2016 year end close microsoft dynamics ax -...

2016 Year End CloseMicrosoft Dynamics AX

Presenter

Lee Sussman

Senior Consultant

Microsoft Dynamics AX

UXC Eclipse

Insert Picture

• Planning, Communication and Accountability

• Required, Recommended and Optional Procedures

• Year-End Checklist

• Additional and Follow-on Considerations

• Tips, Tricks and Techniques

Agenda

Introduction and Comments: The instructions and images in this document apply to and are sourced from Dynamics AX version 2012. The live ENV used for demo purposes will be 2012 R3. Questions specific to versions 4.0, 2009, and 7.0 are welcome and will be addressed within the scope of a follow-on meeting with your Consultant.

Planning, Communication, and Accountability

Planning, Communication and Accountability

Planning Criteria

• Closing schedule by Company (and on consolidated basis), Functional area and Resource

• Define critical path across Tasks, including Past due and Today’s remaining tasks, dependencies, owners, and deadlines. Identify and resolve blockers. Available tools include Microsoft project.

• Establish cut-off dates by Sub-ledger (aka Module access) level. Navigation: Ledger> Ledger calendar> Module-access level.

• Resource scheduling

• Ensure Resources and Approval parties are available horizontally and vertically across the organization to maintain continuity. Manage vacations during a period characterized by PTO.

• Communication and Accountability

• Ensure all Team members understand:

• their role and responsibilities, and

• where they fit in the “big-picture” across the critical path

Required, Recommended, and Optional Procedures

Year-End Close Prerequisites

Required:

• Complete all Period 12, prior period and Quarterly processes

• Revalue currency; open/(unsettled) AR, AP, GL monetary transactions. Adjs Control a/c., unrealized +/-

• Settle Sales tax payment obligations. (GL> Periodic> Sales tax payments)

• Add new Fiscal year to existing Fiscal calendar into which Closing entries and balances will post. (GL> Setup> Fiscal calendars)

• Validate (GL> Setup> GL Parameters> Ledger) Fiscal year close setups which define the FYE closing procedure.

Recommended:

• Create (Sys Admin> Users>) User groups to limit module access

• Validate propriety of Ledger rollup; Ensure COA are correct for Main account type:

• Asset, Liability, Equity, Revenue, Expense

• Validate propriety of FIN reporting rollup; ensure Main account categories are correct.

• Review pending POs, PO Invoices and SOs; resolve blockers and post. Status’ include: In review and Match variances.

Optional:

Tools and techniques:

• Closing Sheet to post adjusting journal entries to Period 13.Alternative: General and other journal types.

• Fiscal Calendar> Period 13 to segregate audit and tax adjustments from Period 12 regular, recurring transactional activity. Alternative: 12th Period

• Opening transactions routine:

• Print-out created transactions (to file)

• Run in Batch

Validate GL Parameters > Ledger > Fiscal Year Close Setups

• Balance Sheet: Creates Opening balances

• Profit & Loss: Reclassifies Closing balances to Retained Earnings or equivalent Capital account

• Recommendations:

1. Delete close-of-year transactions during transfer – Check. Re: re-running the opening balance job – to which I recommend one

opening entry vs. an original opening entry + subsequent adjustments aggregating net difference by GL account.

2. Create closing transactions during transfer – Don’t check. Closing entry zeros-out ending balances, including Balance Sheet.

3. Set fiscal year status to closed – Don’t check. Step to be performed manually at the appropriate time.

4. Voucher number must be filled in – Check. Manually enter detailed description. Example: FYE_2016.1

Fiscal Year Close Opening Transactions Periodic Job

• End date – 12/31/2016, 3/31/2017, 6/30/2017 or equivalent FYE date.

• Balance (Sheet) accounts – ‘Closing-> Opening’ describes automated process resulting in Opening transactions/(Opening balances) = Fiscal year-end closing balances.

• Main Account for transfer of Yr. end result -Retained earnings or equivalent capital account. Default account sourced from GL> Setup> Posting> Accounts for Automatic transactions> Year-end result.

• Voucher Number – Manually enter descriptive alpha/numeric string to ID respective versions.

• Print created transactions – Recommendation to save to a file. Retrieve for immediate review and subsequent retrieval.


Select which FIN dimensions will characterize Opening transactions:

1. Balance Sheet: All or none 2. Profit & Loss: Select all applicable FIN dimensions

Additional considerations: Run in Batch - to which pre-requisites include: Batch group, Recurrence and Alerts..


Selecting OK on the Periodic job form generates the following succession of forms:


Saving the file to the Desktop (or appropriate folder across file structure) in any one of numerous formats including Excel from which Report can be generated:

Note: AX created opening transaction lines for each Main account and dimension combination – the aggregate of which comprise the opening balance of any given GL account.

Tools and Techniques: Closing Sheet

• Efficient tool to enter, review the result and post Year End adjs.

• Create one, or multiple Closing Sheets

• Load GL account balances

• Enter amount by which to adjust acc’t balance in Transfer column

• Transfer; enter value by which to adjust account balance

• Post

• Optionally Print to screen and/or file

• Alternative: Enter adjs. using General and other journal types

Year-End Checklist

Accelerate FYE Close – Perform the Following Procedures

• Accruals:

– Contingent liabilities; outcome probable and amount estimable – record expense, loss or liability

– Auto reverse (using standard functionality) prior and current period accruals. Adjust and re-accrue, if required

• Deferrals:

– Record deferrals; expense not yet consumed, and/or revenue not yet earned

– Convertible to: (GL> Setup> Posting>) Accrual schemes

• Reserves:

– Doubtful accounts

– Lower of Cost or market (Inventory obsolescence)

– Sales returns

– Warranty

– Gift cards

• Periodic journals:

– Recurring transactions characterized by static amounts and fixed GL accounts

– Examples include: Payroll, Selling & Admin. expenses, Interest Income and Expense

• Fixed Assets:

– Process acquisitions and depreciation. Record disposals.

– Reconcile Fixed Assets: FA> Reports> Periodic> FA Balances – generates on an “As of date” basis. Note: Timing by which User generates Report a consideration.

• AR and AP

– Collectability of AR

– Propriety of AP

• General ledger

– Run Actual to Budget, and to Prior year reports. Analyze material variances and disposition, if required.

Period 12

Sub-Ledger and Ledger Checklist

Production

• End Production orders reported as finished.

Project management

• Time & Material:

• Process timesheets

• Manage> Accrue revenue +

• Post Costs (B4 invoicing)

• Fixed Price and Investment:

• Periodic> Estimates or Manage> Process> Estimates to create Estimates; re-classes hours, expenses and fees to WIP, and recognizes revenue based on completion status

• Periodic> Eliminate or Manage> Process> Estimates> Eliminate. Closes-out project – re-classing estimates from WIP to FA or Ledger account

• Time & Material, Fixed Price and Investment:

• Process and post journals; Hour, Expense, Item and Fee

• Periodic> Project invoices; Create and post Proposals (NA for Investment projects)

• Reconcile (GL> Reports> Project> Reconciliation) – payroll allocation; profit and loss and WIP

Reports to generate: GL> Reports> Project> Reconciliation> Payroll allocation, Profit and loss and/or WIP


Travel and Expense• Process expense reports; especially if billable –

Additional considerations:

o Approval workflows across which expense reports are reviewed and approved for payment

o Cash flow sufficient to fund EOM payments to Employees and Contractors

o Verify propriety of expense categories; airfare, hotel, rental car as pre-requisite to payment

Fixed Assets • Post open Fixed Asset Journals; Acquisition, Depreciation, Disposal

Tip: Use Journal> Proposals (acquisition and depreciation) functionality

• Update replacement costs and/or insured values for FA Groups based on (%, annual increase) factors. Run Periodic Update replacement costs and insured values job

• Generate Reports incl.: Periodic> Fixed Asset balances – a “Point in time” report that should be run after all prior year activity has posted and before current year activity posts

• Tax Depreciation> One Depr. profile per Value model/(GL Tax layer), or multiple per Depr. Books

1st Business week after FYE – Sub-Ledger and Ledger Checklist

Accounts Receivable

• Reconcile unapplied cash, i.e. credits on a/c identified by review of Detailed Customer Aging

• Open AR Payment journals; process as required and post

• Enter and Post Customer (including Advance) payments

• Periodic> Sales update> Invoice Shipments Picked/Packed/Shipped, but not Invoiced. Stock items recorded to AR Not invoiced, and Accrued sales; shipped not invoiced:

• Sales and Marketing> Common> SOs> Shipped but not invoiced SOs, or AR> Reports> Transactions> SOs> Order lines not invoiced

• Review SOs Invoiced in Period 12 for transactions that do not qualify for revenue recognition because Delivery terms did not transfer ownership at FYE. If destination terms are FOB (or similar), and if Seller cannot substantiate delivery –revenue to be re-classed to deferred GL account until Delivery terms are satisfied.

• Special attention to: International shipments

• Process recurring and non-recurring Free text invoices for services; rents, warranties and other.

• Process Return orders (generates credit memo; posts to Customer account)

• Reconcile AR:

• AR> Reports > Status > Customer Aging

• GL> Reports> Reconciliation > Customer

1st Business week after FYE – Sub-Ledger and Ledger Checklist

Accounts Payable

• Post open AP Journals; Invoice Journal and Payment Journal• Process PO receipts: credit Accrued purchases (AP), debit Received not invoiced (INV)• Invoice PO receipts; status: Confirmed or Received not invoiced

• Procurement & Sourcing > Reports > Status > Accrued Purchases Check ‘PO receipts with GL postings’ checkbox

• Invoice non-stock POs; status: Confirmed or Open (not requiring Product receipt) • Procurement & Sourcing > Reports > Status > Accrued Purchases.

Uncheck ‘PO receipts with GL postings’ checkbox Select the PO order lines> Item number parameter and populate with “{space}“

• Review Pending vendor invoices – facilitate disposition• Process Return orders (generates debit memo; posts to Vendor account) • Reconcile AP

• AP> Reports > Status > Vendor Aging OR GL>Reports> Reconciliation > Vendor • GL> Reports> Reconciliation> Vendor> Vendor

Purchase orders: GL> Periodic> Fiscal Yr. Close> PO Year End process

• Reverse encumbrances as of Year End and carry-forward to beginning of New YearPre-requisite: Budget control for POs and encumbrance process must be enabled.


Inventory; settles issues to FIN updated receipts and records cost adjs.

1. Process SO Packing slips, SO invoices, PO Product receipts and PO invoices – relieving/increasing Inventory, and facilitating settlement:

2. Recalculation – recalculate cost value based on FIFO, LIFO, or other costing basis without closing transactions and inventory:


Inventory

3. Run Close routine: INV> Periodic> Closing & Adj.> Close Procedure:

• Check Open quantities – Generates list of transactions not fully settled, i.e. items that are physically but not financially updated as of the report date. Requirement to invoice.

• Check Cost prices – Generates list of items that exceed User defined maximum deviation based on variance between Item cost price per Vendor invoice and Item record.

• Close: Reports > Status > Inventory Value – per adjacent screenshot

Note: Prevents inventory transactions from posting to Closed period but Adjs. can be “Cancelled”.

• Reconcile INV and WIP – Reports include: Status> Inventory Value, and Potential Conflicts; Inventory and GL, and WIP and GL

• Optional: Update running cost average (Post-closing checkbox)

Note: Scope of Close routine does not include Standard cost and Moving average/(perpetual).


Cash and Bank Management

• Settle open cash transactions; Vendor and Customer records • Deposit slip payment cancellations (Customer receipts pending cancellation)• NSF transactions: AR> Collections> select Account> select closed transaction> select ‘NSF

payment’:

• Reverse (lost or missing) checks• Reconcile Bank accounts –

• Standard or Advanced methodology – and • Identify differences, if any between ledger and sub-ledger: GL> Reports> Reconciliation>

Bank


General Ledger

• Post Open General journals. Review as required and post. • Tip: Periodic> Journals> Post journals functionality

• IF: GL parameters> Batch transfer rules = Asynchronous, THEN run Periodic> Batch transfer for sub-ledger journals• Inquiries to identify: Sub-ledger journal entries not yet transferred

• Process Allocation Requests. Example: Advertising expense based on business unit sales

• Post Ledger Accruals. Example: Amortize prepaids.

• Periodic> Ledger settlements to clear unmatched debits and credits

• Periodic> Consolidate (incl. Eliminations) > Online or by using Management Reporter

Additional and Follow-on Considerations

Period-End Close—Additional Considerations

Retail

• Calculate and Post statements for all stores / channels and consolidated around Channel

Foreign Currency revaluation

• AR and AP> Periodic Foreign currency revaluation, OR

• GL> Periodic> Foreign currency revaluation

Note: Scope includes Bank and other monetary accounts. Balance sheet accounts revalued at Closing rate as of end of period. Profit & Loss accounts revalued at Average rate for the period. To Do: Update Currency exchange rate types.

Sales tax

• Settle; Process sales tax obligations due for payment to the respective Authorities

GL> Periodic> Sales tax payments > Sales tax payments

• Reconcile sales tax

GL> Reports> Reconciliation> Sales tax

Cyclical counts for inventory and fixed assets

• Schedule cycle counts. Expand sample size based on initial results if required.

Credit and collections

• Review Customer balances for collectability. Write-off Bad debts against Reserve as required.

• Run interest calculation as pre-requisite to billing, (if applicable).

Period-End Close – Follow-on Considerations

Jump Start on New Year

1. Update Date intervals (If fixed). Recommendation: Configure dynamic, not static intervals.

2. Update Periodic journal entries. Example: Pre-paid expenses.

3. Update Accrual schemes. Example: Depreciation, Amortization, Interest income/exp.

4. Update Ledger Allocation rules and basis. Example: Benefits costs based on headcount

5. Generate budget plan from GL (prior year balances), or Budget register entries.

6. Evaluate GL Account structure; Main accounts and dimensions.

7. Review and disposition “Pending” transactional activity; Invoices, unposted PY journals.

8. Reset Number sequences as required if Fiscal Year is included across the segments.

a. Org Admin> Common> Number sequences> Number sequences

Note: 1099 process which describes a US reporting requirement to the IRS is considered a post, post-close procedure – the deadline to which is January 31 if reporting amounts in Box 7: Non-employee compensation.

Tips and Tricks

5 Tricks in 5 Minutes

Close open POs; Product receipt quantity < quantity on the line(s).

Select the PO line(s)> Update line> Deliver remainder> Cancel quantity. Changes Deliver remainder quantity to 0 and PO status to Received or (if prior quantities) were invoiced to: Invoiced.

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Close open SOs; Packing slip quantity < quantity on the line(s).

Select the SO line(s)> Update line> Deliver remainder> Cancel quantity. Changes Deliver remainder quantity to 0 and SO status to Delivered or (if prior quantities) were invoiced to: Invoiced.

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Review AP debit and immaterial AR credit balances for write-off consideration:

AP Payment journal> Lines> Payment proposal> Query: enter amount >-$25 AR Payment journal> Lines> Payment proposal> Query; enter amount < $25:

Additional considerations: o AR> Periodic> Reimbursement functionality to refund overpaymentso AR> Collections> Aging Snapshot> select account> select Open transaction(s) to Write-off

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Create Month and Year End close “Favorites” Groups

a. Click on Favorites> Create Group> Name: “Year End Close”b. Click on Year End Close groupc. Right click on GL Area Page> Fiscal year close menu Item> Add to favorites:

• Navigation: File> Favorites> Year-End Close> Fiscal year close> Menu items

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FIN Consolidations, Eliminations and Currency Translation: Recommendation to consider Management Reporter instead of Periodic> Online Consolidation tool if standard transactional reporting, i.e. Ledger transaction list, Summary trial balance is not required. The following per MSFT’s “Financial Consolidations and Currency Translation” Whitepaper published Jan. 2014:

Benefits of using Management Reporter for financial consolidations and currency translation

Customers using Management Reporter for financial consolidations and currency translation will recognize a variety of benefits:

• Depth of data – You can create consolidated reports that bring together actual and budget data, at both the account and dimension level. For Microsoft

Dynamics AX, this includes data from both Budgetary Control and Budget Planning.

• Dynamic consolidations – Consolidations can be done at any time, at any level in the organizational hierarchy. No dummy consolidation company setup is

required.

• Complete audit capabilities – All dimensions, accounts, and transactional detail are maintained for analysis and audit. In addition, Management Reporter

provides full drill-back to the original transaction in any of the legal entities being consolidated.

• Consolidate with data outside Dynamics – You can use Microsoft Excel to easily bring in data from non–Microsoft Dynamics ERPs.

• Streamlined currency translation – After minimal setup in Microsoft Dynamics AX, you can translate any Management Reporter report into any reporting

currency that has been set up. In addition, you can set up an unlimited number of reporting currencies.

• Post eliminations at the source – You have the option to print an elimination report to verify elimination transactions, and then post any new eliminations as

standard intercompany transactions. You also can choose to use an elimination legal entity for any transaction you don’t want in your legal entities.

Supported consolidation scenarios

• Management Reporter and AX 2012 support the following consolidation scenarios, among others:

• Single-level and multi-level consolidations across legal entities

• Consolidations using organization structures that are created with legal entities

• Consolidations with eliminations

• Minority interest

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