ERP/3.0/User Manual/Period End Close to Financial Report
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Contents
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Introduction
This workflow manages the life-cycle of an accounting period, from the moment the finance staff opens it to the moment they close it and finally permanently close it.
Abstract Business Process
The abstract Period end Close to Financial Report business process is defined by the following diagram:
Roles Involved
The following roles are involved in order to complete this process:
- Finance - in charge of auditing and supervising accounting entries and consolidated reports
Configuration
Before posts to the general ledger can be made the fiscal year and the accounting periods within need to be configured.
Please refer to the Configuration Manual.
Step by Step
Open Period
A period must be opened before any document with its accounting date falling into that period can be posted to the general ledger. The application does not allow the user to post a document within a period that does not exist or is not opened. Opening and closing periods is done using the Financial Management || Accounting || Transactions || Open/Close Period Control window.Each time the user wants to open or close a period or a group of periods it has to create a new record in this window and specify the action (open or close) desired. This way, it's easy to track who opened or closed a particular period and when it happened.
To open a period, create a new record within the window mentioned:
Fields to note:
- Year - fiscal year for which the action will take place
- Until Period No. - the last period until which this action is going to be effective to. For example, to open periods from January to March, choose March in the Until Period No. dropdown.
- Period Action - three options are available:
- Close Period: closes the periods which can still be opened afterwards
- Open period: opens a period. Note: after a specific fiscal year has been created, all periods within it are closed by default and must be opened explicitely.
- Permanently Close Period: closes the period so it cannot ever be reopened.
Note: Periods can be opened and closed as many times as required until the Permanently Close Period action is taken.
If you try to post a document (such as a sales invoice) to a period that does not exist or is not opened, the following message is thrown:
Create Automatic Accounting Entries
There are three different ways of posting documents that have accounting consequences.
Manual Posting
If the background accounting is not configured and turned on, the user must manually post individual documents upon completion using the Post button:
The general ledger posting generated is then shown as a result of clicking the button:
Once a document has been posted, the Post button will change into Unpost. Clicking it presents us two options
- Checking off the Delete accounting entry box and clicking OK will unpost the document and delete the accounting entry.
- Leaving the Delete accounting entry box empty and clicking OK will take us to the report that only displays the actual general ledger posting in order to see it:
Batch Posting
To batch post all unposted documents, the Financial Management || Accounting || Transactions || GL Posting by DB tables window is used.
Imagine there are 10 invoices (sales or purchase) completed but not posted and the user wants to post them at the same time. Using the window mentioned above, enter the filters available or leave them blank to consider all unposted documents:
Click OK to post the matching document to the general ledger and showing the resulting message:
The individual document types that can be batch posted are:
- Invoices
- Amortizations
- GL Journals
- Financial Account Transactions
- Financial Account Reconciliations
- Payments
Note: If the automatic background posting process is activated, executing the batch posting will show the user an error message saying that the batch posting cannot be used while background accounting process is enabled.
Background Posting Process
There is a possibility to have an automatic background process posting every completed document that has accounting effect. This way, the user will not need to post documents manually, as it will be done by the application automatically and as such transparent to the user.
If this is required and not configured yet, please ask your Openbravo consultant to do so.
Correct Existing Transactions
Once a document is posted, it is not possible to edit the document directly The steps required are:
- Un-post the document
- Re-activate the document
- Change required information
- Complete the document back
- Post the document again
To unpost a document, open its header and click the Unpost button:
Check the Delete accounting entry box and click OK:
The system will display a message with the number of journal posts deleted:
An Example
Suppose there is a line of an invoice that contains a product expense that has been posted to the 60000 account but the user realizes the posting should actually have been made to the 62800 account.
Once the invoice has been unposted (see previous section) go to the Master Data Management || Product window, [Accounting] tab. Change the actual 60000 expense account to the 62800.
Save the record. Go back to the invoice and post it. The result will be the following:
The correct posting has been made this time.
Note: If more than just the expense account of a product should have been changed (like product amounts, quantities, or terms and conditions) then the document also needs to be reactivated and then completed back before it is reposted.
Manual GL Journals
There are some general ledger postings that are not a result of a document within the application. Some examples are:
- write offs
- period adjustment postings
- reclassification of postings due to auditing issues or other reasons
- etc.
The application allows the user to create a document that generates these postings. To enter them use the Financial Management || Accounting || Transactions || G/L Journal window. An example of a G/L Journal we will use in this example is the following:
In order to be able to group several postings together, the [Batch] tab is used. There, create a new record:
Fields to note:
- Description - brief note describing the cause of this document
- Document Date - the date when this document is created
- Accounting Date - not used here
- Currency - not used here
- Period - not used here
- Template - check this if the document will be used as a template for similar posts in the future
- [Header] - the tab where further info of the document will be entered such as accounting dates, amounts, currencies, etc.
Save the record and switch to [Header] tab to create a new record:
Fields to note:
- Description - brief note describing the cause of this document
- Document Date - the date when this document is created
- Accounting Date - date used to define the fiscal period the resulting posting will belong to
- Currency - currency of the document
- Period - Accounting period of the GL Journal used for this posting. The period must be opened in order to post to it
- Opening - use this check to mark the posting as an opening one. This is used to create the initial journal.
- [Lines] - lines where specific accounts and the amounts of the journal are added
Save the record and switch to [Lines] to enter the lines of this journal. This example uses two separate lines:
Fields to note:
- Accounting Combination - an account combination from the chart of accounts
- Description - additional notes related to this posting
- Currency - currency of the line that inherits its default value from the [Header]
- Foreign Currency Debit - the debit amount in the currency selected above
- Foreign Currency Credit - the credit amount in the currency selected above
As the resulting posting of this document should be:
...then the first line entered must be:
...and the second one:
Once both lines are correctly entered and saved, go back to [Header] and Process and Post the G/L Journal. See the Create Automatic Accounting Entries section of this document to see how the final posting is done:
Operations that Should not be Done using the GL Journal
The following scenarios should not result in the of a GL Journal document:
- GL Journal for Cash Movements (Bank or Cash) All transactions related to cash movements must be registered using the Bank Statement or Cash Journal document. If a bank movement related posting needs to be done, a payment needs to be created first and then reconciled using a bank statement.In order to create payments that do not originate from documents inside the system, see the following guide:http://wiki.openbravo.com/wiki/ERP/2.50/Configuration_Manual/Setting_up_accounting#Creating_pending_payments_.28receivables.2C_payables.29
- Debt Transfer from one Business Partner to Another Transferring debt from one business partner to another should not be done using this document since the original payment would remain pending. Instead, the Settlement document must be used, settling the old payment and creating a new one to the new business partner with the old amount.
Print Preliminary Report
Accounting reports can be found under the Financial Management || Accounting|| Analysis Tools menu node:
- Balance Sheet and P&L Structure
- Trial Balance Report
- General ledger report
- General ledger journal
- Not posted documents
Balance Sheet and P&L Structure
This window is used to generate the following two reports:
- Profit & Loss Statement
- Balance Sheet
Use the Financial Management || Accounting || Analysis Tools || Balance Sheet and P&L Structure window to specify the parameters required:
Fields to note:
- Accounting Report - choose P&L or Balance Sheet accordingly
- Account Level - the level of depth within the chart of accounts that should be used for displaying the report
- Show only accounts with value - check this to show only accounts with amounts different from zero
- Show Account codes - check this to show the account code before the account name
- Year - Choose the year you wish to execute the report for
- From & To date - time window inside the chosen year
- Reference year - choose the year to compare the results to in the report:
- From & To Reference Date - time window inside the chosen comparison year
Once the desired parameters are entered click the PDF Format button to generate it:
Trial Balance Report
This report displays exact amounts for each of the accounts. To generate it, use the Financial Management || Accounting || Analysis Tools || Trial Balance Report window:
Fields to note:
- From & To Date - limit transactions included inside a time frame.
- Account Level - the level of depth within the chart of accounts to display.
- From Account & To Account - narrow down the range of accounts to be displayed.
There is the possibility to choose one or several business partner(s), product(s) and Project(s) in order to filter down the transactions included:
- Business partner - Choose the number of business partners desired to filter the included transactions by.
- Product - Choose the number of products desired to filter the included transactions by.
- Project - Choose the number of projects desired to filter the included transactions by.
- Group By - Dimension (Business Partner, Product or Project) you want to group the results by.
To generate the report, click the Search button:
Clicking the blue link showing each account's number will take you to the General Ledger Report and show you the specific postings related to that account. See the next section for more information on this report.This report can also be seen as a PDF or EXCEL format. Use the toolbar buttons to do so.
Notice that in the EXCEL format, the dimensions Business Partner, Product and Project are always shown and due to that, the data is always grouped by the three of them. This makes the EXCEL format to return different result from PDF or HTML versions. The information returned is the same but it is grouped differently.
General Ledger Report
This report shows the transaction details for the accounts within a desired period of time. To execute it go to Financial Management || Accounting || Analysis Tools || General Ledger Report window:
Fields to note:
- From & To Date - select the time frame to include
- Hide Matched Debt/Payments - check this to avoid showing the information of already matched payments movements. Useful to see only pending payables in business partners accounts.
- From & To Account - select the range of accounts to display
There is the possibility to choose one or several business partner(s), product(s) and Project(s) in order to filter down the transactions included:
- Business partner - Choose the number of business partners desired to filter the included transactions by.
- Product - Choose the number of products desired to filter the included transactions by.
- Project - Choose the number of projects desired to filter the included transactions by.
- Group By - Dimension (Business Partner, Product or Project) you want to group the results by.
Click the Search button in order to generate the report:
This report can also be seen as a PDF or EXCEL format. Use the toolbar buttons to do so.Clicking the blue link containing the date of the transaction the system will take you to the General Ledger Journal report showing the complete general ledger posting.
General Ledger Journal
This report shows complete GL postings that result from a document within the application. To execute the report go to Financial Management || Accounting || Analysis Tools || General Ledger Journal:
Fields to note:
- From & To Date - select a date range of postings to be displayed
- Show Closing - check this to show period/year closing entries
- Show Regularization - check this to show the period/year regularization journal entries
- Show Opening - check this to show the period/year opening journal entries
Click the HTML Format button to display the journal postings that fit the criteria entered:
This report can also be executed and exported to .pdf and .xls formats. Use the toolbar for that.Clicking in the blue link at the top left side of each journal, the system will navigate the user to the document that generated the journal entry (invoice, bank statement, settlement...) . In other words, it will give the user the ability to show the information of the document that generated this posting.
Not Posted Documents
This report lists all documents that are completed but not yet posted to the general ledger. It is a useful report most commonly used to make sure there are no unposted documents before closing a period or executing other financial reports.To generate it go to Financial Management || Accounting || Analysis Tools || Not Transaction Report:
Choose a date range to be included in the search and click the HTML Format button. Results are grouped by document type.
Close Period
Please refer to the Open Period section of this chapter to learn how to close a period since the process is analogous. Instead of the Open Period Action Type, select the Close Period one.Note: No documents with the Accounting Date that falls into the closed period can be posted.
Close Permanently
Please refer to the Open Period section of this chapter to learn how to permanently close a period since the process is analogous. Instead of the Open Period Action Type, select the Permanently Close Period one.Note: No documents with the Accounting Date that falls into the permanently closed period can ever be posted again.
Print Final Reports
Please refer to the Print Preliminary Reports section of this chapter to learn how to use the financial reports. Generating preliminary and final reports process is the same.
Fiscal Year End Process
Executing this process will make the system:
- Create the regularization journal entry
- Create the year closing journal entry
- Create the new year opening journal entry
To execute this process go to Financial Management || Accounting || Setup || Fiscal Calendar window and switch to [Year] tab:
Choose the year you need to close, and click the Create Reg Fact Acct button. This will automatically trigger the following actions:
- Creating the regularization journal for the closing year
- Creating the year closing journal for the closing year
- Creating the new year opening journal for the opening year
Note: Once this process has been executed, no document can be posted to the closed year. However, this closing process can be undone by clicking the button Drop Reg Fact Acct.