How to efficiently handle period-close process in Oracle

Session ID:

Prepared by:

How to efficiently handle period-close process in Oracle EBS R12 - a critical study

10081

Anpu Rajaratnam, Cree Inc.

April 2-6, 2017 in Las Vegas, NV USA #C17LV

Presenter Information

Name: Anpu Rajaratnam

Title: IT Architect (Finance)

Company: Cree, Inc.

Brief: A seasoned solution architect and Oracle Finance Expert with many years of professional experience in information technology and Oracle EBS.

Credentials: C.Eng., MASCE, PMP, CPA, CGMA, FCMA, OCP, OCE


Company Information

Cree is a market-leading innovator of lighting-class LEDs, LED lighting, and semiconductor solutions for wireless and power applications.

www.cree.com

http://www.cree.com/


Abstract

In this session, audience will learn the details for the importance of period and year-end close, recommended sequence of subledgers close, insights, and guidance on period-end procedures. This article provides guidance on the period-end close procedures across Financials, Manufacturing, Procurement, Projects, and Inventory. This paper will examine the critical components, issues, and best practices on period-close.


Presentation Objectives

o To understand the importance of period-close process

o To understand that in Oracle EBS R12, period close is possible only at ledger level and not at operating unit.

o To learn that in Oracle EBS R12, inventory period close is possible by either at individual or multiple inventory organization level.

o To understand the recommended sequence of subledgers close and dependencies.

o To understand the importance of year-end close process.

o To examine the critical components, issues, and best practices of the period-close.


Document Note

o This document is written for all cases whether Oracle EBS R12 is implemented for a single operating unit under one ledger or multiple operating units under single ledger or single/multiple operating units under multiple ledgers.

o This documents provides the details for the recommended sequence of subledgers close, insights of closing process, and guidance on period-end procedures.

o It is not the intention of this paper to provide a complete details including all the detail steps for each subledger application close and GL Close, and instead this paper will examine the importance, sequence, critical components, issues, and best practices of the period-close.

o This paper examines and will include Oracle Lease and Finance Management, Oracle Cash Management, Oracle Treasury, Oracle Payables, Oracle Purchasing, Oracle Order Management, Oracle Receivables, Oracle Assets, Oracle Projects, Oracle Cost Management, Oracle WIP, Oracle Inventory, and Oracle General Ledger as part of period-close.

o This document intends to provide a reference for planning period-end close process for ‘real-life’ implementations.

How to efficiently handle period-close process in Oracle EBS R12 - a critical studyImportance of period-close process


Importance of Period-Close Process

o Every Oracle EBS customer needs to successfully close their ledgers each period. However, often this process becomes complex and difficult to handle, and therefore proper understanding and streamlining this process to have an effective period-close becomes very critical.

o Closing is the process of completeness of transaction processing and accounting for all transactions at the end of each period so all accounting information is transferred to the General Ledger.

o Subledgers cannot be closed if the required transactions in that period are not processed, accounted, and transferred. Subledgers are E-Business Applications that transfer accounting records to the General Ledger - for example, Payables, Receivables, Purchasing, Inventory, etc.

o By period-close we ensure that all transactions are accounted and accounting information is transferred to General Ledger. If we don’t do the period-close then we are not using and/or missing the available system functionality to confirm all subledger transactions are accounted and transferred to General Ledger.

o If we don’t close the subledger period then new transactions can be effected in past periods and this will invalidate the already accounted and reported results in General Ledger.



o Although this document particularly refers to ‘Period-End Close Procedures’, many of these procedures or processes within each application can be performed more regularly throughout the accounting period as required. Each application provides its own control as to when and how often data is transferred from the application to the General Ledger.

o Is period-close is mandatory for all Oracle Sub-ledgers and General Ledger? Technically period-close is not a mandatory task.

By period-close, we ensure required controls are in place and met and once a period is closed system will not allow any new transactions. This ensures only transactions and journals for the period are processed, recorded, and reported.

The key is that once results are reported then transactions and accounting need to be frozen for that period, and this can be better achieved through period-close process.



o What would be the disadvantages and/or inefficiencies if the ‘inventory periods are not closed’?

The control of disallowing the transactions for prior period is taken out, and this will cause issues in the reconciliation issues between Oracle General Ledger and Oracle Inventory.

This will allow the unprocessed and invalid transactions to stay, and this will accumulate over the period of time and at one point the issue may become as extreme and uncontrollable.

We will not able to confidently report on inventory transactions and accounting.

When a change to an existing transaction or new transaction is effected in a prior period and transferred to Oracle General Ledger this will invalidate the reconciliation performed between Oracle Inventory and published General Ledger results, and this is critically an inefficient way to manage accounting. Any changes must be handled through the current period so that this is not disturbing the prior periods accounting.


Period-Close Process: Secondary Ledger and Reporting Currency Ledgero If you run Create Accounting program, it will post data in Primary Ledger as well

as in Secondary Ledger (subledger or journal level) and Reporting Currency Ledger (subledger or journal level)

o If Secondary Ledgers are used then period-close for the Secondary Ledger should be taken place after the period-close of primary-ledger. The same is applicable to Reporting-Currency Ledgers. This means, as far as closing is concerned, you need to close primary, secondary, and reporting ledgers separately.

o If you close Secondary Ledger first and then either allow transaction processing in the Primary Ledger and/or directly enter journals and post in Primary Ledger this will lead to an error (Error31 - Unopened Secondary Ledger Period). If period is reopened in Primary ledger while the same period in the Secondary Ledger is closed, this will again lead to an error (Error31 - Unopened Secondary Ledger Period).


Subledger Accounting Close Process

Following are the general guidelines to perform the period-close process for every subledger:

1. Complete transactions2. Create accounting3. Reconcile transactions4. Post to General Ledger5. Reconcile accounting6. Close period

The important thing to note, is that the accounting is not the accounting distribution on the transaction. The final accounting by SLA could result in different accounting entries being generated based on the accounting rules you have configured. Therefore, you need to ensure that all your accounting for your transactions is created before you post to GL, in order to update the accounting balances correctly.


Overview of Oracle EBS Accounting

In Oracle EBS R12, distributions on transactions in subledgers are considered to be the default accounting and therefore should not be used for reconciliation purposes. The reason is that SLA enables you to change the accounting for transactions so it is different from the default accounting. Therefore, the subledger accounting becomes the single source of truth for accounting reconciliations.


Sub Ledger Accounting – Process Change

Differences between R11i and R12


Sub Ledger Accounting – Process Change

The subledger accounting journal represents your real accounting and the balancing lines are created as part of these subledger accounting journals. The journals can then be posted to the general ledger to update the GL balances.

A period-close for a subledger for a period essentially means that the subledger accounting for that subledger is closed for the selected period.


Subledger Accounting – Reconciliation

• In Oracle EBS R12, there is no reason to reconcile distributions on transactions to the GL, and this is because the accounting reconciliation should be between SLA Data and GL Data and not between transaction data and GL Data. You can still reconcile transaction reports to accounting reports.

• The new accounting reports in Release 12 now also contain more comprehensive information, and not just on balances but also on suppliers, customers and transactions.

• The main point to note is that when you do account balance reconciliation, you should ignore distributions in Release 12, especially if you have altered your subledger accounting rules.

How to efficiently handle period-close process in Oracle EBS R12 - a critical studyOracle EBS R12 Period-Close is at Ledger Level


Period-Close is at Ledger Level

• In Oracle EBS R12, period close is possible only at ledger level and as such period-close works at all the ledger associated operating units and not at the individual Operating Unit (OU) for applications based at OU.

• If a Ledger is associated with more than one Operating Unit then all Operating Units under this Ledger must be completed for period-close activities and therefore must be ready to close the Ledger at the same time.

• All of the operating units that share a ledger also share the same period status. When you update the period statuses to ‘Open’ in one operating unit, that period is opened for all operating units within the ledger.

• There is an enhancement for this (Bug 7154359 – Close periods for OU of same Ledger separately) and is under review by product management and it is still at pending or work-in-progress stage as of writing this document.

• General Ledger Period Close for multiple ledgers can be performed simultaneously by using a Ledger Set.


Period-Close: Possible Cases

Case Ledger Operating Unit Subledger Period-Close Process

1 Single Single OU Ledger level, for single Ledger

2 Single Multiple OU Ledger level, for single Ledger

3 Multiple Single OU per Ledger

Ledger level, for each Ledger

4 Multiple Multiple OU per Ledger

Ledger level, for each Ledger


Period-Close: Possible Cases

o When single ledger with single operating unit is in place, period-close will only need to be performed for that ledger.

o When single ledger with multiple operating units is in place, period-close will need to be performed for only that ledger.

o When multiple ledgers with single operating unit per ledger is in place, period-close will need to be performed for each ledger.

o When multiple ledgers with multiple operating units per ledger are in place, period-close will need to be performed for each ledger.

o Subledger Period Close Exceptions Report can be run for multiple ledgers by using Ledger Set for any subledger. This report is also called by the Period Close Validation Program to extract all those events which are either not transferred or are not accounted for.

o General Ledger ‘Open Period’ and ‘Periods - Close Period’ programs can be run for multiple ledgers in a single run by using a Ledger Set.

How to efficiently handle period-close process in Oracle EBS R12 - a critical studyIn R12, inventory period close is possible by either at individual or multiple inventory organization


Close Inventory Period:Closing Multiple Inventory Organizations

oUse the Close Period Control program to close a period across multiple inventory organizations based on a pre-defined organization hierarchy and by selecting a starting organization. This program will close the inventory period for the selected starting inventory organization and all the inventory organizations below it.

o Prerequisite:

Set up a valid Organization Hierarchy in Oracle HRMS that include all required inventory organizations which need to be part of.


Close Inventory Period:Closing Multiple Inventory Organizationso Run Close Period Control program

Parameters:

• Organization Hierarchy: Enter a valid organization hierarchy name from the list of values. You can choose any organization hierarchy where all organizations subordinate to the hierarchy origin share the same item master, calendar and chart of accounts.

• Starting Organization: Enter a hierarchy origin (Organization) to execute the program. This starting organization may or may not have subordinate organizations.

• Close Period From: Enter the list of valid period(s) to close, and this will be your current inventory period.

• Request Count: Enter the number of requests to actively run at one time.


Close Inventory Period:Closing Multiple Inventory Organizations

oUsing this functionality will avoid the need to open and close multiple inventory organizations one by one, and is a very efficient way to manage the inventory periods.

o To achieve this, an enterprise needs to decide on a single hierarchy or required number of hierarchies and a starting inventory organization for each hierarchy. As an example, hierarchy can be:

• At enterprise level

• Based on each primary ledger e.g. One for US Ledger, one for Canada Ledger etc.

• Based on each LE or OU.

• Based on selected inventory organizations under a Ledger, LE or OU


Closing Multiple Inventory OrganizationsExample: Inventory Org Hierarchy 1

IO-100

IO-110

IO-111

IO-120

IO-121

IO-121

IO-130 IO-140

IO-141

IO-142


Closing Multiple Inventory OrganizationsExample: Inventory Org Hierarchy 1o In the above hierarchy, if the Inventory Organization IO-100 is

selected as the origin or starting organization during the Close Period Control program run the it will close all the subordinate organizations below it. This means all IO-100, IO-110, IO-111, IO-120, IO-121, IO-122, IO-130, IO-140, IO-141, and IO-142 will be closed.

o If the Inventory Organization IO-110 is selected as the starting organization during the Close Period Control program run it will close all the subordinate organizations below it. This means IO-110 and IO-111 will be closed.

o If the Inventory Organization IO-130 is selected as the starting organization during the Close Period Control program run it will close IO-130 only.

oHere, all organizations subordinate to the hierarchy origin must share the same item master, calendar and chart of accounts.


Open Inventory Period:Opening Multiple Inventory Organizationso Use the Open Period Control program to open a period across multiple inventory

organizations. This program works same as the Close Period Control program

o Prerequisite: Set up a valid Organization Hierarchy in Oracle HRMS that include all required

inventory organizations which need to be part of. You can use the same hierarchy that will be used for Closed Period Control program or use a new hierarchy.

o Run Open Period Control program Parameters:

• Organization Hierarchy: Same as the one used for Close Period Control program.

• Hierarchy Origin (Starting Organization): Enter a hierarchy origin (Organization) to execute the program. This starting organization may or may not have subordinate organizations.

• Number of Periods to Open: Enter the number of periods to open. You can open the next periods and additional periods for the hierarchy origin organization, and its subordinate organizations in the organization hierarchy. To open periods, they must have a Future status.

How to efficiently handle period-close process in Oracle EBS R12 - a critical studyRecommended sequence of subledgers close and dependencies


Period-Close Dependencies:

The following are some considerations and dependencies for an effective period-close process:

1. Many period-close processes within each subledger can take place in parallel with other subledgers. For subledger period-close steps and details please refer the Oracle White Paper ‘Period-End Procedures’

2. Certain steps need to wait for the related subledger period-close, and it is important to understand this fact. Example: As part of PO Close, Accrual Reconciliation should happen before PO Period-Close but only after AP Period-Close.

3. In Release 12, Cost Management becomes an application module holding Inventory, Receiving, and WIP accounting entries. Therefore accounting in Cost Management must be completed and transferred to Oracle General Ledger for these Manufacturing and Procurement Applications.


Period-Close Module Dependencies

Oracle Payables

AP

Oracle

Receivables

AR

Oracle Projects

PA

Oracle Order

Management &

Shipping

OM, WSH

Oracle Cash

Management

CE

Oracle Assets

FA

Oracle Inventory

INV

Oracle

Purchasing

PO

Oracle Treasury

XTR

Oracle General

Ledger

GL

Oracle Lease and

Finance Management

OKL

Period Close Module Dependencies

Oracle Cost

Management

CST

Oracle Work In

Process

WIP


Period-Close Dependencies:

The following are some restrictions and dependencies on period-close process:1. Oracle Payables need to be closed before Oracle Purchasing is closed to

account for purchasing accruals at period end.2. Oracle Payables need to be closed before Oracle Inventory and Oracle

Assets.3. Oracle Cash Management activities need to be processed and completed

before Oracle Receivables, as bank reconciliation in Cash Management will create miscellaneous receipts in Oracle Receivables and so forth.

4. Oracle Assets can't be closed before Oracle Payables. This will result in assets not imported from AP in the correct period.

5. Oracle Receivables shouldn’t be closed its period until all Oracle Projects invoices have been interfaced to it.

6. Before closing accounting periods in Oracle Inventory, Oracle Receivables and Oracle Payables, must process all outstanding intercompany shipments including, but not limited to, posting to Oracle General Ledger

7. Finally, you close all of your subledgers before you close General Ledger.


Period-Close Sequence:

The period-close procedures can vary between the industries and companies, and however the major processes and the period close sequence will remain same. It is beneficial to follow the closing process sequence recommended by Oracle. The following is the recommended period-close sequence for procedures and close:

1. Oracle Finance and Lease Management2. Oracle Order Management & Shipping3. Oracle Cash Management4. Oracle Treasury5. Oracle Payables6. Oracle Receivables7. Oracle Purchasing8. Oracle Inventory, Oracle Costing, Oracle WIP9. Oracle Projects10. Oracle Assets11. Oracle General Ledger

Note: Oracle Order Management, Shipping & Execution, Cash Management, Treasury, Work In Process, and Cost Management applications don’t have their own period.


Period-Close Sequence:

5. Oracle

Payables

AP

6. Oracle

Receivables

AR

9. Oracle

Projects

PA

2. Oracle Order

Management &

Shipping

OM, WSH

3. Oracle Cash

Management

CE

10. Oracle

Assets

FA

8. Oracle

Inventory

INV

7. Oracle

Purchasing

PO

4. Oracle

Treasury

XTR

11. Oracle

General Ledger

GL

1. Oracle Lease and

Finance Management

OKL

Period Close Sequence

8. Oracle Cost

Management

CST

8. Oracle Work

In Process

WIP

Note: OM, WSH, CE, XTR, WIP, and CST Applications do not have their own period, and only their related period-close activities need to be performed for these applications. Actual Period Close

Period-Close Activities

How to efficiently handle period-close process in Oracle EBS R12 - a critical studyImportance of year-end close process


Importance of Year-End Close Process

• Many organizations follow specific procedures to generate special journal entries to close and open fiscal years. These closing entries apply to both the income statement and balance sheet. Auditable closing procedures vary considerably, depending on country’s reporting requirements, generally accepted accounting practices in a country, and organization’s business needs.

• The year-end close process is a mandatory requirement in some countries, and used to meet their audit requirements.

o Oracle General Ledger is equipped to create actual closing journals for year-end and other periods. Oracle has provided two programs to accommodate the year-end-close process, and you can optionally run one or both of these closing processes, and are:• Create Income Statement Closing Journals

• Create Balance Sheet Closing Journals



o Create Income Statement Closing Journals process systematically creates a journal entry that shows the revenue and expense account balances moved to the retained earnings account.

o Create Balance Sheet Closing Journals process systematically creates a journal entry that closes the balance sheet account balances to zero.

o You can only close actual journals, and you cannot close budget or encumbrance balances.

o If your organization has multiple legal entities, you can create closing journals for multiple ledgers simultaneously with ledger sets. You also have added security through data access sets because you can only run the closing journals programs against ledgers you have full read and write access to through your data access set.



oTo process year-end closing journals: Set up the last day of your fiscal year as an adjusting period.

Set up the first day of your next fiscal year as an adjusting period.

Ensure that the adjusting period is open.

Complete your routine accounting before the last day of the fiscal year.

Complete and post your adjustments and closing entries in the last adjusting period of the fiscal year.

Print your general ledger trial balance and other month-end and/or year-end reports.

Define your ledger set if you plan to submit the closing journals programs for multiple ledgers simultaneously.



oTo process year-end closing journals (contd..): In the last adjusting period of the fiscal year you want to close:

• Run the Create Income Statement Closing Journals process to transfer income statement year-end account balances of your revenue and expense accounts to the retained earnings account.

• Run the Create Balance Sheet Closing Journals process to close and zero out the year-to-date balances of all balance sheet accounts: assets, liabilities, and owner's equity.

In the first adjusting period of your new fiscal year:• Run the Open Period program to open the first period of the new year.

• Reverse and post the balance sheet closing journals to reopen those balances.

How to efficiently handle period-close process in Oracle EBS R12 - a critical studyCreate Income Statement Closing Journals


Year-End Process: Income Statement Closing Journals1. General Ledger provides two options for the Income Statement

Closing Journals:a. Option 1: Income Statement Close Mode

• You can choose to zero out each income statement account, and post the balance to the retained earnings account.

• When you run the process, and enter Closing Account in the Parameters window, entries are posted against each revenue and expense account in the account range processed. It is the reciprocal of the account's YTD balance and zeroes out each account.

• The amount posted to the retained earnings account is effectively the net sum of the revenue and expense accounts' YTD balances.

b. Option 2: Income Statement Offset Mode• Alternatively, you can post the reciprocal of the net income balance to

an income statement offset account instead of zeroing out each revenue and expense account.


Year-End Process: Income Statement Closing Journals1. General Ledger provides two options for the Income Statement Closing

Journals (contd..):

o Option 2: Income Statement Offset Mode (contd..) When you run the process, and enter Closing Account and Income Offset

Account in the Parameters window, The revenue and expense accounts included in the specified account range will not be zeroed out. Instead, the program will take the net sum of the revenue and expense accounts. This sum includes the balance in the income statement offset account. It will then post the reciprocal of the net sum to the income offset account, in the appropriate debit (DR) or credit (CR) column..

The amount posted to the retained earnings account will be the reciprocal of the amount posted to the income offset account. This retained earnings amount will then also be equal to the net sum of the revenue and expense accounts processed.

Note: For both options, STAT balances will not be processed by the program.


Year-End Process: Income Statement Closing Journals2. Running the Create Income Statement Closing Journals Program:

1. Ensure that the adjusting period you are closing is an open period. 2. Post all revenue and expense adjustment entries to the appropriate periods.3. Print General Ledger accounting and analysis reports.4. If you have accounts you want to process that are disabled then temporarily re-

enable the account to post the generated closing journal. The Segment Value Inheritance program can be used to re-enable and then disable these accounts.

5. Run the close process, Create Income Statement Journals in the adjusting period you want to close for your ledger or ledger set. The parameters are:

a. Ledger/Ledger Setb. Period:c. Account Fromd. Account Toe. Closing Accountf. Income Offset Account (optional)

6. Post the Income Statement closing journals to update year-to-date actual balances or period to date actual balances. If you chose the Income Statement Offset option, proceed to your next open period.


Year-End Process: Income Statement Closing Journals2. Running the Create Income Statement Closing Journals Program (contd..):

7. If any adjustments for your ledger are required after its income statement closing journals are posted, reverse and post the original closing entries, make your adjustments, then rerun the closing process.

8. Run the Open Period program to open the first period of the new fiscal year. This program closes out all revenue and expense accounts to the Retained Earnings account. However, because posting of the closing journals has already zeroed out the revenue and expense accounts to the Retained Earnings account, there are no balances to transfer and no further effect on Retained Earnings.

9. If revenue and expense adjustments need to be made after opening the new fiscal year for your ledger, for accuracy, you must reverse the closing journals, post, enter your adjustments, run the Create Income Statement Closing Journals, and post for your ledger.


Year-End Process: Income Statement Closing Journals3. Income Statement Closing Journal Attributes:

a. General Ledger automatically creates a separate journal batch for each ledger in a ledger set if the closing program is submitted for that ledger set.

b. The effective date of your closing journal entries is the last day of the period you specify in the parameters window, typically the adjusting period on the last day of your fiscal year.

c. The closing journals you generate are marked for reversal in the same period the journals were generated.

d. General Ledger closes the ledger currency and entered currency balances with different journal entries within a ledger's journal batch.

How to efficiently handle period-close process in Oracle EBS R12 - a critical studyCreate Balance Sheet Closing Journals


Year-End Process: Create Balance Sheet Closing Journals1. The Create Balance Sheet Closing Journals process:

• Generates journals that reverse of the debits and credits of the ending year-to-date actual balances for the period or year that you have selected to close.

• Transfers the balance, which is the net of the reversed asset, liability, and equity accounts, to the closing account that you specify. Note: Your balance sheet should be balanced if you completed the Close Process: Create Income Statement Closing Journals to update the retained earnings account. If the range of balance sheet accounts is balanced, then there is no transfer of balances.

• Must be run in an open period. The recommended period is the last period of the fiscal year being closed, which should be an adjusting period.

• To be run in an adjusting period to avoid large balance fluctuations in standard accounting periods.

2. Running the Create Balance Sheet Closing Journal program:1. Set up the last day of your fiscal year as an adjusting period. 2. Set up the first day of your next fiscal year as an adjusting period. 3. Ensure that the adjusting period your are closing is an open period. 4. Complete your routine accounting before the last day of the year.5. Complete and post all adjustment entries related to the period or year you are closing. 6. Print your trial balance, account analysis and other month-end and/or year-end reports.


Year-End Process: Create Balance Sheet Closing Journals2. Running the Create Balance Sheet Closing Journal program (contd..):

7. Run the close process, Create Balance Sheet Closing Journals in the adjusting period you want to close for your ledger or ledger set. The parameters are:

a. Ledger/Ledger Setb. Period:c. Account Fromd. Account Toe. Closing Accountf. Income Offset Account (optional)

8. Post the Balance Sheet closing journals to zero-out balance sheet account balances.If any adjustments for your ledger are required after its Balance Sheet closing journals are posted, reverse and post the original closing entries, make your adjustments, then rerun the closing process.

9. In the first adjusting period of the new fiscal year, reverse the balance sheet closing journals to repopulate the balance sheet accounts.

10. Post the generated reversing journals.


Year-End Process: Create Balance Sheet Closing Journals3. After running the Create Balance Sheet Closing Journal process in the last

day of the fiscal year:

• Open the next fiscal year by running the Open Period program.

• Reverse and post the balance sheet closing journals to repopulate the balance sheet accounts.

4. To make adjustments after posting the balance sheet closing journals:

• Reverse the original closing entries and post the reversal.

• Make your adjustments.

• Rerun the closing journal processes to capture the additional adjustments.


Year-End Process: Create Balance Sheet Closing Journals4. Balance Sheet Closing Journal Attributes:

a. Closes only actual balance types, and ignores budget and encumbrance balances.

b. Uses the last day of the period that you select in the parameters window as the effective date of the closing entries and which is the adjusting period.

c. Creates a separate closing account by Primary Balancing segment.

d. Closing journals are marked for reversal in the period following the period the closing journals were generated.

e. If you use secondary ledgers or reporting currencies, you must define a conversion rule to prevent replication of your year-end closing journals from your primary ledger. Replication can cause unbalanced journal entries if different currencies and conversion rates are used in the ledgers. Instead, run your closing journal processes directly in your reporting or secondary ledgers to ensure that the balances are reduced to zero.

How to efficiently handle period-close process in Oracle EBS R12 - a critical studyCritical components, issues, and best practices of the period-close


Critical components, issues, and best practices of the period-close1. Once a period is closed in Oracle Inventory, it can never be re-opened.

2. Once a period is permanently closed in Oracle Projects or Oracle General Ledger it can never be re-opened.

3. Use the auto-reversal journal function wherever possible to eliminate manual interference.

4. Use the control accounts for key customer and supplier accounts to prevent the manual or ad-hoc journals for these accounts.

5. Do not delete system generated journals at any time, and if required reversed and post it to have zero effect.

6. Use the Oracle provided standard reconciliation mechanism to reconcile between Oracle Subledgers and Oracle General Ledger.

7. The Open Account AP Balances Listing replaces the standard R12 Open Balances Listing Report, and please refer to the My Oracle Support note 604739.1 and 553484.1 for details.


Critical components, issues, and best practices of the period-close

8. The sweeping functionality is now available for Oracle Receivables, and refer the appropriate note for further detail on Unaccounted Transaction Sweep program.

9. AR to GL Reconciliation Report simplifies the reconciliation process by comparing AR and GL account balances in a single place. Try to take advantage of this report.

10. Third Party Balances Report can be used to display balance and account activity information for and Customers and Suppliers.

11. Make sure that transaction tax processing, if applicable, is fully completed and ready for tax reporting.

12. Limit the number of key accounts used in accrual reconciliation (Expense AP Accrual Account, Inventory AP Accrual Account, Receiving account, Purchase Price Variance Account, Invoice Price Variance Account, & Exchange Rate Gain or Loss Account).

13. The AP and PO Accrual Reconciliation Report provides a transactional breakdown of each accrual account with a net balance not equal to zero. The Accrual Reconciliation Reports are used to analyze un-invoiced receipts, and to reconcile the balance of the AP accrual accounts, and use these reports effectively.

14. Use caution when setting up the Accrue Expense Items flag to either Period End or Accrue At Receipt for Expense Items.


Critical components, issues, and best practices of the period-close14. Make sure that the Inventory Accrual (Perpetual), Expense Period-End Accrual,

Expense Perpetual Accrual (if used) processes follow the Oracle recommended procedures to do a systematic accrual reconciliation with least manual interference.

15. It is strongly recommended that latest patches for the Accrual Reconciliation Load Run process be applied. See Doc ID 1490578.1 (Updated on 22-NOV-2016) for a current list of patches to apply and steps to perform to get the latest fixes.

16. If Oracle Order Management is used, for the order-shipments invoiced in Oracle Receivables, revenue recognition has been processed in Oracle Receivables and the accounting entries between ‘Deferred COGS account’ and ‘COGS account’ must be generated in INV-CST. For this purpose two concurrent programs must be run from either Cost Management – SLA or Cost Management responsibility:

• Collect Revenue Recognition information• Generate COGS Recognition event

17. If it is an upgrade and if the FA Account Generator Workflow was customized in 11i, and after upgrade the customizations will either have to be re-implemented using SLA or ‘FA: Use Workflow Account Generation should be set as Yes’. In the second case workflow will be used to generate accounts.

https://support.oracle.com/epmos/faces/DocumentDisplay?parent=DOCUMENT&sourceId=1522143.1&id=1490578.1


Critical components, issues, and best practices of the period-close18. There is no separate program in R12 Oracle Assets to perform the rollback in

(which was the case in 11i). Any changes on a depreciated asset will result in an automatic rollback. Rollback takes place at Asset Level in Release 12 compared to Asset Book level in Release 11i.

19.As of now, there is no integration between Oracle Treasury and Subledger Accounting (SLA). Treasury sends the journals directly to GL and not via SLA.

20.Maintain period-end and period-average exchange rates for all foreign currencies to which you want to translate.

21.If you are using Oracle Financials Accounting Hub to generate accounting for your 3rd party systems, the accounting journal details will automatically by stored in the XLA tables, prior to being transferred (in summary or detail) and imported into Oracle General Ledger.

22.Limit or eliminate the use of suspense account. If suspense accounting is not allowed, Oracle General Ledger will not automatically post out-of-balance batches


Critical components, issues, and best practices of the period-close23. Consolidation can be performed using Global Consolidation System, Financial

Consolidation Hub or Hyperion Financial Management (HFM) depending on your need. Global Consolidation System is already licensed within Oracle GL, and is one go place to do the data transfer, revaluation, translation, elimination, consolidation, and reporting

24. Consider AGIS (Advanced Global Intercompany System) when there is a need for journal processing between legal entities and ledgers with journal approval, inter-company invoicing, and security in place. AGIS is also fully integrated with Subledger Accounting (SLA) and support AME supervisory level approval process.

How to efficiently handle period-close process in Oracle EBS R12 - a critical studyPeriod Close Steps


Period-Close Related Steps: Oracle Lease and Finance Management

Please refer the Oracle White Paper named ‘Period-End Procedures’ for a detail reference on period-close procedural steps. It is not the intention of this document to provide the details on procedural steps for period-close. The following are provided for a cross-reference only.


Period-Close Related Steps: Oracle Lease and Finance ManagementThe following are the Oracle Lease and Finance Management period-close related steps in sequence:

1. Complete booking, rebooking, and contracts processing.

2. Generate and complete all accruals

3. Complete recording of all actual losses and/or make loss provision.

4. Complete and interface the transaction entries to other Oracle Subledgers (Oracle Receivables, Oracle Payables) and General Ledger.

5. If required, enter manual invoices for ad-hoc billing items

6. Record any required adjustments

7. View Account Balances Report

8. Reconcile the Oracle Lease and Finance Management with Oracle General Ledger.

9. Close the current OLFM Period

10. Open the next OLFM Period

Note: If required, you can re-open the OLFM Period


Period-Close Related Steps: Order Management

The following are the Order Management related steps in sequence:1. Complete All Transactions for the Period Being Closed 2. Ensure all Interfaces are Completed for the Period (Optional) 3. Review Open Orders and Check the Workflow Status 4. Review Held Orders 5. Review Customer Acceptances (Optional) 6. Review Discounts 7. Review Backorders 8. Review and Correct Order Exceptions 9. Reconcile to Oracle Inventory 10. Create Service Contracts (Optional) 11. Reconcile to Oracle Receivables (Optional) 12. Run Standard Period End Reports


Period-Close Related Steps: Cash ManagementThe following are the Cash Management related steps in sequence:

1. Complete Daily Cash Management Activities 2. Load Bank Statements 3. Generate Sweep Transactions 4. Create Bank Statement Cash flows 5. Reconcile Bank Statements 6. Create Miscellaneous Transactions 7. Complete Bank Transfers 8. Review Auto-Reconciliation Execution Report 9. Resolve Exceptions on the Auto-Reconciliation Execution Report 10. Run Bank Statement Detail Report 11. Run Transactions Available for Reconciliation Report 12. Resolve Un-reconciled Statement Lines 13. Post to General Ledger 14. Run the GL Reconciliation Report 15. Run the Account Analysis Report for the General Ledger Cash Account 16. Review the Account Analysis Report 17. Correct any Invalid Entries to the General Ledger Cash Account (Optional)


Period-Close Steps: Oracle Treasury

The following are the Oracle Treasury Period-Close steps in

sequence: 1. Complete Daily Trading Activities

2. Perform Revaluation

3. Generate Accruals and Amortization

4. Generate Journals

5. Transfer Journals to General Ledger


Period-Close Steps: Payables

The following are the AP Period-Close steps in sequence:1. Complete All Transactions for the Period Being Closed2. Run the Payables Approval Process for All Invoices3. Review and Resolve Amounts to Post to the General Ledger4. Reconcile Payments to Bank Statement Activity for the Period5. Transfer All Approved Invoices and Payments to the General Ledger6. Review the Payables to General Ledger Posting process after completion7. Submit the Unaccounted Transactions Sweep Program8. Close the Current Oracle Payables Period9. Accrue Uninvoiced Receipts10. Reconcile Oracle Payables Activity for the Period11. Run Mass Additions Transfer to Oracle Assets12. Open the Next Oracle Payables Period13. Run Reports for Tax Reporting Purposes (Optional)14. Run the Key Indicators Report (Optional)


Period-Close Steps: Oracle Receivables

The following are the AR Period-Close steps in sequence:1. Complete All Transactions for the Period Being Closed 2. Reconcile Transaction Activity for the Period3. Reconcile Outstanding Customer Balances4. Review the Unapplied Receipts Register5. Reconcile Receipts6. Reconcile Receipts to Bank Statement Activity for the Period7. Post to the General Ledger8. Reconcile the General Ledger Transfer Process9. Reconcile the Journal Import Process10. Print Invoices11. Close the Current Oracle Receivables Period12. Review the Subledger Period Close Exceptions Report13. Third Party Balances Report14. Reconcile Posted Journal Entries15. Review the Unposted Items Report16. Review Account Analysis Report17. Open the Next Oracle Receivables Period18. Run Reports for Tax Reporting Purposes (Optional)


Period-Close Steps: Purchasing

The following are the PO Period-Close steps in sequence:1. Complete All Transactions for the Period Being Closed2. Review the Current and Future Commitments (Optional) 3. Review the Outstanding and Overdue Purchase Orders (Optional) 4. Follow Up Receipts - Check With Suppliers5. Identify and Review Un-invoiced Receipts (Period-End Accruals) 6. Follow Up on Outstanding Invoices7. Complete the Oracle Payables Period-End Process8. Run the Receipt Accruals - Period End Process9. Reconcile Accrual Accounts - Perpetual Accruals10. Perform Year End Encumbrance Processing (Optional) 11. Close the Current Oracle Purchasing Period 12. Open the Next Oracle Purchasing Period 13. Run Standard Period End Reports (Optional)


Period-Close Steps: Inventory

The following are the Oracle Inventory Period-Close steps in sequence:

1. Complete All Transactions for the Period Being Closed 2. Check Inventory and Work in Process Transaction Interfaces 3. Check and fix pending Transactions 4. Transfer Summary or Detail Transactions 5. Open the Next Inventory Period 6. Close the current Oracle Payables and Oracle Purchasing Periods 7. Close the Current Inventory Period8. Run Standard Period-End Reports and reconcile the Perpetual Inventory

with GL 9. Validate the Work in Process Inventory


Period-Close Steps: Projects

o The following are the PA Period-Close steps in sequence:1. Change the Current Oracle Projects Period Status from Open to Pending Close2. Open the Next Oracle Projects Period3. Complete all Maintenance Activities4. Run Maintenance Processes5. Complete All Transactions for the Period Being Closed (Current Period)6. Run the Cost Distribution Processes7. Run the Generate Cost Accounting Events Program8. Interface Cost Transactions to Other Applications9. Generate Draft Revenue for All Projects10. Review and Release Revenue for All Projects11. Run Generation Revenue Accounting Events Process12. Run Create Accounting to Process Revenue Accounting Events13. Generate Invoices14. Transfer Invoices to Oracle Receivables


Period-Close Steps: Projects

o The following are the PA Period-Close steps in sequence (contd..):15. Run Period Close Exceptions and Tieback Reports16. Run Final Project Costing and Revenue Management Reports17. Change the Current Oracle Projects Period Status from Pending Close to Closed18. Advance the PA Reporting Period (Optional)19. Update Project Summary Amounts20. Restore Access to User Maintenance Activities21. Reconcile Cost Distribution Lines with General Ledger (Optional)22. Permanently Close the Oracle Projects Period (Optional)


Period-Close Steps: Oracle Assets

The following are the Oracle Assets Period-Close steps in sequence: 1. Complete All Transactions for the Period Being Closed

2. Assign All Assets to Distribution Lines .

3. Run Calculate Gains and Losses (Optional)

4. Run Depreciation

5. Create Accounting

6. Rollback Depreciation

7. Create Deferred Depreciation Journal Entries (Optional)

8. Depreciation Projections (Optional)

9. Review and Post Journal Entries

10. Reconcile Oracle Assets to the General Ledger Using Reports

11. Run Responsibility Reports (Optional)


Period-Close Steps: Oracle General LedgerThe following are the Oracle General Ledger Period-Close steps in sequence:

1. Ensure the Next Accounting Period Status is set to Future Entry2. Complete Oracle Sub-ledger Interfaces to Oracle General Ledger3. Upload Journals from Web Applications Desktop Integrator to Oracle General

Ledger (Optional)4. Complete Non-Oracle Sub-ledger Interfaces to Oracle General Ledger

(Optional, only required if you want to post from non-Oracle systems)5. Generate Reversal Journals (Optional)6. Generate Recurring Journals (Optional)7. Generate Mass Allocation Journals (Optional)8. Review and Verify Journal Details of Unposted Journal Entries9. Post All Journal Batches 10. Run the Period Close Exceptions Report11. Run GL Trial Balances and Preliminary Financial Statement Generator Reports 12. Revalue Balances (Optional)13. Translate Balances (Optional)


Period-Close Steps: Oracle General Ledger

The following are the Oracle General Ledger Period-Close steps in

sequence:14. Consolidate Ledgers (Optional)

15. Reconcile Intercompany (optional)

16. Review and Correct Balances (Perform Reconciliations)

17. Enter Adjustments and Accruals and Post

18. Perform Final Adjustments

19. Close the Current Oracle General Ledger Period

20. Open the Next Oracle General Ledger Period

21. Run Financial Reports for the Closed Period

22. Run Reports for Tax Reporting Purposes (Optional)

23. Perform Encumbrance Year End Procedures ( Optional)


Contact Information

Thank you very much for attending my presentation on ‘How to efficiently handle period-close process in Oracle EBS R12 - a critical study’. Below is my contact details.• Name: Anpu Rajaratnam• Position: IT Architect - Finance• Company: Cree, Inc.• Email: [email protected], [email protected]• Phone: (919) 656-8832

mailto:[email protected]

mailto:[email protected]

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How to efficiently handle period-close process in Oracle