Beware of the Pitfalls of Transaction MR11

  • by Robert Jackson, SAP MM Consultant and MM/PM Training Specialist
  • January 22, 2013
Understand the dangers of using transaction MR11 to correct differences between quantity received and quantity invoiced on a PO, and learn a more effective way of dealing with the situation.
Note
For more transactions that can affect moving average price, read Bob's In-Depth report.

Many people that use transaction MR11 do not understand what it is intended for, nor how it works. They therefore use it for the wrong reason. There are far better approaches available than using transaction MR11 even when it is executed for its intended purpose. The very nature of the transaction makes it deceptive to users.

Transaction MR11 deals with differences in quantities received versus quantity invoiced on a purchase order (PO). People often mistakenly take that to mean that executing it will cause the History tab on POs to visually reflect a dollar value balance between goods received (GR) and invoices. Others mistakenly think that it will bring about an actual difference in quantity on hand. It does neither of those. Its effect is only on the accounting side, and only behind the scenes. In this article, I will explain what MR11 is intended to do, how it works, and a better way to accomplish the same task.

The Purpose of MR11

Transaction MR11 makes an accounting correction (the clearing of the GR/IR account) based on a difference in quantity existing between a GR and an invoice. The physical inventory side of that difference is ignored. The quantity difference is used only to determine the direction and dollar amount of correction needed on the accounting side as a result of that difference.

The transaction essentially “forces a balance.” In my opinion, this is seldom appropriate. In its most logical use, it is intended to compensate for a difference in GR and invoice quantity when the lower quantity of the two is correct. It always reacts assuming the higher value is in error. It cannot correct differences between a GR and an invoice when the higher quantity is correct, and therefore should never be used when that is the case. Instead, simply post the additional GR or invoice necessary to match the higher (correct) quantity. Even when the lower quantity is correct, a far better approach is to correct the underlying problem using reversals and re-postings rather than execution of MR11.

How Does MR11 Work?

Transaction MR11 is executed against any PO with any difference in quantity between the GR and invoice for a line item. MR11 cannot be executed if the quantity of the GR and the invoice are the same even if the dollar value of the GR and invoice are different. The value does not matter at all in regard to whether the system will allow MR11 to be executed.

Situations in which the system allows you to use MR11 include a PO with an existing GR but with no invoice, an invoice with no GR, one of each but with different quantities, or several of each that in total result in a difference in quantity. As an example, MR11 is executed on a PO that has multiple GRs or multiple invoices on a single PO line item, and there has always been a difference between them in the total quantity.

The system first determines which particular GR or invoice is the offending document (i.e., which one caused the higher quantity posting), and the quantity difference that the document created and now needs to be corrected. The system determines the price per item involved in that particular document. It then determines the dollar value of the correction by multiplying that price per item times the quantity difference that the correction is for (not the necessarily the entire quantity on that particular document).

The system makes a correction to the GR/IR account in that amount, and posts a corresponding, opposite correction to the stock account. The direction of charge against the stock account depends on whether the correction was for excess GR quantity or excess invoice quantity.

Results of MR11

The system depicts the results of MR11 by inserting a separate line or section in the PO History to show the correction. It is listed as AccM, which stands for Account Maintenance document. This is not a material document like that shown for a GR (there is no material movement type shown beside the document number). Like an invoice, an Account Maintenance document is strictly an accounting document.

This PO History line shows a quantity (with either a negative or positive sign), but it always shows a value of $0.00 (Figure 1).


Figure 1
PO History including an AccM with a value of $0.00

Note
The system adding this line to PO History is one of the reasons many people are confused about the intended purpose of the MR11. This depiction in PO History makes it appear that the correction is only to quantity with no effect on value, when in fact, it is the opposite. It has no actual effect on quantity in the stock account, but does indeed affect the stock account in terms of dollar value, even though the resulting line in PO History shows a value of $0.00. Confusion is almost guaranteed for the average user.

If the quantity shown on the AccM line in PO History is negative (-), it means the system removed the accounting effect of excess invoice quantity and added money to the stock account as a correction. As long as there was already quantity on hand in the stock account, this affects the moving average price, and always makes it higher. It has to, because it adds value to the account without adding inventory quantity.

Note
Moving average price is a value that changes automatically over time based on the value of individual postings for a material such as GRs and invoices. The system uses the current moving average price to determine the value of certain transactions involving materials. These include goods issues, which establish actual costs for materials.

If the quantity shown on the AccM line is positive (the positive sign is implied), it means that MR11 removed the accounting effect of excess GR quantity, and took money from the stock account as a correction (but remember that it does not remove physical quantity from inventory). This affects the stock account value (and therefore, the moving average price) only if there is current value on the stock account (and therefore, there has to be quantity on hand as well). The different effects of the AccM line are compared in Table 1.

As you might expect, as long as there is stock on hand with value, this circumstance  always makes the moving average price lower because it removes value from the stock account without reducing inventory quantity.


Table 1
Effects of MR11

MR11 executes even if the current value of the stock account is zero. However, there must be on-hand quantity in the stock account for the posting to take place on the stock account. If the quantity on hand is zero at the time of using MR11, value is added to a price difference account instead to the stock account. The moving average price is left unchanged.

If there is only partial quantity on hand in the stock account at the time, the dollar amount that the system adds to or takes from the account (depending on whether this is correcting excess invoice quantity or GR quantity) is proportionate to that quantity and based on the price per item of the invoice or GR that MR11 is correcting for. The remaining amount is posted to a price difference account.

A Better Approach to Correcting Differences Between GRs and Invoices

Instead of dealing with the counterintuitive quantity, negative and positive signs, and zero dollar value shown in PO History with MR11, as a general rule, you can use one of the following approaches instead:

If the GR is the incorrect document:

  • Reverse the invoice involved, allowing the incorrect GR to be reversed.
    (Note: Failure to reverse the invoice first causes or increases confusion when viewing the PO History tab.)
  • Post the corrected GR.
  • Re-post the invoice.

If the invoice is the incorrect document:

  • Reverse the invoice.
  • Re-post the invoice with the correct values.
These steps are depicted in the PO History in an unambiguous manner that all could understand, and inventory and accounting balances become accurate with no forcing of balance.

Robert Jackson

Robert A. Jackson has 13 years of experience with ERP software including 11 years experience with SAP. He is an SAP-Certified Consultant in Materials Management and has significant experience in the development and presentation of SAP Plant Maintenance training. He also has 27 years of experience in commercial nuclear power maintenance with 17 as a certified Nuclear Training Instructor/Developer for maintenance training programs. Robert has developed, presented, and managed training programs at three separate nuclear power plants for journeyman technicians, maintenance contractors, and management positions.

For the last 10 years, he has served as an MM consultant, Tier III customer support, and configuration specialist on a project for the US Navy involving maintenance. During that time, he also assisted the project’s Training Department in the creation and review of numerous training guides and authored many training bulletins.

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You may contact the author at rj02008@yahoo.com.

 

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Comments

7/20/2013 3:11:21 AM
Antonio Parisi

Although rare, there may be cases where you received your 10 pcs and then received an invoice for only 6 of them; then something happens, and your vendor disappears from the radar screen... In such cases, in order to balance GR/IR and be able to close (and then archive) your PO, MR11 is the right solution (after the right amount of time).
Since you basically got 4 pieces for free, the reduction of the V-price is correct in accounting terms as well as it's correct to get a credit in your Price Diff account if no stock is on-hand at that point in time.
I fully agree on the fact most users have a confused idea on what MR11 is there for.
1/18/2013 6:46:56 AM
Kees van Westerop

During my projects I have been using transaction MR11 only to balance the GR/IR account and only for those cases where both the GR and the IR are correct. So it I agree that the transaction shouldn't be used to correct GR or IR. But I want to stipulate that its purpose is to balance the GR/IR account Not balancing the GR/IR account means that the PO's concerned cannot be closed and nor archived.

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