Closing accruals
Accrual is an accounting method in which revenues and expenses are recognized on the date of the transaction, not when funds are received or payed out.
Accruals are part of the fiscal year closing, but can also apply to monthly closings.
Expense accruals
It is common for the invoicing period to be different from the accounting fiscal year or period.
If needed, you can charge-off the expenses for the period covered by the invoice but not included in the processed fiscal year or period.
Insurance invoices are generally drawn up once a year, but a contract can cover a period that spans 2 fiscal years.
For a contract that covers the period from April 3, 2021 to March 31, 2022 for an amount of $120,000, excluding tax:
- For an invoice received April 3, 2021, you perform a standard posting of the cost.
- At the year-end close on December 31, 2021, you need to account for the amount covering the period from January 1, 2022 to March 31, 2022.
Sales accruals
The same principle applies, but the allocations differ slightly.
For a long-term payment schedule for which the invoicing is not in the same period or fiscal year when services are provided.
The accruing expenses, such as personal costs or purchase costs, are not yet committed. You need to put the revenue statement on hold until the services are carried out.
- Work invoiced on September 15, 2021 for an amount of $490,000 without tax, of which $23,400 for completion services is planned for January 2022.
- At year-end close on September 30, 2021, you need to record the sales accrual amount of $23,400.
Expense accruals and budget closing
Main steps for budget closing
- Renew the annual envelopes.
- Close the purchase request lines and the order lines not to be transferred.
- Process receipts, invoices to receive, and expense accruals on fiscal year end.
- Process carry-forward unclosed pre-commitments and commitments.
- Process carry-forward multiannual envelopes.
If you do not review an annual envelope, carrying forward commitments and pre-commitments creates a new envelope and a renewal is no longer possible.
You can carry forward commitments before or after processing invoices to receive by the end of the fiscal year.
You need to carry forward multiannual envelopes as the last step of the budget closing.
Expense accruals creation rules
Expense accruals are generated when the period covered by the service overlaps 2 periods or fiscal years. Only the posted invoices with lines containing service period dates are retained.
Expense accruals do not include the tax amount. Expense and sales invoice footers are not included in the calculation unless they are related to the line in the original invoice or credit note.
Envelopes
Multiannual
The envelope and budget still exist. The budget needs to have an approved budget line with the same characteristics as the original budget line for the order. If not, you cannot create the expense accrual. In that case, it is noted in the log file.
Annual
The envelope can only exist if it was created by renewal agreement or by carrying forward unclosed commitments created before the expense accrual.
If the envelope does not exist for the new fiscal year, you cannot create the expense accrual.
If the envelope was renewed or carried forward, a control ensures that the following exists.
- The new envelope code.
- The budget for this envelope.
- The approved budget line corresponding to the original budget line.
If they do not exist, the expense accrual process is blocked.
Create an expense accrual
Expense accruals are not affected by carrying forward unclosed purchase lines. Creating the expense accrual cancels an expense related to the accrual amount relative to the N+1 period for the accrual fiscal year.
Expense accrual discount
Whether the accrual has been reported before or after carrying forward unclosed purchase lines, the discounts for the next fiscal year create an expense line with respect to the relative charge at the N+1 period.
Expense and sales accruals management after adding a ledger
When adding a ledger to a company, sales and purchasing documents are not updated. For example, the new ledger currency rate is not updated in the sales and purchasing invoice document.
As a result, when you generate accruals on invoices created prior to adding the new ledger, the currency rate in the new ledger is determined by the rate date for the generated journal entry.
If the Rate type field for the current document type is set to Original date, the currency rate is determined by the document date in the journal entry, which is the original invoice date.
If the Rate type field for the current document type is set to Document date, the currency rate is determined by the accounting Date field in the journal entry, which is the accruals accounting date.
Prerequisites
Screen management
This section provides field help on each tab or screen for this function.
Entry screen
Criteria
Generation
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Select this checkbox to generate entries. If not selected, the process only generates a log file that lists the invoices that can be generated. |
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If the Generate entries checkbox is selected, you can select the generation type:
Note - warningA period for a ledger cannot be closed until the simulated postings are converted to actual postings or canceled. You can change the status of simulated postings using the accounting functionality.
Any recalculation of the same accrual for a period identical to or different from the initial calculation cancels the documents in active simulation mode created at the time of the first calculation. This action generates a new active simulation or actual documents according to the generation type. |
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This field is only available when the Generation type is Actual. Temporary: Most of the information can be changed, with some exceptions:
Final: modifications of the journal are only for information purposes or concern the analytical postings. The date, amounts, accounts, VAT code, and other purely accounting information can no longer be modified. The Entry status needs to be Final when the Generation type is Actual and the company meets one of the following criteria:
Situations that can affect journal entries:
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Use this field to define the document type linked to the journal entry, which matches the original document: customer invoice, miscellaneous operations, collection, and so on. This information follows management rules relating to the VAT, reminders, and so on. Based on the setup selected for the document type, the propagation to the manual ledgers can be opened or closed. The default value comes from the VCRTYPSVC - Accrual journal type parameter (CPT chapter, CLO group) or the TYPACC - Simulation journal type parameter (TC chapter, INV group). Note - warningThe document type takes precedence and blocks the propagation to other company ledgers for the entry site.
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Enter the journal code, up to 5 alphanumerical characters, for which the entries generated by the calculation are recorded. The journal can be set up by default based on the type of document chosen. It corresponds to the accounting journal in which the entry is recorded. |
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This date corresponds to the generation date for the entries. It needs to be in a fiscal year or period that is open for all the ledger types. It is the reference date by default. |
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This date matches the reversal date for the generated entries. It needs to be in an open fiscal year or period. It matches the accounting date on which the accruals need to be reversed. By default, it is the first day of the period following the accounting date. |
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Select this checkbox to generate a log file. |
Batch task
This function can be run in batch mode, but no dedicated standard task is delivered to run it.
Specific Buttons
- Memo: Select this action to save the current settings to a Memo code to be reused later. The memo is linked to your user profile, not to the function or the screen.
- Recall: Select this action to enter a Memo code to load the settings saved with the code.
- Delete memo: Select this action to delete a memo code.