Record To Report

Record to Report (RTR) Concepts

1. Chart of Accounts: A structured list of a company's general ledger accounts used for financial
repor ng.

2. General Ledger: A central repository where all financial transac ons of a company are recorded.

3. Journal Entries: Records of individual financial transac ons in chronological order before they are
posted to the general ledger.

4. Accruals: These are revenues and expenses that are recognized before cash is exchanged.

It means recording transac ons when they occur, regardless of when the cash actually changes hands.

5. Deferrals: These are revenues and expenses that are recognized a er cash is exchanged.

It involves postponing the recogni on of revenue or expense un l a later accoun ng period.

6. Fixed Assets: Tangible assets with a useful life of more than one accoun ng period, such as property,
plant, and equipment.

7. Deprecia on: The systema c alloca on of the cost of a fixed asset over its useful life.

8. Intercompany Transac ons: Financial transac ons that occur between en es within the same
corporate group.

9. Reconcilia on: The process of comparing two sets of records or accounts to ensure they are in
agreement.

10. Trial Balance: A report that lists the balances of all general ledger accounts at a specific point in
me to ensure debits equal credits.
11. Closing Process: The series of steps taken at the end of an accoun ng period to prepare financial
statements and close temporary accounts.

12. Financial Repor ng: The process of communica ng financial informa on about a company's
performance to external stakeholders.

13. Consolida on: The process of combining financial informa on from mul ple en es within a
group to present a unified view.

14. Financial Statements: Reports that summarize the financial performance and posi on of a
company, including the balance sheet, income statement, and cash flow statement.

15. Variance Analysis: The process of comparing actual financial results to budgeted or expected
results to iden fy and explain differences.

16. Audit Trails: Documenta on that provides a chronological record of the sequence of ac vi es or
transac ons.

17. Financial Controls: Policies and procedures implemented by a company to ensure the accuracy,
reliability, and integrity of financial repor ng.

18. Compliance: Adhering to relevant laws, regula ons, and standards in financial repor ng and
business opera ons.

19. GAAP (Generally Accepted Accoun ng Principles): Standard accoun ng principles, standards, and
procedures that companies must follow when preparing financial statements.

20. IFRS (Interna onal Financial Repor ng Standards): Interna onal accoun ng standards developed
by the Interna onal Accoun ng Standards Board (IASB) for global financial repor ng.
RTR Ques on & Answers

1. What is the RTR process?

The RTR process involves collec ng, processing, and delivering relevant, mely, and accurate financial
informa on.

This includes the steps from recording financial transac ons to genera ng financial reports, which are
used for internal management and external stakeholders.

2. Can you explain the importance of the RTR process in an organiza on?

The RTR process is crucial as it ensures the accuracy and integrity of financial data, which is essen al
for decision-making, regulatory compliance, and financial transparency.

It helps in tracking performance, iden fying areas for improvement, and ensuring that financial
statements reflect the true financial posi on of the organiza on.

3. What are the key components of the RTR process?

The key components of the RTR process include:

1. General Ledger (GL) Accoun ng

2. Fixed Assets Accoun ng
3. Intercompany Accoun ng
4. Transac on Processing
5. Accounts Reconcilia on
6. Month End Close Process
7. Consolida on
8. Financial Repor ng
9. Internal Control
10. Audit

4. How do you ensure accuracy and compliance in financial repor ng?

To ensure accuracy and compliance, I adhere to accoun ng standards (such as GAAP or IFRS),
implement robust internal controls, conduct regular reconcilia ons, review and validate data, and stay
updated with regulatory changes.

Using reliable accoun ng so ware and conduc ng periodic audits also play a crucial role.

5. Can you describe your experience with financial closing ac vi es?

My experience with financial closing ac vi es includes preparing and reviewing journal entries,
reconciling accounts, ensuring all transac ons are recorded, and genera ng financial statements.

I also coordinate with various departments to gather necessary informa on and ensure that deadlines
are met.
6. How do you handle intercompany transac ons and reconcilia ons?

Handling intercompany transac ons involves recording transac ons between en es within the same
organiza on accurately, ensuring proper documenta on, and elimina ng intercompany balances
during consolida on.

Regular reconcilia ons are performed to match intercompany transac ons and resolve discrepancies
promptly.

7. What tools and so ware are you familiar with for RTR processes?

I am familiar with various accoun ng and ERP systems such as SAP, Net Suite, Oracle, and QuickBooks.

8. Describe a challenging situa on you faced during the financial close process?

One challenging situa on was iden fying a significant discrepancy during the financial close process.

I inves gated by tracing transac ons, consul ng with team members, and reviewing documenta on.

A er iden fying the root cause, which was an incorrect journal entry, I corrected the entry and
implemented addi onal checks to prevent future occurrences.

9. How do you stay updated with changes in accoun ng standards and regula ons?

I stay updated by regularly a ending professional development courses, par cipa ng in webinars and
workshops, subscribing to industry newsle ers, and being an ac ve member of professional
accoun ng organiza ons.

I also review publica ons from regulatory bodies such as the FASB, IASB, and local accoun ng boards.

10. What steps do you take to prepare for an audit?

To prepare for an audit, I ensure all financial records are accurate and complete, reconcile accounts,
review internal controls, gather suppor ng documenta on, and compile financial statements.

I also coordinate with the audit team to provide necessary informa on and address any queries
promptly.
11. Can you explain the concept of accrual accoun ng?

Accrual accoun ng is an accoun ng method where revenue and expenses are recorded when they
are earned or incurred, regardless of when cash is exchanged.

This approach provides a more accurate picture of a company’s financial posi on by recognizing
economic events as they occur.

12. What is your experience with financial consolida on?

My experience with financial consolida on involves combining financial statements of different

en es within a group to create a single set of financial statements.

This includes elimina ng intercompany transac ons, aligning accoun ng policies, and ensuring
consistency in repor ng.

13. How do you priori ze tasks during the busy financial close period?

During the busy financial close period, I priori ze tasks by crea ng a detailed schedule, focusing on
cri cal and high-impact ac vi es first, and ensuring clear communica on with team members.

I also set aside me for unexpected issues and regularly review progress to stay on track.

14. What steps do you take to ensure the integrity of the general ledger?

To ensure the integrity of the general ledger, I perform regular reconcilia ons, review journal entries,
maintain proper documenta on, and conduct periodic audits.

Implemen ng strong internal controls and access restric ons also helps in maintaining accuracy and
preven ng unauthorized changes.
15. What is Accounts Reconcilia on?

Bank Reconcilia ons:

Purpose: Reconciling the company's cash records (general ledger) with the bank's records (bank
statement).

Process: Comparing the transac on in the bank statement (deposits, withdrawals, fees) with the
company's cash account in the general ledger. Adjustments are made for outstanding checks, deposits
in transit, bank errors, and other discrepancies.

Credit Card Reconcilia on:

Purpose: Matching credit card transac ons recorded in the general ledger with credit card statements
from the provider.

Process: Reconciling individual credit card transac ons, fees, and payments to ensure accuracy.
Addressing discrepancies caused by missing transac ons, refunds, or processing errors.

Accounts Receivable Reconcilia on:

Purpose: Ensuring that the accounts receivable (amounts owed by customers) recorded in the general
ledger match the details in the subsidiary ledger or customer statements.

Process: Matching individual customer balances with the accounts receivable control account in the
general ledger. Inves ga ng and resolving differences due to unapplied payments, credits, or billing
errors.

Accounts Payable Reconcilia on:

Purpose: Verifying that the accounts payable (amounts owed to vendors) recorded in the general
ledger align with vendor invoices and statements.

Process: Comparing vendor balances in the Accounts payable ledger with the general ledger.
Addressing discrepancies caused by unmatched invoices, prepayments, vendor credits, or billing
mistakes.

Fixed Assets Reconcilia on:

Purpose: Fixed Asset Reconcilia on is the process of verifying that the balances in the fixed asset
register match the corresponding general ledger accounts.

Process: Ensures that the fixed asset register matches the general ledger accounts for fixed assets,
including any addi ons, disposals, and deprecia on.
Intercompany Reconcilia on:

Purpose: Balancing transac ons and balances between different entries or divisions within the same
organisa on.

Process: Reviewing transac ons between intercompany accounts to ensure consistency and accuracy.
Resolving discrepancies caused by intercompany loans, transfers, sales, or expenses.

Inventory Reconcilia on:

Purpose: Valida ng the accuracy of inventory records in the general ledger against physical inventory
counts.

Process: Conduc ng physical inventory counts and comparing them with the inventory balances in the
general ledger. Adjus ng for shrinkage, spoilage, or discrepancies between book inventory and actual
quan es.

Payroll Reconcilia on:

Purpose: Verifying payroll transac ons and deduc ons recorded in the general ledger against payroll
reports and employee records.

Process: Comparing payroll expenses, tax withholdings, and benefit contribu ons in the general ledger
with payroll reports from the payroll system. Resolving discrepancies related to employee salaries,
benefits, or payroll taxes.
16. What are the Adjusted Journal Entries?

1. Prepaid Expense

When you purchase something

DEBIT Prepaid Expense

CREDIT Cash

When you incur an expense

DEBIT Expense (ex: office supplies)

CREDIT Prepaid Expense

2. Accrued Expenses

In the Current Month

DEBIT Expense (ex: office supplies)

CREDIT Accrued Expenses

In the Month, in which the bill is received

DEBIT Accrued Expenses

CREDIT Expense

3. Accrued Interest

Accrued interest is booked to show the amount of interest

DEBIT Interest Expense

CREDIT Accrued Interest

4. Deferred Revenue

Upon Invoice

DEBIT Accounts Receivable

CREDIT Deferred Revenue

As the contract gets carried out

DEBIT Deferred Revenue

CREDIT Revenue
5. Deprecia on

Deprecia on is recorded to reflect the wear and tear

DEBIT Deprecia on Expense

CREDIT Accumulated Deprecia on

6. Inventory

When inventory is purchased

DEBIT Inventory (or raw materials / WIP / finished goods)

CREDIT Cash

When goods are sold

DEBIT COGS

CREDIT Inventory (or related acct)

17. What are the SAP T Codes used in RTR?

General Ledger SAP T Codes

Master Data

FS00: G/L Account Master Record Maintenance

FS01: Create G/L Account

FS02: Change G/L Account

FS03: Display G/L Account

Pos ng

F-02: Enter G/L Account Pos ng

FB50: G/L Account Pos ng

F-04: Post with Clearing

FB01: Post Document

F-05: Post Foreign Currency Valua on

Display and Repor ng

FBL3N: G/L Account Line Items Display

FS10N: G/L Account Balance Display

S_ALR_87012301: G/L Account Balances

S_ALR_87012282: G/L Account Transac on Figures

Periodic Processing

F.01: Financial Statements

F.05: Foreign Currency Valua on

F.13: Automa c Clearing

Closing Opera ons

F.03: Reconcilia on of FI and CO

F.07: G/L Account Carry forward

Special Ledger

GB01: Create Special Ledger

GB02: Change Special Ledger

GB03: Display Special Ledger

Fixed Assets SAP T Codes

Asset Master Data

AS01: Create Asset Master Record

AS02: Change Asset Master Record

AS03: Display Asset Master Record

AS04: Create Asset Master Record (in mass)

AS05: Change Asset Master Record (in mass)

AS06: Delete Asset Master Record

Asset Transac ons

ABZON: Asset Acquisi on

ABUMN: Asset Transfer

ABAVN: Asset Re rement by Scrapping

ABAON: Asset Re rement with Revenue (Without Customer)

ABZP: Post-Capitaliza on

Asset Deprecia on

AFAB: Deprecia on Run

AW01N: Asset Explorer

AW01: Asset Value Display

Periodic Processing

AFAMA: Change Deprecia on Key

AJAB: Close Fiscal Year

AJRW: Recalculate Values

Repor ng

S_ALR_87011964: Asset Balances

S_ALR_87012048: Asset History Sheet

S_ALR_87011990: Deprecia on List

S_ALR_87011965: Assets Acquired

Integra on with General Ledger

AO90: Account Determina on

OABW: Define Deprecia on Areas

Intercompany SAP T Codes

Financial Accoun ng (FI)

FB50 - Enter G/L Account Document

FB70 - Enter Customer Invoice

FB60 - Enter Vendor Invoice

F-02 - General Ledger Pos ng

F.05 - Foreign Currency Valua on

F-44 - Clear Vendor

F-32 - Clear Customer

Controlling (CO)

KB11N - Enter Intercompany Pos ng

KB21N - Enter Ac vity Alloca on

KE21N - Enter Profitability Segment Adjustment

KO02 - Change Order

KOB1 - Actual Costs for Orders

Materials Management (MM)

ME21N - Create Purchase Order

ME22N - Change Purchase Order

MIGO - Goods Movement

MIRO - Enter Incoming Invoice

General Ledger

FS00 - G/L Account Master Record Maintenance (Centrally)

OB52 - Maintain Pos ng Periods

18. What are the General Ledger Month End Close process?

General Ledger Month End Close Process

Prepara on

1. Review Calendar

Verify the month-end close calendar and key deadlines.

Communicate melines and responsibili es to the finance team.

2. Pre-Close Ac vi es

Ensure all transac ons for the period are recorded.

Verify that all subsidiary ledgers (AP, AR, Payroll, Inventory) are closed and reconciled.

Transac on Entry and Review

3. Journal Entries

Post all recurring, adjus ng, and actual journal entries.

Ensure all manual journal entries are approved and posted.

4. Reconcile Accounts

Bank reconcilia ons.

Intercompany accounts reconcilia on.

Fixed assets and deprecia on schedules.

Prepaid expenses and amor za ons.

Accrued liabili es and expenses.

Other balance sheet account reconcilia ons (e.g., loans, investments).

5. Subledger Reconcilia on

Accounts receivable reconcilia on.

Accounts payable reconcilia on.

Inventory reconcilia on.

6. Review Suspense/Unallocated Accounts

Clear any items in suspense or unallocated accounts.

Preliminary Financial Review

7. Trial Balance

Generate and review the trial balance for discrepancies.

Inves gate and resolve any large or unusual variances.

8. Variance Analysis

Perform variance analysis against budget and prior periods.

Document and explain significant variances.

Final Adjustments and Review

9. Financial Statements Prepara on

Prepare preliminary financial statements (Income Statement, Balance Sheet, Cash Flow Statement).

Review for completeness and accuracy.

10. Final Adjustments

Post any final adjus ng entries based on preliminary review.

Re-run and review updated financial statements.

Management Review and Repor ng

11. Management Review

Present financial statements to management for review.

Obtain approvals from relevant stakeholders.

12. Prepare Financial Reports

Prepare internal management reports.

Prepare external repor ng (if applicable, e.g., regulatory filings).

Close and Archive

13. Finalize Close

Lock the accoun ng period to prevent further entries.

Backup and archive all month-end working papers and suppor ng documents.

14. Post-Close Ac vi es

Communicate the close comple on to all stakeholders.

Start planning and prepara on for the next month-end close.

15. Con nuous Improvement

Document any issues encountered and areas for improvement.

Review and update the month-end close checklist as necessary.

19. Men on Month End Close Ac vi es Checklist?

Sl Task Name
1 Expenses
2 Revenue Accounts
3 Accounts Receivable
4 Accounts Payable
5 Inventory Accounts
6 Fixed Assets Accounts
7 Depreciation
8 Amortization
9 Intercompany Accounts
10 Payroll
11 Journal Entries
12 Accounts Reconciliation
13 Control Accounts
14 Trial Balance
15 Financial Statements