ConnectWise Inventory: Adjustment Type Use Case > Audit Trail Correction
It is important to keep a close eye on the matching balances in both ConnectWise Inventory Valuation report, and Xero asset account value. The corresponding Warehouse Values should match the values of the accounts in Xero.
Based on our experience in working through the various costing models, the FIFO / LIFO models will provide the most effective accounting transaction, as these are not affected by anomalies in the Audit trail, such as where single items are received at $0 cost, dramatically lowering the average costing value of the inventory items.
As a rule, Wise-Sync will only post the transactions presented as an accounting Transaction, so where costs are effected by Reversals or Adjustments, these will only be affected to Xero, when a transaction is created which affects the balance of the account, such as an Invoice, Purchase Order or Adjustment.
Connectwise will pass through the costing based on what is selected on the "My Company > Purchasing and Inventory Setup Options".
The following example shows how to correct a single inventory Item's value in ConnectWise to match the value in Xero. As you can see, there are a number of transactional considerations which can create considerable heart-ache for your accounting team, so it's best to tread with caution.
At this time an Inventory Valuation Detail report was run, in both ConnectWise and Xero, to allow for the side-by-side comparison:
| Connectwise Valuation Report | Xero Inventory Account Transaction Report |
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You will see from the ConnectWise FIFO Costing, that the cost of $0 does not agree with the valuation of the same assets in the inventory account: $31,080 / Server Quantity = $7770.00
The following Product Audit Trail screen can help to highlight any discrepancies:
| Connectwise Product > Audit Trail | Source of Transfer > ConnectWise PO:8 |
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There are several issues here:
1. The FIFO cost transfer from Warehouse CL1, was incorrect at $2000 per unit.
2. The Receipt on PO9, has then set the FIFO at $7770, with the subsequent transactions affecting the FIFO cost.
3. The Shipment Reversal has then cleared the FIFO cost, for unknown reasons.
4. The original source PO was incorrect, with the product cost being entered as $2000
In this case, the issue was traced to the incorrect receipt of a product on a Purchase Order, where the goods were initially received at a cost of $2000 each, together with what appears to be an anomaly.
There are two options in handling out of balance events between the inventory system and the Accounting Transactions affecting the balance of Inventory Value:
1. Correct Xero and reduce the Inventory Valuation: By either re-posting the affected PO allowing the cost to be updated to that recorded in ConnectWise, or create a manual journal to offset the adjustment against Inventory Devaluation Account; or
2. Correct ConnectWise and Raise the Costing (FIFO): Apply an Audit Trail Correction Adjustment, so that the value of the stock is raised by changing the FIFO costing to $7770 as per the initial stock value.
As the issue is specifically in relation to ConnectWise FIFO costing being incorrectly devalued, the second option will be the most appropriate to bring ConnectWise value into the line with Xero.
Create a new Inventory Adjustment > Audit Trail Correction
Create a New Adjustment
1. Enter a adjustment ID for internal reference.
2. Select the Adjustment Type from the List
3. Enter a detailed reason for internet use.
4. Enter any notes
Save the form by clicking on the "Save" icon.
Add Products to the Adjustment:
| Connectwise Product Adjustment (Reversing Error) | Connectwise Product Adjustment (Correction Entry) |
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Select the Product Tab, and click on the "New" icon to create a new Detail Entry
1. Enter the Product ID, then select the Warehouse and Bin
2. Select the Qty to Adjust (-'ve)
3. Enter the Value to apply to the Reversal
TIP: To edit the unit cost, you must enter a +'ve number, edit the unit cost and then change to a -'ve number.
Save the Record
Create a New Product to Enter the new Cost
4. Enter the Product ID, then select the Warehouse and Bin
5. Enter the QTY to adjust (+'ve)
6. Enter the Value to apply to the Adjustment
Save the Record
The products SoH Movement should then have a net effect of 0, as per the following:
Close the Adjustment Record
Once all product items have been added to an Adjustment Record, the record can be closed.
1. Click on the "Close" checkbox and press Save.
Note: Once an adjustment has been closed, it cannot be re-opened.
Compare ConnectWise Valuation Report
Once all product items have been added to an Adjustment Record, ConnectWise valuation report can be compared again.
At the same time the valuation report was run, in both ConnectWise and Xero, to allow for the side-by-side comparison:
| Connectwise Valuation Report | Xero Inventory Account Transaction Report |
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The ConnectWise Valuation Report is now showing the current FIFO value of the same value of the Assets contained in the Inventory Account in Xero.