Certain types of open accounting activity need to be addressed at year end for a number of reasons. One major reason is that such activity would be selected by the Annual Close process and closed out as a nominal account. In the case of a real account, the activity would be rolled forward into the new year. Another major reason is a desire to keep the budget (BFY) and accounting fiscal years (FY) the same for a particular type of accounting. If not rolled, an accounting line processed in a prior BFY/FY will pass that BFY along to all accounting lines referencing it in the new FY as well as all modifications, resulting in situations where the BFY is prior to the FY. In Accounts Receivable and Accounts Payable there are controls set on the Application Parameter (APPCTRL) page to stop the inference of the BFY to certain referencing accounting lines.
Besides manually addressing open items, Advantage Financial provides three options to address open activity. There are many other policy and procedure reasons that exist for choosing or not choosing any of the above options.
Roll – A modification to an open accounting line increments the BFY, resulting in postings that back out the open balance in the prior BFY and FY while also booking the open amount into the current BFY and FY. Rolled receivables, however, will retain the original fiscal year, but will increment the budget year, as the receivable and associated accrued revenue must remain in the prior fiscal year for financial reporting and as input to Annual Close.
Lapse – A new transaction is created that performs a zero-dollar reference to the open accounting line, thus closing that line out in the prior BFY and FY.
Accrue – In the situation of an open encumbrance in which the goods or services have been received but not yet invoiced so that a payment request has been generated, a modification to the open accounting line occurs where the line amount is reduced to the closed amount. That open amount is then placed on a new accounting line, which was copied from the one modified down, with an accrual event type. This modification reduces the encumbrance in the prior BFY and FY while also creating an accrued expenditure in the prior BFY and FY.
Leave – Some sites even choose to leave activity open in the original BFY in which it was recorded. It is not a requirement that such activity be removed by one of the three options above.