The purpose of the Annual Close chain is to facilitate the closing of nominal accounts and rolling forward of real accounts from an accounting fiscal year that is being closed to the subsequent accounting fiscal year. Nominal account balances (for example, cash expenditures, accrued expenditures, collected revenue and billed revenue) are closed to fund balance, retained earnings or agency due to accounts as specified by fund code in the Close Into Account field on the FUND page.
The level of Chart of Account (COA) detail an annual close uses is determined by the summarization options for input ledger to the process. The default ledger, the Full Detail Accounting Ledger (LDGR_FYDAD), or other input ledgers should have those COA attributes required to record opening balances in the new year. The most common level of detail required is Fiscal Year, Posting Code, Fund, Sub Fund, BSA, and Sub BSA. However, if closings should be done at a Department level, then that COA value can be a summarization option on the input ledger. More COA detail in the ledger means more closing entries as the number of input ledger records will increase.
A journal voucher is used to record all annual closing entries. A new transaction is created for each combination of Fund, Sub Fund, Fiscal Year, and Accounting Period. These values are written to the header of each transaction for quick identification. The Accounting Line Limit field on the System Options - General tab is used to control the size of annual closing transactions. When a combination of Fund, Sub Fund, Fiscal Year, and Accounting Period provides more accounting lines than the limit, the Annual Closing Process will create a transaction with the limit minus one line, and automatically create a balancing entry using the Balance Posting Code input parameter. The remaining lines will go on one or more other journal vouchers, with the last transaction having another automatically generated line to balance. This second line will bring the Offset Account balance to zero.
Running the process in report mode produces records on the LDGR_FYDAD table (not visible online) that corresponds 1:1 with the number of journal voucher lines that will be created in update mode. Multiple report runs can be performed on one or more funds while preparing for a close to ensure not only setup is correct but also to assure mistakes have not occurred in transaction processing.
Transactions created from Annual Close do pose a potential for being larger than what can be successfully handled by the application. There are funds that have access to many balance sheets that can lead to a very large transaction. To determine the size, number of accounting lines, that will be output from the process, count the records on the LDGR_FYDAD table for each fund and divide by two. The division is because 1 transaction is being created for each FY, Fund, and Sub Fund combination. From this analysis, you will have the average size and maximum size. Set your Accounting Line Limit to an amount that will ensure you do not have any very large transactions created. That size limit is one that is determined on an individual application basis based on system capabilities.
To accommodate the movement of account balances, two annual closing fiscal months have been created. Fiscal month 99 has been created for the accounting fiscal year that is being closed. Additionally, fiscal month 0 has been created for the subsequent accounting fiscal year into which account balances are being rolled. These fiscal months have been reserved for the annual closing activity only to allow for the segregation of annual close transaction activity. Setup on the Transaction Control (DCTRL) page for all transaction codes should have a Time Restriction of Limited by Accounting Periods or Limited by Both. The Time Restriction Severity on DCTRL should also be set to Reject. Then all transaction codes other than the JVAC (or other created by Annual Close) should be listed on the Allowable Accounting Periods for Transaction Code (AAPDC) page with accounting periods 1 to the highest adjustment period other than 99. Then the JVAC (or other) should be listed with only periods 0 and 99.
After transaction creation and loading, the chain job submits each transaction. When all have been successfully submitted, the final job in the chain sets the Closing Process Run indication to True on Fiscal Year (FY) for the year closed. This job step also sets the Closing Process Run indication to True on Accounting Period (APD) for period 99 in the old year and for 0 in the new year.
Posting codes are the primary information point for the process to determine what action to take for the account. Each posting code is associated with a closing classification on the Posting Code (PSCD) page. Those classifications are established on the Posting Code Closing Classification (PSCDCL) page. On that PSCDCL page, each classification is associated with a Closing Action.
Details on how each of those Closing Actions trigger behavior in the batch process is given below along with an example and reporting hints to make use of the closing entries more effectively.
Close Out Nominal: This action takes an account balance and posts an entry to the Offset Posting Code that is the opposite type of posting than the selected account. Then a posting is made to the Fund Balance, Retained Earnings, or Agency Due Posting Code based on the setting of the fund code of the selected account. This second posting is of the same type (debit or credit) as the selected account. All of these postings occur in APD 99 of the year being closed.
Below are a selected nominal account and the pair of postings from a close. In this example, the fund code closes to fund balance.
Selected Account
Dr D014: External Cash Expenditure / Expense
Close Out Nominal in Close Year
Dr A200: Fund Balance
Cr A101: Cash Expenditure Close
Reporting can be enhanced to select the A103 and other Offset Posting Codes in APD 99 of the closed year to get a quick balance for a Fund/Sub Fund. The report will have to flip the balance however as the offset accounts are posted in the opposite manner than the selected accounts.
Roll Forward: This action takes two real account balances and creates two pairs of postings. Below are two selected accounts for an example. The first is the cash that would have been posted along with the cash expenditure in the example above. The second is the resulting fund balance from the example above.
Selected Account
Dr A001: Cash
Cr A200: Fund Balance
Close Out Posting in Close Year
Cr A107: Cash Close
Dr A109: Equity Close
Roll Forward Posting in New Year
Dr A001: Cash
Cr A200: Fund Balance
Reporting can be enhanced to select the A107 and other Close Out Posting Codes in APD 99 of the closed year to get a quick balance for a Fund/Sub Fund/BSA/SBSA. The report will have to flip the balance, however, as the close out accounts are posted in the opposite manner than the selected accounts. Reporting that is based on BSA and not posting code should not select any activity from APD 99. To do so would result in a $0 balance in the old year because the same BSA/SBSA of the selected account is used on the close out posting.
Roll Forward into New Account: This action is a special liability balance sheet account balance and posts an entry to the Real Posting Code that is the opposite type of posting than the selected account. This posting occurs in APD 99 of the year being closed. A posting to the Offset Posting Code is then made in APD 0 of the new year. The same balance sheet account originally used in the course of business is maintained on both postings.
Selected Account
Cr R101: Billed Unearned Revenue
Close Out Posting in Close Year
Dr A108: Liability Close
Roll Forward Posting in New Year
Cr R106: Billed Unearned Liability
Reporting can be enhanced to select the A108 and other Close Out Posting Codes in APD 99 of the closed year to get a quick balance for a Fund/Sub Fund/BSA/SBSA. The report will have to flip the balance, however, as the close out accounts are posted in the opposite manner than the selected accounts. Reporting that is based on BSA and not posting code should not select any activity from APD 99. To do so would result in a $0 balance in the old year because the same BSA/SBSA of the selected account is used on the close out posting.
Close To Net Assets: This action takes a special equity account balance and creates a pair of postings closing the equity account into the special Net Assets equity account. The Net Assets account is then rolled in the same manner as Fund Balance was rolled. Items closed into Net Assets are those that form differences in equity for modified accrual and full accrual reporting. In this example, the expense offset account for pre-paid assets was selected. The pre-paid asset account will be rolled in a similar manner to cash shown earlier.
Selected Account
Cr A009: Expenditure Offset
Close Out Special Equity in Old Year
Dr A111: Equity Offset Close
Cr A203: Net Assets
Reporting can be enhanced to select the A203 - Net Assets - account and include it with other equity when creating a modified accrual report. For a full accrual report, the account is excluded along with the pre paid asset account.
Accounts Left in Old Year: This Closing Action will prompt the annual close process to not select the record. For this reason, the account will remain in the closed year and not have any postings into APD 99.
For detailed information on the job (such as when to run, input, output, and process parameters) refer to the associated run sheet in the CGI Advantage General Accounting Run Sheets Guide.