Period Closing Document

       

 

 

ORACLE APPLICATIONS Ver 11i -

DOCUMENT ON PERIOD CLOSING ACTIVITIES

     

Prepared by: Chain-Sys India Pvt ltd     

Table of Contents

1.              Introduction              3

1.1.              About this Document              3

2.              Payables Period Closing Activities              4

3.              Purchasing Period Closing Activities              8

4.              Receivables Period Closing Activities              10

5.              General Ledger Period Closing Activities              14

6.              GL Year End Activities              20

1.    Introduction

1.1.  About this Document   One of the critical activities of effective system administration is the various period-end activities of the Oracle Applications. This document describes the period closure processes involving checking of transactional data, running of transfers of transactional data to the General ledger, reviewing/reconciling of reports and closure of periods in Oracle’s modules.     These activities need to be performed on a defined frequency – daily/monthly/yearly, etc for smooth transfer of data and operations. However, the specific activity of closing of periods in respective/relevant modules should take the following order:  

1. Close Period in Payables 2. Close Period in Purchasing 3. Close Period in Inventory 4. Close Period in Receivables 5. Close Period in GL

  The period end processes are described in detail in the subsequent sections for each of the modules.      

       

2.     Payables Period Closing Activities

Step 1.0               Go to Approve Invoices   

Approve all outstanding invoices. See Invoice Approval process.   Step 2.0               Review Holds

  Run the Unaccounted Transactions report and the Post Holds Report to review holds that will inhibit posting to the General Ledger. Resolve all invoice holds through the Invoice Holds process.               Step 3.0               Go to Check Payments   Pay all invoices that are due by the end of this period through the Check payments process.   Step 4.0               Create Accounting and Run GL Post - Go to General Ledger Post

  Submit the Payables Accounting process to create the accounting entries. Submit the GL Post process.  Refer to the General Ledger Post process for more details.  Ensure that the GL Manager has posted the batch (es) in GL before carrying out Step 11.0.

  Step 5.0              Resolve Posting Exceptions

  Review the AP Journal Entry Exception Report to identify exceptions. Resolve exceptions by updating invoice information as necessary. If the exceptions are due to General Ledger problems (for example, an account incorrectly disabled), refer the report to the GL manager to correct the problems. Refer to the General Ledger Post process flow for more details.

  When all invoices have been updated, or GL errors corrected, return to Step 4.0 in this process. If exceptions still exist, determine if these invoices can be moved to the next period; and if they can proceed to Step 6.0

  Step 6.0               Open Next AP Period

  Open the next period.   Step 7.0              Run Preliminary Invoice Sweep Report

  Unposted InvSubmit the oice Sweep and Payment Program with the Sweep Now option set to ‘No’. This will produce the Preliminary Invoice Sweep Report, which shows all the unposted invoice distributions and payments, which are candidates to be swept to the next period. If all prior steps were completed correctly, any distributions and payments listed should be OK to sweep. If any candidates should not be swept and should be posted to the current period, go to Step 8.0; otherwise proceed with the actual sweep in Step 9.0. If there were no sweep candidates reported, go to Step 10.0.

  Step 8.0              Resolve Unposted Invoice Problems

  Invoice distributions and payments will remain unposted if a Hold has been placed, if the final payment batch was not confirmed, or if there were posting exceptions from Step 4.0, which were not resolved. If there were sweep candidates reported which should be posted to the current period, take action as appropriate to resolve the problems and repeat the close procedure from Step 1.0

              Step 9.0              Run Unposted Invoice Sweep

              Submit the Unposted Invoice Sweep and Payment Program with the Sweep Now option set to ‘Yes’. This will sweep all the unposted invoice distributions and payments to the next period.   Step 10.0 Close Current AP Period

  Close the current AP Period.

  Step 11.0 Run Month-End Reports  

        In Payables, run the following reports:         Run AP Trial Balance Report         Run Posted Invoice Register         Run Posted Payment Register         Run Missing Documents Numbers Report         Run Payment Register         Run Void Payment Register Report         Run Invoice Aging Report         Run Prepayment Status Report

 

Reconcile the AP trial balance with the GL trial balance (the control accounts in GL for creditors should match with summation of the individual creditor account balances in AP trial balance)

  Step 12.0 Reconcile Accounts

  Reconcile unpaid open invoices posted to the AP Liability Account using the AP Trial Balance Report and Posted Invoice and Payment Registers. Verify that: Prior Month AP Trial Balance

Plus (+)               current posted invoices (as reported in Posted Invoice Register) Minus (-)               current posted payments (as reported in Posted Payments Register) Equals (=)               Current Month AP Trial Balance

  Run the Missing Document Numbers Report to identify any missing check numbers. Run the report for each payment document used to record payments. A document may be missing because the manual payment was not recorded.   Reconcile Cash and Discount Taken Accounts using the Payment and Posted Payment Registers. Verify that:

  Payment Register

        Plus (+)               Void Register based on Payment Date         Minus (-)               Void Register based on Void Date         Equals (=)               Posted Payment Register

Run the process and verification for each payment document used to record payments.   Step 13.0 Accrue Un-invoiced Receipts   In Purchasing, submit the Un-invoiced Receipts Report for expense and capital items that have been received but not invoiced. Review and correct account and amount information as required.  Confirm that the GL Accountant has imported the perpetual accruals from purchasing.  Run the Receipts Accrual – Period End Process create an accrual journal entry which will reverse out the following month.  Run GL Journal Import, and post the accrual batch in General Ledger.   Reconcile Un-invoiced Receipts Report with the GL receiving account.

  Step 14.0 Go To Recurring Payments

  If there are monthly recurring payments to create, complete the month-end process by creating the next month’s recurring invoice for each recurring payment.  

       

3.     Purchasing Period Closing Activities

   

Step 1.0             Open the next period. Warning - there are two sets of periods in PO! The Navigation is Setup, Financials, Accounting, Control Purchasing Periods/Open and                Close periods. The second of these, Open and Close periods, accesses the GL periods, so if you close it here, you will close it in GL!

Step 2.0             If you are accruing expense receipts at the period end, run Receipt Accruals - Period End (in Purchasing Reports). You may in fact run this several times, not                necessarily at the month end; it marks the receipt as accrued, so no receipt is accrued twice. Note that the Extended Value parameter is the minimum amount for              an accrual to be made so this should be left at the default of zero.   Step 3.0

               Run the Journal Import and Post Batches in GL for the Accruals. Do not forget to check the Create Summary Journal box or a line will be interfaced for every                receipt Source - Purchasing.

Step 4.0                Run the Purchase Price Variance Report and the Invoice Price Variance Report in PO.

Step 5.0               Run the Un-invoiced Receipts report in PO. Note that this MUST be modified to print out a total. This total should reconcile to the accrual account in GL.

Step 6.0             Run the Accrual Reconciliation Rebuild Report in PO. Note that this may be very large. Also, it only seems to work for items accrued on receipt.

Step 7.0                 Use the Accrual Write-off menu option in AP to remove any unwanted accruals from the Accrual Reconciliation Report (set Source to Purchasing). This                  produces a report which forms the basis of a manual journal to write off the unwanted accruals in GL. Note that the accruals for inventory items are written directly to the GL interface. However they still need to be imported and posted.   Step 8.0

                Delete any failed Receipt transactions. These are visible in under Transactions Summary. Investigate the cause of the failure first. In most cases they are                 duplicate transactions which can arise when the user inadvertently saves the receipt twice, and therefore they can simply be deleted.  

Step 9.0 

                 Close the PO period.

Step 10.0                    Reverse the whole accrual journal manually in GL in the next period. In this way the accrual will represent only the value of the accrual at the period end.                    Running the purchasing period close will change the status of the accrued receipts back to "not accrued" and they can then be used for matching against their                    original charge codes.                                                              

4.    Receivables Period Closing Activities

  Step 1.0 Complete Invoice Transactions:             a. Run Incomplete Invoices Report to identify outstanding invoices.

           Reports:  Listing               b. Complete all Manual Invoices and Adjustments that should be billed in the current period.               c. Change the transaction type to VOID for any invoices that were created in error.

                Navigation: Transactions> Transactions   Step 2.0 Complete Credit Memos:               a. Complete all credit memos that should be credited this period               b. Change the transaction type to VOID for any credit memos that were created in error.                   Navigation: Transactions> Credit Transactions   Step 3.0 Complete Receipt Entry:

                Enter all receipts which should be posted in the current period:                        Navigation: Receipts> Receipts Summary             

         Or Receipts> Batches  

Step 4.0 Complete Misc. Transaction Entry            Enter all Misc. Transaction Activities (Bank Fees, Interest Income, Wire Transfer, etc) that should be posted in the current period:            Enter Receivables Activity to select GL offset accounts for posting.                          Navigation: Receipts> Receipts Summary                          Or Receipts> Batches

     Note:  Cash Management provides function to create Misc. Transaction entries in AR sub-ledger during its Bank Reconciliation processing.        Step 5.0 Process Pending Adjustments               a. Approve or reject pending adjustments to customer invoices.

            Navigation: Control Adjustments> Approve Adjustment                b. Run Adjustment Approval Report and Adjustment Register Report to verify outstanding and approved adjustments.                     Navigation: Reports> Accounting   Step 6.0 Open next Period  

               Navigation: Control> Accounting> Open/Close Periods                a. Open next period:                              Select Open Next Period button.                  b. Set the new next period to Future status.

                  Note: The next period must be open before close of business on Day 1 (the first day of the new period).     Step 7.0 Confirm Final AutoInvoice  

           Confirm that the final AutoInvoice request for the period ran successfully:           Navigation: Help > View My Requests

                This should include all invoices for shipments through to close of business on the last day of the current period.  

Step 8.0 Correct All AutoInvoice Rejects and re-run  

          Correct any AutoInvoice lines listed on the AutoInvoice Error report.  Repeat this step until all lines have processed successfully.    

Step 8.0 Run Revenue Recognition Process               a. Run the revenue recognition process to create any deferred revenue distribution lines. Open any future AR periods as necessary.                     Navigation: Control> Accounting> Revenue Recognition                 b. Review the revenue recognition report for any unusual revenue recognition and accounting.

              Note: Upon executing the AR to GL transfer process, the Revenue Recognition process automatically runs again.   Step 9.0 Print Invoices                   a. Print Invoices created from previous steps.                     Navigation: Print Documents> Invoices                 b. Run Invoice Print Preview Report – lists all invoices selected for printing. Confirm invoice listing.                 c. Run Invoice Print New Invoices – prints customer invoices.                d. Review printed Invoices documents     Step 10.0 Run Journal Entries Report                   a. Run the Journal Entries Report and review it for any unusual accounts.

            Navigation: Reports> Accounting                 b. Correct accounts as needed     Step 11.0 Run General Ledger Interface  

                      Run the GL Interface program to transfer completed invoices and receipt transactions to the General Ledger:

Navigation: Interfaces> General Ledger                            a.      Change Posting Detail field to Summary.

                                                        Enter current period start and end dates.                                                         View the Journal Import report to ensure Status = SUCCESS     Step 12.0 Check Unposted Items                       a. Check that there are no unposted items after the GL transfer:

                 Navigation: Reports> Accounting                                         b. Run Unposted Items Report to identify any items that failed to post during the GL transfer for the specified GL date range.

             Note:  The GL Transfer Program will generate this report if there are items that you attempt to transfer to your general ledger that are out of balance.

             Run Sales Journal by GL Account Report to identify any items that are not been transferred for the specified GL date range. (Specify “unposted” for report             parameter.)  

  Step 13.0 Post Journals                             In General Ledger:                           Navigation: Journals> Post                                                                    Set Period = current period; Batch = AR% and Find.                    Select the AR batches and Post   Step 14.0 Run Period Close Request Set  

            Run the Period Close Reports for AR Request Set                   Navigation: Control> Requests> Run                Step 15.0 Open/Close Periods  

                 Navigation: Control> Accounting> Open/Close Periods                    Find the current Period, set Status = Closed    

           Period Close Reports to run, manually verify with records and reconcile:       1. Applied Receipts Register

                    2. Unapplied Receipts Register                     3. Miscellaneous Transactions Register                     4. Receipt Register                     5. Transaction Register                     6. Adjustment Register                     7. Invoice Exception Register                     8. Aged Trial Balance – 4/7 Buckets by Account (Debtors Aging report)                     9. India Debtors Ledger Report        

Reconcile the Debtors Aging report with GL trial balance report (the control accounts in GL for debtors should match with summation of the individual debtor account balances in aging report)   Reconcile the India Debtors Ledger report with GL trial balance report (the control accounts in GL for debtors should match with summation of the individual debtor account balances in India Debtors Ledger report). However in case party relationship is used or Bills receivable functionality is used in AR module, then there might be differences in reconciling India Debtors Ledger report with GL trial balance report.    

 

5.     General Ledger Period Closing Activities

    Step 1.0 Final Close for Sub-Ledgers                    Receive notification for Sub-Ledger closes. The accounting period for each Sub-Ledger needs to be closed in the following order:                 1. Oracle Payables                 2. Oracle Purchasing 3. Oracle Inventory (close via Cost Management)

4. Oracle Receivables   Note on Closing Periods:  Inventory and Purchasing must close their periods before the close of business on the last day of the month. Payables should close before PO in order to ensure proper expense accruals. Also, the Projects to Payables and Payables to Projects interfaces should be run before closing the AP period.  Receivables should close soon after month-end.   Note on Opening Periods:  Inventory, Purchasing, Receivables and General Ledger must open their period on or before start of business on the first day of the month.     Step 2.0 Open Next Period               a. Open the next period for the new month.                        Navigation: Setup> Open/Close                                       Select Open Next Period button.    

Step 3.0 Review Unposted Journal Entries  

               a. Run Journal General (180) Report for “Unposted” journals for review of account accuracy. Enter parameter for “Source”. Verify account validation     rules.

                      Navigation: Reports> Request> Standard         Step 4.0 Post and Reconcile AP Journals  

                a. Post outstanding Payables journals for period:                       Navigation: Journals> Post                                                                         b. Ask for the AP Trial Balance to reconcile the AP Liability account.                  c. Reconciliation of the Cash and/or Cash Clearing account(s) needs to be done through Cash Management or offline in a worksheet.

Note:  See AP Period Close for more details.  

Step 5.0 Import, Post and Reconcile Accrued PO Inventory Receipt Journals  

              a. Run Journal Import for Purchasing Source to accrue purchase order receipts for inventory items.

                     Journals: Import: Run                                         

                b. Review Journal Import Execution Report and ensure that Status = SUCCESS.                 c. If errors, go to Journal: Import: Correct to identify and correct the errors.                 d. Post the Purchasing journal:                    Journals: Post                                                       

                e. Ask for the PO:  Accrual Reconciliation Report for Inventory items.   Note:  See Cost Management Period Close for more details.     Step 6.0 Notify Purchasing                  a. After importing Purchasing Receipts for Inventory items, notify Purchasing if expenses are to be accrued.

         Purchasing needs to run the Receipts Accrual - Period-End process to generate expense accrual journal entries.   Note:  See Purchasing Period Close checklist for more details.

    Step 7.0 Import, Post and Reconcile Accrued PO Expense Receipt Journals               a. Run Journal Import for Purchasing Source to accrue purchase order receipts for expense and capital asset items.                    Journals: Import: Run                                                         b. Review Journal Import Execution Report and ensure that Status = SUCCESS.                c. If errors go to Journal: Import: Correct to identify and correct the errors.                d. Flag Journal Batch for next month’s reversal. Select reversal period on Default Reversal Period screen. (If journal is marked for reversal at this time, GL                    automatically creates and names the reverse batch. If you don’t flag the journal for reversal at this time it can be flagged later.)                e. Post the Purchasing journal:                   Navigation: Journals> Import> Run                                                         f. Ask for the PO:  Un-invoiced Receipts Report for Expense items.   Note:  See Purchasing Period Close for more details.     Step 8.0 Import, Post and Reconcile Inventory Journals                    a. Perform the GL Transfer from Inventory to GL. This must be done in the Cost Management.                  b. Run Journal Import for Inventory Source:                      Journals: Import: Run                                         

                    Review Journal Import Execution Report and ensure that Status = SUCCESS.

                 c. If errors go to Journal> Import> Correct to identify and correct the errors.                      Post the Inventory journals:                      Navigation: Journals> Import> Run                                                            d. Ask for the following reports from Inventory for reconciliation:

        Inventory Value Report will balance to Inventory Asset  Accounts         Material Distribution Detail Report for posting information         Receiving Distribution Summary Report for posting information

    Step 9.0 Post and Reconcile AR Journals                   a. Post outstanding Receivables journals for period:                       Navigation: Journals> Post                                                                          b.    Ask for a copy of the AR Period Close Reconciliation Worksheet and any supporting reports as required.                               Note:  See AR Period Close for more details.     Step 10.0 Confirm Interface Tables are Empty  

a. Run Interface Errors Report (R2i Custom)                         Navigation: Reports> Request> Standard                    

                    b. Review output and follow up as described on report if any transactions are stuck in interface tables. Step 11.0 Verify GL Account Activity                      a. Run the Trial Balance Detail Report to review GL posted account activity. Select PTD for current period transaction totals.                        Navigation: Reports> Request> Standard                    

                   b. Verify correct account posting per validation rules. Adjust as needed.   Step 12.0 Create and Post Journal Entries using ADI                       Prepare Manual Journals and upload using ADI.                     Application Desktop Integrator [ADI Journal Wizard]

                    a. Define ADI parameters as follows:  (Several parameter fields allow selection by List of Values)

        Category =         Source =         Currency =         Accounting Date =         Batch Name =

        Batch Description =         Journal Name =         Journal Description =         Reverse Journal =         Reversal Period =

                   b. Review import success status from ADI spreadsheet.                    c. Review Journal Import Execution Report. Correct any invalid or disabled accounts from GL Journal Import Correction Screen.

                Navigation: Journals> Import> Correct                    d. Rerun Journal Import and specify source as listed above.

                Navigation: Journals> Import> Run  

Step 13.0 Create and Post all other Manual Journals                       a. Prepare manual journal entries such as accruals, adjustments, Inter-company entries or Eliminations.                       b. Enter journal entries manually using Enter Journals screen, enter all other standard journals for month-end recording and adjustments:                         Navigation: Journals> Enter

                    c. Post the Spreadsheet and/or Manual journals:                        Navigation: Journals> Post                                Step 14.0 Generate and Post Recurring Journals                      a. Generate the Recurring Batches required for month-end adjustments

                              Navigation: Journals> Generate> Recurring                                                                                          b. Post the Recurring journals:                       Navigation: Journals> Post   Step 15.0 Generate and Post Allocation Journals                      a. Generate the Allocation Batches required for month-end adjustments

                               Navigation: Journals> Generate> Allocation                                                                b. Post the Allocation journals:                       Navigation: Journals> Post   Step 16.0 Verify Final Batch Posting  

Verify all current and reversal journal batches have been posted. Run Reports as needed: Navigation: Reports> Request> Standard              Journals - Batch Summary (to verify all batches show posted status)                       Error Journals Report (to review batch error status for corrective action)

If outstanding posted batches due to errors, go to Journal: Import: Correct to identify and correct the errors  

  Step 17.0 Run Preliminary Standard Reports  

Run standard month-end reports: Navigation: Reports> Request> Standard                            Review Trial Balance reports to confirm that account balances are correct. Adjust account balances as needed before close.  

      Step 18.0 Close Current Period  

After all journals are posted and reconciled, close the current period:                             Select the period and change Status to Closed.

  Step 19.0 Run Final Standard Reports  

Run standard month-end reports: Navigation: Reports> Request> Standard                    Review Trial Balance reports to confirm that final balances are correct.

    Step 20.0 Run Financial Statements

  Run month-end financial statements and statements: Navigation: Reports> Request> Financial Note:  You may either run each FSG report individually or use a Report Set. Or       Application Desktop Integrator     [ADI Report Wizard]       Using the ADI Report Wizard you may submit from Server (download a FSG report into an Excel-Spreadsheet or Web based format).  Make sure to       select the proper Report name and Period.  ADI is not able to use Report Sets, only individual reports.

    Step 21.0 Generate and Post Reversal Journals  

                 a. Select journals to be reversed into new period:                Navigation: Journals> Generate> Reversal                                           Make sure the Reversing Period is correct.

                    b. Post the Reversal journals:                        Navigation: Journals> Post                                                       

   

 

6.    GL Year End Activities        Oracle General Ledger application incorporates the year-end closing process into the Open/Close Period program.  When you open the first period of a new year, the    process in the Open/Close program will automatically complete the transfer of all Revenue and Expense account balances to retained earnings.  The program then automatically sets the beginning balances for these accounts to zero for the first period of the New Year.  This process does not create a journal entry, it simply updates the account balances.

 

Step 1.0 Verify Account Types Run the “Chart of Account – Segment Values Listing” report for the Account segment and the “Chart of Accounts – Detail Listing” report for the Balance Sheet range of account values before the first period of the New Year is opened.  Review the reports to determine if any Balance Sheet accounts have been erroneously classified as Expense (default) or Revenue in the Account Type.

 

Step 2.0 Verify that the Next Calendar Year and Periods have been defined Add and verify that the next calendar year and periods have been defined before the end of the current year.  Doing this will ensure the opening of the last period will set the first period of the next (new) year to Future-Entry Status.  

Step 3.0 Run Year-End Reports Run the year-end standard reports.  Review Trial Balance reports to confirm that the final balances are correct.  Also run the year-end FSG report.

 

Step 4.0 Open the First Period of the New Year Open the first period of the new fiscal year to launch a concurrent process to update account balances.  Opening the first period of a New Year automatically closes out your income statement and posts the difference to your retained earnings account specified in the set of books.

Step 5.0 Run Year-End Reports Run the year end standard reports.  Review Trial Balance reports to confirm that the final balances are correct.  Also, run the year-end FSG reports.

Step 6.0 Confirm Revenue and Expense Accounts After the Open/Close Period program completes successfully, run a trial balance report for the New Year.  Verify that all of the Revenue and Expense accounts   have a beginning balance of zero.

 

Step 7.0 Verify Retained Earnings Run the Balance Sheet FSG reports that will give you the Retained Earnings Balance.  This will verify that all balances were rolled properly when the first period of the New Year was opened.

 

Step 8.0 Permanently Close Periods (Optional)     Optionally, permanently close periods in prior year.   When you permanently close a period, journal entry and posting are not allowed and you cannot change this period status. Reporting and inquiry are allowed on permanently closed periods.  Note:  be very careful about permanently closing periods.  Once permanently closed, they cannot be reopened.

 

Step 9.0 Archive Actual Balances or Journal Entries (Optional)

  You can archive and purge account balances, as well as journal batches, entries, lines, and associated journal references for one or more accounting periods, provided the periods are permanently closed.

 

 

         

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