Where in the organization does the responsibility reside for reconciliation of the GR/IR account? AP - General Accounting - Inventory?

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While it can vary by organization, GR/IR is usually the responsibility of AP, which has the expertise and the ability to correct GR/IR, supported by a member from Accounting. This account is usually overlooked, and at times becomes very old and are then hard to reconcile.  It is most critical to ensure the inventory quantities are correct because they affect production.

Judy Bicking says it should be AP; it is usually not Inventory – it’s difficult for them to figure out what they should work on and they are not in a position to correct the entry. So AP does the research to determine if the receipt or the invoice needs to be corrected, since there could be a positive or negative booking depending on the quantities entered on each document.

If it is received and not invoiced, AP researches to find the missing invoice (which is most cases) or discovers it is a duplicate receipt (less frequent), which usually involves two POs.

Judy says the GR/IR account needs to be cleared at least on a quarterly basis, though monthly is best. Some recommend this account be cleared out yearly, but that can be too late.

Companies not using a GR/IR account handle imbalances as an accrual, which creates an entry to the GL number associated with the PO line item; it would then be the budget-holder’s responsibility, but they often do not really look or understand, so normally it is backed up by AP running a monthly report “received but not invoiced,” since AP is in the best position to acquire the invoice, educate the supplier and make the correct entry.

In the case where the problem is unit of measure (UOM), it is the difference between how the company keeps their stock and how the supplier sells it. Example: the buying SKU (stock keeping unit) is usually “each” because they need to know how many they have on hand to build their product; whereas the selling SKU may be in dozens, cases, pallets, etc.  These types of errors can be booked to GR/IR or show up as a mismatch, and AP usually has to convert the suppliers UOM to the company's UOM; so AP, again, is in the best position since they can correct these discrepancies.

There are other situations like these, but they are less frequent.

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