Error in inventory valuation report (Page 1 of 2)

FA is using the average material cost when calculating the cost prices.

The item cost price can be manuelly adjusted in the Items and Inventory tab. These Changes will not affect the stock movements and therefore will show the wrong results when using the stock movement cost prices.

This is the fact for report:

Inventory Valuation report,

The reports, Inventory Sales Report, GRN Valuation report, Inventory Purchasing report, Costed Inventory Movements, Inventory Sales report shows the correct cost price values for the stock movements.

/Joe

The reports, Inventory Sales Report, GRN Valuation report, Inventory Purchasing report, Costed Inventory Movements, Inventory Sales report shows the correct cost price values for the stock movements.

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Does this commit fix the issue?

Hi Apmuthu,
The fix you provide is for the "Costed Inventory Movement Report" (rep308) but my query was for "Inventory Valuation Report" (rep301). So your commit does not fix the issue with rep301

Hi Apmuthu

With all due respect, that's not a solution at all!

1. It's essential that the Inventory Valuation Report is able to be run accurately at any date a user chooses - otherwise this severely limits the usefulness of FA to accountants - who are more often than not reporting on past performance - especially in the context of an audit.

2. If I update unit costs via unit cost adjustments like you suggest, the GL will be adjusted which will make the IVL right but the GL wrong.

3. Then I will have to go and reverse all my temporary adjustments - that is after finding out what I need to adjust in the first place.  That's a big waste of time! 

This is a big flaw! For the benefit of all users it needs to be fixed - which I would gladly attempt to do if I knew how.  Not fixing this puts FA, as an accounting solution, in the "B team" for sure. 

Mark

Maybe we should take away the date selector from Inventory valuation Report, and force users to use the Costed Inventory valuation Report for selecting periods. What do you say guys?

Joe

Well, the problem here is that you are allowed to change the standard costs at any time, which changes the GL as well, but does not change anything in the stock moves.
This will give an incorrect value in the IVR compared to the GL if taken before todays date and the standard cost has been changed manuelly.

The CIVR should give the correct costed value over all periods. If not, please download the final file here. However if you have changed the standard cost manuelly, it will show an incorrect value.

/joe

Thanks Joe
Will wait for updates.
Appreciated.
Mark

Hi Joe

We installed your fixes..

Attachment icon items_trans_db.inc 3.21 kb, 1 downloads since 2014-09-04
Attachment icon rep301.php1 6.53 kb, 1 downloads since 2014-09-04
Attachment icon rep308.php1 8.26 kb, 1 downloads since 2014-09-04

I tested them using the following test data:

1. I created a new inventory item on 5.9.14
2. I purchased 1 unit for 100 + VAT on 5.9.14
3. I purchased 1 unit for 50 + vat on 31.8.14

The results showed errors as documented below.

......................................................................................................................
A)The results I expect to see in the Inventory Valuation Report (IVR) are:
   a) As at 31.8.14 I should see 1 unit x 50 unit cost = 50 total value
   b) As at 5.9.14 I should see 2 unit x 75 unit cost = 150 total value

   The results I actually see in the Inventory Valuation Report (IVR) are:
   a) As at 31.8.14 I should see 1 unit x 75 unit cost = 75 total value
   b) As at 5.9.14 I should see 2 unit x 87.50 unit cost = 175 total value

   Conclusion: The IVR qty is correct at both test dates, the IRV unit cost is wrong at both test dates
..............................................................................................................................................
B)The results I expect to see in the Costed Inventory Movement Report (CIMR) are:
   a) As at 31.8.14 I should see

        Open Stock                  Stock In                     Delivery                       Closing Stock
       Qty   Rate  Value           Qty   Rate  Value         Qty   Rate  Value         Qty   Rate  Value
        0       0        0               1      50       50             0     0        0              1      50      50

    b) As at 5.9.14 I should see

        Open Stock                  Stock In                     Delivery                       Closing Stock
       Qty   Rate  Value           Qty   Rate  Value         Qty   Rate  Value         Qty   Rate  Value
        1       50      50              1      100     100             0     0        0             2      75      150

   The results I actually see in the Costed Inventory Movement Account are:
   a) As at 31.8.14 

        Open Stock                  Stock In                     Delivery                       Closing Stock
       Qty   Rate  Value           Qty   Rate  Value         Qty   Rate  Value         Qty   Rate  Value
        0       0        0               1      75       75             0     0        0              1      75      75

    b) As at 5.9.14

        Open Stock                  Stock In                     Delivery                       Closing Stock
       Qty   Rate  Value           Qty   Rate  Value         Qty   Rate  Value         Qty   Rate  Value
        1       75      75              1      100     100             0     0        0             2     87.5    175

     Conclusion:  The CIMR qty is correct at both test dates, the IRV unit cost is wrong at both test dates.
                       
Issue to Resolve:
The IVR + CIMR do not respect the user's reporting date when costing opening stock. They takes latest average cost                                   
The calculation of average cost by FA for the data used is wrong.

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I then tested them using the following test data:

1. I created a new inventory item on 5.9.14
2. I purchased 1 unit for 50 + vat on 31.8.14
3. I purchased 1 unit for 100 + VAT on 5.9.14 (the date order is different to the first set of test data)
....................................................................................................................................................................
A)The results I expect to see in the Inventory Valuation Report (IVR) are:
   a) As at 31.8.14 I should see 1 unit x 50 unit cost = 50 total value
   b) As at 5.9.14 I should see 2 unit x 75 unit cost = 150 total value

   The results I actually see in the Inventory Valuation Report (IVR) are:
   a) As at 31.8.14 I should see 1 unit x 50 unit cost = 50 total value
   b) As at 5.9.14 I should see 2 unit x 62.50 unit cost = 125 total value

   Conclusion: The IVR qty is correct at both test dates, the IRV unit cost is correct at 31.8.14, but wrong at 5.9.14
....................................................................................................................................................................
B)The results I expect to see in the Costed Inventory Movement Report (CIMR) are:
   a) As at 31.8.14 I should see

        Open Stock                  Stock In                     Delivery                       Closing Stock
       Qty   Rate  Value           Qty   Rate  Value         Qty   Rate  Value         Qty   Rate  Value
        0       0        0               1      50       50             0     0        0              1      50      50

    b) As at 5.9.14 I should see

        Open Stock                  Stock In                     Delivery                       Closing Stock
       Qty   Rate  Value           Qty   Rate  Value         Qty   Rate  Value         Qty   Rate  Value
        1       50      50              1      100     100             0     0        0             2      75      150

   The results I actually see in the Costed Inventory Movement Account are:
   a) As at 31.8.14 

        Open Stock                  Stock In                     Delivery                       Closing Stock
       Qty   Rate  Value           Qty   Rate  Value         Qty   Rate  Value         Qty   Rate  Value
        0       0        0               1      50       50             0     0        0              1      50      50

    b) As at 5.9.14

        Open Stock                  Stock In                     Delivery                       Closing Stock
       Qty   Rate  Value           Qty   Rate  Value         Qty   Rate  Value         Qty   Rate    Value
        1       75      75              1      75     75             0     0        0                2     62.50    125

     Conclusion:  The CIMR qty is correct at both test dates, the IRV unit cost is correct and 31.8.14 but wrong at 9.5.14.
...............................................................................................................................................................

If and when this is fixed, must it be made out with a flag in the config.php to suit each users need or is MarkAndrews requirement universal - accountants please....

How can you create an item on 5th Sep 2014 (later date) and then expect to purchase it on 31st Aug 2014 (prior date)?

The line 67 in the new includes/db/items_trans_db.inc :

change_stock_moves_std_cost($stock_id, $date_, $new_cost - $last_cost)

is wrong since the difference in cost should be calculated by taking the weighted value of the old cost based on its prior stock value and not merely the difference in cost between previous average cost and current cost as is done above.

The correct calculation should be:

QOH = ( PrevQOH + PurchaseQty ) ;
Avg Cost = ( (PrevAvgCost * PrevQOH) + (PurchaseQty * PurchasePrice) ) / QOH ;

BTW, it turns out to be a Little more complicated changing the Costed Inventory Valuation Report.

I am woeking on it and will upload fresh files during the weekend for testing.

/Joe

Thanks Joe
Will down load and test asap and report back to you as you ask.