Converting old code *INZSR

I have a package I'm testing out that converts RPG II and III code to RPG 
IV. It said that it could convert the subroutines to procedures but I ran 
into a problem when it was handling the *INZSR. 

It defined the fields used in key list
FFILE      IF   E           K DISK 
 
d SOMETHING1        10 A 
d SOMETHING2        10 A 

It prototyped it.
d INZSR    pr


c               CALLP  INZSR
c              KEY1    CHAIN FILE
c                              If            %FOUND
c                            'Do some stuff 
c                              Endif
c                              Eval     *inlr = *on

And it created procedure with procedure interface.

p INZSR  b 
d INZSR  pi 

c        KEY1      KLIST
c                         KFLD    SOMETHING1 
c                         KFLD    SOMETHING2 

c                                Eval      SOMETHING1    =  SOMETHINGA
c                                Eval      SOMETHING2    =  SOMETHINGB

p INZSR  e 

But on compile it does not reconize KEY1 gets RNF7030 and of course chain 
got RNF7080.   Can someone explain why? I would not have used KLIST in C 
spec if I had written from scratch I would have put in D SPEC so it would 
have been define at compile time to main part of program. But I'm still 
learning so I want to know why this fails in tech terms not my redneck way 
of thinking
( "because you defined KEY1 in the subprocedure which means it is locally 
defined to it and not the main part of program"). 

Thanks 
Bill Hopkins