A Annual Close Procedure
This appendix contains these topics:
A.1 About the Annual Close Procedure
A fiscal year is considered active for a company when its beginning date is defined in the company setup.
For example, if the beginning date of a fiscal year for a company is 01/01/98, fiscal year 98 is active on January 01, 1998.
To change the active fiscal year, you must change the beginning date of the year. For example, in order to make fiscal year 99 active, the beginning date of the fiscal year must start on 01/01/99 (if the first month of the fiscal year is January).
Figure A-1 Company Numbers and Names screen
Description of "Figure A-1 Company Numbers and Names screen"
Note:
It is impossible to record entries from the previous fiscal year for the active fiscal year.A.2 Annual Close Procedure
J.D. Edwards' annual close procedure for a fiscal year includes the following phases:
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Activating the new accounting period
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Creating adjusting entries for the period close
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Running the final period close
A.2.1 Phase 1: Activating the New Accounting Period
To complete the first phase, fiscal year N must be active, providing that you want to record entries on the previous fiscal year (N) and the new fiscal year (N+1). Consequently, J.D. Edwards recommends that you activate fiscal year N+1 in conjunction with the closing of the last period of fiscal year N.
Running a fiscal year closing procedure, called "period pre-closing," is also recommended in order to set up the balance forward amounts to carry over to the first period of fiscal year N+1. This takes place if the final fiscal year closing has not been run before reporting the first period of the new fiscal year. (This is a common occurrence.)
A.2.2 Phase 2: Creating Adjusting Entries for the Period Close
During the second phase, you must record the last adjusting entries of the fiscal year N to proceed with the final closing of fiscal year N.
You can use one of two solutions to record the last adjusting entries for fiscal year N.
A.2.2.1 Reopening Fiscal Year N
In this case, you are required to reactivate fiscal year N by using the start date for fiscal year N and setting up the last period as the active year and period (General Accounting system only).
J.D. Edwards recommends using a specific document type (for example J9 = year closing entries). After you post the last adjusting entries for fiscal year N, you must reactivate fiscal year N+1 and the current period.
J.D. Edwards also recommends that the last adjusting entries for fiscal year N be made by the same person and be protected from other General Accounting system users, although this is not mandatory.
With this solution, entering records on the previous fiscal year (N) is easily protected.
A.2.2.2 Without Reopening Fiscal Year N
This solution allows for entering records on the last day of the fiscal year N with the specific document type of ##(A7.3) or && (A8.1), without having to reopen fiscal year N. If you choose this solution, you must post these entries in the usual way.
Caution:
With this solution, it is difficult to set up security on the record entry for the previous fiscal year.A.2.3 Phase 3: Running the Final Period Close (available as of A72 and A73LG)
Before running the final period closing, verify that the following steps have been completed:
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Print the necessary reports.
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Print the Trial Balance, the General Ledger, and the General Journal in FINAL mode.
This process identifies the transactions as already printed in final mode for the fiscal year that you are closing and prevents the reports from being run again in final mode for the same fiscal year.
Caution:
This process can be run only once in final mode. However, the reports can be run as many times as required in proof mode, even after final mode has been run. -
Completely back up your environment.
At this point in the annual close procedure, J.D. Edwards recommends that you back up your entire environment for fiscal auditing purposes. The backup is very important because you can be asked, during a tax audit of your information system, to provide reproductions of your reports (General Ledger or other) as well as your accounting system's electronic data files.
After you verify that the preliminary steps have been completed, run the final period close.
When you run the final period close, the program computes the year's income and updates the balance forward amounts for fiscal year N+1.
Note:
The new (N+1) fiscal year's beginning balance date must already be active.