WIPACCRUE - Accrue P&L from WIP Ledger
What is WIPACCRUE
There are 3 recognised forms of P&L in ITAS:-
a) Fully realised, i.e. in the General Ledger, mainly through liquidation of WIP accounts or direct posting.
b) TRADE that has not been Sales Invoiced, i.e. Forward P&L that is evaluated in the procedure VALUATION with the resulting values being posted manually.
c) TRADE that is Sales Invoiced but is not yet fully realized into the PLR i.e. remains in WIP account as a Balance sheet control.
WIPACCRUE is the procedure that provides an analysis of WIP accounts and their transactions (Open status only) to ascertain the value of unrealised P&L. On completion of this accrual transfer, the WIP ledger total will reflect the value of Stock, if there are no anomalies in the WIP postings e.g. sales with no purchases, incorrect tonnage marking.
A company can, optionally (tick the ‘Accrue Uninvoiced Items’ box), to include TRADE accruals (Costs and Commissions) that have not yet been posted to their WIP and the TRADE estimates have been setup. The activation of this feature will produce a full report of the missing accruals that are being included in the WIPACCRUE process. Informal reports can be printed for verification before the final formal process is activated. This process will accrue values for where less than 100% has been posted. This process will also create reversal entries for the amounts in the WIP account that are NOT relevant to tonnages that have been TRADE Sales invoiced. The accounting entries are between the S01 nominated ‘Accrue to’ account and the individual Trading results accounts (NOM) as maintained for each WIP account. If the company is setup to liquidate by EXP code, the ‘Accrue to’ and PLR accounts will be applied accordingly.
The cutoff period determines what accounting records are included and what TRADE records are suitably dated i.e. their contract date must be earlier than cutoff date. When a formal run of WIPACCRUE has been executed, the WIPACCRUE for that period can NOT be rerun. If a company is operating OPS CLOSED privilege and the user running a formal WIPACCRUE does not have the correct privilege to post into a closed accounting period the documents can NOT be posted to their correct period and the process will be aborted.
The main WIPACCRUE features allow for Reporting only, or report and create journals, either for temporary (TA) or permanent transfer (JL), and whether to include ALL costs in accrual, accrue PRO-RATA costs on basis of Sales Invoiced tonnage or a hybrid option between ALL and Pro-rata (see help? on screen). The TA documents are used to transfer the P&L from the period being processed and restated into the next period. The accounting records are postings between the system nominated Stock accrual account (WIP) and the individual trading results accounts (NOM) as maintained for each WIP account. The WIP accounts Dept and Liquidation account are used for the analysis and postings.
WIP accounts that have postings that sum an illogical total tonnage i.e. sold more than bought, no sold tonnage present on accounting transactions etc will be ignored from the accrual process. They will be reported for completeness. It is therefore important to complete an informal process and then correct any incorrect WIP postings before the formal month-end process is actioned. Exception reports will highlight some WIP inconsistencies and any miscoding from NOM, WIP, EXP.
A part of WIPACCRUE is the Stocks analysis which will review each WIP account to determine it's current stock value. The stock values are analysed in 2 parts, the cost of the goods remaining in stock and optionally the weight pro-rata of any associated costs/services for that stock parcel. A full detail list is produced and there is a report totaling values by department/currency. Note that these amounts are an accounting valuation of stock and will not agree 100% with the TRAFREP warehouse type reporting. Also note that the control account of the WIP ledger will not equate to the stock value if there are accounting sales present in the WIP account for which there are no purchase accounting records. The BAL (special) analysis of the WIP control account uses the department of the transaction, whereas the WIPACCRUE procedure uses the department code from the WIP static, logically they should be same but there is no system control to ensure their consistency.
The STOCKS evaluation is based on transactions with expense codes(EXP) that are recognised as Purchases. This does not take into consideration any FX transactions that have been posted to the WIP but are not directly linked to Purchases. The summary of accounting amounts that is reported for each P&L account/Dept only shows what has been identified in the detail report as values being accrued (in full or part). Any WIP accounts that are only stock will not be accrued and therefore will not be a part of these totals.
The report, when being run as a formal process, will always be secured in OPRINT for perpetual viewing.
The report contents are sectioned with :-
a) Section 1 = Optional, when TRADE accruals requested, will list detail accrual for each Un-invoiced TRADE Cost/Commission
b) Section 2 = Detail list for each WIP account and it’s accrual notations/amounts
c) Section 3 = Stocks summary by Dept/WIP account i.e. where Purchases have been posted and NOT fully Sales Invoiced
d) Section 4 = List of Exception WIP conditions e.g. WIP account with sales and NO purchases
e) Section 5 = List of TRADE/Warehouse Rotation refs for located Stock items i.e. relate WIP account to TRADE
f) Section 6 = Stock summary by Department
g) Section 7 = Analysis of accrual values by target P&L account/Expense type
h) Section 8 = List of accounting transactions that have inconsistent department codes i.e. WIP dept versus Tx dept
j) Section 9 = List of target accrue accounts that could not be found on the NOM and what default account has been used instead
The accounts for the WIP accrual postings are determined using the following criteria:-
a) The default account is the WIP liquidation account
b) The EXP list provides the root part of the target NOM account i.e. 7000.6789
c) The stem part of the target NOM account is the derived from WIP liquidation account i.e. 7050.0000
d) The target NOM account, using the above examples is 7050.6789, if it exists in the NOM list, else the WIP liquidation account is used with the appropriate EXP code.
e) If the company is operating FRS23 (Single Currency), the accounting postings will be transferred the true equivalence values in association with the multi-currency amounts.
The accounts for the TRADE accrual postings are determined using the following criteria:-
a) The default account is the S01 accrual target NOM account e.g. 2300.0000
b) The EXP list provides the root part of the target NOM account i.e. 7000.6789
c) The target NOM account, using the above examples is 2300.6789, if it exists in the NOM list, else the S01 default account is used.
d) If the company is operating FRS23 (Single Currency), the multi-currency amounts will be posted and the FRS23 equivalent values will be calculated applying the day exchange rates.
The processing of WIP transactions will only operate correctly if the EXP codes are setup correctly. The EXP codes that represent Purchases must be coded with their IMPORTANCE = 0, Sales must be importance=1, FX details are recognized with importance =90 , all other importance codes are DIRECT costs.