Considerations for Optimized Maintenance for Account Balances
Here are some considerations before opting-in to the Optimized Maintenance for Account Balances feature.
- Project-to-Date Balances
- Account Reclassifications
- Prior Period Posting
Project-to-Date Balances
When you opt in to this feature, the project-to-date (PJTD) balances of income statement accounts may no longer be accurate and should not be relied on. The PJTD balances for income statement accounts reflect the life-to-date or cumulative balance of an account without the zeroing out effect to the retained earnings account that happens at the beginning of each new fiscal year.
This is what happens to its PJTD balance if there were a lapse in periodic account activities for the income statement account combination after crossing over into a new fiscal year. The PJTD balance will effectively reset to zero when balances rows aren't maintained for them in dormant accounting periods following the beginning of a new fiscal year after this feature has been turned on. Its PJTD balance will thus no longer be the correct life-to-date balance for the income statement account.
Account Type Reclassifications
This feature can have an impact if there are cases where an account gets reclassified for its natural account type because either an income statement account should have been classified as a balance sheet type, or a balance sheet type account should have been classified as an income statement type.
Reclassifying an income statement account to a balance sheet account will be problematic if the income statement account has lapses in the periodic balances being maintained. This is because a balance sheet account combination needs to have its periodic balances continuously maintained for every accounting period.
Such a situation needs to be carefully reviewed and addressed to avoid possible corruption with the account balances data. In any case, handling account type misclassification is a correction step that should be done with great care, and if needed, should be done only one time for a given account.
Prior Period Posting
The application will continue to correctly handle the updates for each succeeding fiscal year when you post transactions to an income statement account in a period of a previous fiscal year even when you opt in to this feature. If the posting in the prior period eliminates the lapse in accounting activities for an income statement account when balances records therefore wouldn't have been maintained for it, the application will now accordingly create the necessary balances records for the account.
The beginning balance for the retained earnings account in the succeeding fiscal years will correctly reflect the prior year change in activity for the income statement account, just as it would have if this option weren’t enabled.