Year End Close {FGLM-7}

This option finalizes the financial year the GL is in by transferring the shortfall or surplus per cost center resulting from activities to accumulated funds, transferring the closing balances of asset and liability accounts per GLA as opening balance in following financial year and incrementing the GL financial year.

Before performing a GL year end close the user should ensure that all transactions for the current GL year have been correctly posted and that the ledger is in balance. It is important to ensure that  ALL transactions from other sub-systems are posted. No transactions exists on the invalid GLAs, subsystems period totals balance with ledger control accounts. Financial year-end or "closing" transactions are normally done in cycle 13. Cycle 12 then reflecting only the activities of that cycle without "corrupting" it with year-end transactions.

After all reconciliation and balancing processes have been performed,checked and corrections processed, backups must be taken, after which this option can be executed.
 
User Selection Prompt Text
* an item between square brackets [ ] is the default answer 		Type
&
Length		 Comments
  This Subsystems Year and Cycle will be Incremented, Are you sure that all the processes required before the year end have been completed?  Please enter (Y)es or (N)o A1 When the option is executed, the system will respond with a warning that this process is irreversible, and the system will request confirmation. If the user responds with a (Y) the year process will continue else the process is aborted.
If Yes 1.Validate General Ledger
   
  2.Clear Revenue and Expense Accounts    
  3.Carry Forward Present Balance Sheet    
  4.Open Next Financial Year    
  Note: ALL Previous Options will be Checked and Updated if not Complete    
  Your Selection N2  
If
A)
B)
Expenditure Accounts for Fixed Assets are not Capitalised
Accounts in Account Category = 999 should have Non-Zero Balance
Should the Process Continue when an Imbalance Condition Exists		 A1 If (No) the year end  process will fail and the user must first correct the balance on the control account or run the program with the parameter set to (Y)es.
  Enter the General Ledger Code to be Closed A2 The general ledger code as defined in {FCSC-3}
  Do you Want Previous Options to be Checked (Y/N) The program can be run a number of times up to phases 1, 2 or 3. If the user selects not to check the previous options the program will skip the phase previously completed successfully.
  Enter the Date for Old Year Transaction (YEND-2) DD-MON-YYYY The date that will be inserted on the transfer to accumulated funds transactions (phases 2)  
  Enter the Date for the New Year Transaction (YEND-3) DD-MON-YYYY The date that will be inserted on the opening balance transaction in the new year  (phases 3)
  Do you want to delete old transactions (Y)es / (N)o A1  
 


Example:

year




Processing
Rules
Phase 1: Validate General Ledger
    • Control General Ledger Cycles.
      • The Primary General Ledger should be in cycle "13", thus indicating that all "normal" transactions for the year have been finalised and that the year-end close  transactions need to be processed.  If not, the system will respond with: "Ledger must be in cycle 13 to continue year end". The secondary Ledgers should be in their final cycle.
Report Line -  General ledger is in cycle 13 or secondary GL,
    • Validate that the fields cost centers and account on all transactions on the GL have a valid values 
Report Line - The CC or account fields are not null
    • Control Subsystem Cycles.'
      • All the sub-systems should be in the next financial year, thereby ensuring that no further transactions will be posted from them. If not, the system will respond with: "The fin year of subsystems must be in next financial year, before year end process can continue". The system will validate for transactions against "invalid" GLAs. This action is the same as for Report {FGLPR1-3}, and will be done for the "present" financial year only. If "invalid" transactions are found, the report will be printed. The system will not go past this option until the present year report is clear.
      • All sub-subsystem have been posted for the year being closed.
Report Line - PM Credit has been posted for year 
Report Line - Ar has been posted for year
Report Line - PM Stores has been posted for year
Report Line - The fin. years of subsystems are correct,
    • Validate that Default Accounts required for Transfer of Surplus / Shortfall to the Fund Balances {FCSM-1 b1} 
      • During the year-end process, the system will generate a journal, for the balance of the difference between the income and revenue in a cost center. The journal will credit the transfer account in the cost center and debit the Accumulated Funds account  if the net of revenue less expense is negative or debit the transfer account and credit the Accumulated Funds account if the net of revenue less expense is positive. The user is  notified of the account numbers of these accounts.
        • SURPLUS / SHORTFALL ACC: Indicate the number of the account in which the system will calculate the net income/expenditure
        • TRANSFER TO ACCUMULATED FUND ACC: Indicate the account number to be used as the opposite for the net value. This account will still be in the range of Income and Expenditure accounts: it will, therefore, result in a zero Income / Expenditure after the journal is processed.
        • ACCUMULATED FUND ACC: Indicates the Balance Sheet account to which the net value should be transferred.
      • The system will use these accounts to generate journals "within" cost center. If  a cost centers represent activities that should be cleared  and not transferred to Accumulated Funds then journals should be done manually. 
      • It is possible to start the account structure   with either revenue or expense accounts or asset and liability accounts. The income statement (revenue or expense accounts) and balance sheet ( asset and liability accounts )  of the account structure are separated by the transfer account identified through its account category 490. Accounts in these sections may not be mixed, the balance sheet may not contain revenue or expense accounts and the income statement may not contain asset and liability accounts.     
          Report Line - Default accounts in system operational detail
                    Report Line - Accumulated fund account is linked to account category 700
                    Report Line - Transfer to account fund is linked to account category 490
                    Report Line - Only one transfer account exists
                    Report Line - Account structure defined to start with A and L accounts - No R or E accounts found in range less than surplus account
                    Report Line - Account structure defined to start with A and L accounts - No A or L accounts found in range greater than surplus account
Report Line - No Account exists where the account category type is not R,E,A or L
Report Line - No Account exists where the account category type is R or E with an account category greater than or equal to 490
Report Line - No Account exists where the account category type is A or L with an account category less than 490  
    • Validate that Transaction Types are Linked to the Year-end Events.
      • FN = Rev and Exp to Balance 
      • FO = Balance Sheet to Next Year
      • FY = Posting Debtor/Creditor inter-ledger
      • FQ = Posting budget to next year 
      • FT = Posting budget to next year (reversal of current budget) 
      • FP = Posting commitments to next year
      • For all these events, the user must create and link a transaction type to these events. The system will use these transaction types to generate its automatic entries. Note that for event "FY" the system will use the debtor and creditor's GLAs specified on the definition of the Ledgers in option {FCSC-3}.
Report Line - Transaction code 781 linked to event : fn
Report Line - Transaction code 782 linked to event : fo
Report Line - Transaction code 786 linked to event : fy
Report Line - Credit GLA 000100000001 linked to secondary GL DI  (inter ledger)

    • Test Balance of General Ledger.
      • The system will control that the General Ledger totals are in balance, and thereafter it will control that the imbalance on the Secondary Ledger is equal to the imbalance on the Primary Ledger. This can be controlled with the Trial Balance Report or a Cost Center / Account Cost Report for the whole ledger. Imbalances will normally be caused by faulty cost center or account structures, but since balancing should be part of the monthly procedure, one would expect this to be in order. If not, the system will respond with: "General Ledger not in balance" and if the second test fails: "Imbalance on different Ledgers not equal".
Report Line - General ledger is not in balance
                    Debit: 3571776479742.23         Credit: 3571776564047.23 Balance: -84305.00 Failed

    •  Validates that all GLAs on the GL table is valid for the year {FCSO-7}   
Report Line - All GL transactions valid
    • Account Category Validation   
Report Line - No Account exists where the account category is null
Report Line - No Account exists where the account category type is not R,E,A or L
Report Line - No Account exists where the account category type is R or E with an account category greater than or equal to 490
Report Line - No Account exists where the account category type is A or L with an account category less than 490

  • Accounts in Account Category = 999 should have Non-Zero Balance
    • If the user  requires the year end process to fail if any balance exist on an account with the accounts category 999 the input parameter  must be set to (Y)es
Report Line - Accounts in account cat. 999 are zeroed
  • Accounts with code less than net surplus/shortfall acc And category type 'A' or 'L' are zeroed,
    • Should the user require asset or liability accounts in the revenue and expense  range the program will validate that these accounts have zero when the year end close is performed.
Report Line - Accounts with code less than net surplus/shortfall acc and account category type 'A' or 'L' have non-zero value   
                                                                                                                     
Phase 2: Clear Revenue and Expense Accounts

Create a transfer journal for each cost center where a net balance of the accounts in the revenue and expense account categories.
  • The system will scan through all cost centers: if a balance is found on the "Surplus/Shortfall" account, it will generate a journal between "Transfer" account and the Accumulated Fund Balance account.  If a Trial Balance of the total Ledger is calculated at this point, only balances in the Balance Sheet range of accounts will be found as the journal will result in a zero balance in the income statement section of the cost center (revenue and expense accounts).
Calculate the imbalances on the Ledger to be closed and on other Ledgers: and create the inter ledger transaction required transaction (linked to event "FY").
Phase 3: Carry Forward Present Balance Sheet
The Balance Sheet Accounts are in the Account Category Range 500 to 998

Inserts the GLA balance on balance sheet accounts into the new financial year in cycle 14. If the system detects an account, which does not exist for the New Year, it will create the accounts needed.

  • The balances of ALL accounts linked to account categories 500 to 699 will be transferred to the first account, which is linked to account categories 700 to 740, dependent on the Fund Group. The transfer accounts are hereby zeroed.
  • The balances on  asset expenditure accounts (account categories 890 - 899) are transferred form the expenditure accounts to the capital accounts  linked to the expenditure accounts on the accounts definition {FCSO-3} .
Phase 4: Open Next Financial Year.

Phases 4 update history expenses of option {MEBO-1} and the financial year and cycle on the General Ledger

History of Changes

Date System Version By Whom Job Description
29-May-2008 v01.0.0.0 Charlene van der Schyff t145484 New manual format.
19-May-2009 v01.0.0.1 Marchand Hildebrand t158815 Change to year end program allow account structure ti start with assets and liabilities.
25-May-2009 v01.0.0.2 Charlene van der Schyff t158348 Edit language obtained from proof read language Juliet Gillies.
04-Aug-2009 v01.0.0.3 Charlene van der Schyff t160160 Task no needed for srelease.