At any given time, the balance of the AP (Accounts Payable) accrual accounts can account for the following transactions:
Uninvoiced Receipts
Over-invoiced Receipts
Errors (Invoices or inventory transactions charged to this Account by mistake)
You need to analyze the balance of the AP accrual accounts, distinguish accrued receipts from invoice price variances, and identify errors.
You need to monitor potential problems with purchasing and receiving activities that can affect the accuracy of your AP accrual accounts. You can use the Accrual Reconciliation Report to identify the following problems in receiving, purchasing, inventory, work in process, or accounts payable transactions:
Quantities differ between receipts and invoices
Incorrect purchase order or invoice unit prices (previous releases only)
Discrepancies in supplier billing
Invoice matched to the wrong purchase order distribution (or for receipt-matched invoices, the wrong purchase order distribution for the receipt transaction)
Received against the wrong purchase order or order line
Miscellaneous inventory or work in process transactions that do not belong to the accrual accounts
Payables entries for tax and freight that do not belong to the accrual accounts
Use the accrual reconciliation reports to analyze the balance of the AP accrual accounts. To submit this report, you must have Oracle Purchasing and Payables installed. You can accrue both expense and inventory purchases as you receive them. When this happens, you temporarily record an accounts payable liability to your Expense or Inventory AP accrual accounts. When Oracle Payables creates accounting entries for the invoice, Payables clears the AP accrual accounts and records the liability from the supplier site. There are three accrual reconciliation reports:
Typically, you run the accrual reconciliation reports at month end. After you have entered your receipt transactions and matched your invoices, you can run the accrual reconciliation reports for any transaction date range and identify any differences between your PO Receipts and AP Invoices. The reports display any miscellaneous transactions recorded in error to your accrual accounts. These miscellaneous transactions or transactions unrelated to purchase order receipts may be from Payables, Inventory, or Work in Process (depending on your installation). After you have researched the reported accrual balances, you can use the Accrual Write-Off form to indicate which entries you wish to remove and write off from this report. And, after you have written off these entries, you can use the Accrual Write-Off Report as supporting detail for your manual journal entry.
The accrual reconciliation reports let you easily identify quantity differences (i.e., when the quantity received for a purchase order shipment is smaller than the quantity invoiced). Such differences leave residual balances that never clear from the AP accrual accounts. You should investigate the cause of these differences and take corrective actions before closing your period.
Common causes of quantity differences include late inventory receipts, incorrect receipt quantities, and supplier overbilling. To correct late receipts, ensure that receivers enter all receipts into inventory. To correct receipt quantities, enter receipt corrections. To correct overbilling errors, follow your standard procedure for supplier debit memos to clear the difference.
The accrual reconciliation reports lets you determine how much you should have paid and whether the PO or invoice is correct. Such differences leave residual balances that never clear from the AP accrual accounts. You should investigate the cause of these differences and take corrective actions before closing your period.