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Oracle General Ledger Year End Closing Process (Doc ID 66532.1)

APPLIES TO:

Oracle General Ledger - Version 11.5.10.2 and later

Information in this document applies to any platform.
Checked for relevance on 13-Feb-2016

PURPOSE

General Ledger Year End Closing Information

DETAILS

1. The Oracle General Ledger application encompasses the year end closing process into the Open/Close Period program.
When you open the first period of a new year, the "gloire" process in the Open/Close program completes the transfer of all
Revenue and Expense (income statement) actual account balances to retained earnings account (REA).

The program then sets the actual beginning balances for the Revenue and Expense accounts to zero for the first period of the
new year. This process does not create a journal entry, it simply updates the actual account balances of the new period. The
other account types - Assets, Liability and Owners (balance sheet) naturally move their actual balances into the new year.

Note: It is important to check that you do not have any misclassified accounts (combinations with incorrect account type)
before opening the new year.
To help you detect misclassified accounts get the diagnostic test Oracle General Ledger (GL): Misclassified Accounts
Activityscript for your release from Document 1416402.1: Oracle General Ledger (GL) Diagnostics Catalog.

2. You can open the "new" year before you have completed processing for the prior year. This allows subledger processing to
continue on a normal basis. When a journal is posted to a period prior to the "latest open period", the posting program rolls
forward actual balances to all periods ever opened, thus updating the retained earnings balance, if the first period of the year
falls between the period in which the journal was posted and the latest opened period.

Note: Opening periods prematurely can result in posting performance degradation. This can occur because the posting
program also updates all affected account balances to all future periods that were ever opened.

3. During the Open/Close program, the "gloire" process verifies that a valid, enabled Retained Earnings Account (REA) exists
for each balancing segment value which had any activity in the past (i.e. any existing data in gl_balances even if the current
year had no activity). The process requires this retained earnings account even if all the transactions for a balancing segment
value net to an ending balance of zero.

4. Before opening the first period of a new year, thus "closing" the prior year, perform the following steps:

1. Backup your database.

2. Verify that the next calendar year and periods have been defined.
3. Run the reports you normally run when closing a period. If you have needs for any additional reports for year-end, run
those also. There are no specific 'Year-end' reports in General Ledger.
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5. After completing the above steps, open the first period of the new year. Once this process completes successfully, run a
trial balance report for the new year and verify that all of the revenue and expense accounts have an actual beginning balance
of zero.

Note: To verify of any issue with the closing or opening balances, please use the diagnostic test Oracle General Ledger
(GL): Period Closing script for your release from Document 1416402.1: Oracle General Ledger (GL) Diagnostics Catalog

6. If your organization requires special journal entries to close and open fiscal years then you need to run the Year-End
Closing Journals programs:

Income Statement Closing Journals - journals to move the balances to the specified Retained Earnings Accounts
Balance Sheet Closing Journals - to reverse debits and credits of ending year-to-date actual balances for the period you
want to close. The balance, which is the net of the reversed asset and liability accounts, is transferred to the closing
account you specify.

7. If you have revenue or expense accounts which did not zero out, this is most likely the result of an incorrect account type.
Verify that the account is set up with the correct account type (i.e. Revenue or Expense). To verify the account type, navigate
to the following form from the General Ledger SuperUser Responsibility:

Setup > Financials > Flexfields > Key > Values

Query up the account value and tab through the form until the segment qualifier box pops up. The account type is displayed
in this box. If the account type is incorrect, follow the steps outlined in the General Ledger User Guide section Correcting
Misclassified Account Types (it is same process in 11i and R12).

You should also verify the account type in the account code combinations. If the segment value was created with incorrect
account type (usually Expense), the combinations could have been created with the same incorrect account type. When later
corrected in the segment value it does not update the existing combinations.

Note: in case you need to correct misclassified accounts use the following notes for guidance:

for R12: Document 872162.1

for 11i: Document 1050920.6

8. Only the actual balances automatically cross-over to the new year. Encumbrances and Budget balances require the Carrying
Forward Year-End Encumbrance and Budget Balances program to move the amounts into the new year.

9. Use the Year-End Close Checklist as a guideline to perform year-end processing in Oracle General Ledger.

NOTE: For more complete information on period closure in GL and subledgers please review the Period Close Advisor: E-
Business Suite (EBS).

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Useful References

EBS General Ledger Health Check Analyzer (Doc ID 2117528.1 ) si now

The EBS General Ledger Health Check Analyzer scans your Oracle G
environment and transactional data.
For areas of concern, the output will provide recommendations to prev
existing solutions for uncovered problems. Most existing solutions can
Service Request.
CATEGORIES Review your instance specific output from the analyzer now!S
SQL script or as a concurrent request by following EBS General
Webcast Doc ID 2117528.1 .

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