Closing Financial Periods: General Information

After all the needed transactions have been posted to a financial period and all figures have been verified, you can close the financial period in the system. The following capabilities and restrictions apply to the closing of financial periods:

You can close multiple periods at the same time (for instance, all periods of a financial year).
Financial periods can be closed starting from the first period of the first financial year. You cannot close a financial period if the previous one has not been closed yet, unless it is being closed at the same time.
Once closed, a period can later be reopened, if needed.
You generally close periods to prevent unauthorized users from posting new transactions to the period. However, you can allow users to enter documents and post transactions to the closed period.

Learning Objectives

In this chapter, you will learn how to do the following:

Close a financial period in a subledger
Close a financial period in all the subledgers and in the general ledger at the same time

Statuses of Financial Periods

Every financial period belongs to a range of periods that have a particular status. The system can contain four period ranges, each with a different status. The following table shows the possible statuses of financial periods, describes them, and presents the action or actions you can perform on periods of the listed status. Actions can be performed on periods by using the Manage Financial Periods (GL503000) form.


Status	Description of a Period with This Status	Actions that Can Be Performed
Inactive	An inactive period has been generated in the system but has not yet been opened. Transactions cannot be posted to the period.	Open
Open	An open period can be selected in documents, and transactions can be posted to it.	Close, Deactivate
Closed	If the Restrict Access to Closed Periods check box is selected on the General Ledger Preferences (GL102000) form, transactions can be posted to a closed period by only users assigned to the Financial Supervisor role. If this check box is cleared, any user can post to closed periods.	Lock, Reopen
Locked	A locked period cannot be used for data entry, or for posting in any subledgers. You lock a period to prevent changes to period-specific data that has been verified and disclosed in reports.	Unlock

The following diagram illustrates the statuses of financial periods in the system.

Figure 1. Financial period statuses in the system

Closing of a Period in Subledgers

Although you can close periods in subledgers and in the general ledger at the same time, you may decide to close periods in subledgers (accounts payable, accounts receivable, cash management, inventory, and fixed assets) separately in your system by using the forms listed below for each subledger. To view information about the status of periods, you can use the Manage Financial Periods (GL503000) form.

Before you close a period in these subledgers, you should make sure that there are no unreleased documents that are to be posted to this period. (For the fixed assets subledger, the system also checks whether all assets have been depreciated in the period.) To close periods in the subledgers, you use the following forms:

In the accounts payable subledger, the Close Financial Periods (AP506000) form
In the accounts receivable subledger, the Close Financial Periods (AR509000) form
In the cash management subledger, the Close Financial Periods (CA506000) form
In the inventory subledger, the Close Financial Periods (IN509000) form
In the fixed assets subledger, the Close Financial Periods (FA509000) form

When you close a given financial period in a subledger on any of these forms, all preceding open periods will be closed in the subledger as well.

Closing of a Period in the General Ledger

A period is assigned the Closed status only after it has been closed in the general ledger on the Manage Financial Periods (GL503000) form. For instructions on how to close periods, see Closing Financial Periods: To Close a Period in Subledgers and GL.

Before you close periods, you need to check whether there are unposted documents for the periods that you want to close. To do that, on the Manage Financial Periods form, you select the periods you want to close and click Unposted Documents on the form toolbar. In the Unposted Documents report, which opens, you can review the list of documents that have not been posted to the selected periods.

Closing a period in the general ledger initiates the generation of auto-reversing batches if the Generate Auto-Reversing Entries on Period Closing check box is selected on the General Ledger Preferences (GL102000) form and these batches have been prepared on the Journal Transactions (GL301000) form. If auto-reversing entries should be generated when the applicable period is closed, you should not close the last financial period that was opened; you should always open at least one financial period before you close the most recent period.

You can view closed periods for a particular year on the Master Financial Calendar (GL201000) form if the Centralized Period Management feature is enabled on the Enable/Disable Features (CS100000) form or on the Company Financial Calendar (GL201100) form if the Centralized Period Management feature is disabled. For the closed periods, the Status column contains Closed and the check boxes are selected in the Closed in AP, Closed in AR, Closed in IN, Closed in CA, and Closed in FA columns.

If a period was closed by mistake, you can reopen it on the Manage Financial Periods form. For more information, see Financial Periods: To Reopen a Period.

Posting of Transactions to Closed Periods

In some cases, you may find additional transactions to be processed in a period that was closed. To accommodate such situations, you can allow posting transactions to closed periods by assigning appropriate users to the Financial Supervisor role on the User Roles (SM201005) form. Only users assigned to this role can post to closed periods, regardless of whether the Restrict Access to Closed Periods check box is selected on the General Ledger Preferences (GL102000) form.

If you want to prevent all users from posting to closed periods, you lock periods (that is, you assign the periods the Locked status) on the Manage Financial Periods (GL503000) form. For instructions, see Financial Periods: To Lock a Period.

Period-End Closing Overview

The process of closing a period consists of the following steps:

Optional: Closing the period in the subledgers. (You can instead close the period in subledgers along with the general ledger after performing period-end activities.) For details, see Closing Financial Periods: To Close a Period in a Subledger.
Generating and posting any recurring transactions. For details, see Recurring Transactions: Process Activity.
Performing period-end adjustments—that is, posting adjustment transactions (some of which should be reversed at the beginning of the next period). For details, see Adjusting Transactions: Process Activity.
Revaluing general ledger accounts so that the balances of the accounts in foreign currencies are revalued using the end-period exchange rate. For details, see Revaluation of Bank Accounts: Process Activity.
Reviewing the trial balance and the list of transactions.
Reclassifying transactions if there are errors, as described in Reclassifying Transactions.
Running allocations if the distribution of amounts between branches, accounts, and subaccounts is needed. For details, see and Running Allocations
Closing the period in the general ledger. For instructions, see Closing Financial Periods: To Close a Period in Subledgers and GL.

The overall process of closing a period in the system is shown in the following diagram. The steps marked with a star are described in a process activity in this chapter.