Oracle Applications White Paper ORACLE EBS R12 PAYABLES CLOSING PERIOD PROCEDURES

Jan 2010

Author:

Mohamed Nazih CPA, PMP, Oracle Financials Consultant m.nazih@gmail.com

Version

1.0

R12 Payables - Closing Period 2010

Contents

About the Author ................................................................................... 3 Introduction ......................................................................................... 4 Purpose .............................................................................................. 4 Who Should Read This ............................................................................. 4
Oracle EBS R12 Payables - Closing Period Procedures ......................................... 5 Overview of the Period Close ............................................................................ 5 Prepare for Period Close .................................................................................. 5
1- Complete all receipt processing ............................................................................... 2- Update Matured Bills Payable Status ......................................................................... 3- Import invoices ................................................................................................... 4- Import and process expense reports .......................................................................... 5- Interface adjustments to supplier invoices to payables ................................................... 6- Reconcile bank statements with Cash Management........................................................ 1- Run the Invoice Validation Process............................................................................ 2- Resolve Invoice Holds ........................................................................................... 3- Rerun the Invoice Validation Process if Necessary ......................................................... 4- Approve Invoices ................................................................................................. 5- Confirm or cancel Pay Run ..................................................................................... 6- Create Accounting ............................................................................................... 7- Transfer Purchased Assets ...................................................................................... 5 5 5 6 6 6 6 6 7 7 7 7 8

Complete Transactions .................................................................................... 6

Reconcile AP to GL......................................................................................... 8
1- Run the following reports:...................................................................................... 8 2- Ensure the following is correct ................................................................................ 8

Close AP Current Period .................................................................................. 9

Information Sources............................................................................... 12

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R12 Payables - Closing Period 2010

About the Author

Mohamed Nazih is a Proficient functional consultant in Oracle e-Business Suite with more than six years of experience of solutions design, configuration, testing and documentation and three full life cycle implementations. Prior to Oracle, he worked as a certified accountant and auditor for six years. This experience gave him an advantage to team up with financial staff in many companies in delivering high quality professional services, such as consulting, support, and training. While not working, Mohamed Nazih takes care of his family. Furthermore, he is a self-learner and avid reader in project management, change management, business intelligence, science, and environment issues. Mohamed Nazih values an atmosphere of ethics, punctuality, and teamworking.

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R12 Payables - Closing Period 2010

Introduction
Closing the books is a necessary step in the accounting cycle. In order to issue the financial statement, accounting staff must ensure that subledgers balances are cross checked with relevant General Ledger accounts balances. Doing so in Oracle EBS R12, requires performing actions in order and running many reports to ascertain that ledgers and accounts are in harmony and no surprises will be discovered at year end.

Purpose
This paper will help you understand the steps, order, and reports required to close Oracle Receivables period. Proper closing each month helps minimizing year end time needed to issue financial statements.

Who Should Read This

This paper is aimed to super users and applications auditors, as well as functional consultants and implementers.

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R12 Payables - Closing Period 2010

Oracle EBS R12 Payables - Closing Period Procedures

Overview of the Period Close

At the end of each accounting period, companies must complete the closing process in Payables and reconcile Payables activities for the period.

Prepare for Period Close

1- Complete all receipt processing
Process all possible receiving transactions so when remaining invoices are matched, Invoice Validation will place fewer matching holds. Use the Transaction Status Summary window (Purchasing Responsibility) to ensure all receipts were processed and that none have a status of Error. This form looks like a view only form, however, you can delete records so they may be re-processed. Receipt Accruals are not generated for errored transactions so make sure you do not skip this step.

2- Update Matured Bills Payable Status

Manually update the payment status or run Update Matured Bills Payable Status request to update the status of any future dated payments that have reached their maturity date, but still have a status of Issued.

3- Import invoices
Run: Payables Open Interface Import to process any invoices that are loaded through the Payables Open. Review the exceptions report and resolve any invoice related issues. Typical types of invoices that are imported through this open interface include: o EDI inbound invoices (810) o Invoices from external systems

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R12 Payables - Closing Period 2010

o Invoices created from credit card transactions if using procurement cards o Advance Shipment and Billing Notices (ASBNs)

4- Import and process expense reports

Run: Expense Report Export to process any expense reports that are entered using the Payables Expense Reports window as well as invoices coming from external sources.

5- Interface adjustments to supplier invoices to payables

If using Projects, project balances should be updated with invoices entered in Payables through the accounting period. Final adjustments to supplier invoices like reclassifying from project to project or task to task should be interfaced back to Payables using the PRC: Interface Supplier Invoice Adjustment Costs to Payables program. This program is submitted in Projects.

6- Reconcile bank statements with Cash Management

Reconcile any outstanding bank statements if you are using Cash Management. Depending on how your Payables Options are set up, you may generate clearing events when you reconcile payments. When you run the Payables Accounting process, the accounting will be generated and subsequently sent to the General Ledger during the Payables Transfer to General Ledger process.

Complete Transactions
1- Run the Invoice Validation Process
Invoice Validation process attempts to validate invoices and remove any existing holds. Some invoices may be placed on hold and not validated. If an invoice contains a system hold manually correct the problem that caused the hold and then rerun the Invoice Validation process to remove the hold. If an invoice contains user defined holds, it must be manually removed.

2- Resolve Invoice Holds

Run: Matching Hold Detail Report: to review detailed accounts payable and purchasing information for invoices with matching holds and matching hold releases.

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Run: Invoice on Hold Report: to review detailed information about invoices on hold. You can submit the Validation process before submitting this report to obtain the most up-to-date hold information.

3- Rerun the Invoice Validation Process if Necessary

For many system holds it will be necessary to fix the problem that caused the hold. Rerun the Invoice Validation process after resolving any invoice hold issues to update the status of the invoice to Validated.

4- Approve Invoices
Run: Invoice Approval Status request: to determine which invoices and invoice lines require approval (regardless of payment status) and review all pending approvers for a particular supplier. Run: Invoice Approval Workflow request: to automates invoice approval process. Based on rules define, the workflow determines if an entire invoice or invoices lines need approval, who the approvers are, and in what order approvers should approve payment of the invoice. The workflow then sequentially asks each approver in the approval list to approve invoices online. If both invoice lines and the invoice need to be approved, all the lines of the invoice requiring approval must be approved before the invoice can be approved.

5- Confirm or cancel Pay Run

Pay Runs must be either confirmed or canceled or you will not be able to close the period. After all activities relating to Pay Runs are completed, process any manual payments and Quick Payments. Also, process any stop or void.

6- Create Accounting
Run: Create Accounting request: to create accounting entries for multiple transactions. o To account for invoices, they must be validated. o To account for payments, the invoices must already be accounted. Run: Unaccounted Transactions Report: to identify and review all unaccounted invoice and payment transactions and see the reason that Payables cannot account for a transaction. This report: o Shows only transactions that had problems that prevented accounting. You can then correct the problems and resubmit the accounting process. o Does not include invoices that have no distributions.

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7- Transfer Purchased Assets

Run: Mass Additions Create request to transfer capital invoice line distributions from Oracle Payables to Oracle Assets.

Reconcile AP to GL
1- Run the following reports:
Open Account AP Balance Listing Report or Accounts Payable Trial Balance: to verify that total accounts payable liabilities in Payables equal those in GL. Posted Invoice Register: review accounting lines for invoices that have been transferred to GL. Posted Payment Register: review accounting lines for payments that have been transferred to GL. These reports ensure that your Trial Balance accurately reflects your accounts payable liability by matching the Posted invoices and payments with the AP liability account. You can also compare your AP liability accounts to GL by doing a query of the accounts in GL to identify the account or accounts out of balance. The trial balance total should be the same as your GL liability account.

2- Ensure the following is correct

Total of AP liability accounts in GL (in Trial Balance Report) = = + Open Account AP Balance Listing Report or Accounts Payable Trial Balance (for last day of current period) Open Account AP Balance Listing Report or Accounts Payable Trial Balance (for last day of previous period) Posted Invoice Register Posted Payment Register

If not: Run the GL "Account Analysis" report for the liability account and for the date range in question. Look for transactions with a source other than Payables. This can quickly pinpoint any transactions incorrectly charged to the account. Make sure that you have not made manual journal entries to your liability account in General Ledger. When you identify the accounts you go back to AP and do a query on the account to find the invoices out of balance.

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R12 Payables - Closing Period 2010

Close AP Current Period

Run: Period Close Exceptions Report to review a complete list of exceptions that are preventing closing a Payables accounting period. This report lists, for each organization within the ledger, the following exceptions: o Outstanding Pay Runs o Accounting Entries not Transferred to GL o Bills Payable for which the Maturity Date is within the period but that still have a status of Issued. o Unaccounted Invoices o Unaccounted Payments Close the period in Payables. If you tried to close and the period has exceptions, Oracle Payables automatically run Period Close Exceptions Report (XML).

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(B) Review

(B) Sweep

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Unaccounted Transactions Sweep can be used if: o Payables Period could not be closed due to unaccounted transactions (For example, invoices have holds that could not be resolved before the close) o accounting practices permit it o The period to sweep to is open This program: o Redates all accounting dates of all unaccounted transactions to the first day of the open period specified. o Cannot be run unless the user has the access to all the operating units for the Ledger

Aging Invoice Report Total should equal + Accounts Payable Trial Balance Total The Total of Swept (Unposted Transactions)

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Information Sources
o Metalink Note: 437422.1 o Metalink Note: 759002.1 o Metalink Note: 106740.1 o Metalink Note: 560378.1 o Oracle Payables User's Guide Release 12.1 Part No. E12797-02 o Oracle Payables Implementation Guide Release 12.1 Part No. E1279502

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