Discussion on the monthly and yearly completion processes of Oracle ERP System

Monthly and yearly settlement are special and important business operations of the company's finance. In the process of implementing and promoting the Oracle ERP system, how to combine the current accounting system and practices, make full use of software functions, and do a good job of Closing Accounts and opening accounts, it is a hot issue that troubles financial personnel and even implementation consultants of many enterprises. For this reason, I propose some solutions for my colleagues. Due to time constraints, mistakes and omissions are inevitable. You are welcome to discuss and correct them.
I. What is monthly settlement?
Generally, the financial department of an enterprise should check and settle the account at the end of each month. For example, the current month's manufacturing costs are carried over to production costs, public fees are shared among departments, and relevant reports and analysis reports are prepared and printed. In the end, the next month's accounting process will be closed during the current period.
Oracle ERP is an e-commerce system composed of multiple functional modules, including account processing and transaction processing. The general ledger is called the account processing system, while other modules, such: receivables, payables, assets, and inventories are called business processing systems. They are used to being subsystems. Since a large amount of business data is completed in the sub-system, the monthly settlement process of Oracle is not only at the general ledger system level, so you must check the sub-system accounts in order, and close the subsystem accounting period, and finally close the general ledger period. It is generally recommended that the monthly settlement process be performed in the following order:
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Close the procurement period> close the inventory period> close the payable period> close the asset period> close the receivables period> close the general ledger period bbs.bitsCN.com China Network Management Forum
Ii. Monthly settlement and Closing During the Period
The monthly business completion of the sub-module is usually to ensure that all the business has been completed in the current month, run the corresponding report in the sub-module, and make reconciliation with the corresponding accounts in the general ledger. Find the reasons for the differences and make reasonable adjustments in the general ledger to ensure that the accounts are consistent.
Next let's take a look at how to close the subsystem in sequence:
1) Close the procurement accounting period
1. Run the "Purchase Order details Report", "purchase order and issuance details Report", and "unpaid purchase order reports (by buyer)" and "Open the purchase order report (by cost center) "and other reports, showing the number of orders and the number of actually received records, and checking them (path: Report> RUN );
2. Run the "receive report without invoicing" command to view and check the data in the report (path: Report> RUN );
3. for end-time accounting of cost-based procurement, run the "receive accrued-end" process and import the purchase journals into the general ledger (path: Report> RUN );
4. And close the procurement period (Path: Settings> Finance System> accounting> control the procurement period ).
Ii) Close inventory accounting period
1. Ensure that all transactions have been processed in the current month and the general ledger has been imported;
2. check whether there are any pending transactions in the current month and ask the relevant personnel to handle them (path: View transaction processing> TBD Material Transaction processing );
3. Close the inventory accounting period (Path: accounting closing period> Inventory accounting period ).
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3) Close the accounting receivables Period
Most businesses of the receivables module are based on the order management module and the inventory module. Therefore, the monthly settlement of the receivables module should be completed by the Order Management Module and the inventory module before closing the accounting period.
1. Submit "unfinished invoice Report", "Unverified receipt Registration Form" and other procedures to check whether there are invoices in the unfinished status, loan notices, and receipts in the "accounting" status (Path: report> accounting );
2. Run automatic invoicing to ensure that the invoice for the current month has been fully imported from the Order System (Path: interface> automatic invoicing );
3. Run the import program to the general ledger system to ensure that the current month's invoices and receipts have been fully imported into the general ledger system (Path: interface> General Ledger management system );
4. Close the accounting period (Path: Control> accounting> open/close ).
4) Close Accounting Payable Period
Most of the business of the payable module is based on the operations of the procurement module and the inventory module. Therefore, the monthly settlement of the payable module should be completed by the monthly completion of the procurement module and the inventory module before closing the accounting period.
1. Run the "invoice registration" program to check whether there are any invoices and loan notices that are not approved and need to be re-approved (path: Others> request> RUN );
2. Run the "Accounts Payable management system accounting process" and "Transfer Accounts Payable to the general ledger" to ensure that the transaction processing for the current month is completely transferred to the general ledger (Path: others> request> RUN );
3. Run "create batch Add" to ensure that the information about purchasing fixed assets and construction invoices is sent to the fixed assets module (path: Other> request> RUN );
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4. Close the payable accounting period (path: Accounting> control the payable period ).
5) Close Fixed Assets Accounting Period
The asset module is generally closed only after it is closed during the payable period to prevent any current fixed asset procurement from being capitalized.
1. check whether there are new fixed assets or projects under construction that have not been imported (path: Batch add> prepare batch add );
2. confirm that all assets are allocated to the specified row. If the asset is not specified to the allocated row, the depreciation program at the end of the period cannot be completed or closed. Run the asset list report that is not allocated to any cost center to determine which assets are not specified to the allocation row. Specify the row information for these assets. (Path: Others> request> RUN)
3. depreciation during the period when the operation is not closed, ensure that the depreciation accounting is correct and has been imported into the general ledger (Path: depreciation> operation depreciation );
4. The operation depreciation period (Path: depreciation> operation depreciation ).
6) handle the profit and loss carried forward every month (optional)
If an enterprise needs to carry forward profits and losses at the end of the month, it also needs to carry the income and expenses to the profit subject of the current year as needed. We usually use manual or regular journals. Note: because the balance of each subject needs to be retained for report generation, a virtual revenue account and virtual expense account are usually defined and the following entries are generated in the general ledger module:
Borrow: total revenue of the virtual revenue account this month
Loan: total fee of the virtual fee account this month www_bitscn_com China. Network Management Alliance
Borrow/borrow: total revenue of this month in this year's profit account-total fee of this month |
7) Cost Difference allocation
Premise: Make sure that the sub-module accounts have been imported into the general ledger, and all manual/import journals have been transferred.
The following uses the cost difference allocation in the standard cost method as an example to describe a common practice:
For procurement price differences and invoice price differences, the value options at the end of each month are apportioned based on the value options at the end of each month, including raw materials, self-made products, inventory goods, and sales costs. The following is an overall ledger:
Borrow: sales cost-Product
Finished Product-Difference
Semi-finished products-differences
Raw materials-differences
Loan: Cost Difference-material price difference
Cost Difference-invoice price difference
For differences in WIP material usage, resource efficiency, and manufacturing costs, the product value will be apportioned at the end of each month based on the product value completed in the current month. The general ledger will be apportioned as follows:
Borrow: sales cost-Product
Finished Product-Difference
Semi-finished products-differences
Loan: Cost Difference-material difference
Cost Difference-resource efficiency difference
Cost Difference-manufacturing cost difference
For the differences in standard cost adjustment, the value options should be apportioned at the end of the month in raw materials, self-made parts, finished products, and sales costs. The general ledger should be apportioned as follows:
Borrow: sales cost-Product
Finished Product-Difference
Semi-finished products-differences
Raw materials-differences
Loan: Cost Difference-cost adjustment difference
The average cost method is used. Generally, the difference is relatively small and can be carried forward directly to the sales cost of the current month. If you do need to share the cost, you can also share the cost according to the principle similar to the standard cost difference.

8) Close the general ledger accounting period
1. After all the journals have been transferred, Run "trial form-details" to check the balance and ensure that the balance is correct (path: Others> request );
2. Close the General Account accounting period (Path: Settings> open/close ). BitsCN ~ Com
Generally, an enterprise uses the statement at the end of a month (that is, only the report is generated without the actual profit or loss carry forward) to settle the account. At the end of the year, all the income and expenses are carried over to the profit account of the current year.
If we do not need any yearly end entries, We will directly open the first phase of the new fiscal year to start the concurrent process to update the account balance. When the first phase of the new fiscal year is opened, the system will automatically settle the income statement and transfer the difference to the retention income account specified in the set of accounting books.
If you need to generate annual closing entries, refer to the following practices:
To ensure that the balance in the period after the end of the year is not affected by the end of the year, we usually set the accounting period to 13 (one adjustment period at the end of the year) and 14 period (one adjustment period is set for each year at the beginning and end of the year ). The annual closing entries are all completed within the adjustment period.
By the end of the year, during the period from January 1, December, After all accounting processing is completed, the period from January 1, December will be closed and the year-end adjustment period will be opened. If you need to create an actual settlement journal entry to show the records for transferring the income statement account to the retained income, submit the "close process-create a profit and loss statement to close the accounting" program, this program creates audit settlement journals. If your local accounting rules require you to settle your balance sheet, submit the close process-create a balance sheet to close the accounting process.
In addition, year-end retention can be performed to identify outstanding purchase orders and apply for retention, cancel certain or all retention payments, and carry the retention, budget and available fund balances to the new fiscal year. If the reserved amount is not carried forward, you may need to cancel the existing application and purchase order containing the reserved amount.

Iv. Three types of carry-forward amount for annual settlement
1) how to carry forward year-end profits and losses
When the first phase of the new fiscal year is opened, the system automatically transfers the balance of all revenue and expense accounts to the retention income account. This will not generate any creden.
If you need to generate the corresponding carry-over credential, You need to submit the "close process-create a profit and loss statement to close the accounting" program to automatically create the required credential.
Path: (GL) Others> request> Standard


The program generates a journal to settle the actual balance between the beginning and the present (YTD) of an income and expense account. You can submit this program for any open period. In other words, this program can also be used for monthly Profit and Loss Settlement.
1. Period: the default period is the most recent period. It is usually designated as the adjustment period on the last day of the fiscal year.
2. Account self, to: This range can cover multiple balancing segments, and can include a complete list of CIDR blocks. The system only extracts the income and balance of the billing account within the specified range.
3. Settlement Account: it is usually the residual income account in the balance sheet. If you want to settle multiple balancing segments, the system creates a separate settlement account for each balancing segment.
4. Income Offset Account (optional): You can enter the income statement account.
5. Category: if you do not enter an income Offset Account, the system defaults to "close the income statement". If you enter an income Offset Account, the system defaults to "income offset ".
If both the base currency and foreign currency are used in the income statement balance, a ledger batch is generated in the settlement process, which will contain separate journals for each processing currency. Because the conversion amount is not applied to the base currency, the ledger will only have the input amount. For foreign currency, the journals will have both the input amount and the conversion amount.
If you do not enter any income to offset the account, the system will adjust the YTD balance of each income and expense account within the account to zero, the amount transferred to the remaining income account will be the total net amount of the income and expense account YTD balance. The generated settlement entries are as follows:
Borrow: Revenue details
Loan: Expense details
Loan: earning profits
Note that, for the actually generated entries, the number of income rows is calculated by the borrower, and the percentage of non-offset is net. If the borrower has a balance in the income and expense subject, the same entry line generated by the system also has numbers for the borrower.

If the input income offsets the account, the system does not adjust the income and expense accounts within the specified account to zero. However, the program calculates the total net revenue and expense account (This total includes offsetting the balance in the account ). Then it transfers the total net amount to the corresponding loan item column of the income offset account, if the income is greater than the cost. The generated settlement entries are as follows:
Borrow: Income offset subject
Loan: earning profits
The effective date of the settlement journal entry is the last day of the period you specify in the parameter window, usually the last day of the fiscal year, that is, the adjustment period. After checking the generated journals, the system transfers the records to the retention income account and the balance in the expense account is zero.
When the first phase of the new fiscal year is opened, the system automatically transfers the balance of all revenue and expense accounts to the retention income account. However, since the revenue and balance of the transferred to the retention income account are zero after the settlement date is transferred, the balance will not be transferred during the new accounting year, it will not have any other impact on the retention benefits.
If you need to adjust the income and fee after opening the new fiscal year, the historical accounting adjustment will automatically update the initial balance of the remaining income account for all open accounting periods of the new fiscal year. However, the amount in the settlement Journal does not reflect the adjustment. For accuracy, you must first write off the settlement Journal, transfer the account, enter the adjustment, and then run the program to create a profit and loss statement and settle the ledger. BitsCN ~ Com
Ii) how to carry forward the balance sheet at the end of the year (not recommended)
If the local accounting rules require settlement of the balance sheet, it is best to define the accounting calendar to include two adjustment periods: one is the last day of the accounting year to be settled, and the other is the first day of the new accounting year. During the final adjustment period of the fiscal year to be settled, the settlement journals of the balance sheet will be written off to fill in the balance sheet account again during the first adjustment period of the new fiscal year. This will not affect the account balance during the reporting period.
Note: The system only settles the balance of the base currency and the amount converted from the foreign currency. The foreign currency balance will be ignored.
Path: (GL) Report> request> Standard

1. Period: the period that is recently opened by default, usually indicates the adjustment period of the last day of the fiscal year.
2. Account self-, to: can cover multiple balancing segments, and can include a complete list of CIDR blocks. The system only extracts the balance sheet account within the specified range.
3. Settlement Account: the balance sheet settlement account.
4. Category: The "off balance sheet" option is used by default ".
If you do not need to settle the balance sheet, you usually close the current period and open a new accounting year.

3) year-end retention amount carry-over Processing
First, in the purchase module, Run batch cancellation to cancel the selected unpaid purchase order and apply for retention.
Then, all retention, budget, and actual accounting entries are posted in the general ledger. You can review the retention balance and activities of the general account in detail by using the retained trial form report before the year-end carry-over.
After verifying the correctness, close the last period of the current year, open the first period of the next fiscal year, open the next retention year, open the next budget year. Then execute the reserved amount carry-over (otherwise, all the reserved amount will automatically become zero ):
Path: (GL) Journal> Generate> carry forward

1. carry-over rules: Only reserved funds are allowed. The system calculates the remaining balance from the beginning of the year to the present, and transfers the remaining balance to the opening balance of the first period of the next fiscal year; retention and retention budget-the system calculates the remaining balance since the beginning of the year as of the end of the year, and adds the remaining balance to the budget balance, the total amount is then transferred to the opening balance of the first phase of the next fiscal year. Available funds-the system calculates available funds by subtracting the budget balance from the current year to the current year and retaining the balance. The calculated amount is then transferred to the opening balance of the first period of the next fiscal year.

2. retention type: Enter the retention type to be carried forward. Select "all" to carry forward the amount of all retention types.
3. Budget: Enter the budget name and budget organization.
4. Period from, to: the system calculates the amount from the beginning of the year to date based on the starting period, but does not update the balance of the existing starting period.
5. Carry-over range: the system only transfers the balance of accounts in the input range and the accounts allocated to the specified budget organization.