I do not fancy myself a Financial Consultant, but I help my clients with about everything else and sometimes they come to me with Financial questions:
Mid last year my client was acquired and they have completed their year end close process except Running the process to actually close the year. They are concerned about doing this as they are certain there are additional 2018 entries in regards to the acquisition costs, here are some questions they have:
What if we don’t run the year end close process? what happens?
If we post 2018 entries do we need to reclose the year? Do we need to run other processes to catch up trial balances or anything for ‘month-ends’ that have occurred since? Does each ‘month end’ processes need to be done (capture, generating financial statements, etc)?
What do we need to consider in this situation?
Anyone’s help would be very much appreciated as their first 2019 month end is coming up and they are not sure what to do.
From GL, you don’t have to close the year. We actually leave it open in case we have some reclassification. Nobody in Accounting would book any adjustment that affect income to a prior year after the final financial statements were issued.
That is the reason you close the year because you don’t inadvertently want to post to prior years. Also the Earliest Apply Date will also stop postings to prior year.
You use the Close Fiscal Period/Year to close the month or year. This doesn’t actually “close” anything as you can always uncheck the box to reopen the period. When you are done with the year,
then you run “Transfer Opening Balances to Next Year.” This updates the balance sheet beginning balances. If you make adjustments to the prior year, then you need to rerun the “Transfer Opening Balance to Next Year”
Sally,
Thanks, that helps I think… and it’s what I suspected…
(they also recently showed me that their current 2019 balances are crazy wrong… like negative asset accounts, and I suspected that the Transfer Open Balances is what is missing there)
So what is the purpose of the Close Fiscal Period/Year anyways?
They tell me they don’t even do the per period closes either.
Is it just to prevent accidental entry or something? Perhaps it optimizes indexes or something? Maybe it’s just a security blanket?
Thanks!
You can always reopen the closed year and transfer balances to the current fiscal year after all the postings for previous year are done. It does not cause any issues to my knowledge. We have done that in the past for our year ends.
I found the option . but all the fiscal year is unchecked means it is not closed but i am facing error like::Addition Date cannot be from a closed asset year in Calendar Main.
If you are working with Assets, you need to reopen the Asset Period\Year.
I have found Assets to be a bit messy.
I would advise whatever you are trying to do, you first do in your Test environment to make sure something weird doesn’t happen to your asset values.
