General Ledger End of Month

Introduction

As with the other modules, one of the most important functions in G/L is the month-end process. The G/L module has its own month-end processing and is the final modul, in the Advantos™ ERP application, that performs the month-end process for the accounting system. There is a special checklist the identifies the steps that will complete this month-end process. This process requires you to ensure various financial totals are in balance, produce monthly report packages, and update the final module financial period to the next monthly period. Once completed, G/L will be ready to operate in the next monthly accounting period.

All financial transactions created in the Advantos modules are automatically updated to the general ledger. The month-end process also updates financial totals balances, cleans up old bank account transactions, updates or creates next month's bank books, and purges archive data older than the archive retention definition. With appropriate training, this month-end process can be performed by a user, with Supervisor review of balancing problems.

One key point to understand, and to train your users to be observant of, is the processing month which shows on the General Ledger module main web page. Once you are doing the month-end processing, users should not enter journal entries until this month-end process is complete. Normally the user doing this process is aware not to make journal entries, except to correct errors or post missing transactions not appropriately processed in the other modules.

It is essential to have the month-end process for the other modules complete before doing the month-end process for the General Ledger module. Managing the month-end process for general ledger is not complex and generally can be managed in less than an hour, unless some very difficult balancing problems occur. Thus, you can usually proceed with the General Ledger module month-end process by the fifth working day of a calendar month (for the prior monthly accounting period).

A copy of the checklist for the G/L module is attached. We will review all the steps, explaining what is to be accomplished and what to do if information does not balance. You will note there are numbers at the left hand margin of the checklist before each instruction. These refer you to the menu selections for the reports you are instructed to print or the processes you need to perform. The numbers assume you have already selected the G/L module from the Main Menu.

It is important to note the final, critical, balancing is required to be performed before printing the financial statements. This balancing is critical to the proper operation of the accounting system. It is important to know when the system is having problems and this balancing will detect those problems before they work their way into financial statements. An imbalance here is usually not created by hardware problems, but by invalid G/L account number selections on specific transactions.

However, if trial balances do not equal zero (0) then you may have experienced a hardware problem, such as power failure, or inconsistent power to the computer, which has many causes, such as turning off the computer before main memory has been flushed to disk, static electricity, a high temperature environment where the computer operates, moving the equipment, etc. All of these causes can be alleviated, but it is important to know when such conditions have affected your data base.

Are ALL Other Checklists Complete

Before proceeding with the G/L module month-end process, the Operator must determine all the other modules have been updated into the next accounting month. Only at this time with the module transactions be passed to the G/L module to be included in financial reporting. If more than one person is involved in month-end processing, the person doing the G/L update must ensure all necessary prior processes have been completed.

Enter Journal Entries

Each module Operator should have logged in journal entries and may have actually posted them to the system, but the G/L Operator must confirm this has been done. A log book with sheets for each client set of books can be set up to track what journal entries have been done, by whom and when they were posted to the system. An example of a log book page is attached. Sheets can be printed from the G.L. module menu under Miscellaneous Reports. This is not the last chance to enter journal entries, but any additional ones should be done only to correct any balancing errors and should not be the routine entries done in the modules.

Print G/L Trial Balance

This report will reflect a zero balance for all clients if the system has posted a debit for all credits. If there is a balance for any client, the Operator will need to research the transaction and correct this before proceeding. As mentioned above, out-of-balance situations can be caused by hardware problems so this will need to be researched as well.

Run G/L Validation

This process compares the G/L account totals with each client's subsidiary account totals for A/R, Deferred Income, A/P, Prepaid Expenses, and bank account balances. If an imbalance is discovered, you may make corrections and run corrected financial reports.

Verify Output Totals & Correct Problems

This process is where the corrections to the above errors are made. The presence of items on this report generally indicate additional training should be done.

Each item must be researched and corrections posted through the module or through manual journal entries. It can be very time consuming to work through a report with a lot of balancing errors, so ensure Operators are aware of the need to understand the processes they are responsible for.

In our experience, the most likely errors occur where an Operator needs to do some part of a transaction manually, while the system processes another part. An example would be transferring funds from one client account to another, where one bank account needs to be updated manually to reflect the balance change.

Once all errors are corrected, the financial statements can be printed. Only when no exception report is generated should the Operator proceed to the next step.

Print Income Statements

These are standard income statement reports you keep in the client's monthly financial file. There are usually several income statements printed: 12 month spread, current vs budget, etc. These reports often are provided to your clients also.

Print Cash Flow Statements

These are are standard cash flow reports you keep in the client's monthly file and provide to them at the end of each month. Usually, the 12 month spread is sufficient to file and deliver.

Print Balance Sheets - Balance to 0

This is a standard report reflecting the client's financial position with regard to assets, liabilities and equity totals.

Print G/L Journals - Balance to 0

This report is generally used to reflect account balances at the beginning of year/month, the monthly changes, and the current total balance. Note: income statement accounts always have a beginning of year balance of zero (0).

Review above Financial Statements for Accuracy

First of all, you may select any number of formats for the above reports or create new ones if necessary. The point is you print out the basic financial reports to be distributed to your clients and review them. At this point, errors can still be corrected! By reviewing, we recommend someone with some accounting knowledge review the reports to test for reasonableness, i.e., do the totals reflected in various accounts appear accurate, without large balance shifts in any direction. If something is found needing correction, the Operator can work with the module Operator to process the correction, then the reports can be rerun for only the select clients where errors occured. Errors found here are another indication of additional training requirements.

Print G/L Postings Detail Reports

This report is printed for file history, since the information is eventually purged off the system after 12 months. You may not want for forward to your clients, but simply hold in their monthly accounting file for future use.

Print ALL Bank Books - Verify

These reports are the module's bank statements. It is a good idea to review these carefully as well, since you can still make corrections and rerun selected reports if necessary. If you find an error after the update, the report will have to reflect the error. They can be distributed to clients with monthly financial reports, but a copy should always be kept and attached to the bank reconciliation when completed. The bank reconciliation, bank statement and checks are usually kept in the monthly accounting file.

Run G/L Monthly Update - Verify

Once processed, you will have completed one month's accounting and rolled your system into the next month, ready to begin processing again.

File ALL Printouts in Monthly Files

Simply file these monthly reports in each client's monthly financial file.

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