INV-04

Control Description

The system automatically calculates Work in Process (WIP) for open production orders at period-end. For closed or technically complete orders, the system calculates variances and posts them to the appropriate financial statement lines during settlement.

Risk

Inaccurate calculation or improper cutoff of production order WIP and variances may result in a material misstatement of inventory valuation and cost of goods sold (COGS).

Implementation Details

Implementation Details
1. Core Transaction Codes & Fiori Apps
KKAX / KKAO: Period-end Work in Process (WIP) calculation for open production orders.

KKS2 / KKS1: Production variance calculation for technically completed (TECO) or closed (CLSD) orders.

KO88 / CO88: Individual or collective order settlement to Financial Accounting (FI) and Material Ledger (ML).

OMWB / IMG Path: Automatic account determination configuration.

2. Open Order WIP Calculation Mechanics
At period-end, running KKAX evaluates open production orders (status REL without TECO/CLSD).

Based on Result Analysis Keys, the system compares actual debits against partial credits, calculating capitalized WIP.

Account Determination (OMWB): Configured via transaction keys BSX (Inventory / WIP balance sheet side) and GBB with account modifier AUA (WIP change / settlement variance offset).

3. Closed / Technically Complete Order Variance Mechanics
For orders carrying status TECO or DLV, running KKS2 compares target costs against actual costs to determine input/output variances.

Account Determination (OMWB): Configured via transaction key GBB (modifier AUA) and PRD with modifier PRF (Gain/Loss Production Variance) to route final variances directly to income statement P&L lines during settlement (KO88/CO88).

Test Procedures

A) Test of Design (ToD)

• Confirm via inquiry with the control owner the organization's Chart of Accounts and in-scope plant valuation parameters.

• Inspect Automatic Postings for Open Production Orders (WIP)

◘ Navigate via IMG path (Materials Management -> Valuation and Account Assignment -> Account Determination -> Account Determination Without Wizard -> Configure Automatic Postings) or transaction OMWB.

◘ Click into transaction key BSX to verify the balance sheet inventory/WIP accounts assigned.

◘ Verify transaction key GBB with account modifier AUA and transaction key PRD with account modifier PRF to confirm the proper assignment of settlement variance and gain/loss accounts for open orders. Capture screenshots/logs.

• Inspect Automatic Postings for Closed / Technically Complete Orders

In transaction OMWB, verify the configuration for closed orders:

◘ Confirm transaction key GBB with account modifier AUA is mapped to the correct settlement clearing accounts.

◘ Confirm transaction key PRD with account modifier PRF is properly configured to route final production variances to designated P&L gain/loss accounts.

B) Test of Operating Effectiveness (ToE)

• Verify Period-End WIP Execution (KKAX)

◘ Inspect the background job logs or execution reports for period-end WIP calculation (KKAX) to verify that open production orders were evaluated systematically prior to settlement.

Verify Variance Calculation (KKS2)

• Inspect execution logs for production variance calculation (KKS2) on orders with status TECO or DLV to ensure target vs. actual cost splits were processed correctly.

• Inspect Order Settlement Execution (KO88 / CO88)

◘ Review execution logs for collective settlement runs (CO88) to confirm that open and closed production orders were settled successfully without unhandled system errors.

Trace Settlement Postings to Universal Journal (ACDOCA)

• Select a sample of settled production orders (incorporating both open WIP orders and closed/TECO orders).

• Drill into the financial accounting documents generated during settlement (KO88/CO88) via transaction FB03 or table ACDOCA.

Confirm that:

• Open orders correctly posted capitalized WIP to balance sheet inventory accounts (BSX / GBB-AUA).

• Closed/TECO orders successfully reversed prior WIP and routed final production variances to the correct P&L gain/loss accounts (PRD-PRF), matching the configured automatic account determination rules.