Operational procedures are those procedures that must be performed in a timely fashion at the end of each period. These required procedures perform the following functions. They prevent transactions from being posted to incorrect periods, they provide the valid sub ledger reports that are required to validate and close the General Ledger at a later time, and they allow users to begin processing in the next period. These procedures should be done at the end of the last day of each accounting period before any transactions are processed in the next period.
1. Enter and Post all of the Following Transactions Through the End Of Period
• Sales, Debit and Credit Memo Processing
• Cash Receipts Processing
• Invoice Adjustments
• Reapply any Payments and or Credits to Invoices if necessary
• Apply Finance Charges
2. Halt all Accounts Receivable Activity for this Period. Normally the operational procedures are performed at the end of the last day of the month so that there is no activity occurring in the accounts receivable system when the month-end reports are produced.
• Ensure no new invoices are being created in the Order Completion/Invoicing Modules.
• Ensure that no additional cash payments and or invoice adjustments are posted until the period has been changed.
3. Run An Accounts Receivable Aging to Support Period End Balance Of AR in GL AND retain a hard copy
4. Change the Default Accounting Year and Period to the correct values for the next period. Note: This step is normally performed by the controller or a general ledger accountant with access to the appropriate program. This step is normally also synchronized with the other departments or areas of the company that create accounting transactions such as the payables department, the invoicing department, receiving, etc. The basic idea is to run the final reports for all sub-ledgers, then immediately change the period to ensure that all reports produced use a valid cut-off.
5. Change the System Date. Once the final sub-ledger reports have been run, no transactions should be processed that affect any of the sub-ledgers until both the system period and year and the system date have been changed. This step ensures that all transactions for the new period are booked with the new period and a date that corresponds to the new period. Note: The system date is normally set to the current date automatically each time an operator accesses the system. This step should happen automatically if the system period is changed promptly at month end and if the operators in the system do not process any transactions until the following day (the first of the new month).