Introduction

At each year-end, it’s necessary to do a Fiscal Year End Close in AMS. Also known as a Roll and Clear, periodic accounts are zeroed out and balance sheet accounts are initialized for the new fiscal year.

It’s easily accomplished and straightforward to execute.

This document discusses how it works, and guides you through each step.

Where Is It Found

Fiscal Year End Close GL Roll and Clear

Accountants employ two types of accounts. Balance forward and periodic accounts. Balance forward accounts begin each year with the ending balance from the prior year. In contrast, periodic accounts zero out at year-end and begin each year without a balance. Balance sheet accounts are always balance forward. Income statement and other accounts such as cost centers used for production overheads are usually periodic.

Running your Close Fiscal Year (CFY) job closes every periodic account to a balance sheet (balance forward) account. Like retained earnings or accumulated loss.

Caution!: It is not necessary, or desirable, to manually journal balances out of your periodic accounts at year-end. You risk losing the ability to run prior year reports or make comparisons to the prior year. AMS has a year-end job (GLCM.CFY) to zero out each account, it maintains the detail you’ll need for prior period results. We discuss it more fully below.

While we think of the G/L as having 12 periods, it really has 14 (labeled period 00 thru period 13). Period 00 holds beginning balances; it’s not accessible to users. Period 13 is used by the system for the Fiscal Year End Close.

AMS allows users to manually post to period 13, but you usually don’t need to. Journals posted to period 13 by users work just like any other manual journal.

If your balance sheet is kept with separate accounts for beginning balance, purchases, sold, etcetera period 13 is a good place to write the reclassification entry to set up for next year. That way both your year just ended and next year's inventory accounts report properly. It’s just a normal manual entry (GLJMM.JEC) booked to period 13. If posting to period 13, like any other period, it needs to be open. Using the instructions you provide, the AMS Close Fiscal Year job writes and posts journals. To avoid upsetting your account history, the journals post to period 13. Its last step copies period 13 ending balances to next year’s period 00. This initializes your new year preserving the integrity of your old year.

The Fiscal Year End Close job can be rerun as needed. If you later post to the prior year, the Fiscal Year End Close must be re-run. If you’ve posted to the old year and not re-run Fiscal Year End Close, your opening balances won’t be correct.

Sometimes it’s necessary to issue January statements prior to completion of your year-end audit. If so, run the Fiscal Year End Close prior to reporting for January. This establishes your beginning balances. You’ll run it again after posting audit adjustments, or any other entry, to the old year.

Setting up your Fiscal Year End Closing Rules

Prior to running your Fiscal Year End Close job, you’ll specify which account(s) each cost center will be closed to. Your instruction is recorded in our Chart of Accounts Maintenance and only needs to be done once.

Our Close Fiscal Year (CFY) job creates journals to zero out your periodic accounts. But balance forward account types, think balance sheet, are bypassed by CFY.

From the General Ledger File Maintenance menu(GLCM), choose option ACA – Add or Change Account Descriptions to begin.

This is the same screen used routinely to Add, Change, or Delete General Ledger accounts. In the example above, we’re assuming your chart of accounts is already established. And you now wish to maintain it to add year-end closing rules. In the example above we have entered C to Change and then Cost Center 01.

To continue our example, press enter.

AMS looks up the description for cost center 01, and displays it and other attributes such as active/inactive status, and account type (if specified).

Notice the Close-to-Account field in the lower left of the screen above (red box). This is where you’ll enter the balance forward account to close this cost center to at year-end. While it’s possible to close this cost center to any balance forward account, the most common choices are Retained Earnings or Accumulated Loss.

Time Saving Tip

It’s not necessary (or even desirable) to enter a Close-to-Account for individual accounts within a cost center unless you want that account to journalize differently than the other accounts in that cost center in the CFY entry at year-end. All that’s normally needed is a close-to-account for each cost center.

To have an account journalize differently than the rest of your cost center in the CFY entry, just provide the balance forward account you’d like it closed to in its Close-to-Account field. Account level Close-To-Accounts always take precedence over department level Close-to-Account designations.

Notice the buttons along the bottom of the screen, above. Prior “Costcntr” (F1) and “Next Costcntr” (F3) can be used instead of pressing enter to accept your entry. Using these keys you can quickly scroll through your cost centers to provide the Close-to-Accounts for each. Or just to verify your entries.

If you’re using more than the default balance sheet department (cost center 00), it’s not necessary to enter a Close-to-Account for balance sheet cost centers or accounts. The reason is CFY doesn’t journal out-of-balance forward accounts, so no instruction is necessary.

Performing your Fiscal Year End Close

3 menu options you will work with

1 - Change General Ledger Period (CTL.CGL): This is where G/L period controls are set. Period 13 must be open to perform your Fiscal Year End Close. If period 13 is not open, your closing entry will reject.

Upon completion, it’s a good idea to lock last year. Just set your first open period to period 01 in your new year. You can reopen the prior year at any time if needed. Locking prevents inadvertently posting to a closed period.

2 - Journal Entry Correction & Deletion (GLJMM.JEC): The same journal entry screen you use each month. Use it for any clean-up you wish to do in period 12. Or use it to post to period 13.

3 - Close Fiscal Year (GLCM.CFY): It’s used to perform your Fiscal Year End Close. CFY uses the rules you’ve entered in the chart of accounts Close-to-Account field to construct your closing entry.

In AMS, cost center 00 is always a balance sheet. Optionally you may also use balance sheet departments. When an account is set up (via menu GLCM.ACA) in a cost center other than 00: specifying account type “Asset, Liability, or Equity” creates a balance forward account. Importantly this election is per account, rather than per department.

The Close Fiscal Year job does not journal between balance forward accounts. It only records journals from periodic accounts to balance forward accounts. Balance sheet reclassifications are accomplished with a manual journal entry.

Your Fiscal Year End Close is very simple. Since you’ve already listed your rules in the Chart of Accounts, all that’s needed at run time is specifying the year you wish to close.

Pressing F1 or clicking Stream and Exit performs your Fiscal Year End Close. The Fiscal Year End Close entry acts on your period twelve ending balances including any manual period 13 entries you’ve made.

To avoid circular logic, it doesn’t include itself.

Reports

After running the year-end job, you’ll receive two reports, as described below.

List of Journals Created

The first report lists the journals you’ve created:

Error Notification

If your CFY entry has errors due to improper or missing closing instructions in the Chart of Accounts, you’ll see error messages in your G/L Fiscal Year Closing JE Creation report. An example is shown above (red box).

If your error is due to a missing Close-to-Account instruction in your chart of accounts, you won’t receive an error message on the Automatic Journal Edit List, also produced by this job (this type of error is called out in the G/L Fiscal Year Closing JE Creation report, shown above). Since it only “sees” the completed journal, not the creation process, it doesn’t know of potential omissions in the journal’s creation. It only detects errors that would keep the journal from posting.

Correct the error if necessary and re-run to continue.

Detail of Journal(s)

The second report shows the detail of your journal(s). Here’s the journal for our test company, which has only limited data. Your journal edit list will be much longer.

If all your product cost centers (farming, winemaking, bottling, etcetera) were properly closed to inventory before running your year-end Fiscal Year End Close, the amount posted to Equity equals your profit or loss for the year. Optionally you could use this entry to close production centers to inventory (if they’re periodic accounts). Just use a new line, and change your “To Account” to inventory (or fixed assets, etcetera as applicable).

NOTE: The AMS allocator feature can do recurring entries for you each month. It’s a better way to clear your production cost centers to inventory accounts. Using the allocator you can set up fixed amount, fixed percent, or variable amount entries to be run each month. A variable amount entry can reliably move your production cost center amounts to inventory accounts each month. The AMS allocator supports both simple and complex recurring entry schemes.

As its last step, the Fiscal Year End Close establishes your opening balances for the new year.

If you make any adjustments or change any postings to your prior year, you’ll need to rerun the Fiscal Year End Close. For example, posting audit adjustments. If you don’t re-run it your opening balances may not be correct.

Your last step: Go to the period control for the General Ledger (CTL.CGL) and lock period 13 to further entries by specifying period 01 of your new year as the first open period.

Press F1 or click Accept to record your changes.

If you have questions we haven’t covered, please contact our help desk at helpdesk@AMSsoftware.com.

Documentation

Fiscal Year End Close