Accrual Reversals

To use accrual reversal, you assign application or standard date sources to the Accrual Reversal Accounting Date Source accounting attribute. When this accounting attribute has a value, the Create Accounting process generates an entry that reverses the accrual entry.

Here's what you do to define how and when accrual reversals are automatically performed:

• Indicate that an accounting event is eligible for accrual reversal.

• Determine when the accrual is reversed.

• Schedule the Create Accrual Reversal Accounting process to generate the reversal entries of the accrual.

Note: You must not enable reversal in General Ledger journal for the journal source and category if accrual reversal is implemented in subledger.

Accrual Reversal Process Steps

This flow chart shows the accrual reversal process.

Note: End Date: The date till when the Create Accounting process selects accounting events for processing.

1. Assign a date source to the Accrual Reversal Accounting Date Source accounting attribute at the event class level.

   Use this attribute to schedule the automatic reversal of a journal entry. On the Manage Accounting Attributes page, assign any standard date source or one of these application sources to the Accrual Reversal Accounting Date Source accounting attribute as a nondefault assignment:

   • Next Day: The accounting date of the accrual reversal is the next day following the accounting date of the accrual entry.

   • First Day of Next Accounting Period: The accounting date of the accrual reversal entry is the first day of the following accounting period.

   • Last Day of Next Accounting Period: The accounting date of the accrual reversal entry is the last day of the following accounting period.

   Note: If a default source is assigned to the Accrual Reversal Accounting Date Source accounting attribute, it will be assigned to all the journal entry rule set defined for the event class.

2. Define a journal entry rule set for the event type for which you would like to use the accrual reversal feature and select an accrual reversal accounting date source.

3. Create accrual transaction in subledger.

4. The Create Accounting process creates both accrual and reversal journal entries.

   If that accrual entry has exceptions, you must resolve the exceptions and then manually submit the Create Accounting process again.

   For all valid accrual journal entries, the Create Accounting process also creates the accrual reversal journal entry. Reversals can either be done by switching the debit and credit side on entries or by using negative amounts. You use the Reversal Method option on the Manage Subledger Accounting Options page to specify the method to use for reversals.

   Here are the factors that affect the status of the accrual reversal journal entry:

   • The status of the accounting period of the accrual reversal journal entry

   • The end accounting date specified in the Create Accounting request parameters

   This table summarizes how the application sets the status of an accrual reversal journal entry in different conditions:

   Condition	Open or Future Entry Accounting Period	Closed Accounting Period	Never Opened Accounting Period
   The Create Accounting process is submitted separately and accrual reversal date is on or before the end accounting date.	Creates the reversal entry with the status specified in the Create Accounting request.	Adjusts the accounting date to the next open or future period. Creates the reversal entry with the status specified in the Create Accounting request.	Adjusts the accounting date to the next open period. If the adjusted accounting date is before end date of the Create Accounting process, creates the reversal entry with the status specified in the Create Accounting request. If the adjusted accounting date is after end date of the Create Accounting process, creates the reversal entry with the incomplete status. If no open period is found, creates the journal entry with the incomplete status.
   The Create Accounting process is submitted separately and accrual reversal date is after the end accounting date.	Creates the reversal entry with the incomplete status.	Adjusts the accounting date to the next open or future period. Creates the reversal entry with the incomplete status. If no open period is found, creates the journal entry with the error status.	Creates the reversal entry with the incomplete status.

5. Submit Create Accrual Reversal Accounting to process any incomplete accrual reversal journal entries. This process validates the reversal entry and changes the reversal entry to Final status, if it passes validation.

6. Schedule the Create Accrual Reversal Accounting process to run automatically in each accounting period. As a best practice, run before closing the period.

7. View accrual reversal accounting entries.