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Amy Aschenbrenner, Heartland Business Systems, LLC

Microsoft Dynamics GP Year-End Closing Process – Part I


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Year End Closing is an important task for all financial professionals. When choosing an ERP system you need to be sure it has a smooth year end process. We have outlined steps for closing Microsoft Dynamics GP so you can compare it with other systems.

Step 1 -  THE CLOSING PROCESS – Sales Order Processing

** It is important that the closing be completed after the posting of the last invoices for the period and before any sales are invoiced for the new period. Sales for the new period can be picked and shipped  before closing as long as the documents are held in a batch and not invoiced or posted.

** For Year-end close the Sales Tax Periods for the year and after the last sales documents for the year are posted and invoiced and before any new sales documents are invoiced and posted.

** Before starting year end procedure done annually make sure to close the last period or month of fiscal or calendar year.

 

Sales Order Processing
Monthly Finished Entering & Posting Quotes, Orders, Payments, Returns, or Invoices
Monthly Verified Sales Order Processing Batches Are Posted in the General Ledger
Monthly Only Reconcile the Sales Documents (Sales> Utility>Reconcile- Remove Sales documents- Select Reconcile Sales Documents)
Monthly Removed Completed Sales Documents (Sales> Utility> Reconcile- Remove Sales documents- Select Remove Completed Sales documents) **
Monthly Reviewed Work Quotes (Sales> Reports>Activity Report, or, Smartlist> Sales >Sales Transactions>Open Quotes– change date in between beginning of this month to end of this month)) and complete it for the period you are trying to close
Monthly Reviewed Work Sales Orders (Sales> Reports>Activity Report, or, Smartlist> Sales>Sales Transactions>Open Orders– change date in between beginning of this month to end of this month) and complete it for the period you are trying to close
Monthly Reviewed Work Back Orders (Sales> Reports>Activity Report, or, or, Smartlist> Sales>Sales Transactions> Back Orders– change date in between beginning of this month to end of this month) and Release any that can be filled for the period you are trying to close
Monthly Reviewed Work Invoices (Smartlist> Sales>Sales Transactions>Open Invoices – change date in between beginning of this month to end of this month) and complete it for the period you are trying to close
Monthly Reviewed Work Returns (Smartlist>Sales> Sales Transactions>Open Returns – change date in between beginning of this month to end of this month) and complete it for the period you are trying to close
Monthly Pack, Pick and Ship all orders that can be delivered. (Smartlist> Sales>Sales Transactions>Fullfilment orders to pack, pick & ship reports & ship complete orders report)
Monthly Invoice all shipped orders
Monthly Post all batches & Verify Sales Order Processing Batches are Posted in the General Ledger
Monthly Print any other  Sales reports as required
Monthly Maintain Balance Sheet Supporting Documentation
Annually Post all transactions for the year
Annually Perform the period end / monthly process listed  above for the prior period
Annually Print Sales Tax Detail report if needed- Skip this step if doing in sales, receivables or payables. It is important to perform this step only in one module in year-end closing process.
Annually Close the Sales Tax Periods for the year (Tools>Routines>Sales>Tax year-end)** - Skip this step if doing in sales, receivables or payables. It is important to perform this step only in one module in year-end closing process.
Annually Removed Very Old History (Tools>Sales> Utility>Remove Sales, transaction, distribution history)– Anything Older than 5 Year?

 ** The removal of Sales documents takes all completed sales documents remaining in the open tables and move them into history (if history is maintained, otherwise deletes it). The removal process will not delete open sales orders. However, completely shipped as well as voided documents will be processed.

 ** Closing the Sales tax periods for the year is a process that must only be performed once during the year end close. Ensure that the process is only performed once. This process is also mentioned in Receivables and Payables. Skip step in the other two modules and only perform in one module either sales, receivables or payables.

Step 2 - THE CLOSING PROCESS – Purchase Order Processing 

** Reconciliation of the Received Not Invoiced report to the Accrued purchases account must be completed prior to issuing financial statements for the period.

 

Purchase Order Processing
Monthly Finished Entering Purchase Orders
Monthly Finished Posting Receiving’s Transactions
Monthly Finished Posting Invoice Transactions
Monthly Finished Posting Returns
Monthly Print an open Purchase Order (Smartlist>Purchasing>Purchase Orders> Open Purchase Orders, or, Purchasing> Reports> Analysis > Purchase Order Status )report
Monthly Close any Purchase Order that can be closed
Monthly Reconciled Open Purchase Orders (Purchasing >Utility>Reconcile Purchasing documents) – You can ‘print report only’ to check the reconciliation results and then reconcile.
Monthly Reviewed Received Not Invoiced (Purchasing> Reports>Analysis> Received not Invoiced  Report,or, Smartlist>Purchasing>Receiving line items>Shipments received but not invoiced)**
Monthly Reviewed Expected Shipments (Purchasing > Reports>Analysis > Expected shipments Report)
Monthly Post all batches & Verify Purchase Order Processing Batches are Posted in the General Ledger
Monthly Reconcile or Verify Received Not Invoiced Matches the General Ledger Accrued Purchases**
Monthly Removed Completed Purchase Orders (Purchasing> Routine>Remove Completed PO)
Monthly Forwarded Balance Sheet Supporting Documentation to General Ledger Manager
Annually Post all transactions for the year
Annually Perform the period end / monthly process listed  above for the prior  period
Annually Removed Very Old History (Purchasing >Utility> remove purchasing, transaction or/and period history) – Anything Older than 5 Year?

** If you track your inventory then it is very important to review and reconcile your ‘Received Not Invoiced’ Report. As Inventory is received, the receiving transaction debits inventory and write the offsetting credit to the Accrued Purchases account. When vendor invoices for those items, it is important to match the invoices to the purchase orders (by using Enter Match Invoices transaction in Purchasing) and allow the software to debit the Accrued Purchase account before crediting Accounts Payable. Reconciling the ‘Received Not Invoiced’ report ensures that the process is correctly documented.

**In general, it is expected that the total value of the items received from purchase orders and not yet invoiced equal exactly the amount in the Accrued Purchases account. If they don’t match then error has been made.  Thus it is important to match this report value to the GL. Otherwise, financial statements provided will be incorrect.

Step 3 -  THE CLOSING PROCESS – Inventory

** The process must be completed after the posting of all transactions for the period being closed and before posting any transactions for the next accounting period.

 

Inventory Management
Monthly Confirm Sales Order Processing is Complete
Monthly Confirm Purchase Order Processing is Complete
Monthly Finish Posting Stock Count Activity
Monthly Finish Posting Inventory Adjustments
Monthly Post all the transactions(Invoicing, sales order processing and inventory transactions) for the month and year if year-end**
Monthly Post all batches, including recurring batches & Verify Inventory batches are Posted in the General Ledger
Monthly Reconciled Inventory (Inventory> Utility>Reconcile)
Monthly Reviewed Inventory In Use, In Service, Damaged, and Returned (Smartlist> Inventory>Item Quantity>Item status)
Monthly Reviewed Stock Status (Inventory >Reports>Activity>stock status Report)
Monthly Reviewed Historical Stock Status (Inventory >Reports>Activity>historical stock status Report)
Monthly Verified Stock Status Matches the General Ledger Inventory**
Monthly Verified Historical Stock Status Matches the General Ledger Inventory**
Monthly Print Desired Period end reports such as the Stock Status, Purchase Receipts, Turnover, Transaction History, and Serial Number List.
Monthly Close Period  (Tools>Setup>Company>Fiscal Period) Select the year and close the module (Inventory) for that period
Monthly Forwarded Balance Sheet Supporting Documentation to General Ledger Manager
Annually Post all transactions for  the year
Annually Perform the period end / monthly process listed  above for the prior  period
Annually Process Year End Closing (Inventory> Routine>Year-end close) If you want you can remove discontinued items.**
Annually Removed Very Old History (Inventory> Utility> remove transaction or period and distribution history) Anything Older than 5 Year?

 **Post all the transactions before closing the year to have accurate historical information. If you want to enter future-period transactions before closing the year/month, create a new batch that has new transactions. However, do not post the batch until after the year has been closed (recommended).

** Matching the Inventory sub ledger to the GL is important to ensure valid postings have occurred during the accounting period. Should postings outside of inventory transactions affect the GL, or should inventory transactions not post through the GL, adjustments will be required. Print the stock status report sorted by accounts. This will provide a total of the inventory sub ledger per inventory asset account and allow easy matching of the totals.

** The Stock Status report and the Purchase Receipts reports can contain only current information. Therefore, if you do not print these reports at the end of the month, you cannot print these reports for that specific month at a later date

 What Happens during the Year end close for Inventory:

1.       All inventory period summary records for quantity, cost, and sales are transferred to history for those items for which history is being maintained.

2.       Sets the quantity sold field in the item quantities/site records to zero.

3.       Sets each item’s beginning balance to the quantity on hand at each site.

Please look forward for Year-End Closing Process - Part 2  in Jan 2010 issue...

For further information on year end procedures contact Anderson, Tackman & Co.

by Sherry L. Berg, CPA & Suruchi Taneja, MBA/MIS

Anderson, Tackman & Co, PLC Wisconsin Microsoft Dynamics GP Partner

2 Responses to “Microsoft Dynamics GP Year-End Closing Process – Part I”

  1. asmaa saleh says:

    I want to start recording in year 2014 before I close year 2013 is that mean keeping all transactions in 2014 saved not posted , so if I want to post is there problem ?

  2. Gijeet says:

    Hello, in SOP, what do you mean when you say “change date in between beginning of this month and end of last month”? What date are we changing and why? Thanks.