Costing Transactions and Creating Accounting Entries

This chapter provides an overview of transaction costing and entry creation and discusses how to:

• Generate costs for transaction records.

• Create accounting entries.

• Create transaction costs and accounting entries processes.

• Review and change item costing and accounting entries.

• Cost and account for consigned inventory.

• Cost and account for the repair and maintenance of assets.

• Cost and account for vendor managed inventory.

• Calculate and apply purchase price variance and exchange rate variance.

• Generate a PeopleSoft Enterprise Performance Management (PeopleSoft EPM) extract.

Understanding Transaction Costing and Accounting Entry Creation

The inventory system posts inventory transactions into the TRANSACTION_INV table, from there PeopleSoft Cost Management can assign costs to the transactions and create accounting entries. The Cost Accounting Creation process (CM_CSTACCTG) is an application engine process that completes these tasks by launching the:

1. Transaction Costing process (CM_COSTING). This application engine process picks up these inventory transactions and attaches costs to each transaction based on the item's cost profile.

2. Accounting Line Creation process (CM_ALC). This application engine process picks up the calculated costs, creates the accounting entries, and stores the entries in the CM_ACCTG_LINE table.

The Cost Accounting Creation process page launched both of these process using one run control page. This enables you to:

• Streamline the maintenance of run control definitions.

• Run both processes in a continuous stream without a break between steps.

• Run just the Transaction Costing process or just the Accounting Line Creation process based on your current processing needs.

PeopleSoft Cost Management provides inquiries and reports to view the accounting entries. Use the Edit Unposted Accounting Lines page to change the accounting entries before they are posted to the general ledger. Once, you are satisfied with the entries, use the Journal Generator process (JRNL_GEN_REQUEST) to summarize the accounting entries into journal entries. PeopleSoft General Ledger can then post the journal entries to the correct ledgers.

This diagram illustrates the cost flow for inventory transactions:

Transaction Costing and Accounting Line Creation process flow

See Also

Using Journal Generator

Creating Accounting Entries

Understanding PeopleSoft ChartFields

Common Elements Used in This Chapter

Generating Costs for Transaction Records

The Transaction Costing process picks up inventory transactions from the TRANSACTION_INV record and calculates the costs of each transaction, including, material, conversion, conversion overhead, landed, inbound, outbound, and other costs. The parameters for the Transaction Costing process are defined on the Cost Accounting Creation process page.

The Transaction Costing process:

• Calculates the cost of receipts.

• Calculates the cost of depletions. If chosen in setup, this could include costing negative inventory depletions before a corresponding receipt is available.

• Calculates and updates the weighted average costs and actual costs of items having cost profiles that use actual, periodic average, or perpetual average cost methods.

  Note. For standard cost items, the system does not automatically set frozen standard costs when you use the Transaction Costing process. To update standard costs, you must use the Cost Rollup process (CEPCROLL) and Update Production Costs process (CEREVAL, SFPREVAL, CES5001).

• Calculates purchase price variances and exchange rate variances.

• Calculates landed costs.

• Calculates the cost of make items produced in PeopleSoft Manufacturing.

• (optional) Launches the Negative Inventory Resolver process to check for new receipts (putaway and adjustment transactions) and adjust the quantities and costs of previously recorded negative inventory depletion transactions.

See Also

Additional Information for the Costing Structure

Using the Cost Rollup Process to Calculate Product Costs

Updating Production Costs

Understanding Standard Costing for Purchased Items

Costing Negative Inventory

A negative inventory depletion transaction is a depletion transaction that drives the item quantity to a negative balance in the system even though physically the quantities did exist. The negative inventory feature is activated by selecting the Allow Negative Inventory check box on the Inventory Definition-Business Unit Options page.

Once PeopleSoft Inventory has shipped a negative inventory depletion transaction, you have options in PeopleSoft Cost Management on how to cost the transaction. There is no corresponding receipt or receipt cost to apply to the negative inventory depletion transaction. The Insufficient Qty Cost Option on the Cost Profiles page determines how the Transaction Costing process applies costing to negative inventory transactions:

The current cost used to cost negative inventory depletion transactions depends on the Deplete Cost Method on the item’s Cost Profile as follows:

If a current cost is not available for actual or average cost items, then the system uses the value entered in the Default Actual Cost field of the Define Business Unit Item - General: Common page.

The Accounting Line Creation process can process the costed depletion transactions and create accounting entries for the general ledger. This enables negative inventory depletion transactions to be reflected in the period end account balances rather then held up for receipt costs.

A negative inventory depletion transaction is costed by creating a dummy receipt row with a zero quantity. The depletion transaction is matched to this dummy receipt, which uses the new transaction group 001 (negative inventory) and is inserted into the costing tables. Once sufficient stock is received into the business unit, the negative state of the depletion can be cleared by using the Negative Inventory Resolver process.

Using the Negative Inventory Resolver

The Negative Inventory Resolver process has been added to the Transaction Costing process to check for new putaway and adjustment transactions, and if sufficient quantities have been received into the business unit, the resolver process:

• Applies the new receipt quantities to the previously recorded negative inventory depletion transactions. The resolver matches the negative inventory depletion transactions to actual stock received. This removes the dummy receipt (transaction group 001) from the depleted depletion transaction.

• Creates adjusting accounting entries for items using the Deplete Cost Method of Actual Cost. The resolver creates an entry to reverse the cost previously recorded for the negative inventory depletion transaction and to record a new transaction at actual receipt cost. These changes flow to the Accounting Line Creation process where two accounting entries are created:

  1. A reversing entry to remove the depletion based on the last actual cost received before the negative state.

  2. An entry to record the depletion based on the actual receipt costs.

  For items using the Deplete Cost Method of Value at Current Standard, Perpetual Weighted Average, or Retroactive Perpetual Weighted Average, the resolver does not change the previously recorded cost for the negative inventory depletion transaction. The standard or average cost on record at the time of the depletion was used on the original depletion and is not changed when the resolver corrects the negative state by matching the negative inventory depletion transactions to actual stock received.

• Inserts resolved negative inventory depletion transactions into a history table called CM_RESOLVE_HIST.

To resolve negative inventory, select the Resolve Negative Inventory check box on the Cost Accounting Creation process page. The process is launched within the Transaction Costing process after receipts have been processed, but before depletions.

Note. The Negative Inventory Resolver process is optional. It is highly recommended that you use this process to resolve all 001 transactions so that reports and queries do not reflect negative states that have been resolved. The resolver does not impact the total on hand quantity. For costs, it only impacts the total inventory value for actual cost items.

Inquiries for Negative Inventory

Two inquiries are available to monitor the costing of negative inventory depletion transactions and the recalculations of the quantities and costs performed by the Negative Inventory Resolver process. These queries are CM_PENDING_RESOLVER and CM_RESOLVED_NEG_HIST and can be viewed using the Query Viewer.

• The CM_PENDING_RESOLVER query returns negative inventory depletion transactions that have not been resolved.

• The CM_RESOLVED_NEG_HIST query returns negative inventory depletion transactions that have been resolved and recorded in a history table CM_RESOLVE_HIST.

See Also

Defining Cost Profiles

Determining Your Negative Inventory Strategy

Calculating Cost for Actual or Average Makeable Items

For makeable items using actual or average cost profiles, the Transaction Costing process processes according to the production ID. After the production ID has been closed for accounting, the Transaction Costing process finishes debiting the unposted transactions and calculates the actual cost of the assembly items. Then, the process clears WIP to finished goods for all cost books. Finished goods receives the completed items. They are posted to the TRANSACTION_INV record or directed to another production ID. The Transaction Costing process gathers the actual costs that have been recorded and posts the costs to the CE_ACTUAL_COST table. Then, the Transaction Costing process posts the manufacturing costs from the CE_ACTUAL_COST table to the CM_ACTUAL_COST table.

If the production ID is not costed by the Transaction Costing process, the transaction displays on the Pending Transactions page under the Pending Calculation Prdn Cost. If an item is not costed, simply enter the necessary corrections to the production data and the item will be costed on the next run of the process. There are a number or reasons that the Transaction Costing process may not pick up a production ID that has been closed for accounting, including:

• The Transaction Costing process was not run for the business unit and cost book with the Calculate Actual Prdn Costs check box selected.

• For direct labor costs, no actual labor rates are set up for the business unit when the make item's Cost Profile has a labor cost method of Actual Time-Crew Rate.

• For direct labor costs, no conversion rates exist for the business unit when the make item's Cost Profile has a labor cost method of Actual Time-Conversion Rate.

• For direct labor costs, either no routing times or no conversion rates are defined for the business unit when the make item's Cost Profile has a labor cost method of Standard Time-Conversion Rate.

• For direct labor costs, no default cost version is active for the business unit when the make item's Cost Profile has a labor cost method of Standard Time-Conversion Rate.

• For direct machine costs, no conversion rates exist for the business unit when the make item's Cost Profile has a machine cost method of Actual Time-Conversion Rate.

• For direct machine costs, either no routing times or no conversion rates are defined for the business unit when the make item's Cost Profile has a machine cost method of Standard Time-Conversion Rate.

• For direct machine costs, no default cost version is active for the business unit when the make item's Cost Profile has a labor cost method of Standard Time-Conversion Rate.

• For overhead costs, no conversion overhead codes were defined.

• For overhead costs or direct materials, no default cost version is active for the business unit.

• For direct materials, the production ID has rows stuck in CM_DEPLETION or CM_DEPLETE.

• For direct materials, insufficient quantity exists to satisfy the depletion.

• For direct materials, an adjustment has been posted since the last time the Transaction Costing process has been run and the process must be run again for this production ID.

• The production ID has uncosted rows in CE_ACTUAL_COST, due to:

  • A lower level production ID with unfinished costing. The lower level production ID has the Hold for Final Cost check box selected the cost profile and the Transaction Costing process was run in mid-period mode.

  • A current level open production ID that has the Hold for Final Cost check box selected the cost profile and the Transaction Costing process was run in mid-period mode.

  • The production ID has rows stuck in CM_DEPLETION or CM_DEPLETE.

  • The production ID is not defined for actual or average costing.

Using Reverse Component Consumption

The Transaction Costing process also reverses the depletion cost for components or kits returned to inventory. During a reverse component consumption, the transaction groups, 220 (Component Kit) and 230 (Component Consumption), are inserted in the TRANSACTION_INV table with a negative quantity. The Transaction Costing process must find the correct cost and process the receipt to the CM_RECEIPTS record.

In a standard costed environment, the reverse component consumption is received and put away at the standard cost.

For actual and average costed environments, the original receipt cost must be located by back tracking from the depletion record (for the production ID that consumed the component) to the original receipt. The process uses the last component consumed for the unit, item, production ID, and operation sequence. If the item is lot or serial-controlled, then the specific lot or serial must be found on the depletion record. FIFO and LIFO items also use the last consumed on the depletion record.

Creating Accounting Entries

The parameters for the Accounting Line Creation process are defined on the Cost Accounting Creation process page. The Accounting Line Creation job performs up to four processes in this order:

Numbering Sequence of the Accounting Lines

Within the Accounting Line Creation process, a substantial reduction in processing time can be achieved by using set-based processing to number the lines of the newly-created accounting entries. As delivered, the system uses row-by-row processing to create the sequential accounting line numbers. By performing additional set up steps you can switch from row-based processing to set-based processing to generate the line numbers. The set-based approach is optional. The delivered default option is the row-by-row approach.

Using the set-based processing method to generate the sequential accounting line number is significantly faster than row-based processing. However, set-based processing can produce gaps in numbering. For example, within one accounting entry with four lines, the lines can be numbered 1, 5, 6, and 11, rather than 1, 2, 3, and 4.

See Also

Selecting the Method to Number Accounting Lines

Creating Accounting Lines

The Accounting Line Creation process retrieves costed transactions and finds the ChartFields to use for the debit and credit lines of each accounting entry. The results are stored in the CM_ACCTG_LINE table. The process always uses the date and time of the transaction and not the transaction date that was entered. Accounting entries can be manually back dated using the Edit Unposted Accounting Lines page.

The Accounting Line Creation process searches for the correct ChartField information to build the accounting entry lines. The system searches for the ChartFields based on this logic starting with the first step and continuing until a match is found:

1. If the transaction is an interunit transfer of inventory stock, then the ChartFields to define the intransit account, interunit receivables, and interunit payables balancing entries are derived from the method that you selected for interunit accounting.

   The other parts of the accounting entries are derived from these pages.

2. If location accounting is used for the storage areas or production areas, the system first searches for the correct Storage Area Accounting page or Production Area Accounts page.

   When the entries on these pages match the same key fields on the transaction, then the correct ChartFields are found to build the accounting entry. Often, these pages define just one side of the accounting entry and the other side is derived from the Accounting Rules page or the interunit transfer method. The system searches for the page by starting with the first rule and continuing until a match is found:

   Rule	Unit	Area	Cost Element
   1	Business Unit	Storage Area or Production Area	Cost Element
   2	Business Unit	Storage Area or Production Area	Blank

3. The Accounting Line Creation process uses the Accounting Rules page (Account Distribution page) with the most specific information matching the transaction. There are some situations where more than one Accounting Rules page can match the transaction. In this case, the search for the correct Accounting Rules page uses the logic in this table starting with the first rule and going through all twelve rules. The system uses the first rule encountered that matches the transaction.

   Rule	Unit	Trans Group	Item ID	Item Group	Distrib Type	Cost Element
   1	Business Unit	Transaction Group	Item ID	Blank	Distribution Type	Cost Element
   2	Business Unit	Transaction Group	Item ID	Blank	Distribution Type	Blank
   3	Business Unit	Transaction Group	Item ID	Blank	Blank	Cost Element
   4	Business Unit	Transaction Group	Item ID	Blank	Blank	Blank
   5	Business Unit	Transaction Group	Blank	Item Group	Distribution Type	Cost Element
   6	Business Unit	Transaction Group	Blank	Item Group	Distribution Type	Blank
   7	Business Unit	Transaction Group	Blank	Item Group	Blank	Cost Element
   8	Business Unit	Transaction Group	Blank	Item Group	Blank	Blank
   9	Business Unit	Transaction Group	Blank	Blank	Distribution Type	Cost Element
   10	Business Unit	Transaction Group	Blank	Blank	Distribution Type	Blank
   11	Business Unit	Transaction Group	Blank	Blank	Blank	Cost Element
   12	Business Unit	Transaction Group	Blank	Blank	Blank	Blank

4. ChartFields entered directly on the transaction override these rules. Often, this is just one side of the accounting entry.

   Note. If the accounting pages have not been defined correctly, then the effected transactions are written to the error table. To view any errors occurring in the CM_ACCTG process, use the Accounting Line Errors page.

See Also

Understanding Interunit Transfers

Setting Up the Accounting Rules Structure

Understanding Stock Transfers Between Business Units

Using Commitment Control

Commitment control enables you to check expenditures against a predefined budget. In PeopleSoft Cost Management, these expenditures typically occur when you expense inventory material to a department or expense account. Commitment control considers actual expenditures and imminent future obligations (encumbrances and pre-encumbrances). The option to use commitment control must be selected at both the installation and ledger group level. In multibook environments, only the primary ledger transactions should be checked against control budgets.

Note. Commitment control does not apply budget checking to manufacturing transactions.

If you are using commitment control, the accounting entries must pass budget checking before you can pass them to the general ledger system using the Journal Generator process. If you select the Budget Check Accounting Lines check box on the Accounting Line Creation process page, then the Commitment Control Processor process runs on the accounting lines in the CM_ACCTG_LINE table with a BUDGET_LINE_STATUS of N (not budget checked) or E (error in budget check). Once the line passes budget checking, the status changes to V (valid budget check). Entries that do not pass budget checking appear on the CM Transaction Exceptions - Header Exceptions page, where you can resolve the error status by adjusting or redirecting charges to alternate accounts or changing budget periods for the transactions if authorized to do so.

Note. The Budget Processor process (FSBKBDP3) considers all of the accounting lines in a transaction set together. If one accounting line fails the budget check, the Budget Processor process rejects the entire transaction set.

Commitment Control Statuses

The header of the transaction can have these statuses in the BUDGET_HDR_STATUS field:

The transaction line can have these statuses in the BUDGET_LINE_STATUS field:

The statuses in the CM_IU_INDICATOR field tell the Commitment Control Processor process whether to pick up the line. If you use the centralized interunit and intraunit processor to create intraunit ChartField balancing entries, then these accounting lines do not need to be budget checked.

See Also

Setting Up Basic Commitment Control Options

Understanding the Budget Checking of Source Transactions

Acquiring Intraunit Entries

Intraunit processing, or fund balancing, creates balancing entries for transfers between ChartFields (such as Fund) within the same business unit. Intraunit balancing can be performed on any ChartField within the business unit except Account. The ChartField Balancing process (CM_IU_ACCTG) compares debit and credit ChartFields (except Account) for the same item and cost element. If the ChartFields are not the same, the interunit receivable and interunit payable accounting entry is created. For example, suppose that these transactions are entered for the same item and cost element. The system is set up for intraunit balancing on the fund ChartField. The interunit receivable account is 4003 and the interunit payable account is 4002 for this transaction:

The Accounting Line Creation process creates this interunit receivable and interunit payable transaction:

Set up the PeopleSoft system to use intraunit accounting. If you are using intraunit ChartField balancing, you must balance the intraunit accounting entries before you can pass them to the general ledger system using the Journal Generator process. If you are also using commitment control, the accounting entries must pass budget checking before they are available to perform ChartField balancing.

To perform ChartField balancing using the Accounting Line Creation process, select the Acquire IntraUnit Entries check box on the Accounting Line Creation process page. This check box is selected by default. The Intraunit Balancing process runs on the accounting lines in the CM_ACCTG_LINE table with a BUDGET_LINE_STATUS of Vand a CM_IU_STATUS of N (not balanced), or E (error). Once the intraunit transaction has been balanced successfully, the CM_IU_STATUS changes to B (balanced) or to X (balancing not required). Entries that could not be balanced are given the status of E (error) and appear on the Edit Unposted Accounting Lines page where you can resolve the error status.

Note. On the intraunit transaction, if the ChartField that you are balancing on changes after the ChartField Balancing process, then the system resets the CM_IU_STATUS to N (not balanced) and the transaction must be rerun by the ChartField Balancing process.

Intraunit ChartField Balancing Statuses

The transaction can have these statuses in the CM_IU_STATUS field:

See Also

Using Interunit and Intraunit Accounting and ChartField Inheritance

Setting the General Ledger Distribution Status

The Set GL Distrib Status (general ledger distribution status) process in the Accounting Line Creation job insures that the accounting entries are not passed to the general ledger system until they are complete. The process also updates the status of accounting entries as they are picked up and used by the Journal Generator process. All rows that have a budget check status of V (valid) and an intraunit ChartField balancing status of B,I, or X will have their GL Distrib Status (general ledger distribution) set to N (ready).

GL Distribution Statuses

The transactions can have these statuses in the GL_DISTRIB_STATUS field:

Creating Transaction Costs and Accounting Entries Processes

The Cost Accounting Creation process is an application engine process that can launch both the Transaction Costing process and the Accounting Line Creation process.

Page Used to Create Transaction Costs and Accounting Entries

Running the Cost Accounting Creation Process

Access the Cost Accounting Creation page.

Generate Table Statistics	(Database administration) This check box enables database administrators to control whether or not this process should issue basic table statistics update commands to the database for the tables accessed by this process. The Cost Accounting Creation process is structured to delete temporary working data at the beginning of the process, before that deletion step, accurate table statistics can be generated. Database platforms keep statistics about the distribution of the key values in each index and use these statistics to determine which indexes to use in query processing. Cost-based query optimization depends on the accuracy of the distribution statistics. Table statistics should be updated whenever a large amount of data in an indexed column has been added, changed, or removed (that is, if the distribution of key values has changed). The update table statistics option gives database administrators an added tool for maintaining table statistics for query optimization; however, sites that already have database administration procedures in place for periodically updating table statistics might want to clear this option.
Generate Temp Table Statistics	The Cost Accounting Creation process stores some of its temporary working data in dedicated temporary tables. This check box is defaulted to make it easier for database administrators to generate accurate table statistics for these types of tables.
As of Date	The process selects all unprocessed lines with a transaction date less than or equal to this date.

Cost Inventory Transactions group box

This section contains the parameters used by the Transaction Costing process.

Create Accounting Lines group box

This section contains the parameters for the Accounting Line Creation process.

Coalesced Selection group box

Specify one or many business unit and cost book combinations on each request in the Coalesced Selection group box. All the business units in one request are processed together as one set to take advantage of set-based relational database performance on sets of data. Define the same parameters for all business units within one request or add multiple requests to define different parameters for each request.

Use the Insert Row button within the Coalesced Selection group box to add as many business units and cost books as needed to one request.

To create multiple sets that process one at a time, create multiple process requests on the same process page by using the Insert Row button just below the Process Request Parameters bar (far upper right of page). Depending on your environment, multiple sets could take longer to process than one set. Each request will be run sequentially.

The system displays the business unit setting for Location Accounting.

Note. Within one process request, all the business units must have the same setting for location accounting. A warning message displays if there is a mismatch.

See Also

Defining Cost Profiles

Reviewing and Changing Item Costing and Accounting Entries

PeopleSoft Cost Management provides several interactive pages to help you analyze, compare, and review the item costs generated in a manufacturing or distribution environment. You can monitor the transactions as they are processed through the Transaction Costing, Accounting Line Creation, and Journal Generator processes. In a manufacturing environment, you can analyze the production costs at every stage of the production ID, enabling you to identify cost fluctuations early in the process.

This section discusses how to review the inventory transactions as they flow through the accounting system.

Reviewing Item Setup

PeopleSoft provides you with inquiry pages to help you review the costing status of an item. Use the:

• Item Cost Inquiry component to review every part of an item's costing definition.

  This ten page component provides information about how the item is set up for costing within the business unit.

• Inventory On Hand page to identify the basic costing setup for an item and the current quantity on hand.

Monitoring the Costing Flow

PeopleSoft provides inquiry pages to enable you to monitor the transactions at each stage as they flow through the accounting processes of the Transaction Costing, Accounting Line Creation, and Journal Generator processes.

• The Message Log inquiry page checks for the successful completion of all processes, including the Transaction Costing, Accounting Line Creation, and Journal Generator processes.

• The Cost Tolerance Inquiry page identifies possible cost errors for all transactions that have completed the Transaction Costing process.

• The Pending Transactions page identifies the number of transactions at each stage of the costing flow.

  Predefined queries give detailed transaction information about each area.

• The Insufficient Qty Tool (insufficient quantity tool) page identifies depletion transactions (in environments using the negative inventory feature) where accounting entries are not created due to insufficient quantity.

Comparing and Analyzing Manufacturing Costs

PeopleSoft Cost Management enables you to monitor the costing of items produced in PeopleSoft Manufacturing for all types of costing (frozen standard, actual, and average costing methods). Use the:

• Actual Cost Inquiry page to review the actual costs of production for a manufactured item.

  Costs are broken down by business unit, item ID, operation sequence, cost category, conversion codes, and other criteria.

• Proactive Production Cost - PID Cost to take a snapshot of the production costs at any stage in the production process.

  Then, these captured costs can be compared and analyzed using the Compare Cost Measures component.

• Compare Cost Measures component to identify costing flow issues by comparing the production costs at various stages for production for a single production ID or production schedule.

• Pending Transactions page to identify the number of production completions that have been putaway in inventory, partially or completely, and the number of production completions that have not been costed by Transaction Costing process.

  Predefined queries give detailed transaction information about each area.

Verifying the Creation of Accounting Entries

Once you generate accounting entries using the Accounting Line Creation process, you can review or change the entries before they are picked up by the Journal Generator process for posting in the general ledger.

Use the:

• Accounting Line Errors page, the Edit Unposted Accounting Lines page, and the Detail Accounting page to review and change accounting entries.

• From the Edit Unposted Accounting Lines page, you can link to the Change Accounting Date page to redirect the accounting entry to an earlier accounting period by changing the accounting date of the transaction before it is sent to the general ledger.

• Pending Transactions page, Unposted Accounting Lines page, Posted Accounting Line page, and the Accounting Entries page to inquire about the accounting entries.

Verifying Your Entries Passed Budget Checking

If you are using commitment control, the accounting entries must pass budget checking before you can pass them to the general ledger system using the Journal Generator process. Entries that do not pass budget checking appear on the CM Transaction Exceptions component, where you can determine the action necessary to resolve the error. The Pending Transactions page also has a query for transactions not posted to the general ledger that identifies the transaction's budget checking status. If you change a line that has already been budget checked, the budget status is set to N, and the line must run through budget checking again.

Verifying Your Entries Passed ChartField Balancing

If you are using intraunit ChartField balancing, the intraunit accounting entries must be balanced before passing them to the general ledger system using the Journal Generator process. Also, if you are using commitment control, the accounting entries must pass budget checking before they are available to perform ChartField balancing. The system assigns an error status to entries that cannot be balanced. They appear on the Edit Unposted Accounting Lines page, where you can resolve the problem. The Pending Transactions page also has a query for transactions not posted to the general ledger that identifies the transaction's status. When the accounting entries have successfully passed the Intraunit ChartField Balancing process, you can no longer change the interunit receivables and payables accounting lines.

Note. If you use commitment control and intraunit accounting (fund accounting), budget checking and intraunit ChartField balancing must be completed successfully before the accounting entries can be passed to the general ledger system. Once the accounting entries have been processed by the Journal Generator, you can no longer change any information on the accounting entries.

Using Reports

Use the Accounting Register report and the Transaction Register report to review both transaction costing and accounting entries.

See Also

PeopleSoft Enterprise Cost Management Reports

Pages Used to Review and Change Item Costing and Accounting Entries

Using Cost Tolerance Control

Access the Cost Tolerance Inquiry page.

PeopleSoft Cost Management receives transactions from a variety of sources. The Cost Tolerance Inquiry page helps you to monitor transactions flowing into your cost management system and identifies possible cost errors from any of the sources of incoming inventory. Use the inquiry page to view costed inventory transactions that exceed your cost tolerance parameters. The inquiry results can be viewed on screen or downloaded into a spreadsheet such as Microsoft Excel for further analysis.

In order to be evaluated by this inquiry, an inventory transaction must have successfully completed the Transaction Costing process of the Cost Accounting Creation process.

Search Criteria

Enter your search criteria to select the inventory transactions to be examined for cost tolerance exceptions. Your search criteria determine the sample population to be used.

Cost Tolerances and Searching

To qualify as an exception, a transaction must exceed either the % Under or % Over tolerance and also exceed the Threshold tolerance. Cost tolerances are:

Click the Search button to identify transactions that exceed your cost tolerance parameters. The exception transactions are based on the following calculation:

1. Based on the business unit, book, date range, and item selection entered on this page, the system finds all costed inventory transactions that meet these parameters and creates a sample population.

2. An average cost is calculated for each business unit/cost book/item ID combination based on the sample population.

   Note. This average cost could differ from the average cost used in PeopleSoft Cost Management transactions since the search criteria on this page could limit the number of transactions used.

3. Each individual transaction in the sample population is then compared to the average cost of the sample for the business unit/cost book/item combination using the cost tolerances to find exceptions. Remember, to qualify as an exception, a transaction must exceed either the % Under or % Over tolerance and also exceed the Threshold tolerance.

Viewing Search Results

Click the Details link to access the query results:

Values displayed include:

Costs are viewed with four decimal places; however, the intermediate calculations and comparisons utilize the full precision values available.

Using the Pending Transactions Inquiry

Access the Pending Transactions page.

Use this inquiry page to review inventory accounting transactions that have not yet been posted to the PeopleSoft General Ledger. This inquiry enables you to monitor pending transactions in these stages of the costing flow:

• Before production completions from PeopleSoft Manufacturing have been putaway into PeopleSoft Inventory.

• Before production completions from PeopleSoft Manufacturing have been costed.

• Before the Transaction Costing process.

• Before the Accounting Line Creation process.

• Before the Journal Generator process.

Click the Details links to view current transaction information generated by predefined queries for each of these three stages: (TRANSACTION_INV, CM_PENDING_COSTING, CM_PENDING_ACCTG_LINE, and CM_PENDING_GL_DISTRIB). This page also provides a link to the Query Viewer, where you can run queries or schedule them to run at a later time.

Using the Insufficient Quantity Tool

Access the Insufficient Qty Tool page.

This PeopleSoft Application Engine program (CM_NEG_INV) provides you with a query of the accounting line entries that would be generated for those transactions held in CM_DEPLETIONS_VW due to insufficient quantities.

The negative inventory feature is activated by selecting the Allow Negative Inventory check box on the Inventory Definition-Business Unit Options page. Use the Insufficient Qty Cost Option on the Cost Profile page to specify how the negative inventory feature should be applied; select Hold to delay costing the entire depletion transaction that drives the item quantity to a negative balance until sufficient stock is putaway to cover the depletion transaction, or select Partial to split the depletion transaction that drives the item quantity to a negative balance and costs part of the depletion transaction up to the currently available stock quantity. The remaining depletion transaction is held until sufficient stock is putaway.

By Business Unit, Book, and As of Date this process collects the rows in CM_DEPLETIONS that are held back due to insufficient quantities and creates a query displaying the accounting entries that would be generated. The system saves the information into CM_NEG_SNP2_TBL where it is keyed by process instance, business unit, transaction group, accounting date, and line number. It includes the field, CM_ERROR_CODE, to identify rows where an accounting entry could not be determined, because a transaction accounting rule was not found.

After you run this process click the Query Results link to view the results. Using the query, the results can be exported to a Microsoft Excel spreadsheet or a CSV text file.

Editing Unposted Accounting Lines

Access the Edit Unposted Accounting Lines page.

After you run the Accounting Line Creation process, use this page to review and make changes to the accounting entry line information for a transaction prior to generating journal entries. For any transaction, you can correct the ChartFields and also change the accounting date. For example, you can adjust or redirect charges to other accounts, change the budget period for the transaction, or redirect the entry to a previous accounting period.

ChartFields

Line Status

Select the Line Status tab.

To view and change unposted lines:

1. Enter the business unit, transaction group, and accounting date range.

   If you do not enter a date range, all unposted transactions relating to the transaction group appear. If you do not enter a transaction group, all transaction groups appear related to the business unit that you entered.

2. (Commitment control only) Enter the budget status.

   Values are: E (error in budget check), N (not budget checked), and V (valid budget check).

3. (ChartField balancing only) Enter the IU status (intraunit ChartField balancing status).

   Values are: B (balanced), E (error), I (ignore. The line is not an intraunit transaction), N (not balanced), H (hold for other business unit affiliates), P (in process), S (staged), and X (balancing not required).

4. Click the Search button to populate the account line information on the lower portion of the page.

5. To alter the accounting date of a transaction, click the Change Accounting DT button to access the Change Accounting Date page, where you can enter a new accounting date for accounting entry. If commitment control is enabled, you cannot change the transaction if any line has passed budget checking. Accounting date is determined by the transaction date, open periods, and lag days. If the transaction date is greater than the last open date, then the accounting date is set to the first date in the next open period. If the transaction date is less than the first open date it will be set to the first open date.

6. Select the ChartFields tab or Line Status tab to display information for any accounting line.

   Change any incorrect data in the editable fields.

7. Click the Budget Check Details button, if available, at the beginning of the account line to access the Commitment Control page for that line.

   Note. For any line in error, changing information on the line resets the budget status. Rerun the GL Dist Status and the Accounting Line Creation process. Balancing ChartFields will not be available in balanced rows; therefore, you cannot make changes for those ChartFields.

See Also

Creating Accounting Entries

Using the Commitment Control Page

Viewing Header Exceptions

Access the CM Transaction Exceptions - Header Exceptions page.

The Budgets with Exceptions group box on the lower portion of the page displays all the commitment control budgets that had exceptions for the transaction. You can limit the number of budget rows the system displays by entering selection criteria.

Note. The ChartFields that appear might not match the budget ChartFields, because the Budget Processor process translates the transaction ChartFields into the corresponding budget ChartFields using the control budget definition.

See Also

Viewing and Handling Budget Transaction Exceptions

Viewing Budget Details and Transaction Activity

Costing and Accounting for Consigned Inventory

If you use the inbound consignment inventory option, a supplier can place goods at your location, but payment is not due until you sell or use the goods.

When you receive a consigned item into inventory, the quantities are tracked but no accounting is performed. The liability is not recognized until the consigned receipt is consumed. Consumption transactions and any subsequent transactions are costed, and accounting entries are created. Consumption transactions for consigned items include:

• Transfer from a non-owned location to an owned location.

• Shipping/Issue or Express Issue.

• Adjustment.

• Physical accounting adjustment.

• Stock used as a component in a PeopleSoft Manufacturing production order.

See Also

Understanding Consigned Purchases in Inventory Management

Costing Consignable Items

The receipt cost associated with the depletion transaction (as defined by the item’s cost profile within each cost book) determines the transaction values.

PeopleSoft Cost Management does not include consigned receipts in an item’s average cost, but it does include stock transfers from a non-owned to an owned location. The system costs consigned depletions at the consigned receipt’s cost, instead of the average cost of the item. For items using an average cost method, the system updates the average cost when you:

• Put away a consignable item in an owned location.

• Receive a consignable item from a non-consignment supplier.

• Transfer a consignable item from a non-owned storage location to an owned storage location.

• Consume the item into a production ID in the manufacturing process.

Creating Inventory Accounting Lines for Consumed Consignment Inventory

When consigned inventory is consumed and costed, the Accounting Entry Line Creation job generates the appropriate distribution accounting for each transaction group that is processed.

Transfer From a Non-Owned to an Owned Location

Inventory transfer transactions (060), where a consigned item is moved from a non-owned to an owned location, create this entry:

DR Inventory

CR Accrued Liability

If location accounting is not used, the bin-to-bin transaction pulls the debit side of the accounting entry from the Accounting Rules page. If location accounting is used, the bin-to-bin transaction pulls the debit side of the accounting entry from the Storage Area Accounting page for the destination storage location. The accrued liability account (credit side) is retrieved from the original receipt line in the RECV_LN_DISTRIB record.

Shipping/Issue or Express Issue

Issue transactions (030-034) create this entry:

DR COGS

CR Accrued Liability

The COGS account is determined using existing logic. The accrued liability account (credit side) is retrieved from the original receipt line in the RECV_LN_DISTRIB record.

Issue to PeopleSoft Maintenance Management

Issue consigned inventory stock to a work order in PeopleSoft Maintenance Management using transaction group 231 (WM Usage).

DR Work Order

CR Accrued Liability

When items are issued from PeopleSoft Inventory to a work order, PeopleSoft Maintenance Management can provide overriding ChartField combinations on the work order. These account distribution overrides are used with the existing accounting logic in PeopleSoft Cost Management to create the necessary accounting entries. If overrides are not provided, the work order expense account is determined using existing logic and the accrued liability account is retrieved from the original receipt line in the RECV_LN_DISTRIB record.

Adjustments and Physical Accounting Adjustments

Inventory adjustment transactions (050, 051, 053) and inventory counting adjustment transactions (040, 041) that adjust the stock level down will create this entry:

DR Adjustment Account

CR Accrued Liability

The adjustment account is determined using existing logic. The accrued liability account (credit side) is retrieved from the original receipt line in the RECV_LN_DISTRIB record.

Stock Consumed as a Component in Manufacturing

Component consumption transactions (230 and 220) create this entry:

DR WIP

CR Accrued Liability

The WIP account is determined using existing logic. The accrued liability account (credit side) is retrieved from the original receipt line in the RECV_LN_DISTRIB record.

Costing and Accounting for the Repair and Maintenance of Assets

PeopleSoft Maintenance Management is a product within the asset life cycle management suite in PeopleSoft Enterprise Financials. This product manages the maintenance and repair of an asset. The maintenance and repair of an asset may require parts from inventory. Work orders, created in PeopleSoft Maintenance Management, place demand for parts or items in PeopleSoft Inventory, where demand fulfillment picks, issues, and depletes the part. The technician maintaining the asset may pick up the material or the material might be delivered directly to the job site. Once work is completed, the technician returns any unused material back to PeopleSoft Inventory.

Depletions and returns for work orders are placed in the TRANSACTION_INV table where the transactions are picked up by PeopleSoft Cost Management for costing and accounting line creation.

Issuing Materials to a Work Order

When items are issued from PeopleSoft Inventory to a work order, the transaction group 231 (WM Usage) is used to debit a work order expense account and credit inventory. However, PeopleSoft Maintenance Management can provide overriding ChartField combinations. These account distribution overrides are used with the existing accounting logic in PeopleSoft Cost Management to create the necessary accounting entries. In order to override the ChartField combinations used to create accounting entries in PeopleSoft Cost Management, the Activity ID field must be populated for the work order placed in the TRANSACTION_INV record. If this field is not populated, the Accounting Line Creation process uses the default accounting rules as dictated by the Accounting Rules pages and the Storage Area Accounting pages. In addition to the Activity ID field, PeopleSoft Project Costing requires the following fields to be populated in order to post the transactions to the correct project/work order:

• Project ID

• Business Unit PC

• Resource Type

• Resource Sub Cat

• Resource Category

• Analysis Type

After the Transaction Costing and Accounting Line Creation processes have been run, the data is staged in the CM_ACCTG_LINE record with N in the PC_DISTRIB_STATUS field for the PeopleSoft Project Costing import process to pick up and post to the work order.

Returning Materials to Inventory

Once the repair or maintenance work is completed, the technician may return unused items to PeopleSoft Inventory. Items are returned by entering a negative quantity in the same component used to issue the items originally. During a reverse issue, the transaction group, 231 (WM Usage) is inserted in the TRANSACTION_INV table with a negative quantity. The Transaction Costing process must find the correct cost and process the receipt to the CM_RECEIPTS record.

Note. You cannot return more stock than originally issued to the work order.

Costing and Accounting for Vendor Managed Inventory

Vendor managed inventory is a supply chain management strategy in which a vendor manages goods that are located in a customer's warehouse. The goods can be consigned or non-consigned stock. The consigned stock is owned by the vendor until the customer consumes it, and the non-consigned stock is owned by the customer when it is received.

As the vendor, you will create a Vendor Managed Inventory (VMI) business unit, which represents your customers warehouse. This PeopleSoft Inventory business unit will have storage locations that contain items and item quantities. These items and item quantities will match the consigned items and item quantities at the customer site.

Non-Consigned Goods

Non-consigned stock is owned or consumed by the customer when it is received into their warehouse. When the sales order is shipped and depleted, the transaction is written to the TRANSACTION_INV record using the transaction group 037 (VMI Interunit shipment) to debit the cost of goods sold account and credit the inventory account. In addition, the auto-putaway process is initiated and updates the item quantities in the VMI business unit and the OM Billing Interface process (OM_BILL) selects demand lines for invoicing and sends them to PeopleSoft Billing in order to create an invoice for the customer.

Consigned Goods

Consigned stock (not VMI) is owned by the vendor until the customer consumes it from the customer's warehouse. When consigned items are consumed, the customer sends an EIP message to the VMI business unit. This creates a transaction in the TRANSACTION_INV record using the transaction group 038 (VMI Consumption) to debit the cost of goods sold account and credit the inventory account. The OM Billing Interface process reads the transaction table and creates a billing-only sales order for all 038 transactions.

See Also

Using Vendor Managed Inventory

Calculating and Applying Purchase Price Variance and Exchange Rate Variance

In addition to costing the purchase receipt transactions, the Transaction Costing process calculates variances for material charges and for any existing landed cost charges. The variances are calculated based on the values retrieved by the Landed Cost Extract process from matched and posted vouchers in PeopleSoft Payables.

An exchange rate variance (ERV) occurs when the invoice for the purchased item is in a different currency than the inventory business unit’s currency and the exchange rate between the two currencies changes between the time that you enter the purchase order and the time that you voucher the invoice.

Given the costs passed in from the Landed Cost Extract process, variances between the material price, landed costs, and exchange rates are calculated:

• For standard-cost items, two variances can be calculated, purchase price variance (PPV) and exchange rate variance.

  1. The purchase price variance is the difference between the standard costs for the material and landed cost elements and the corresponding actual costs from the matched, posted, and extracted vouchers. Based on the timing of the voucher processing and the Landed Cost Extract process, the PPV could be computed and posted in one or two parts. If the voucher is not available when you run the Transaction Costing process, then the system calculates the difference between the standard cost and the PO price. When the voucher becomes available, then the Transaction Costing process computes the difference between the voucher price (in terms of the exchange rate at PO time) and the standard cost less variances previously recorded.

  2. The exchange rate variance is the change between the exchange rate for material and landed costs on the PO and the exchange rate for material and landed costs on the voucher. This is calculated once the voucher has been matched, posted, and extracted. This is the difference between the amount on the voucher (in terms of the voucher exchange rate to the base currency) less the amount from the PO receipt (in terms of the PO exchange rate).

• For actual-cost items, variances are always applied once the voucher price has been matched, posted, and extracted.

  Putaways and depletions are adjusted for the variances. The cost adjustments are calculated for the difference between the current material and landed costs on the PO and the newly determined material and landed costs from the voucher (that has been matched, posted, and extracted). This adjustment does not break out the ERV separately; it is combined with the price variance. The Transaction Costing process finds the original putaways and updates the on-hand inventory stock and depletion records for the variance. The variance is posted based on the ChartField combinations used on the original entries. If you select the Hold for Final Cost check box on the Cost Profile page and run the Transaction Costing process in mid-period mode, then costing of putaways and depletions is put on hold until the corresponding invoices are matched, posted, and extracted; this eliminates the need for variances. This means that costs are not updated unless all cost components with the same cost element have been fully matched and the MATCH_STATUS_LC flag has been set to zero.) If you run the Transaction Costing process in regular mode, all transactions are costed using the available costs, regardless of the setting of the Hold for Final Cost check box. This means that costs are updated by element for all components with the MATCH_STATUS_LC flag set to zero, even if the flag is not zero for all components with that element.

• For perpetual weighted average items, the price variance and the exchange rate variance are calculated and applied if the Apply Perpetual Average Adjs check box is selected on the Transaction Costing process.

  The price variance is the difference between the PO material and landed costs and the voucher material and landed costs. The exchange rate variance is the difference in the exchange rate between the PO and the voucher. The Transaction Costing process automatically updates the current weighted average unit cost to take into account the price change. Inventory stock is revalued to the new weighted average using these transaction groups: 401 (Wt Avg Updates from AP) and 403 (Wt Avg Cost Updates - ERV). If the variances are based on more item units than are currently in on-hand stock, then the variance is applied proportionally to the on-hand inventory stock and the excess variance is written off using transaction group 405 (Wt Avg Update Writeoffs). This writeoff typically debits an expense account and credits an accrued liabilities account. For example, suppose that 100 units are vouchered and the variances are calculated for the 100 units; however, only 90 units are currently on hand. In this case, only 90 units worth of variance costs are applied to the item’s weighted average cost for re-averaging purposes. As a result, 10 units worth of variance costs are written off.

• For periodic weighted average items, no variances are computed for material costs, landed costs or exchange rate variances.

  This method assumes that the invoices have been matched, posted, and extracted within the same period that the PO was entered. When you run the Transaction Costing process, it picks up the invoice costs for putaway and average cost calculations. If the invoice costs are not available, then the PO costs are used but no variance updates the average cost calculations for delayed invoice costs.

Example of Purchase Price Variance vs. Exchange Rate Variance - Standard Costing Method

This example illustrates the accounting entries for purchase price variance and exchange rate variance for a standard cost item. The inventory business unit’s currency in this example is U.S. dollars (USD).

The standard cost of the item is 90.00 USD.

10 units are received.

At receipt time, an entry is made to debit the inventory account at the standard cost of the item and credit the accrued liabilities account at the PO price. The difference between the PO price and the standard cost is considered purchase price variance.

When you receive the invoice, the price has changed to 520 EUR. At the same time, the exchange rate has improved from 1:5 to 1:7. There is an unfavorable purchase price variance (the increase in price from 500 to 520 EUR) and a favorable exchange rate variance (1:5 to 1:7), which results in more EUR per USD.

1. The liability is equal to the invoice price multiplied by the current exchange rate:

   520 x .143 = 74.36 x 10 (quantity received or invoiced) = 743.60

2. To determine the second part of the purchase price variance (the difference between the invoice and PO), the new price of 520 EUR is converted using the PO’s exchange rate:

   520 x .20 = 104.00

   104.00 - 100.00 = 4.00 x 10 (quantity received or invoiced) = 40.00

3. The exchange rate variance is the difference between the current rate and the PO rate multiplied by the invoice price.

   .143 - .20 = .057

   .057 x 520 = 29.64 x 10 (quantity received or invoiced) = 296.40

Example of Purchase Price Variance vs. Exchange Rate Variance - Weighted Average Cost

This example illustrates the accounting entries for purchase price variance and exchange rate variance for an average cost item. The inventory business unit’s currency in this example is USD.

10 units are received.

At receipt time, an entry is made to debit the inventory account at the PO price and credit the accrued liabilities account at the PO price.

When you receive the invoice, the price has changed to 520 EUR. At the same time, the exchange rate has improved from 1:5 to 1:7. There is an unfavorable purchase price variance (the increase in price from 500 to 520 EUR) and a favorable exchange rate variance (1:5 to 1:7), which results in more EUR per USD.

1. The liability is equal to the invoice price multiplied by the current exchange rate:

   520 x .143 = 74.36 x 10 (quantity received or invoiced) = 743.60

2. To determine the second part of the purchase price variance (the difference between the invoice and PO), the new price of 520 EUR is converted using the PO’s exchange rate:

   520 x .20 = 104.00

   104.00 −100.00 = 4.00 x 10 (quantity received or invoiced) = 40.00

3. The exchange rate variance is the difference between the current rate and the PO rate multiplied by the invoice price.

   .143 - .20 = .057

   .057 x 520 = 29.64 x 10 (quantity received or invoiced) = 296.40

See Also

PeopleSoft Enterprise Inventory Reports: A to Z

Generating a PeopleSoft EPM Extract

Use the EPM Costing Extract process (enterprise performance management costing extract process) page to enable integration between PeopleSoft Cost Management and PeopleSoft EPM by populating an on-hand staging table. A PeopleSoft EPM process extracts data from this table, transforms it, and places it into a PeopleSoft EPM data warehouse.

Note. To find out how PeopleSoft EPM uses and reports PeopleSoft Cost Management data, refer to the PeopleSoft Enterprise Performance Management documentation and the ETL mapping reports included on the PeopleBooks CD.

Page Used to Generate a PeopleSoft EPM Extract