It’s month end, now comes the reconciliation crunch

Richard ByromOracle Applications Consultant

Appsworld January 2004

Agenda

• Presentation assumptions and objectives• Why and how should we reconcile• Setup issues• Close procedures for each module, reconciliation

results & two way drill down• Additional Tips• Conclusion• Questions and Answers

Objectives

• This presentation emphasizes the importance of on a regular basis so as to ensure improved control over financial information

• To discuss different setup issues and that may impact your ability to reconcile.

• To outline the month end close process for each module and give practical examples of expected reconciliation results.

Objectives

Manufacturing subledgers

Financial subledgersOracle

General Ledger

Payroll &Human Resources

Objectives

GENERAL LEDGERTransactions- Journals -

- Interfaces -Master Data

- Chart of Accounts! -- Sources & Categories -- Document Sequencing-

FIXED ASSETSTransactions

- Additions / Disposals -- Depreciation -

Master Data- Asset Categories -

ACCOUNTS PAYABLETransactions

- Invoices / Memos -- Payments -Master Data- Suppliers -

ACCOUNTSRECEIVABLETransactions

- Invoices / Memos -- Receipts -Master Data

- Customers -

CASH MANAGEMENTTransactions

- Reconciled Payments -- Reconciled Receipts -

- Miscellaneous Transactions -Master Data

- Bank Accounts -

What should be reconciled?

• Control Accounts

• Inter Modular Movement

• Intercompany Accounts

What happens if we don’t reconcile properly?

• Potential data corruption not detected

• Sub modules may not be posted to the GL

• Multiple months may remain open for a variety of modules

• Repetitive errors may not be detected

• Posting of non standard journals to control accounts

• Open item system carries forward problems to next year.

Why the problem with reconciliations

• Inadequate training/inexperienced users

• Lack of understanding of the system architecture

• Trying to use old procedures for a new system

• Bad Management

How should we reconcile?

• Establish your out of system procedures• Ensure that all the standard functionality provided

by the system is understood and used• Make use of additional tools if necessary

Setup Issues – General Ledger

• Sequential numbering of documentation should be taken into consideration.

• Chart of accounts should be appropriately designed and have an appropriate groupings and sub grouping by using parent and child relationships.

• Document types and sub types need to be looked at

Setup Issues – Sub Ledgers

• Master Data– Should be separated according to the different

groupings of debtors available per profile options– Customers should be given appropriate hierarchies– Customer numbering should done in such a way that

facilitates understanding of the various listings

Setup Issues – Sub Ledgers

• Transactional Data– Ensure that appropriate transaction types are created– Control A/C’s should appropriate filter the information

through to General Ledger– Autoaccounting– Need to look at document numbering

Month end close steps

1. Pre-posting activities2. Posting to supporting systems 3. Run verification Reports4. Reconcile against interfacing systems5. Close periods6. Problem Solution7. Two way drill

Receivables Steps – Pre-posting

• Pre-posting activities– Enter Receipts– Enter Invoices– Record NSF checks– Run Autoinvoice Interface– Print New Invoices– Run Incomplete Invoice Reports– Adjustment Approval Report

Receivables Steps – GL Posting

• Posting to GL(AR) Interfaces > General Ledger

Receivables Steps – Reports & Period Close

• Verification Reports– Sales Journal by GL Account*– Receipt Journal Report*– Journal Entries Report*– Transaction Register*– Adjustment Register– Receipt Register Report*– Aged Trial Balance* – Invoice Exceptions Report– Applied Receipts Register– Unapplied Receipts Register

• Close Periods

Receivables Steps – Reconciliation Results

Jul-02Beginning AR Trial Balance 94,890,824.48+ Transaction Register 26,197,804.53 - Receipt Register -42,318,784.05 +/- Adjustment Reqister 0.00 - Prepayments Remittance Report* 0.00Ending AR Balance 78,769,844.96

Receivables Steps – Reconciliation Results

Description Amount CommentsCurrent Period End AR Aging Total 39,330,142.00 Extracted from AR Aging Report for Jul-02Prior Period End AR Aging Total 55,454,778.25 Extracted from AR Aging Report for Jun-02Change in AR Balance -16,124,636.25 x

+ Invoices/Debit Memos 26,409,424.57 Extracted from AR Sales Journal Reports - Credit Memos -211,620.04 Extracted from AR Sales Journal Reports - Cash Receipts -42,318,784.05 Extracted from AR Receipt Journal Reports - Write Offs 0.00Change in AR Balance -16,120,979.52 y

Debits Posted 26,763,035.64 Extracted from Trial BalanceCredits Posted -42,887,671.89 Extracted from Trial BalanceChange in AR Balance -16,124,636.25 x

x = y = z -3,656.73

Reconciliation Problems

• If AR does not reconcile to the general ledger– Check that the reports have been run for the correct

date/period– Run GL Interface– Make sure all Journals are posted in the General

Ledger– Re-Run both Trial Balance Reports– Check for journal entries in the AR Control accounts

in GL, not generated by AR.– Check for Invoices raised against the AR Control

account

Receivables two way drill - Invoices

Receivables two way drill – Invoice Status

Receivables two way drill – Invoice Accounting

Receivables two way drill – Cash Receipts

Receivables two way drill

Receivables two way drill – Receipt History

Receivables two way drill-Miscellaneous Receipts

Receivables two way drill-Miscellaneous Receipts

Receivables two way drill- GL to Invoice

Receivables two way drill – Drilldown effect

Payables Steps

• Pre-posting activities– Enter Employee Expense Reports– Enter Invoices– Run Invoices on Hold Report– Run Payables Approval– Check for Unapproved Invoices

Payables Steps – Transferring to GL

Payables Steps – Create mass additions

Payables Steps – Reports & Period Close

• Verification Reports– Accounts Payable Trial Balance*– Posted Invoice Register*– Posted Payment Register*– Expense Distribution Report– Invoice Aging Report*– Posting Hold Report– Invoice Register*

• Close Periods

Payables Steps – Reconciliation Results

• Reconciliation can also be achieved using Tutor Business Form FOR0672

Description Amount(Previous Month) Accounts Payable Trial Balance -27,428,898.13+ (Current Month) Posted Invoice Register 7,778,812.99- (Current Month) Posted Payment Register -5,779,945.70(Current Month) Accounts Payable Trial Balance -25,430,030.84

Reconciliation Problems

• If AP does not reconcile to GL– Check that the reports have been run for the correct

date/period.– Run GL Post in Accounts Payable.– Post all payables generated batches in the General

Ledger– Re-Run both Trial Balance reports– Check for Journal Entries in the AP control account,

not generated by Accounts Payable.– Check for Payments/Invoice Distributions made

against the AP control account.

Payables two way drill – query an invoice

Payables two way drill – view accounting

Fixed Assets Steps

• Pre-posting activities– Prepare Mass Additions– Post Mass Additions– Delete Mass Additions– Prepare Manual Additions– Retire Assets– Adjust Assets– Capitalize CIP Assets– Run Depreciation

Fixed Assets Steps – GL Posting

• Run Journal Entries

Fixed Assets Steps – Reports & Period Close

• Verification Reports– Cost Detail Report*– CIP Detail Report– Asset Addition Report– Cost Adjustment Report– Asset Retirements Report– Asset Reclassification Reconciliation Report– Asset Transfer Reconciliation Report– CIP Capitalization Report– CIP Assets Report– Unposted Mass Additions Report

• Close Periods

Fixed Assets Results

• Alternative reconciliation using FOR0674 Tutor Business Form

• Printing of Reconciliation Report

Description Cost NBVPrevious Month’s Ending Balance 120,951,159.11 96,421,655.44+ Asset Additions 658,900.00 658,900.00+ (-) Adjustments 0.00- Depreciation Charge -450,506.21 - Retirements 0.00+ Capitalizations 0.00+ (-) Reclassifications 0.00+ (-) Transfers 0.00Current Month’s Ending Balance 121,610,059.11 96,630,049.23

Cash Management Steps

• Pre-posting activities– Capture/Interface Bank Statements– Automatically reconcile statements– Manually reconcile amounts not cleared– Check all statements are fully reconciled

• Bank Statement Detail Report• Online checks

Cash Management Steps

• Post to GL– Ensure payables and receivables posting has

taken place• Verification Reports

– Cash In Transit Report– Cleared Transactions Report*– General Ledger Reconciliation– Transactions available for Reconciliation

Cash Management Results

• Check Receipts against Receivables Reports, Cash Account per GL and Cash Management Reports

• Check Payments against Payables Reports, Cash Account in GL and Cash Management Reports

Cash Management two way drill – Account Inquiry

Cash Management two way drill – Drilldown effect

General Ledger Steps

• Pre-posting activities– Reconcile interfaces from feeder systems– Enter Manual Journal Entries– Reverse Entries– Run Journal Import– Generate Recurring Journal Entries– Generate Mass allocations

• Post Journal Entries

General Ledger Results

• Verification Reports– Journal Entry Report– Account analysis Report*– Account Analysis – Sub Ledger Detail Report– Trial Balance – Detail Report*– Run Financial Statement Generator – FSG’s

• Close Periods

Additional Tips – File Export

• To export the results of an online inquiry or onscreen view choose File > Export from the menu

• Save the file generated to your desired location

• Open the file from Microsoft Excel. Ensure that from the open dialogue box in Excel you specify files of type all *.*

• When the text import utility appears choose finish, you can now sort the file according to your personal requirements

Additional tips Cont.d – Tools>Copy File

• Use Tools > Copy file from the menu when you are in a report

• Save the file in web or text format to your desired location – preferably use text

• Import the file into Excel using the text import wizard as displayed – use the report column headers as your fixed width delimiters.

Additional tips cont.d - Tutor

• Use Oracle Tutor Business forms to give you reconciliation templates.

Conclusion

• Reconciliations are important in order to identify problem areas and rectify them on a timely basis.

• Procedures should be put in place to facilitate reconciliation as well as ensure that the organisation is making use of all possible tools.

• Setups as well as inquiry and reporting tools have a significant impact on the ease of reconciliation.

Please come and see my next presentation:• Take the pain out of Public Sector Budgeting

implementation Setups – Thursday January 29th, 2004 at 03:30 PM in room 20D.

AQ&

Speaker Information

Name : Richard Byrome-mail : richard@rpcdata.com

richard@richardbyrom.comCompany : RPC Data LtdWeb Site : http://www.rpcdata.com

http://www.richardbyrom.com