Monthly and Yearly G/L Processing - "Closing the Books"

Screen ID:	PGLEOM-01
Screen Title:	End-of-Month Processing
Panel ID:	4507
Tool Number:	360
		Click here to magnify

Access this screen by selecting Tool #360 Run GL EOM/Upload to Analytics Booth.

Month-end processing is the last step necessary to close a fiscal month. You can also use the month-end feature to generate thirteenth-period (year-end) closing entries.

Month-end is not a calendar process like other general ledger functions—you dictate when month-end occurs. Month-end is processed only after all general ledger functions such as reconciling and posting are complete for the month, and you have decided on final positions for financial statements. In calendar terms, this point may not occur until well into the following month.

In effect, performing month-end processing “freezes” the system so that no other entries for that month can be made. This is important so that data on financial statements will be consistent no matter when they are run.

Year-end processing is the same as month-end processing, except that the system zeros out income and expense accounts. In effect, when you process year-end you are closing out December and entering a new year-to-date calculation.

“Closing” - A Term with Multiple Meanings

In accounting, the word “closing” is generally used to describe the final reconciliation of a ledger or set of ledgers. We “close” the daily work, the weekly work, the monthly work, and finally the annual work.

To CU*BASE users, “closing” does not generally entail any special processing other than verifying counter-balancing reports against support documentation. However, two processes must be understood when it comes to CU*BASE closings: End-of-Month closing and End-of-Year closing.

End-of-Month Closing

The G/L system uses a control month and year to govern the posting of debits and credits to the proper time periods. This control feature is maintained either by running the end-of-month processing procedure or by updating the month and year directly in Chart of Accounts Maintenance. End-of-Month processing is designed not only to advance the control month and year for posting, but also to allow the system to run several reorganization and internal analysis programs to keep the credit union's data organized and indexed properly.

The control month and year is a “back stop” control, which means that once the month and year is set, you are restricted from posting debits and credits to previous periods, but not from posting into the future. All journal entries, including any reserve/closing entries, should be posted prior to running end-of-month.

End-of-Year Closing

Accounting is based on the measurement of the net debit and credit activity over a period of time. Depending on the type of financial statement, the time period is measured differently:

Balance Sheet	A balance sheet is a statement of financial position based on only an end point—in other words, the total of all debit and credit activity since the credit union was established.
Income Statement	An income statement shows net debit and credit activity measured from one point in time to another point in time—for example, from January to June. Income and expense totals start over with the beginning point.

Therefore, at the end of each year, the debits and credits for income and expense G/L accounts must be zeroed and started over for the next year. This is accomplished not by erasing the totals from January to December (this would not allow comparisons between years). Rather, CU*BASE creates a 13^th closing period where the net debit and credit activity of income and expense G/L accounts are equal, but opposite of the first twelve periods.

The following example illustrates the effect of 13^th period entries on income and expense G/L accounts:

Month	Net Activity	Year-to-Date Net Total
January 2013	+ 15,000	15,000
February 2013	+ 10,000	25,000
March 2013	+ 5,000	30,000
April 2013	- 5,000	25,000
May 2013	+ 10,000	35,000
June 2013	+ 20,000	55,000
July 2013	- 15,000	40,000
August 2013	- 10,000	30,000
September 2013	+ 5,000	35,000
October 2013	+ 10,000	45,000
November 2013	+ 10,000	55,000
December 2013	+ 10,000	65,000
13^th Period Closing 2001	- 65,000	0
January 2014	+ 10,000	10,000
February 2014	+ 5,000	15,000

Therefore, when the system references the 13^th period or year-end closing entries, it is referring to the entries which zeroed out the income and expense G/L accounts. When many reports are printed, you can choose to include these year-end entries or not, depending on the desired results.

Using the above example, following are four different scenarios which would result in a different net total on a printed report:

Requested Data	Include 13^th Period Entries?	Net Total Shown
Net Income for Jan 2013 - Dec 2013	No	65,000
Net Income for Jan 2013 - Dec 2013	Yes	0
Net Income for Nov 2013 - Jan 2014	No	30,000
Net Income for Nov 2013 - Jan 2014	Yes	- 35,000

Performing End-of-Month Closing

When this screen is used to perform end-month processing, the system will accomplish two very important things:

The Current Processing Period will be changed to the next month. Posting (and unposting) will no longer be allowed for previous months. This will “freeze” the account balances which will show on financial statements.
The system will reorganize the general ledger history file, making it run much more smoothly and efficiently. (You must check the Reorganize G/L History File Also box for this to happen.)

When ready, use Enter to begin the process, or use the back arrow to cancel and return to the Home Page. If proceeding, the system will display two separate acknowledgment messages: one before processing begins and another when it is done. Use Enter as instructed by the system.

WARNING: Before you begin month-end processing, make sure that no one else is using the general ledger system. If someone else is using the system while you are processing month-end, the program will encounter an error message.

Field Descriptions

Field Name	Description
Corporate ID	The corporation number for which the month-end processing will be done.
If last fiscal period, generate end-of-year entries	Uncheck (No) the box for normal month-end processing. Check (Yes) the box when performing year-end processing. Refer to the Year-End Processing Guide for step-by-step instructions on year-end processing. This document is free and updated annually. If further assistance is required, contact a Client Service Representative for available Tier II support options (for a fee.)
Wait until specified time to begin (HHMMSS)	It is not recommended that you use this field.
Reorganize G/L history file also	Use this field to indicate whether or not the system should reorganize the general history file. This is recommended because it can speed up access time when using these files.