Period-End processing in Payables R12

Accounts payable activity must be reconciled for the accounting period that is to be closed. The following steps are taken in performing period-end processing for Oracle Payables.

The posting level for Oracle Payables must be determined when planning period-end procedures. Where detail level accounting transactions are required to be posted to the General Ledger using sub-ledger accounting (hereafter referred to as SLA), there may be technical constraints involved, relating to the physical data storage volume, and posting and report processing speed degradation caused by the sheer volume of posted transactions. In Release 12 the detailed level of posting can be controlled by GL summarize options and also at SLA journal line type level. Subledger Accounting can contain all of the detailed subledger accounting level analysis, so that the general ledger can remain “thin”. Then, Subledger Accounting online inquiry and BI Publisher reports can be utilized to report and analyze balances, and their

transactions.

Procedures:

1. Complete All Transactions for the Period Being Closed

Ensure that all transactions have been entered for the period being closed.

Completing all transactions for Oracle Payables:

* Complete Invoices and Credits

* Complete Prepayments

* Complete Expense Reports

* Complete Invoice Import

* Complete Payments

If you import transactions from an external system, or you are using Internet Expenses or Xpense Xpress, ensure you have imported all transactions, and reviewed all audit trails for completeness. One consideration for Accounts Payable where there are multiple operating units within the same ledger is that all operating units must be ready to close at the same time. All of the operating units that share a ledger also share the same period statuses. When you update the period status to ‘open’ in one operating unit, that period is opened for all operating units within the ledger. When you attempt to update the period status to ‘closed’ in one operating unit, the system checks for unposted transactions in all operating units within the ledger. If there are unposted transactions in any of the operating units, the system asks you to resolve the un-posted transactions for those operating units before it allows you to close the period for the ledger. If Multi-org Access Control is implemented, period closing can be performed across OU’s from a single responsibility, through one OU at a time.

2. Run the Payables Approval Process for All Invoices

Run the Payables Approval process to approve all unapproved invoices and invoice lines in the system, so that they can be paid by Oracle Payments and posted to the general ledger.

3. Review and Resolve Amounts to Post to the General Ledger

a) Review the Invoice on Hold Report

This report enables review of any holds currently applied to invoices that would prevent the payment and/or posting of these invoices. The report details all invoices that Oracle Payables cannot select for posting and therefore cannot create journal entries. Where possible, resolve any identified holds which will prevent posting to the general ledger, and then re-run the Payables Approval process to approve these invoices.

b) Review the Journal Entries Report

This report enables review and analysis of accounting entries in the Payables subledger, as accounted by SLA. Using the report parameters, you can produce a detailed or summary listing of the accounting information you want to review. This report is owned by SLA. The report also lists, in detail, transactions that have been accounted with error and all entries that could not be transferred to the general ledger. When a transaction is accounted with errors, review the details and make necessary changes. By altering the parameters, the report also lists those transactions which have been posted in the general ledger, and those which have not been posted but have been accounted. SLA groups the report by ledger, ledger currency, source, category, and event class. Data is then sorted by accounting date, event type, supplier name, document number, and voucher number.

c) Review the Unaccounted Transactions Report

This report enables review of all unaccounted invoice and payment transactions and a view of the reason that Payables cannot account for a transaction. Accounts Payable sorts the report by transaction type (invoice or payment), exception, supplier, transaction currency, and transaction number. Run this report after you have run the Create Accounting Process. The report will then show only transactions that had problems that prevented accounting. You can then correct the problems and resubmit the accounting process. Note that this report does not include invoices that have no distributions.

d) Optionally run a Payment Process Request at the month end

By running a month end Payment Process request, you may create a payment for as

many due invoices as possible.

e) Confirm all Payment Instructions

Run the Payment Instruction Register for the period that is to be closed, or finalize any outstanding payments. Use Oracle Payments to confirm any payment instructions. Check the status of the Payment Process Request/Payments/Payment Instructions to ensure that all payments have been processed. The Payment Instruction Register lists each payment created for a payment process profile or for a manual payment. Actual payments can be compared against this register to verify that Oracle Payables/Oracle Payments has recorded payments correctly. The report lists each payment in a payment process request, including setup

and overflow payment documents, in ascending order, by payment number. This Oracle Financials E-Business Suite Release 12 Period End Procedures 24 report is automatically submitted when payment instructions are being created and can also be submitted from the standard report submission (SRS) screen.

Attention: Oracle Payables prevents the closing of a period in which all payments have not been confirmed.

f) Optionally run the Payments Register

The Payment Register details payments printed in a particular accounting period. This report can be used to review payment activity for each bank account used during the specified time period. Warning: The report total only shows the net (less discounts) payment amount, whereas the Posted Payment Register total is the total payment amount, including discounts. If only verifying report totals, these two reports would not balance. Therefore it is necessary to subtract the ‘Discounts Taken’ from the Posted Payment Register report total and then compare this calculated amount to the total displayed on the Payments Register Report.

4. Reconcile Payments to Bank Statement Activity for the Period

Once detailed bank statement information has been entered into Cash Management, the information must be reconciled with the subledger transactions.

Cash Management provides two methods to undertake reconciliations:

a) Automatic

Bank statement details are automatically matched and reconciled with subledger transactions. This method is ideally suited for bank accounts which have a high volume of transactions.

b) Manual

This method requires a manual match of bank statement details with subledger transactions. This method is ideally suited to reconciling bank accounts which have a small volume of monthly transactions. The manual reconciliation method can also be used to reconcile any bank statement details, which could not be reconciled automatically.

5. Transfer All Approved Invoices and Payments to the General Ledger

Release 12 provides 3 modes of accounting: Final, Final Post and Draft. The transactions that have been accounted in Final Post have already been transferred to, and posted in the general ledger. The transactions that have been accounted in the Final Mode have been transferred to GL or can still be within the subledger based on the parameter Transfer to General Ledger (either 'Yes or 'No') in the Create

Accounting program.

When accounting mode is Final and transfer to GL is set to ‘No’ then, “Transfer Journal Entries to GL” program needs to be run from the Standard Report Submission (SRS) window. Please review the “Transfer Journal Entries to GL” report generated by this program; make sure there are no errors reported on this report. The transactions in draft accounting mode can be included on accounting reports but cannot be transferred to the general ledger. A draft entry does not update balances and does not reserve funds.

SLA creates detail or summary journal entries for all eligible events when you post. The journal entries are posted in Oracle General Ledger to update account balances. Invoice journal entries debit the expense or other account entered on an invoice distribution line, and credit the liability account specified on the invoice, unless you have modified the SLA rules to create alternative accounting entries to address your specific business needs.

Payment journal entries debit the liability account and credit the cash account of the

bank account used to pay an invoice. The Create Accounting process transfers data to the General Ledger tables, creating journal entries for these invoice and payment transactions. Posting is determined by the parameter ‘Post in GL’ which is set during Create Accounting.

Attention: The generated journal batch needs to be posted from within Oracle General Ledger if the mode of accounting was ‘Final’, Transfer to General Ledger was ‘Yes’ and Post in GL was set to ‘No’.The journal batch will be automatically posted in General Ledger if the mode of accounting was ‘FINAL’ and Post in GL was set to ‘Yes’.

6. Review the Payables to General Ledger Posting process After Completion.

The following reports can be run to review the invoices and payments that were posted to Oracle General Ledger, from Oracle Payables, for the period that is to beclosed, i.e. the current accounting period.

a) The Subledger Accounting Program Report generated by the Create Accounting
program.This report provides either the summary or details (dependent on the parameters provided during Create Accounting program) of the subledger journal entries createdas a result of running “Create Accounting Program”. This report also provides anyerrors that may have occurred during generation of the journal entries.

b) The Posted Invoices Register

This report is used to review invoices for which information has been posted to Oracle General Ledger to create journal entries, and can be used to verify that the total invoice amount equals the total invoice distribution amount. The report lists eachAccounts Payable Liability Accounting Flexfield and the invoices posted to theaccount.

c) The Posted Payments Register

This report is used to review the payments posted to Oracle General Ledger during a particular accounting period, and can be used to review the payment activity for eachbank account used during that period.

7. Submit the Unaccounted Transactions Sweep Program

The Unaccounted Transactions Sweep Program transfers unaccounted transactions from one accounting period to another. Because you cannot close a Payables period that has unaccounted transactions in it, if your accounting practices permit it, you might want to use this program to change the accounting date of the transactions to the next open period. For example, you have invoices for which you cannot resolve holds before the close, and your accounting practices allow you to change invoice distribution GL dates, you can submit this program to change invoice distribution GL dates to the first day of the next open period so you can close the current period. The ‘Unaccounted Transactions Sweep Program’ will not roll forward accounted transactions, or accounted transactions with errors. To create successful accounting entries for accounted transactions with errors, correct any accounting errors and resubmit the Create Accounting Process. The program transfers unaccounted transactions to the period you specify by updating the GL dates to the first day of the new period. You can then close the current accounting period in Oracle Payables.

To submit the Unaccounted Transactions Sweep Program:

1. In the Control Payables Periods window if you try to close a period that has exceptions then the system enables the Exceptions button.

2. Choose the Exceptions button in the Control Payables Periods window. Payables opens a message window. From the window you can choose the following buttons:

• Review (This submits the Period Close Exceptions Report.)

• Sweep

3. Choose the Sweep button. Payables opens the Sweep to Period window. In the Sweep to Period field, Payables provides the next open period. You can accept this default or enter another open period.

4. Choose the Submit button to submit the Unaccounted Transactions Sweep

Program. Payables automatically produces the Unaccounted Transactions Sweep report.

8. Close the Current Oracle Payables Period

Close the accounting period by using the Control Payable s Periods window to set the Period Status to ‘closed’. This process automatically submits the Subledger Period Close Exceptions Report. The Subledger Period Close Exceptions Report lists all accounting events and journal entries that fail period close validation. It is automatically submitted by General Ledger when closing a GL period if there are unprocessed accounting events or untransformed journal entries.

You can also generate the Subledger Period Close Exceptions Report through a

concurrent request as follows:

* For the application associated with the responsibility

* For all applications in the General Ledger responsibility

9. Run Mass Additions Transfer to Oracle Assets

After you have completed all Payables transaction entries, and confirmed all invoice holds, and carry forwards, submit the Mass Additions Create program to transfer capital invoice line distributions from Oracle  Payables to Oracle Assets. For foreign currency assets, Payables sends the invoice distribution amount in the

converted functional currency. The mass addition line appears in Oracle Assets with the functional currency amount. After you create mass additions, you can review them in the Prepare Mass Additions

window in Oracle Assets. It is recommended to do a final Mass Additions Create after the period close to ensure that all Payables invoices are:

* Included in the correct period and

* Any additional invoicing will become part of the next periods invoice and asset processing period.

Suggestion: If the volume of transactions in Accounts Payable requiring Assets update is large, you should consider running the Mass Additions Createprocess on a more regular basis.

10. Open the Next Oracle Payables Period

Open the next accounting period by using the Control Payables Periods window to set

the Period Status to Open.

11. Run Reports for Tax Reporting Purposes (Optional)

A variety of standard reports can be used to provide tax information, which is required to be reported to the relevant Tax Authority, including withholding tax. Withholding tax is handled by Payables whereas other tax requirements are handled by E-Business Tax. The E-Business Tax data extract draws tax information from each application and stores the data in an interface table. Output from the tax extract is designed to look as

close to a simple tax report as possible. Suggested Reports include: Financial Tax Register Use the Financial Tax Register to view the output from the Tax Reporting Ledger. The Tax Reporting Ledger consists of accounting information created in Oracle Payables, and Oracle General Ledger. The short name of this report is RXZXPFTR.

These tax registers are available:

• Tax Register (default)

• Interim Tax Register

• Nonrecoverable Tax Register

These summary levels are available within each Tax Register:

• Transaction Distribution Level

• Transaction Level (default)

• Transaction Line Level

Tax Audit Trail Report

Use the Tax Audit Trail report to review tax information for posted or partially posted invoices. This report provides detail tax and invoice information and the total amounts for each tax rate code in the invoice currency and functional currency. The report lists, for each tax rate code, distributions of all posted or partially posted

The report includes, for each invoice, both the tax amount and the invoice amount subject to tax. The short name of this report is ZXXTATAT.

12. Run the Key Indicators Report (Optional)

This report enables review of the accounts payables department’s productivity. This statistical information can be useful for cash flow analysis and forecasting purposes, when combined with similar information from Oracle Accounts Receivable. When you submit the Key Indicators Report, Oracle Payables generates reports you can use to review payables transaction activity, and review the current number of suppliers, invoices, payments and matching holds in the system.

The Key Indicators Report generates the following reports:

a) Key Indicators Current Activity Report

Use the Key Indicators Report to review your accounts payable department's productivity. The Key Indicators Report provides current activity indicators that compare current period activity with prior period activity in three major areas: suppliers, invoices, and payments. Payables further breaks down each category into basic items, exception items, and updates. The report provides the number of transactions for each indicator (such as number of automatic payments created during a period) and amount values where applicable to the Key Indicator (such as total value of automatic payments created during a period).

b) Key Indicators Invoice Activity Report

Report that compares the invoice activity for each of your accounts payable processors during the period you specify and the previous period. Oracle Payables produces this report only if you choose ‘Yes’ for the Include Invoice Detail parameter.

c) Key Indicators State of the System Report

The Key Indicators State-of-the-System Report provides a period-end view of Oracle Payables, as well as average values. For example, it includes:

Suppliers:

* Number of suppliers.

* Number of supplier sites.

*Average sites per supplier (number of sites divided by the number of suppliers)

 Invoices:

* Number of invoices.

* Number of invoice distributions.

* Average lines per invoice (number of invoices divided by the number of distributions.)

* Scheduled payments (number of scheduled payments based on payment terms and manual adjustments in the Scheduled Payments tab).

* Average payments per invoice (number of invoices divided by the number of scheduled payments).

Payments:

* Number of payments (both manual and computer generated) created and recorded in Payables.

* Invoice payments (number of invoice payments made by Payables - a payment document can pay multiple invoices).

* Average invoices per payment (number of payment documents divided by the number of invoice payments).

Matching holds:

* Matching holds (number of matching holds in Payables).

* Average matching holds per invoice on matching hold (number of matching holds divided by the number of invoices on matching hold).