# Oracle Fusion Inventory: Cycle Count Setup and Adjustment Approval > Source: https://netray.co/erp-help/fusion-cycle-count-adjustment-approval-and-accounting > Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems. > Section: ERP Help ## Short answer In Fusion, a cycle count is defined for an inventory organization with item selection, a count schedule and tolerances. Counts are entered, variances outside tolerance need approval, and approved adjustments become inventory transactions that are costed and accounted like any other. Most problems come from tolerance setup, approval routing or an adjustment account. ## Kind how-to ## System oracle-fusion ## Erp Oracle Fusion Cloud SCM ## Module Inventory Management / Cycle Counting ## Query how to set up cycle count and approve adjustments in Oracle Fusion Inventory ## Alternate Queries - Fusion cycle count adjustment approval - Oracle Cloud inventory cycle counting setup - Fusion cycle count tolerance and accounting - Fusion cycle count adjustment not posted ## Applies To Oracle Fusion Cloud SCM Inventory Management; labels and some features depend on release ## Steps ### How to run a cycle count end to end **Items:** - Define the cycle count for the inventory organization, selecting the items or categories to count and whether ABC classification drives frequency. - Set count tolerances for positive and negative quantity and cost variance so only meaningful variances go to approval. - Set the adjustment account for the count so approved adjustments have somewhere to post, or confirm it is derived from your cost accounting rules. - Generate count requests or schedule the count so sequences are created for each item and location in scope. - Enter counts against the count requests, including lot and serial detail where items are tracked. - Review variances; those within tolerance are accepted, while those outside tolerance go to approval or recount. - Approve or reject adjustments, or request a recount, in line with your authorization limits. - Confirm the adjustment transactions complete, then check cost processing and accounting for the adjustments in Cost Management. ## Sections ### Definition, schedule and selection **Body:** The cycle count definition is the contract for the count: which organization, which items, how often, and what rules apply. ABC classes let high-value items be counted more often than low-value ones, which is the usual way to cover an inventory without a full wall-to-wall count. Selection is where most surprises arise. Items that are not stocked, are disabled for inventory transactions, or are excluded by the selection criteria do not generate counts. If a location looks uncounted, check whether it was in scope before suspecting a scheduling fault. ### Tolerances and approval **Body:** Tolerances separate noise from real discrepancy. A tight tolerance on a high-cost item sends nearly every count to approval, which overloads approvers, while a loose one lets real shrinkage pass without review. Set them by value and risk rather than a single global number. Approval can be routed to a person or role based on the variance size. When an adjustment sits unapproved, the quantity in the system remains wrong and the book value is unchanged, so watch the approval queue as part of daily inventory control. ### Adjustment transactions and accounting **Body:** Approved adjustments post as inventory transactions that change on-hand. Cost Management values them at the item cost and creates distributions, and Create Accounting turns them into subledger entries that hit inventory and the adjustment account in the general ledger. If an adjustment has been approved but has not posted to the ledger, follow the same chain as any transaction: on-hand updated, costing processed, accounting created, then transferred. A gap at any step explains the difference between a counted quantity and a ledger balance. ## Pitfalls - Using one tolerance for all items regardless of value, which overloads approvers or hides losses. - Counting items in a subinventory with a restrictive material status and expecting available quantities to change. - Leaving adjustments pending approval over a period close, so on-hand and the ledger disagree. - Skipping lot and serial detail on tracked items, which causes count rejection or incorrect adjustments. - Posting manual miscellaneous transactions to fix count variances instead of using the count adjustment flow. ## Ai Angle ERPray, grounded on Fusion inventory and cost data, can show which counts are awaiting approval, the value of pending variances by item and subinventory, and which approved adjustments have not yet been costed or accounted. It reads only and shows the query, leaving approval decisions to your inventory controllers. ## Faq ### Can I use ABC classification in Fusion cycle counts? **Answer:** Yes, cycle counts can be driven by item classification so higher-value classes are counted more often. Define the classification and link it to the count frequency rules for your organization. ### What happens to variances within tolerance? **Answer:** They can be accepted without approval and adjusted, depending on how the count is configured. Variances outside tolerance go through approval or recount. ### Where does the adjustment hit the ledger? **Answer:** Through cost accounting and Create Accounting, which debit or credit inventory and the adjustment account per your accounting rules, then transfer to the general ledger. ### Why was an item not included in the count? **Answer:** Usually because it fell outside the selection criteria, is not stocked in the organization, or is not enabled for inventory transactions. Review the definition and item attributes first. ## Search terms Oracle Fusion cycle count, Fusion inventory cycle counting, cycle count adjustment approval Fusion, Fusion count tolerance, Fusion ABC classification, Oracle Cloud inventory adjustment, Fusion cycle count accounting, Fusion physical inventory SCM --- Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json