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C. Purchase Verification with Ledger & Register

1. What is Purchase and Purchase Tax Data Verification?

Purchase verification means checking whether the total purchase value and tax amounts recorded in the Purchase Register and Accounts match correctly.
This process ensures that all purchases are properly recorded in both systems.

In short, purchase verification confirms:

  • The total purchase value is the same in Accounts and the VAT Purchase Register.

  • The tax amounts (VAT on purchase) are also properly matched in both.

2. Purchase Data Flow

Before verifying, we need to understand how purchase data flows in the system. Purchases can be recorded in two ways:

  1. Inventory → Receipt

    • For stockable items (food, goods, consumables).

  2. Accounts → Purchase Posting (Manual)

    • For services and non-running assets (e.g., consultancy, equipment, maintenance).

👉 These are the only correct entry points that reflect in the VAT Purchase Register.

2.A. Inventory Receipts vs VAT Purchase Register

  • VAT Purchase Register (Inventory type) always matches the Inventory Receipt total.

  • Why? Because the register takes parent totals and receipts store child details.

⚠️ Case to note:

  • Receipt shows data based on Receipt Date, while VAT Register shows data based on Bill Date.

  • That’s why Bill Date and Receipt Date should not cross months.

👉 Generally, no mismatches occur here, but it’s always good to check.

3. Inventory vs Account Stock-In Data Flow & Cases

We create a Stock Subhead under Accounts (e.g., Inventory, Stock & Inventory).
System posts data from Inventory Module to these ledgers.

For each inventory group:

  • Stock Value Ledger: Stock of Group Name

  • Cost Ledger: Cost of Group Name

⚠️ Important:
Stock should only be entered via Inventory → Receipt.
Other methods (manual JVs, RVs, Manual PJVs, etc.) create mismatches because they update ledgers but not physical stock.

3.A. Common Mismatch Cases for Purchases

  • Case 1: Remaining Purchase Postings
    Purchases not yet posted in Accounts.
    Always clear pending postings before verification.
  • Case 2: Manual Transaction Entry (JV/RV)
    Updates stock ledger but not physical stock.
  • Case 3: Manual PJV Entry
    Posts purchase in ledger but bypasses inventory module.
  • Case 4: Wrong Mapping
    Example: Food sales accidentally mapped to stock ledger.
    Rare, but possible.
  • Case 5: Inventory Ledger Created Outside Inventory Subhead
    If wrongly grouped, totals won’t tally.
  • Case 6: Non-inventory items booked inside inventory
    Example: Service/fixed assets posted as inventory.
    ❌ Not recommended → very hard to tally later.

4. Inventory Purchase Data Verification (Receipt vs Ledger)

Steps:

  1. Load Receipt report.

  2. Open Ledger Reconcile Report in Accounts.

  3. Apply Filters:

    • Subhead: Inventory (or stock subhead name).

    • Posting From: GR PURCHASE.

  4. Compare totals.

⚠️ If mismatch:

    • Remove Subhead filter → recheck. Maybe stock recorded in non-inventory ledger? (Important).

    • Ignore VAT and vendor payments.

    • If still not matched → break totals into smaller parts and tally step by step.

5. Receipt Tax vs Account Ledger Tax

VAT on purchases is recorded in VAT on Purchase Ledger (under Current Assets).

Steps:

  1. Open Ledger Reconcile Report.

  2. Select VAT Ledger.

  3. Posting From: GR PURCHASE.

  4. Compare with Purchase Register VAT values.

⚠️ If mismatch:

    • Verify bill-wise entries using Excel tools (e.g., SUMIF).

6. Account Purchase Journal Voucher (Manual PJV) vs Account Ledger

  • Account Purchases directly record in Ledger.

  • Generally, no mismatch.

  • Still, auditors compare VAT Purchase Register vs Ledger.

Steps:

    1. Load VAT Purchase Register (Purchase Type: Account).

    2. Open Ledger Reconcile Report.

    3. Filters:

      • Posting From: AC PURCHASE.

      • Only check Assets & Expense Ledgers (exclude VAT Receivable).

    4. Compare values.

7. Account PJV VAT vs Account Ledger VAT

  • VAT is auto-posted by the system.

Steps:

  1. Load VAT Purchase Register (Purchase Type: Account).

  2. Open Ledger Reconcile Report.

  3. Filters:

    • Posting From: AC PURCHASE.

    • Ledger: VAT on Purchase / VAT Receivable.

  4. Compare both.

⚠️ Rare Case:

    • User manually selects VAT ledger instead of system auto-posting.

    • Hard to detect, but possible cause of mismatch.

8. Final Notes

  • Always verify in total first.

  • If mismatch → break data into smaller groups until the issue is found.

  • Understand the expected data source (Register vs Ledger).

  • Use Ledger Reconcile Report for explaining to clients:

    • Show which voucher created which entry.

    • Point out the cause of mismatch.

✅ By following these steps, you can confidently verify Purchase Data & Taxes, identify mismatches, and explain them clearly to clients.

Documented By - Sundar Mishra.

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