Monday, October 26, 2009

Inventory Costing Validation Process in Dynamics AX 4.0 and 2009

Inventory Costing Validation Process in Dynamics AX 4.0 and 2009

This was posted by Kent Smith and it is his personal experience;

I was recently asked of a client to validate that the FIFO costing in Microsoft Dynamics AX works correctly for their auditors.  This was on a 4.0 environment so the 2009 validation processes weren’t an exact fit.  The process we came up with should be applicable to 2009 as well however.  The process is as follows (I would recommend to run this per item to keep it simple):

  1. Run the Specify Inventory Value report (Inventory Management -> Reports -> Status -> Inventory Value -> Specify inventory value) as of the first date of a new period to attain beginning cost price (latest transaction cost / transaction quantity).
  2. Run the Inventory Transactions report (Inventory Management -> Reports -> Transactions -> Inventory Transactions) as of the first of the period through the end of the period by Financial Date.  Sort this by Financial Date.
  3. Match values from the beginning cost on your “Specify inventory value” report to the running issues on the “Inventory transactions” report.  As you run out of inventory for each receipt, match up against the next receipt by financial date.  These should all match out including adjustments.  The formula for determining your cost per quantity of the transaction will be the (financial cost amount + adjustment) / quantity of the transaction.

This process could obviously be modified to validate the other costing methods as well just by changing the criteria of how you match or average costs.  It will give you a simple way to validate costs per transaction.  One additional note on the process is that this will only be effective after the closing of the period.  Until then, Microsoft Dynamics AX will not adjust costs according to any costing model.




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