Period-End Process In Receivables R12

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Oracle Receivables requires periodic internal reconciliation of the transactions entered into the Accounts Receivables system. Oracle Receivables provides a comprehensive set of reports to facilitate the reconciliation of outstanding customer balances, transactions, receipts, and account balances. The application provides the functionality to enable reconciliation of your sub-ledger, before posting to the General Ledger. Posting to the General Ledger allows the extraction of details from Oracle Receivables, and the creation of journal entries in the General Ledger. After posting to the General Ledger, it is possible to reconcile Oracle Receivables with the General Ledger by verifying that all the correct journal entries were made.

Procedures:

The following steps are taken in performing period-end processing for Oracle Receivables.

1. Complete All Transactions for the Period Being Closed

Ensure that all transactions have been entered for the period being closed.
Completing all transactions for Oracle Receivables:
* Complete Invoicing, Credits and Adjustments
* Complete Receipts and Reversals
* Complete Invoice and Customer Import
* Complete Lock Box Processing
* Run the revenue recognition program (Optional; required if OM-shipping is used)
If you import transactions from an external system or Oracle Projects, ensure that you have imported all transactions and master files, and reviewed all audit trails for completeness.

2. Reconcile Transaction Activity for the Period

Reconcile the transaction activity in Oracle Receivables, before posting to the General Ledger using SLA. This reconciliation process checks that Oracle Receivables transactions are balanced, ensuring that all items eligible for posting are reflected on the Sales Journal. Run the following reports for the same accounting
period date range:

a. Transaction Register

This report details all the transactions (i.e. invoices, debit memos, credit memos, deposits, guarantees and chargebacks) entered with a GL date between the period start and period end dates, specified for the period being reconciled. This report shows transactions which were entered and completed.

b. Sales Journal by Customer Report and the Sales Journal by GL Account Report Oracle Financials E-Business Suite Release 12 Period End Procedures 40 This report enables the review of all transactions for the specified period. The summary totals for the sales journal are by Posting Status, Company, and Transaction Currency. This report details, by account type (i.e. receivables, revenue, freight, tax), the general ledger distributions for posted and/or un-posted invoices for the specified period. The total on the Sales Journal by GL Account should equal the total of items eligible for posting as listed on the Transaction Register. If any discrepancies are evident, research the customer balances to find out which balance does not tally, using the Sales Journal by Customer report. By using the following formula, ensure that the Transaction Register matches the Sales Journal:
Transaction Register (Items eligible for posting) + 2 * Credit Memo Total = Sales
Journal (Debits plus Credits)
E.g. $100 + (2 * $20) = Debits $120 + Credits $20
($120 Debits - $20 Credits)
Attention: The Transaction Register total for any credits must be adjusted, as they are negative on the Transaction Register and positive on the Sales Journal.
Attention: Ensure that the monthly transaction total is accurate and that no distribution issues exist.

c. Journal Entries Report

This report enables the review and analysis of accounting entries in the Receivables subledger, as accounted by SLA. Using the report parameters, you can produce a detailed or summary listing of the accounting information you want to review. The report also lists in detail, transactions that have been accounted with error, and all entries that could not be transferred to the general ledger. When a transaction is accounted with errors, review the details and make the necessary changes. By altering the parameters, the report also lists those transactions, which have been posted in general ledger, and those which are yet to be posted but have been accounted. SLA groups the report by ledger, ledger currency, source, category, and event class. Data is then sorted by accounting date, event type, customer name, document number, and voucher number.

Note: To avoid duplication with subledger journal entries, general ledger journal entries imported from Subledger Accounting are not included in the report.
 
d. AR to GL Reconciliation Report
The AR to GL Reconciliation report compares the account balances in Oracle Receivables to those in Oracle General Ledger, and highlights journal sources where discrepancies might exist. This report simplifies the reconciliation process by comparing Receivables and General Ledger account balances in a single place.
Run the AR to GL Reconciliation report:
* After the Create Accounting program in Receivables has completed, and
* You have reviewed the Unposted Items report to confirm that all journal entries have posted, and
* You have used the posting execution reports to confirm that the journal entries exported from Receivables match those posted in General Ledger.
Oracle Financials E-Business Suite Release 12 Period End Procedures 41
This report will show a difference between Receivables and GL account balances only if items did not successfully post to GL accounts. The Difference column indicates how the activity in Receivables compares to the journal source of Receivables in the General Ledger. If the actual balance of a specific account is different in Receivables than in GL, then the following columns highlight the type of journals that affect the account balances:
* GL Source Manual - Manual journal entries made in the General Ledger.
* GL Subledgers Not AR - Journal entries posted to the General Ledger from other subledgers, such as Oracle Payables or a legacy feeder system.
* Unposted in GL - Unposted Oracle Receivables journals in the general ledger. During the internal reconciliation process, use the AR Reconciliation report to confirm that your transactional and accounting data match. However, even if the data matches, the journals could still post to incorrect GL accounts. The 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.
 
3. Reconcile Outstanding Customer Balances
Reconcile the outstanding customer balances at the beginning of a specified period with the ending balance for the same period, using the following formula, known as the Roll Forward Formula:
Period-End Balance = Outstanding Balance at Start of Period + Transactions + Adjustments – Invoice Exceptions – Applied Receipts – Unapplied Receipts
The following list represents the various components that affect a customer’s balance and the reports, which can be run and reviewed to reconcile these components:
Component Report
Beginning Balance Aging reports
Transactions Transaction Register
Adjustments Adjustment Register
Exceptions Invoice Exceptions Report
Applied Receipts
Applied Receipts Register (Identify
payments received from customers)
Unapplied
Receipts
Unapplied and Unresolved
Receipts Register (identify
payments received from customers)
Ending Balance
Aging report (as of the last day of
the accounting period)
Oracle Financials E-Business Suite Release 12 Period End Procedures 42
Attention: You can use the Invoice Exceptions Report to adjust the Transaction Register for any transactions, which are not open in Receivables, and therefore do not show up in the aging reports.
 
4. Review the Unapplied Receipts Register
Use the Unapplied Receipts Register to review detailed information about your customers’ on-account and unapplied payments for the date range that you specify. You can use this report to determine how much your customer owes after taking into account all on-account and unapplied amounts. Receivables displays information about your on-account or unapplied payment such as GL date, batch source, batch name, payment method, payment number, payment date, on-account amount, and unapplied amount. This report includes both cash and miscellaneous receipts. If any of the Receipts listed can now be applied to outstanding transactions, you can perform this action by re-querying the receipts and following the normal application procedure.
 
5. Reconcile Receipts

Ensure that Oracle Receivables receipts balance by running the following reports:
 
a) Receipts Journal Report
This report displays details of receipts that appear in the Journal Entries Report. The Journal Entries Report shows the receipt numbers that contribute to a particular GL account. Using the receipt number, you can review the detailed information on the Receipts Journal Report.

b) Receipt Register
Use this report to review a list of receipts for a specified date range.
Attention: Normally the total of the Receipts Journal report should equal the total of all the receipts in the Receipt Register for the same GL date range.

6. Reconcile Receipts to Bank Statement Activity for the Period

Once detailed bank statement information has been entered into Cash Management, the information must be reconciled with the subledger transactions. Cash Management provides two methods to undertake reconciliations:
 
a) Automatic
Bank statement details are automatically matched and reconciled with subledger transactions. This method is ideally suited for bank accounts which have a high volume of transactions.

b) Manual

This method requires a manual match of bank statement details with subledger transactions. This method is ideally suited to reconciling bank accounts which have a small volume of monthly transactions. The manual reconciliation method can also be used to reconcile any bank statement details, which could not be reconciled automatically.

7. Post to the General Ledger
Prior to posting to the General Ledger, the Receipts Journal Report and Sales Journal display the transactions that would be posted to the General Ledger (provided the posting process was run for the same GL date range). After internally reconciling the transactions and receipts using these two reports, it is possible to perform external reconciliation during and after the posting process. The posting process for Oracle Receivables involves a single step: Create Accounting This process can be submitted from the transactions screen to account for a specific receivables transaction or from the SRS screen to account for all receivables transactions. The accounting is done at the ledger level and the program has the ability to transfer and import into the General Ledger based on the parameters specified. If Create Accounting is submitted in the ‘Final’ mode without transferring it to the General Ledger, the entries will have to be transferred separately.
 
8. Reconcile the General Ledger Transfer Process
The Create Accounting program produces the Subledger Accounting Program report that shows you the subledger journal entries created for successful accounting events. Compare this report to the Journal Entries Report (run in Posted status mode) and verify that they match. Use the same General Ledger date ranges for the Journal Entries Report and the Create Accounting program. Create Accounting will generate a report which details the transferred transactions, transactions in error etc. Once transactions and receipts have been transferred to the GL tables, Oracle Receivables regards these items as having been ‘posted’ within the sub-ledger. Account balances for transactions and receipts can be reconciled by generating the Sales Journal by GL Account Report, the Receipts Journal Report (in ‘transaction’ mode) and the Journal Entries Report for posted items. The account totals in the Sales and Receipt journals should match the corresponding account balances in the Journal Entries Report.
Attention: The ‘Detail by Account’ version of the Journal Entries Report may be the most useful for reconciliation in this case. When running any Oracle Receivables reports that display accounting involving
transactions that have been posted to GL, the following statements apply: If SLA final accounting lines exist, then SLA accounting is displayed. If SLA accounting lines do not exist, then AR distribution accounting is displayed.
 
9. Reconcile the Journal Import Process
Create Accounting program submits Journal Import automatically when launched in ‘Mode = Final’ and ‘Transfer to GL = Yes’. Reconcile the Journal Import by manually reviewing the transactions in the Subledger Accounting Program Report, and comparing them with the Journal Entries Report output. The Journal Entries Report is a new Subledger Accounting BI Publisher report which is available from the subledger applications and can be run with parameter Posted = Yes, No or ALL, which users can copy and modify the report template according to their needs.

Attention: If the customer is using Reporting/Accounting sequences, they can run Journal Entries Report using Sequence Ranges created in the Create Accounting program run, and compare the total with the Journal Import Execution Report.

10. Print Invoices
Once you are satisfied that the customer balances are reconciled, ensure all the invoices generated during the month have been printed and issued. If the Balance Forward Billing functionality is used, ensure that the consolidated (BFB) invoices have been generated for the current period.
Note: Balance Forward Billing replaces consolidated billing invoices (CBI) feature of 11i. For more information on the setup of balance forward billing, refer to the Oracle Receivables Implementation Guide or the Oracle Receivables User Guide.

11. Close the Current Oracle Receivables Period
Close the current period in Oracle Receivables using the Open/Close Accounting Periods window.
Attention: 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.
 
12. Review the Subledger Period Close Exceptions Report
The Subledger Period Close Exceptions Report lists all the accounting events and journal entries that fail period close validation. It is automatically submitted by General Ledger when closing a GL period if there are unprocessed accounting events or un-transferred journal entries.
You can also generate the Subledger Period Close Exceptions Report through a concurrent request as follows:
* For the application associated with the responsibility
* For all applications in the General Ledger responsibility
 
13. Third Party Balances Report
Run Third Party Balances Report from the SRS screen.
This report is used to display balance and account activity information for Suppliers and Customers. It retrieves the following information:
* Third party balances for third party control accounts
* Subledger journal entry lines that add up to the total period activity for each control account, third party, and third party site
* Third party and third party site information
* User transaction identifiers for the associated event
The balances in this report can be compared with the General Ledger balances for the same control accounts to reconcile.

14. Reconcile Posted Journal Entries
After running the GL posting process in Oracle General Ledger, for the transactions, which were transferred in FINAL mode and with Post in GL being set to NO, run the Journal Entries Report (with ‘Posted = Y’) to help reconcile the posted journals.
 
15. Review the Unposted Items Report
Oracle Receivables prints the Unposted Items Report for all items that are not posted for the specified GL date range. Run the request from the Submit Requests window. The output will consist of all items not posted to the General Ledger for the specified GL date range. Using the Submit Requests window to generate this report, submit with a GL date range for at least the current financial year. This report should not generate any output if all Receivables transactions have been successfully posted to the General Ledger. If there are any items not posted for the current or prior periods, then re-open both appropriate Receivables and General Ledger Periods and initiate another posting.
 
16. Review Account Analysis Report
The Account Analysis Report provides drill-down information about the activities relating to a particular account for a period or range of periods. It only includes journal entries transferred to and posted to the General Ledger. Review this report and compare it with the Third Party balances report.
Note: To avoid duplication with subledger journal entries, General Ledger journal entries imported from Subledger Accounting are not included in the report.
 
17. Open the Next Oracle Receivables Period
Open the next period in Oracle Receivables using the Open/Close Accounting Periods window.
 
18. Run Reports for Tax Reporting Purposes (Optional)
A variety of standard reports can be used to provide tax information, which is required to be reported to the relevant Tax Authority, including withholding tax. The E-Business Tax data extract draws tax information from each application and stores the data in an interface table. Output from the tax extract is designed to look as close to a simple tax report as possible.
The following tax registers are available:
a) Deferred Output Tax Register
b) Recoverable and Non-Recoverable Tax Registers
c) Single Cross Product Tax Register
d) Standard Input and Output Tax Registers
The following summary levels are available within each Tax Register:
* Transaction Header
* Transaction Line
* Accounting Line