Oracle EBS R12 Receivables Period Closing Procedures

  • 12,643 views
Uploaded on

a white paper that lists steps and reports required to close Oracle Receivables

a white paper that lists steps and reports required to close Oracle Receivables

More in: Business
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
  • Mohammed, very well written, i have a question how can I download this white paper
    thanks
    Aijaz
    Are you sure you want to
    Your message goes here
No Downloads

Views

Total Views
12,643
On Slideshare
0
From Embeds
0
Number of Embeds
2

Actions

Shares
Downloads
982
Comments
1
Likes
1

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Oracle Applications White PaperORACLE EBS R12 RECEIVABLESCLOSING PERIOD PROCEDURESJan 2010Author: Mohamed Nazih CPA, PMP, Oracle Financials Consultant m.nazih@gmail.comVersion 1.0
  • 2. R12 Receivables - Closing Period © 2010ContentsAbout the Author ................................................................................... 3Introduction ......................................................................................... 4Purpose .............................................................................................. 4Who Should Read This ............................................................................. 4 Oracle EBS R12 Receivables - Closing Period Procedures ..................................... 5 Overview of the Period Close ............................................................................ 5 Prepare for Period Close .................................................................................. 5 1- Import Sales Order or Project Billing Transactions ......................................................... 5 2- Reconcile bank statements with Cash Management........................................................ 5 Complete Transactions .................................................................................... 5 1- Complete Invoicing, Credits and Adjustments .............................................................. 5 2- Complete Lock Box Processing................................................................................. 6 3- Complete Receipts and Reversals ............................................................................. 6 4- Run the revenue recognition program ........................................................................ 6 Internal Reconciliation .................................................................................... 7 1- Reconcile Transactions.......................................................................................... 7 2- Reconcile Receipts............................................................................................... 8 3- Reconcile Outstanding Customer Balances .................................................................. 8 4- AR Reconciliation Report ...................................................................................... 10 4- Potential Reconciling Items Report .......................................................................... 10 Create, Transfer, and Post Journals ................................................................... 12 Reconciling Journals Transfer Process ................................................................. 14 Reconciling Journals Import Process (GL) ............................................................. 14 External Reconciliation .................................................................................. 15 Close AR Current Period ................................................................................. 17Information Sources............................................................................... 18 Page 2 of 18
  • 3. R12 Receivables - Closing Period © 2010About the Author Mohamed Nazih is a Proficient functional consultant in Oracle e-Business Suite with more than six years of experience of solutions design, configuration, testing and documentation and three full life cycle implementations. Prior to Oracle, he worked as a certified accountant and auditor for six years. This experience gave him an advantage to team up with financial staff in many companies in delivering high quality professional services, such as consulting, support, and training. While not working, Mohamed Nazih takes care of his family. Furthermore, he is a self-learner and avid reader in project management, change management, business intelligence, science, and environment issues. Mohamed Nazih values an atmosphere of ethics, punctuality, and team- working. Page 3 of 18
  • 4. R12 Receivables - Closing Period © 2010Introduction Closing the books is a necessary step in the accounting cycle. In order to issue the financial statement, accounting staff must ensure that subledgers’ balances are cross checked with relevant General Ledger accounts’ balances. Doing so in Oracle EBS R12, requires performing actions in order and running many reports to ascertain that ledgers and accounts are in harmony and no surprises will be discovered at year end.Purpose This paper will help you understand the steps, order, and reports required to close Oracle Receivables period. Proper closing each month helps minimizing year end time needed to issue financial statements.Who Should Read This This paper is aimed to super users and applications’ auditors, as well as functional consultants and implementers. Page 4 of 18
  • 5. R12 Receivables - Closing Period © 2010Oracle EBS R12 Receivables - Closing Period ProceduresOverview of the Period Close At the end of each accounting period, companies must complete the closing process in Receivables and reconcile Receivables activity for the period.Prepare for Period Close 1- Import Sales Order or Project Billing Transactions Run: AutoInvoice Master Program to process Sales Order exported from Oracle Order Management or Transactions exported from Project Billing. 2- Reconcile bank statements with Cash Management Reconcile any outstanding bank statements if you are using Cash Management.Complete Transactions 1- Complete Invoicing, Credits and Adjustments  Run: Incomplete Invoices Report: to review all of your incomplete invoices, debit memos, credit memos, and on-account credits. Incomplete invoices do not update your open receivables balance nor do they display on your aging.  Use the Transactions window to complete your invoice or debit memo once you have updated them. For credit memos and on-account credits, use the Credit Transactions window. Page 5 of 18
  • 6. R12 Receivables - Closing Period © 2010 2- Complete Lock Box Processing 3- Complete Receipts and Reversals  Ensure all payments received have been recorded  Ensure all recorded receipts have been applied (i.e., there is no Unidentified Receipts)  Ensure all cash application adjustments, write-offs, and transfers have been made 4- Run the revenue recognition program To generate revenue distribution records for your invoices and credit memos that use invoicing and accounting rules. Page 6 of 18
  • 7. R12 Receivables - Closing Period © 2010Internal Reconciliation Reconcile the periods operational activity with Receivables accounting data, before posting to the general ledger. 1- Reconcile Transactions  Transaction Register: includes all transactions (such as invoices, credit memos, debit memos, chargebacks, deposits, and guarantees) that affect a customers outstanding balance for a specified period, including transactions that do not post or age.  Sales Journal by GL Account:  Includes all transactions associated with specified GL account  Should be run with a posting status of Unposted  Ensure the following is correct: Page 7 of 18
  • 8. R12 Receivables - Closing Period © 2010 Transaction Register postable items total should equal Sales Journal by GL Account (posting status is unposted) total. Note: Sales Journal by GL Account is in functional currency, while Sales Journal by Customer is in entered currency. 2- Reconcile Receipts  Receipt Register: includes a list of receipts (standard trade and miscellaneous) for a specified period  Receipt Journal: includes the journal entries for both standard and miscellaneous receipts  Ensure the following is correct Receipts Register total should equal Receipt Journal total. Note: Receipt Journal by Account is in functional currency, while Receipt Journal by Customer is in entered currency. 3- Reconcile Outstanding Customer Balances  Aging - 4 Buckets and Aging - 7 Buckets: includes outstanding receivables at a specific date  Adjustment Register: includes approved adjustments that affect transaction balances for the selected period  Adjustments include manual adjustments, automatic adjustments, bills receivable endorsements, invoices applied to commitments, and credit memos applied to commitment-related invoices  When reconciling, the Adjustment Registers total should match the Adjustments Journal  Invoice Exception Report: includes detail for any transactions where Open Receivables is set to No. These transactions:  Appear on Transaction Register, but do not on aging reports  Affect aging, but may still affect GL balances, if postable  Applied Receipts Register: includes all receipt applications that affect customer balances. You can review how customers receipts were applied to invoices and debit memos or reversed from invoices and debit memos Page 8 of 18
  • 9. R12 Receivables - Closing Period © 2010  When reconciling, the Applied Receipts Registers total should match the Applied Receipts Journal  Unapplied and Unresolved Receipts Register: includes all receipts that are not fully applied to customer transactions This report includes:  receipts with unapplied cash  receipts with applications that require resolution, such as applications to: o On Account o Prepayment o Claim Investigation (for users of Oracle Trade Management only) This report excludes:  Receipts applied to activities that do not affect the customer balance, such as receipt write-offs, short-term debt, and credit card refunds  Miscellaneous receipts  When reconciling, Unapplied and Unresolved Receipts Registers total should equal Unapplied Receipts Journal total  Ensure the following is correct Outstanding customer balances at the beginning of a specified period are reconciled with ending balance for the same period, using the Roll Forward Formula: Component Report Beginning Balance Aging reports + Transactions Transaction Register + Adjustments Adjustment Register + Exceptions Invoice Exception Report + Applied Receipts Applied Receipts Register + Unapplied Receipts Unapplied and Unresolved Receipts Register = Ending Balance Aging report (at end of accounting period) Page 9 of 18
  • 10. R12 Receivables - Closing Period © 2010 4- AR Reconciliation Report  provides a quick update on the status of your receivables by comparing:  Transactional data (affects aging and consistent with registers reports) in an Activity column  Accounting data (affects GL accounts balances from journal reports) in a Journal column  Displays summarized information consistent with detailed egisters and journal reports. To view the underlying detail, run these reports: 1- Aging 7-Buckets - By Account report or Aging 4-Buckets report (to view the beginning and ending balances) 2- Transaction Register and Sales Journal 3- Adjustment Register and Adjustment Journal 4- Applied Receipts Register and Applied Receipts Journal 5- Unapplied and Unresolved Receipts Register and Unapplied Receipts Journal 6- On-Account Credit Memo Gain/Loss Journal 7- Invoice Exception Report  uses the Roll Forward Formula above 4- Potential Reconciling Items Report  AR Reconciliation report confirms that transactional and accounting data match but give no indication that journals had been posted to the correct GL accounts  Potential Reconciling Items report addresses this issue by suggesting journal items that might potentially post to GL accounts with unexpected account types, thus creating reconciliation issues in Oracle General Ledger  An unexpected account type refers to GL account types that are not normally associated with an items GL category. General Ledger account types used by Oracle Receivables include assets, liabilities, income, and expense  For example, a receivable item might be expected to post to an asset account; if the item posts to a non-asset account, then it will display on the Potential Reconciling Items report Page 10 of 18
  • 11. R12 Receivables - Closing Period © 2010  Potential Reconciling Items report includes the following items:  Adjustment journals with offset accounts that are asset accounts, rather than income or expense  Revenue journals for invoices and credit memos that post to account types other than income  Unearned revenue journals that post to an account type other than liability  Unbilled journals created for deferred billing that post to an account type other than asset  Late charge journals that post to an account type other than income.  Cash, confirmation, or remittance journals that post to account types other than asset  Short term debt journals created by factoring receipts that post to account types other than liability  Non-recoverable tax that posts to an account type other than expense  Possible causes of this discrepancy could be due to:  Incorrect accounting setup  Incorrect manual updating of GL account distributions  Setup created for activities that is inconsistent with the intended use of Oracle Receivables  When a potential reconciling item is an error, correct the individual transaction as well as the incorrect setup to prevent future occurrences of the same error  Potential Reconciling Items report:  Should be run as an automatic step during the submission of the AR Reconciliation report  Is an exception report that will print only if selected as a parameter upon running the AR Reconciliation report. Typically, run the Potential Reconciling Items report: o For new software installations, to confirm the correct derivation of accounting o Whenever accounting setup has been modified, such as the creation of new transaction types or receivables activities Page 11 of 18
  • 12. R12 Receivables - Closing Period © 2010Create, Transfer, and Post Journals  Run Submit or Create Accounting after processing all postable records.  Submit Accounting spawns the following programs:  Revenue Recognition  Create Accounting  Accounting Program  Transfer Journal Entries to GL (if run with Transfer Journal Entries = Yes)  Journal Import  If Submit Accounting IS NOT submitted, you will need to run the Revenue Recognition Master Program before running Create Accounting. Page 12 of 18
  • 13. R12 Receivables - Closing Period © 2010 Create Accounting Submit Accounting Page 13 of 18
  • 14. R12 Receivables - Closing Period © 2010Reconciling Journals Transfer Process  Subledger Accounting Program report:  Is produced by Create Accounting program  Shows subledger journal entries created for successful accounting events.  Journal Entries report (in Posted status mode):  includes all transactions that should be posted to General Ledger (i.e. associated transaction type has Post to GL set to Yes)  displays: o details of what is or will be posted to each GL account for a specific period and o Journals by receivables categories  Ensure the following is correct Subledger Accounting Program report total should equal Journal Entries report total.Reconciling Journals Import Process (GL)  Journal Import Execution report:  Is produced by (GL) journal import process  Shows total debits and credits for the journals it created.  Posting Execution report: Is produced by (GL) journal posting journals process  Unposted Journals report  General Journals report  Ensure the following is correct: total of these report should equal (what is transferred by Receivables = what is posted by GL) Page 14 of 18
  • 15. R12 Receivables - Closing Period © 2010External Reconciliation After posting, reconcile subledger details with General Ledger. Run Create Run AR to GL Accounting Program Reconciliation Report Reconciling Yes Items? Differences due to: - GL Source Manual No - GL Subledgers Not AR - Unposted in GL Reconciliation Identify Differences and Complete Take Corrective Actions Two approaches can be used  Reconciliation Report approach: AR to GL Reconciliation report is matched with the account balances for the same accounts in GL  Aging Report approach: Aging 7 Bucket by Account Report is matched with the Account Analysis report / Trial Balance Report in GL  AR to GL Reconciliation report:  Simplifies reconciliation process by comparing account balances in Oracle Receivables to those in Oracle General Ledger in a single report.  If total balance of all accounts is different in Receivables than in GL, then there are items did not successfully post to GL accounts.  If balance of a specific account is different in Receivables than in GL, then the type of journals that affect the account balances are highlighted in the following columns: o GL Source Manual: Manual journal entries made in the general ledger. Page 15 of 18
  • 16. R12 Receivables - Closing Period © 2010 o GL Subledgers Not AR: Journal entries posted to the general ledger from other subledgers, such as Oracle Payables or a legacy feeder system. o Unposted in GL: Unposted journals in the general ledger. Page 16 of 18
  • 17. R12 Receivables - Closing Period © 2010Close AR Current Period  Close current period in Oracle Receivables using the Open/Close Accounting Periods window.  Where there are multiple operating units within the same ledger all operating units must be ready to close at the same time. All of the operating units that share a ledger also share the same period statuses. When you update the period statuses to ‘Open’ in one operating unit, that period is opened for all operating units within the ledger.  Period cannot be closed if there are any unprocessed accounting events or unposted journal entries in Oracle Subledger Accounting (SLA) for the period.  Review Subledger Period Close Exceptions Report:  Lists all the accounting events and journal entries that fail period close validation.  is automatically submitted by GL upon closing a GL period if there are unprocessed accounting events or un-transferred journal entries. Page 17 of 18
  • 18. R12 Receivables - Closing Period © 2010Information Sources o Metalink Note: 740297.1 o Metalink Note: 740964.1 o Metalink Note: 961285.1 o Oracle Receivables Users Guide Release 12.1 Part No. E13522-02 Page 18 of 18