed up A/P voucher processing.
If you are using on-line receiving method, there’s no need to enable this feature because there’s no such a concept as “Receiving Accrual Account” in on-line receiving process. However, we do recommend most users to use batch receiving instead of on-line for the additional features and benefits of batch receiving process.
NOTE: This use of this feature is controlled, (turned off and on), in Accounts Payable Global Setup. Additional Files Used by This Feature:
Accounts Payable
1. APRCNFIL - Receiving Account Reconciliation File. This file will be updated when posting AP Transactions. Two reports will be generated from this file: The Outstanding Report (similar to A/P Open Items), and The Date by Date Report. We will discuss the purpose of these reports later in this document. 2. APRCNHIS - Receiving Reconciliation History File. This file will be updated when you purge the APRCNFIL file. The purpose of this file is to provide history information. You can generate an Outstanding Report from this file. Purchase Order
1. PORCNFIL - Receiving Account Reconciliation File. This file will be updated after posting Receiving Transactions in P/O. Two reports will be generated from this file: The Outstanding Report, and The Date by Date Report.
2. PORCNHIS - Receiving Reconciliation History File. This file will be updated when you purge the PORCNFIL file. The purpose of this file is to provide history information. You can generate an Outstanding Report from this file.
Setting Receiving Accrual Account in P/O Setup
Before we can begin using this feature, you will need to setup the Receivings Accrual Account. Figure 2A.4 shows how to do this. Field 16 under P/O setup is where you define the account. In our example, we set this account to 02165-10000-00000.
Figure 2A.4 P/O Setup
Run InstructionsPurchase Order Menu Ò Processing Ò Reconciliation Processing Updating and Maintaining P/O & A/P Account Reconciliation Files
P/O Receiving: We will start by entering and receiving a purchase order as shown in Figure 2A.5. After posting P/O Receiving, the system will update the Receiving Account Reconciliation File where it can be maintained as shown in Figure 2A.6.
Figure 2A.5 shows a purchase order being received.
Figure 2A.6.
After posting P/O Receiving, the system automatically updates The P/O Account Reconciliation file.
Processing A/P Transactions
During A/P transaction, the system will display a P/O Reconciliation Search window, (Figure 2A.7 next page). You can easily select the line item by highlighting it and pressing <Enter>. The voucher no. is 50138, and applied to P/O 000039-00. Note: If you prepaid a P/O without receiving it, you will still need to enter the “Receiving Accrual Account”, “P/O No.”, “Line No.”, “Qty”, and “Unit of Measure”. After posting the A/P Transactions, the system updates the A/P Receiving Account Reconciliation File, Figure 2A.8 next page. This is a maintained file that can be edited.
Posting Considerations P.O. 000039-00
Posting P.O. Receiving: DR Inventory $720.00 CR Rec Accrual 720.00
Posting A/P Voucher DR Rec Accrual $720.00 CR Accts Payable 720.00
If Invoice had come in at $750.00
Posting A/P Voucher DR Rec Accrual $720.00 DR PPV 30.00 CR Accts Payable 750.00
Reporting
The Reporting Function is accessed from: Elliot Main Menu à Distribution à Purchase Order & Receiving à Processing à Reconciliation Processing à Report
What makes this feature powerful is that it provides detailed reporting to reconcile the ending balance in the G/L receiving accrual account. This function gives you the option to print three reports: 1. Outstanding Report, 2. Date by Date Report, and 3. History Report.
1. Outstanding Report: This report should be run at the end of the accounting period. The report will list all Receivings that have not been invoiced and Invoices that have not been received, and compare the net balance to the GL Receiving Accrual Account. This report is generated from the A/P and P/O Account Reconciliation Files.
2. Date by Date Report: This report should be run when the Outstanding Report net balance does not match the GL Receiving Accrual Account balance. This report compares the subledger net changes with the G/L Accrual Account and isolates any discrepancies on a day by day basis.
If the net changes for a day match, that day will be skipped. If net changes do not match, the report will print the subledger detail and the G/L Accrual Account detail for that day. By isolating discrepancies to a day, it then becomes relatively easy to identify where the problems come from, e.g., someone updates the G/L Accrual Acct, but not from A/P or P/O. This report is generated from the A/P and P/O Reconciliation Files, and the GL Transaction File. 2. History Report: This is exactly like the Outstanding Report. The difference is that it is generated from the history files: APRCNHS and PORCNHS. These two history files are updated when you purge the A/P and the P/O Account Reconciliation files.
Oustanding Report
This report items from the AP Reconciliation File and the P/O Reconciliation File. At the time of printing, you have the option to report fully reconciled items. When you purge these files, only the reconciled items get purged by a cut-off date.
The report is in four sections:
1. Unapplied A/P 2. Outstanding P/O 3. Fully Applied P/O 4. Grand Total (Net Balance)
Section 1: Unapplied A/P
These are A/P invoices posted against prepaid Purchase Orders or those P/O’s or line items that have net been received yet. When the P/O lines are received, they will be reported as Outstanding P/O line items in Section 2. To reconcile the P/O line items just received against the Unapplied A/P’s, you must go to Reconciliation Processing Menu, Processing Sub Menu Re-apply. After this has been done, the posted voucher and posted line items will appear in Section 3, Fully Applied Purchase Order line items.
Section 2: Outstanding P/O Line Items
This reports items from the P/O Reconciliation file and these line items are P/O line items that have been received but not vouchered in A/P.
Section 3: Fully Applied P/O Line Items
This report lists the P/O line items matched up, (reconciled) to the corresponding A/P voucher. If one P/O line item had two receivings, it would appear twice and each with it’s corresponding A/P voucher. This is also the information, (reconciled items), that gets purged when you run the Purge function.
Section 4: Grand Total (Net Balance)
This is the last page of the Outstanding Report and reports the difference between Unapplied A/P transactions and outstanding P/O line items.
Grand Total: A Debit balance indicates there are more unapplied A/P transactions than P/O line item receivings. A Credit Balance indicates more posted receivings than posted vouchers for line items in A/P.
In addition to Prepaid Purchase Orders and line items posted before P/O Receiving, a Debit balance can also occur when you post an A/P voucher without processing it against the P.O. Receiving. This also another good reason why you should reconcile at Month End.
A zero balance will indicate that all the P/O receivings have been matched up to an A/P voucher and that there are no Unapplied A/P transactions.
Remember:
P/O Receivings: DR Inventory CR Accrual Account
A/P Vouchers DR Accrual Account CR Accounts Payable DR Purchase Price Variance (PPV)
Day By Day Report
This report groups and isolates all transactions on a Date By Date reporting basis, thus making it easier to find transactions that do not match up.
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