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    Anil Nair
    Period End Accruals
    Topic posted November 29, 2018 by Anil NairRed Ribbon: 250+ Points, tagged FAQ, Financials, Fusion, How-To, Orders, Setup 
    790 Views, 18 Comments
    Title:
    Period End Accruals
    Summary:
    Period End Accruals
    Content:

    A client is implementing Self Service procurement and Purchasing without inventory.

    All the items are expense items with majority of the purchases are category based. Few capex purchases.

    The accruals are setup for period end.

    1. What other setups are required to be completed specific to period end accruals?
    2. What are the steps to complete the period end accruals in Oracle Fusion Cloud?
    3. At what stage in the period close process, the period end accruals are completed

    Thanks.

    Comment

     

    • Deepak Padhy

      Hi - please follow the below Note for Period end accruals.

      How to Create Period End Accruals and Generate Uninvoiced Receipts Report (Doc ID 2382599.1)

      • Anil Nair

        Thanks for the note.

        Can you confirm if the below summary of the period end accruals looks fine to proceed.

        There is also reference to the cost management, does this mean we have to give cost management role access (Cost Accountant) to the period close users?

        We have budgetary control enabled, will this impact the below process or require any additional steps.

        Steps - Period End Accruals

        1. Close the current Payables Period

        2. Submit Transfer and Accounting Processes Schedule the following processes to be run regularly during the period and run them manually at the end of the period to ensure that all transactions are interfaced and processed.

        • Transfer Transactions from Receiving to Costing process to interface receipt transactions.
        • Transfer Costs to Cost Management process to interface costs from Payables transactions to Cost Management.
        • Submit the Create Uninvoiced Receipt Accruals process to generate accrual accounting for receipts that occurred in period, but the expense and payable are not yet booked in Payables. The process creates an accrual for the expense and liability for those un-invoiced receipts.
        • Submit the Create Entries for Receipt Accounting process to create the necessary journal entries in General Ledger

        3. Submit the Uninvoiced Receipt Accrual Report to review uninvoiced receipt accruals in a business unit.

    • Deepak Padhy

      yes, the steps mentioned above is correct.

      Thanks.

    • Neelam Thakur

      Hi Anil,

      We have implemented Period End Accrual as well and have just realized that there are some limitations. You cannot Clear Receipt Accruals with Period End Accrual but you can only do that with At-Receipt. Just wanted to point it out. It  may not be  concern for you, but we are wishing that we had known this at the time of implementation. We are now considering moving to At-Receipt Accrual.

       

      Neelam

      • Anil Nair

        Thanks Neelam for pointing out the system limitation.

        Do you know what is the impact if the business decides to shift from period end accruals to At-Receipt?

        Regards,

        Anil

        • Neelam Thakur

          Excellent question Anil! It is something we are looking into as well. Our discussions are on-going and I will provide an update when we have completed our analysis.

      • Jaykumar Prajapati

        Hello Neelam,

        This is not a limitation. System has a capability to set when to Accrue expense item either at Period end or At Receipt.

        You can define this setup under 'Manage Common Options for Payables and Procurement'

         

        Thanks,

        Jay

        • Neelam Thakur

          Hi Jay,

          I was not talking about the ability to accrue. I was talking about the ability to clear the accruals. Something has accrued and you decided it should not and you want it to stop accruing. With Period-end, the only way to do this to make a change to the invoice or PO. With At-Receipt, you can actually either auto-cancel accrual, based on rules defined or manually cancel it.

          See excerpt below from Close Procedures White Paper. This is only possible if you Accrue at Receipt

          Clear Accruals
          In some cases, there are balances in the accrual account that would never be cleared by an actual expense entry. These need to be monitored on a regular basis to ensure that the accrued liabilities show a true picture.
          Use the Accrual Clearing Rules to set up rules to automatically clear out the small discrepancies that don’t have a material impact.
          You have the option to review open accruals in the Adjust Receipt Accrual Balances window or in the report to identify accrual balances that need to be written off, and manually write them off.

          Thanks,

          Neelam

    • Dom Galano

      We implemented receipt on accrual and it has taken a long time to get to grips with it, our implementation partner completely underplayed the impact.

      These may be obvious to some but here are some pointers:

      The accounting is now driven by the receipt, if receipting is wrong the accounting is wrong , receipting is done by the users so make sure your training is spot on or you will find yourself with a lot of receipts to correct!

      Make sure all you receipt -invoice-PO matching tolerance are all tight this helps stop incorrect receipting-( separate tolerances for goods and value reqs)

      Make sure you have all the correct subledger accounting rules defined for extra accounting events like ( invoice price variance, expense adjustments)

      You need to define the receipt clearing rules , you also need to define a rule for "finally closed" POs or the accrual doesn't get released even if the documentation says it does.

      As well as all the other normal create accounting and other transfer processes you need to run the accrual match process, this updates the "Accrual reconciliation Report". This is you only report to see your outstanding accruals but if it has too many rows it won't open in excel only PDF (had an open SR for months).A download of the receipt accounting screen can help but it hasn't got all the info.

      Hope this helps someone!

      • Neelam Thakur

        Hello Dom,

        I cannot stress how much I appreciate that perspective. I have been trying to look up Period-End Accruals vs. At-Receipt accrual but have not found anything useful. You bring up some very good points. I am particularly interested in your statement about Final Close. I wonder if we Finally Close a PO, our accruals will clear. We haven't tried that.

        Thanks again!. This is the sort of info that makes Customer Connect such a useful platform.

        Neelam

        • Dom Galano

          This is also important to understand. You get extra accounting entries for receipting goods even if you have direct delivery. even worse If you have to correct the receipts you get multiples of multiples.  Soooo many lines in your GL.

           

          so important someone raised an ER.

          ER To Have One Accounting Event For Direct Delivery In Receipt Accounting Flow (Doc ID 1559758.1)

        • Minna Muikku

          I really appreciate these comments, since we are accruing at receipt (don't know why this was chosen when implementing) and now we are struggling with the very same problems that Dom mentioned. Self Service Users create receipts with wrong amounts, these go straight into accounting and investigating and correcting these sometimes takes a lot of time.

          Dom, you mentioned "Make sure all you receipt -invoice-PO matching tolerance are all tight this helps stop incorrect receipting-( separate tolerances for goods and value reqs)" Can you really set different tolerances for quantities and values? Because we were told that you cat only set a %-tolerance, and that same tolerance applies to all.

          Another question: You mentioned finally closing the PO: what shoud Final Close do? Does the outcome differ depending on whether we use accrue at receipt or accrue at period end?

          E.g We have a PO for 5000 EUR, receipt for 4000 EUR and invoice for 3000 EUR. I go and Final close the PO. What should be the outcome?

          Br,

           

          Minna

           

          • Dom Galano

            Sorry if I wasn't clear I was just trying to say you have separate tolerances for goods and services.

            If PO Line Type is GOODS then the match basis will be Quantity.
            If PO Line Type is SERVICES then the match basis will be Amount

            See 

            How do Invoice Tolerances Work for Amount and Quantity Variance Holds (Doc ID 1996489.1)

            ===

            The question about final close. If you finally close and you run clear receipt accruals(N.B. there should be a rule set up).

            In the above example an accrual of 1000 EUR should be released.(I presume the invoice for 1000 is never coming or you won't be able to match).

            But for commitment accounting it will not stop 5000 showing against budget(2000 commitment 3000 actual) and if you have CPA or BPA with a control amount it will not stop the 5000 being taken against the control total.

            e,g, if the CPA control amount is 7000 you will only be able to raise a PO for another 2000.

            The only way to free the amount against the control total is to raise a change order to change original PO to 4000.

            I mention the control totals on CPAs and BPAs because it has been an issue for my users who keep saying "but the invoice is only for 3000 I should have 2000 left!"

            ME: "sorry doesn't work like that , raise a change order " They will never get 2000 back unless the receipt is changed to 3000 to match invoice.

            I'm not very popular!

             

    • Dom Galano

      N.B.

      Procurement Manager used to be able to open Finally closed PO's(even though Docs said you can't) , but from 18B it no longer works has anyone else discovered this?

      We are waiting for Oracle to confirm.

       

      old note.

      Prevent Users From Reopening 'Finally Closed' Purchase Orders (Doc ID 2186047.1)

    • Rajib Pramanik

      Hi Gurus,

      I have one quick question to clarify. While studying the SLA relating to AP Invoicing, I have observed that the Journal Rule relating to 'Invoice Price Variance' only fires if the config is 'Accrue At Receipt' (Condition attached with the Journal Line Rule)

      Now in that context my questions are:

      1. Why the IPV accounting has been designed to fire only for ‘Accrue at Receipts’ config based transactions ?

             1. a.   Therefore if the config is ‘Accrue at Period End’, why any IPV lines at the AP distribution level will remain unaccounted ?

      2. If the config is ‘Accrue at period end’, what will happen to the PO Vs Invoice Unit price difference ?

      Thanks for clarifying.

      regards,

      Rajib

       

      • Ivan Pena

        Hi Rajib,

        My understanding is that under period end accruals the IPV is booked along with the charge, so it's handled by the "Item" journal line rule. In any case, I suggest that you post this as a separate question under the Financials forum. 

        Ivan