Correcting a closed month without reopening it

It is the fourth working day of November and October is closed. Then the warehouse lead tells the controller that a mid-October shipment was posted wrong: the truck carried the right product, but the paperwork named the wrong flavor. Or a document was posted for a truck that never left the dock. The books now say stock moved that did not, and cost of sales in a signed month is off by the cost of the goods. Every ERP offers the controller the same three exits, and each one costs something. Cairn is built so that most corrections need none of them.

Three exits that all cost something

The first is to reopen October. Mechanically it works, and it restates a month that the owner, the lender and the auditor have already seen. Every figure built on that month moves with it: the tax accrual, the consolidation, the board pack. The error was one shipment. The blast radius is the whole close.

The second is to delete the shipment. The books look clean afterwards because the evidence is gone. Nobody can later see that October once said 36 cases left, or why cost of sales read what it did.

The third is a manual journal. The ledger now agrees with the trial balance and everything underneath it disagrees. The shipment still says the goods left, the lot still shows as consumed, the cost layers are still drawn down. Take the shipment that named the wrong flavor: 36 cases that left stock at 12.50 a case on paper, 450.00 of cost. The journal moves 450.00 in the ledger and does nothing about the 36 cases. Inventory in the subledger and inventory in the ledger drift apart, and someone has to reconcile them by hand.

Two verbs: Delete and Reverse

Cairn gives a posted document two corrections and is plain about where each applies. Delete works only while the document's period is open. It unwinds the document and every posting it made, then replays what came after, as though the entry had never been made. That is the right tool for a mistake caught the same week, when nothing signed depends on it.

Reverse works on a document from any period, including a closed month. It keeps the original on file and posts a mirror document, numbered REV-n, dated today in the current open period. October is not touched. The verb covers receipts, shipments, returns, credit memos, vendor returns, adjustments, builds, work order completions, material issues and counter sales, along with invoices, bills, customer and vendor payments, deposits and journal entries, so a controller learns one habit instead of a rule per document type. The full rules are on the reversing entries page.

Cairn refuses when the order of events forbids a correction. If a later document has used the stock this one brought in, the refusal names that document so you correct it first. A receipt that quality is still deciding, one with a live inspection lot, cannot be reversed or deleted at all. A refusal that names the document is a to-do list of one.

For the shipment that never left, the reversal is the whole fix. For the wrong flavor on the paperwork, the mirror takes the bad shipment out and the right one is posted as an ordinary document in November. Reverse corrects a document. If goods physically went to a customer and came back, that is a customer return, a document of its own.

The mirror puts the cost that left back

The accounting question hides inside the word mirror. When the 36 cases come back, at what cost? Cairn's rule is that stock returns at the cost that left: the shipment's own consumed cost, not today's cost and not a fresh average. In the example, the 36 cases return at 12.50 a case, and cost of sales is credited the 450.00 it was charged, in November.

Putting them back at today's cost would manufacture margin out of an error. If replacement cost has crept up to 13.10 since October, a shipment that should never have happened would add 21.60 to inventory value, and the books would show a gain on a mistake. Returning the goods at the cost that left means the correction nets to what it should: nothing.

Why nothing in between is re-costed

Between the October shipment and the reversal, the business kept running. A November receipt came in at a higher price, two more orders shipped, a build consumed the same item. The tempting reversal replays all of it to produce what the history would have been. Cairn re-costs nothing in between. Those documents keep the costs they were posted with, and the correction lives in one place, the mirror, dated today.

This is the same discipline as keeping October closed. A reversal that quietly re-costs November's sales would restate figures people have already used, which is reopening with better manners. Every document stays right for what was known when it posted, and the one thing that changed is a visible event with a date.

When the Cost of Sales Adjustment leg appears

Most reversals post two sides, stock back and cost of sales out. A third leg, Cost of Sales Adjustment, appears only for an item on standard cost whose standard has moved since the shipment. Under FIFO, LIFO or weighted average the stock carries the cost that left, so it goes back exactly and there is nothing to adjust. Under standard, stock is carried at the standard in force now. Take a different item that shipped in October at a standard of 12.00 and sits at 12.40 today: on 36 cases the gap is 14.40. Cairn posts that gap on its own line, where the controller can see it, instead of burying it in inventory or smearing it into cost of sales.

That gap is explainable because a change of standard is itself a document. A change of costing method or standard is posted as an inventory cost revaluation, numbered ICR-n, dated, with its own postings, and never as a quiet edit to the item. The controller who asks why the adjustment is 14.40 can open the ICR that moved the standard from 12.00 to 12.40 and see the day it happened. Cairn runs FIFO, LIFO, weighted average and standard side by side with parallel costing, so a change of basis is a real event on the books, and it is posted like one.

The linked pair is the audit trail

The original document stays exactly where it was and wears a Reversed badge. The mirror is linked to it both ways, so from either record one click reaches the other. An auditor who asks about the October shipment finds the original in October, the mirror in November, and the postings of both.

That is a choice with a consequence, and it is worth saying plainly. October's statements stay as they were signed, which means the error stays in October and the correction lands in November, visible and dated. For a mistake that is not material, that is the right treatment. If the error is material to October, reopening the month is your call, and nothing in Cairn stops you making it.

Flint, the assistant, helps with the cases that never reach a clean reversal. It reads the ledger and shows the inventory tie per account as of a day, names the items that drift and says from what, and a manual journal on the inventory account is one of the causes it looks for. It reads and explains, and it never posts a correction on its own.

The financial close holds, and the error is fixed in the period where it was found. The month you signed stays the month you signed, and the fix carries a number: REV-63.