GL Period Closing

At the end of an accounting period, controllers are responsible for closing the books to support an organization's financial and management reporting. Regardless of the size of an organization, the process of periodically closing the books is an important activity that provides the basis for a company's financial and management reporting.

One of the common issues regarding period closing is the absence of a clear period closing process. Many organizations blend the development of management reporting with the close process. Managers can be tempted to reopen the books to provide more acceptable numbers, causing the close cycle to become iterative and lengthy.


General Ledger Period Closing Checklist

Step	Description	Required/ Optional
1	Ensure the Next Accounting Period Status is Set to Future Entry	Required
2	Complete Oracle Sub-ledger Interfaces to Oracle General Ledger	Required
3	Upload Journals from ADI (Applications Desktop Integrator) to Oracle General Ledger	Required
4	Complete Non-Oracle Sub-ledger Interfaces to Oracle General Ledger (Optional)	Optional
5	Generate Reversal Journals (Optional)	Optional
6	Generate Recurring Journals (Optional)	Optional
7	Generate Mass Allocation Journals (Optional)	Optional
8	Review and Verify Journal Details of Unposted Journal Entries	Required
9	Post All Journal Batches	Required
10	Run General Ledger Trial Balances and Preliminary Financial Statement Generator Reports (FSGs)	Required
11	Revalue Balances (Optional)	Optional
12	Translate Balances (Optional)	Optional
13	Consolidate Sets of Books (Optional)	Optional
14	Review and Correct Balances (Perform Reconciliations)	Required
15	Enter Adjustments and / or Accruals and Post	Required
16	Perform Final Adjustments	Required
17	Close the Current Oracle General Ledger Period	Required
18	Open the Next Oracle General Ledger Period	Required
19	Run Financial Reports for the Closed Period	Required
20	Run Reports for Tax Reporting Purposes	Optional
21	Perform Encumbrance Year End Procedures	Optional

Ensure the Next Accounting Period Status is set to Future Entry

Set the status of the next accounting period to ‘Future Entry’ if it is not already, except at year-end.

At year end, it is recommended that you complete all period end processing, prior to opening the first period of the new financial year.


Complete Oracle Sub-ledger Interfaces to Oracle General Ledger

Journals are created to enter accounting information into Oracle General Ledger. Journals are comprised of batch level, journal entry level, and journal entry line level, information.

Ensure that the accounting information from the sub-ledgers (Oracle Payables, Purchasing, Inventory, Receivables, Assets and Projects) have been transferred to Oracle General Ledger. Run all interfaces from the sub-ledgers into Oracle General Ledger. Apart from Assets, which creates journal entries at the time of transfer, the Payables, Purchasing, Inventory, Receivables and Projects modules transfer data to the GL_INTERFACE table. The Journal Import Process populates the GL_JE_BATCHES, GL_JE_HEADERS, and GL_JE_LINES tables, and is either run automatically from the sub-ledger modules, or manually from Oracle General Ledger at a later time.

The journal posting process, run in Oracle General Ledger, actually updates the GL_BALANCES table.

Note: For sub-ledger modules which are using the journal import process and after running Journal Import, if not automatically completed, review the Journal Import Execution Report to identify which journal entry batches were not successfully imported. 

• Delete any error journal entry batches. Determine the source(s) for these error batches, and retrieve the run ID from the Journal Import Execution Report . 
• Make necessary corrections - in the GL_INTERFACE table, via the Correct Journal Import Data window. 
• Re-import these corrected journal entry batches from the GL_INTERFACE table. Simply re-enter the source from which journal entry batches are to be imported. 

Attention: Leave sufficient time to re-import any journal entries not successfully imported from the feeder systems. Then update and post them


Upload Journals from ADI (Application Desktop Interface) to Oracle General Ledger

Journals information can also be imported from spreadsheet or other accounting information from any non-Oracle sub-ledgers has been transferred to Oracle General Ledger. Run the Journal Import process for these sources and ensure the resulting Journal Entries are Posted either automatically by AutoPost or manually.


Generate Reversal Journals (Optional)

Select all the Journals required to be reversed. Submit the process to generate the Reversal Journals.


Generate Recurring Journals (Optional)

Select all the Recurring Journals that require generation for the current period. Submit the process to generate the Recurring Journals.


Generate Mass Allocation Journals (Optional)

Select the Mass Allocation Journals that require generation for the current period.

Ensure that all entries to the source accounting flexfields used in the MassAllocation Journal definitions are finalized for the current period, prior to generating the journal.

Post step-down allocations in the correct order (i.e. perform the calculation and post, for each successive level of allocation entry.


Review and Verify Journal Details of Unposted Journal Entries

• Review any remaining unposted journal entries for the current period 
• Update journal entries as appropriate 

Attention: Journal entries can be reviewed on-line, or via reports. Reviewing journal entries prior to posting minimizes the number of corrections and changes after posting. Following review of journal entry batches, perform any journal entry updates, including any adjusting entries, before posting.

Standard Journal reports available included:

• Journals- Batch Summary Report 
• Journals - Dual Currency Report 
• Journals - Foreign Currency Reports 
• Publish Journals - General Reports 
• General Journals Report 
• Journals - Entry Report 
• Journals - Line Report 
• Journals- Tax Report 
• Journals- Document Number Report (when document sequencing is used) 

Post All Journal Batches

• Post all journal entries for the current period, including reversal, recurring and allocation journals.
• Review the results of the post. 

The Posting Execution Report facilitates review of the results of journal entry posting. Oracle General Ledger generates this report every time posting of journal entry batches occurs. This report indicates any errors in journal entries or journal entry lines were discovered during the posting process.

Run the General Journals Report with a Posting Status of Error Journals to review error journal entry batches and their journal entries:

• Update unpostable journal entries:  Locate the problems with unpostable journal entry batches using the following information:

1. Control Total: When using a control total, ensure that the debits and credits equal the control total.

2. Period Status: 

• Post Actual batches to open periods. 
• Post Budget batches to any period in an open budget year. 
• Post Encumbrance batches to any period up to the last period in the latest open encumbrance year. 

3. Batch Status:

• Oracle General Ledger describes the problems with unpostable batches. 
• Common reasons for unpostable batches are: 

• Control total violations 
• Posting to unopened periods 
• Unbalanced journal entries 

Attention: All errors in the journal entry batches must be fixed, and the corrected journal entries re-submitted for posting.

• Post updated journal entries. 

Run General Ledger Trial Balances and Preliminary Financial Statement Generator Reports (FSGs)

To maintain a consistent audit trail, it is advisable to create a standard period-end accounting report set that can be run at each period end. 

Custom accounting reports can be created by using the Financial Statement Generator like:

• Balance Sheets e.g. Detail Trial Balance Report 
• Income Statements 
• Gross Margin Analyses 

Revalue Balances (Optional)

Revalue account balances to update functional currency equivalents.


Translate Balances (Optional)

• Define any new currencies to which accounting balances are to be translated. 
• Maintain period-end exchange rates for all foreign currencies to which you want to translate. 
• Maintain average exchange rates for all foreign currencies to which you want to translate. 
• Maintain historical rates or amounts for any owner’s equity accounts to be translated. 
• Translate account balances to any defined currency. 

Consolidate Sets of Books (Optional)

Consolidate Within a Set of Books

• Enter consolidating journal entries 
• Automatic Eliminating Entries - define mapping rules to eliminated intercompany receivables, payables, investments in subsidiaries, intercompany sales etc. 
• Recurring Journals- use formula’s 
• Post consolidating journal entries 
• Define a reporting hierarchy that consolidates all the companies 
• Define financial statements with the reporting hierarchy 

Suggestions:

• To automatically generate the amounts and accounts for consolidating and eliminating journal entries, use recurring journal entry formulas. 
• To produce financial reports that reconcile your consolidating companies with the consolidated totals, enter the consolidating entries to a separate company, and build reports with a separate column for ‘consolidating entries’. 

Consolidate Across Sets of Books using the Global Consolidation System (GCS)

• Define consolidations. 
• Perform revaluation and translation of foreign subsidiaries as required. 
• Run consolidations. 
• Enter consolidated and eliminating entries. 
• Report on this consolidated set of books using FSG’s 
• Analyze results using drill-down capability from Parent SOB’s to Subsidiary SOB’s. 

Review and Correct Balances (Perform Reconciliations)

Oracle General Ledger should be reconciled with all other modules. Adjust journals to correct any errors in the journals. Create and post adjusting journals to correct errors in account balances.

1. Review Detail Account Balances On-line
2. Review Account Balances via Reports:

• Request accounting reports: such as general ledgers, general journals, trial balances, and accounts analysis reports to facilitate reconciliation of Oracle General Ledger with the other Financials and manufacturing modules. 

• General Ledger Reports: General Ledger Reports facilitate tracing back each transaction to the original source. These reports list beginning and ending account balances and all journal entry lines affecting each account balance. The report provides detailed information on each journal entry line including source, category and date.

• Accounts Analysis Reports: These reports list the accumulated balances of a range of Accounting Flexfields and all journal entries that affect that range. Detailed information is provided for each journal entry line which includes the source, batch name, and description. 

• Trial Balance Reports: Use trial balance reports to review account balances and activity in summary or detail. 

• Journal Reports: These reports print journal entry batches and include journal entry subtotals, and descriptions and reference information for each journal entry line. You can report on foreign currency, posted, unposted or error journal entries and report on a specific batch or on journal entries from a specific source. 

3. Clear Suspense Accounts

• Examine the general ledger and account analysis reports to identify the source of entries to the suspense accounts. 
• Determine the adjusting entries required to net these accounts to zero.

Attention: If suspense accounting is not allowed, Oracle General Ledger will not post out-of-balance batches.

4. Reconcile Subsidiary Ledgers

• Identify differences between subsidiary ledgers and the general ledger.
• Determine which differences are errors requiring adjustment to the general ledger. 

5. Check other key system accounts have not been transacted by ad-hoc journals, for example, Creditors Control, Debtors Control, Intercompany accounts, etc.

Enter Adjustments and / or Accruals and Post

To correct errors in account balances made by posting incorrect journals, create and post adjusting and reversing journals.

Attention: The details of posted journals cannot be changed, except to mark or unmark for reversal. An incorrectly entered posted journal must be reversed to back-out the accounting of the original posted journal.

Other journal entry adjustments, for example, write-offs (refer Accrual Write-Off Report), and manual accruals can be entered into Oracle General Ledger at this point also.


Perform Final Adjustments

Enter and Post any final adjustments as required by the organization.


Close the Current Oracle General Ledger Period

Close the current General Ledger accounting period in the Open and Close Periods window.

The period can be ‘soft closed’, if later adjustments to the balances for that period may be applicable, or ‘permanently closed’, which means that the period cannot be re-opened in the future. This step will need to be repeated for each General Ledger Set of Books.


Open the Next Oracle General Ledger Period

Open the next General Ledger accounting period in the Open and Close Periods window.

Choose status ‘Open’ to open a new accounting period, or to re-open a previously soft closed period to enable adjustments to be made.

Generate and post reversal journals that were entered in the prior period, for example any Oracle Purchasing receipted accruals and manual accruals.

Any Journals entered into this period while it had a status of Future Enterable, can now be posted as the period now has a status of Open.

This step will need to be repeated for each General Ledger Set of Books.


Run Financial Reports for the Closed Period

• Run a final Trial Balance Report. 
• Run final Financial Statement Generator Reports (FSGs) or Report Sets as required by the organisation. Including Income Statements and Balance Sheets. FSGs can also be published via the Application Desktop Integrator (ADI). 
• Run any Financial Analyzer Reports 

Run Reports for Tax Reporting Purposes

A variety of standard reports can be used to provide tax information which is required to be reported to the relevant Tax Authority, including withholding tax.

The Financial Tax Register can be used to view the output from the Tax Reporting Ledger using Reports Exchange and Application Desktop Integrator (ADI). Using these products you can change the layout of the report, publish the report in different formats, and export the data to a tab delimited or HTML file.

The Tax Reporting Ledger consists of accounting information created in Oracle Receivables, Oracle Payables, and Oracle General Ledger. The Financial Tax Register uses this data to generate Tax Register reports using the Rxi reporting tool.

The following tax registers are available:

• Tax Register 
• Interim Tax Register 
• Non-recoverable Tax Register 

Perform Encumbrance Year End Procedures

Oracle Financials provides a number of facilities for the processing of outstanding encumbrances as part of year end processing. The default processing for Oracle Financials at year end is to extinguish any outstanding encumbrances/ unused funds when you close the last period of the Financial Year within the General Ledger application.

The carry forward process enables managers to perform any of the following:

• Carry forward encumbrances for existing transactions (purchases/requisitions). 
• Carry forward encumbrances, and the encumbered budget. 
• Carry forward the funds available as at the end of the year. 

Other facilities available:

• Use mass allocations to bring forward part of the funds available. 
• Carry forward budgets into the current appropriation budget, or to a separate budget to identify between current year and carry forward amounts if required. Mass budget processing also allows you to combine these budgets. 

To perform Encumbrance year end procedures, including CarryForward, you must complete each of the following steps:

• Open the next encumbrance year: Use the Open and Close Periods window to open the next encumbrance year. 
• Open the next budget year: Use the Define Budget window to define a budget for the next budget period. 

Attention: Ensure that the budget that you use is inclusive of the periods for the next budget year that you require.

Attention: Ensure that the calendar periods for the next budget year have been created prior to running this step.

Verify that the next year budget figures have been entered. If you define a new budget for the purposes of the next year budgetary control, you may also need to update the following:

• Define Budget Organizations, where you have attached the funding budget to defined account ranges within this form. 
• Define Summary Accounts, where summary templates are used as the basis for the budgetary control procedures. 
• Run Year End Carry Forward, This process enables you to determine the criteria that you want to use for carrying forward your encumbrances. 

The year-end carryforward is normally completed in two steps:

• Perform the Year End CarryForward in Preview mode 
• Perform the Year End CarryForward without selecting the Preview option 

Within the Year End CarryForward form, you can select a wide range of criteria for carrying forward balances:

• CarryForward Rule - this rule enables you to select Encumbrances Only, Encumbrances and the Encumbered Budget, or Funds Available as the basis for the Carry forward 
• Encumbrance Type - select All for all encumbrances, or select the encumbrance type that you require i.e. Commitment, Obligation etc. 
• From/To Budget and Budget Organization- select the budgets where they are different 
• Accounting Flexfield Ranges - select the range of relevant accounting flexfields to be carried forward.