Microsoft Dynamics GP Year-End Closing Process – Part I

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.

 ** 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.

** 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.

 **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

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