Accounting Periods
- Persia Xenopoulou (Deactivated)
- Former user (Deleted)
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Overview
An accounting period is defined as the time frame in which financial transactions are posted. It can cover a month or a year and can have a value of 'Open' or 'Closed.' Only one accounting period can be open at a time.
The first accounting period is automatically created by the system when accounting period settings are specified. The following periods are created once the current period is closed (through the Closing Period process). Once closed a period cannot be reopened and transactions can no longer be posted against it.
Before a period is closed, the user can identify the financial transactions that were created during the period and have them posted, by using the Accounting Period Posting process.
Incorrect data, such as wrong periods in financial transactions, can be identified and corrected by using a utility.
Setting Up Accounting Periods
Accounting period settings
Configuration > Finance Application > Accounting Periods > Set Up Accounting Period Settings
Before working with accounting periods, the respective settings must be configured.
Accounting period settings define the periods' business rules and whether the period will be monthly or yearly. On saving the settings the first period in the system is created. The settings are also used in the closing process to create new accounting periods. Accounting period setting cannot be modified or deleted. Only one set can be defined.
Accounting Period Definition* | The basis for calculating a period's time frame. Can be 'Monthly' (default) or 'Yearly'. |
|---|---|
| Accounting Year Definition* | Available if a 'Yearly' accounting period definition is selected. Defines the first day a the company's accounting year (e.g. 1 January). The day and month must be supplied. |
Using Accounting Periods
Configuration > Finance Application > Accounting Periods > Manage Accounting Periods
Accounting Periods Data Entry page
Accounting period fields
This table contains an explanation of the sections of the accounting period Data Entry page.
| Main Information | |
|---|---|
Name: the period's month and year (e.g. January 2016) or only the year in case of annual accounting periods. From Date: the first day of the period. To Date: the last day of the period. Life Cycle State: whether the period is 'Open' or 'Closed'. Once the period is closed, the following become available: Closed Date: the date on which the period was closed. Closed by Accounting Period: the period which follows the current period. Period Closing Performed By User: the user who closed the period. Accounting Period Totals is a section only available for closed periods. | |
| Period Transactions | |
A 'Read-only' list of the transactions which were considered during the accounting period's closing process. Available once the period is closed. | |
Draft Transactions | |
A 'Read-only' list of transactions created during the period that are still in a 'Draft' state. Only available for open periods. | |
| Accounting Period Error Logs | |
| A list of accounts which were not successfully processed during the closing process run; includes accounts receivables which have transactions posted on a date outside the accounting period's time frame. |
Processing accounting periods
Actions are subject to validations which take place before an action is initiated (prerequisite) or after it is submitted (postcondition).
Posting financial transactions to be included in current period
Draft financial transactions that should be included in the current period must be posted before it is closed (one can't post against a closed period). Draft transactions created within a specific period can be viewed, selected and posted from the respective tab in open periods.
- Select the open period from the Accounting Period Summary page.
- View Draft Transactions from the respective tab.
- Select the ones to include by checking the checkbox
- Click on Post Financial Transactions from the Actions menu.
Correcting data before closing an accounting period
The Accounting Period's Closing Validation Process can check for errors in posted financial transactions and accounts receivable and repair incorrect information that could affect the closing process.
- Click on Period Closing Corrections from the Actions menu of the the 'Open' Period Data Entry page
- The process runs and notifies the user once completed. Proceed to the closing of the period.
This step is optional as the system will run a check during the Closing of the period. If necessary, the user is instructed to run the Correction step.
Data which is considered erroneous and identified by the process:
- Financial transactions which are not posted and have an accounting period.
- Financial transactions which do not have an accounting period and are posted with a date before the start of the period.
- Financial transactions which are posted with a date before the start of the period being closed.
- Accounts receivable which are:
- not related to the period being closed
- have a creation date before the start of the period
- have at least one transaction posted with a date before the accounting period began.
- not related to the period being closed
Closing an accounting period
The accounting period is closed by using the Close Period action, after financial transactions have been posted and errors corrected.
- The closing process is executed by the scheduler and can take place right away or is scheduled for later. It cannot be scheduled to be executed repeatedly.
- 'Terminated' accounts with posted transactions (submitted before the termination) which are not yet related to any accounting period are also considered during the period closing process.
- An Error Log is used to register all accounts or financial transactions that could not be processed.
- Click on Close Period from the Actions menu.
- From the modal window select whether to execute the process immediately or schedule it for later.
- Click on Submit.
- When the process is completed:
- The Accounting Period Totals tab is populated.
- The current period is closed.
- The period is copied on all financial transactions posted within the period.
- A new period is created.
- The opening balance of all accounts receivable is calculated.
| Prerequisite | You can only close open periods |
|---|---|
| Postconditions | Accounting Period Settings are defined |
Accounting Period Analytics
Reports
Accounting Period Report
Accounting period information can be extracted in a structured format for analysis by using reports. Financial transactions included in the report are selected and grouped by the selected accounting period. The user can select the fields displayed in the report.
Refer to Reports for more information.
Business Examples
Scenario
Company ZX works with monthly accounting periods. Every time a period is closed a report of the financial transactions included in that period should be sent to the Financial Manager.
Solution
Configuration
Accounting Period Settings:
Set up 'Monthly' Accounting Period Settings; The first accounting period will be created automatically.
Process
Managing Accounting Periods:
- If the Accounting Period created from the Accounting Period Settings is correct (i.e. the current month), then no further processing is required.
- If the Accounting Period is over, then execute Close Accounting Period as many times as necessary until the Open Period is equal to the current month.
Monthly Process of Closing Accounting Periods:
Once the correct Accounting Period is set, execute the following processes on the 1st day of the following month:
- Post Draft Financial Transactions
- Period Closing Corrections
- Closing
Report Scheduling
Once the process is completed, schedule and send a report of the latest Closed Accounting Period to the Financial Manager.