I hope someone can help, as i seem to have come to a dead end in my investigations and have an increasingly frustrated customer… Can any one tell me whether they have experienced problems with the acceptance of average cost calculations in Navision (I’m working on 3.60). My customer believes that the average costing is fundamentally incorrect, in that it does not use any expected costs in the average cost calculation. This can result in 1. A negative inventory G/L account when you have inventory. 2. Incorrect postings to COGS for sales where the purchase invoice has not yet been posted. Number two is more serious, as the profit calculations will be overstated until the actual costs come in. Navision does not post an accrual for expected cost of goods sold for average costed items, and there is no audit trail to find out what the expected profits are. Please can someone help???
Hi Alison Not being an accountant I cannot comment on the UK validity of Average costing, and even if I did I do not believe someone else’s interpretation would appease your frustrated customer. However as you are running 3.60 have you turned on expected costing? This will post the expected cost in order to get an estimate of the cost of the received items before receiving the actual invoice. These costs go to the interim accounts set-up against the posting groups. I have not looked at this at all, and I am unsure how this would work with average costing, but it is something you may want to look at. I will also enquire about the Average costing validity, but I have heard of no complaints before (that I can remember). Hold on in there![:D]
Thanks Steven (? Xonitek - are you in winchester - thats just down the road from me!) We have ticked the expected cost posting, and surprisingly, this does not have any impact upon posted COGS for average costed items. Whether that was intentional I’m not sure - hopefully I’ll get to the bottom of this soon… x
Can I ask another question / re-phrase my original question ? Does anyone know how accountants using Navision Average Costing accrue for “expected COGS” (negative sales, in Navision speek or sales made before purchase invoicing) at the end of an accounting period? It seems to me that it would not be easy to find this figure using the standard system.
Hi Alison We are in Eastleigh, moved a couple of years ago, so I am even closer! 1. Did you use the COGS (interim) account in the posting group set-up? 2. As a non-accountant I will flakily say they put in a reversing accrual for the expected costs based upon difference between the adjusted and actual from the valuation report based upon the entries in the GSNI and GRNI reports. So my understanding is you can have £200K in your balance sheet stock and the adjusted cost on the inventory valuation report shows £250K. This means there is a net difference of £50K hanging around in stock received not invoiced or stock shipped not invoiced. You would then debit your balance sheet stock to the tune of the £50K and credit the Receiving Accrual account in the balance sheet to £50K. I am assuming the inventory valuation £200K also has a cost posted to G/L of £200K, otherwise they may have additional areas to look at (run adjusted costs and post to GL batch routines). The differences between the adjusted and actual will be further highlighted if you are in an industry where the goods are sold prior to the purchase invoice being posted, as you can then potentially go negative in the inventory valuation report, but this is countered by the reversing accrual for the expected cost (it is naturally reversing as this transaction will eventually happen!). Just reading SSAP9, I will let you know what it says, if anything! [:D]
Hi Alison I do not have an actual copy of SSAP 9 (I was reading about SSAP 9)but the person raising this query should have one. I believe that whilst the standard does refer to the aceptability of average costing in the UK it does not tell you how to calculate the average cost. If this is true, then assuming we can get the figures out in an acceptable format, then your end user can be appeased!
In case anyone was interested, I thought I would give you an update on this. Navision cannot include the expected costs in the average cost calculation because of the way the information is stored in the value entries - however - you can make a very small change to codeunit 5804 Item Cost Management. This means that if the average cost calculation is zero, Navision will use the Unit Cost amount to post an entry to COGS. The unit cost should be manually updated for a new item - for an item with zero inventory, the unit cost will be the last average cost calculation. I have asked Navision whether they can include this in the next hot-fix as it is pretty important for any company using average costing. Changes to the code unit are as follows: PROCEDURE CalculateAverageCost@5801(VAR Item@1000 : Record 27;VAR AverageCost@1001 :… END; //IF AverageQty < 0 THEN IF AverageQty <= 0 THEN EXIT(FALSE); Due to the changed exit condition the unit cost of the item journal is used to valuate the sale in COD22.