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Epicor ERP

Year End Processing and


Procedures Course
10.0.700.2

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Revision: July 25, 2014 2:51 a.m.
Total pages: 20
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Year End Processing and Procedures Course

Contents

Contents
Year End Processing and Procedures Course........................................................................4
Before You Begin....................................................................................................................5
Audience.........................................................................................................................................................5
Prerequisites....................................................................................................................................................5
Environment Setup..........................................................................................................................................6

Overview.................................................................................................................................7
Business Cycles - Year End.....................................................................................................8
Sales and Collection Cycle................................................................................................................................8
Acquisition and Payment Cycle......................................................................................................................11
Payroll and Personnel Cycle............................................................................................................................13
Manufacturing and Inventory Cycle................................................................................................................14

Close the General Ledger.....................................................................................................16


Year End Accounting Checklist............................................................................................18
Conclusion.............................................................................................................................19

Epicor ERP | 10.0.700.2

Year End Processing and Procedures Course

Year End Processing and Procedures Course

Year End Processing and Procedures Course


This course is designed to review a series of proposed methods for closing a company's fiscal year. It is important
to remember that each company's year end close and housekeeping procedures include action items unique to
its business methods and operations. The information in this course should only serve as a guide to developing
procedures specific to your company.
Procedures suggested throughout this course should not be interpreted as a sole listing of effective methods.
Upon successful completion of this course, you will be able to:
Recognize records to process and post at year end close time.
Identify items to verify or write-off before a year end close.
Understand and differentiate between the four business cycles' year end processes.
Commit inventory, COS and WIP transactions to the general ledger (GL).
Reconcile accounts, statements, registers and records.
Close the fiscal year.

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Year End Processing and Procedures Course

Before You Begin

Before You Begin


Read this topic for information you should know in order to successfully complete this course.

Audience
Specific audiences will benefit from this course.
Cost Accountant
CFO/Controller
Payroll Staff

Prerequisites
To complete the workshops in this course, the necessary modules must be licensed and operating in your training
environment. For more information on the modules available, contact your Epicor Customer Account Manager
at EpicorCAM@epicor.com. It is also important you understand the prerequisite knowledge contained in other
valuable courses.
Navigation Course - This course introduces navigational aspects of the Epicor application's user interface.
Designed for a hands-on environment, general navigation principles and techniques available in two user
interface modes - Classic Menu and Modern Shell Menu. Workshops focus on each of these modes and
guide you through each navigational principle introduced.
Financial Foundations Course - This course introduces you to the maintenance modules and programs in
the Epicor application that set the basis for the financial activities within your company.
General Ledger Course - This course provides a clear perspective of the maintenance programs, concepts,
processes, and reporting tools you encounter as you work within the General Ledger (GL) module.
Payroll Processing Course - This course reviews the Payroll module's concepts and reporting tools. Topics
of discussion include maintenance program setup, various Payroll processes, and the impact these processes
have on the general ledger. Hands-on workshops guide you through the Payroll setup steps and processes.
System Flow Course - This course introduces a basic quote to cash scenario that includes the process from
the initial customer quote to final cash receipts and payment of supplier invoices. This course emphasizes the
series of processes that make up the quote to cash process by using a simple scenario to highlight various
transactions. Your organization may have more complex processing routines than those described in this
course.

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Before You Begin

Year End Processing and Procedures Course

Environment Setup
The environment setup steps and potential workshop constraints must be reviewed in order to successfully
complete the workshops in this course.
Your Epicor training environment, in which the Epicor demonstration database is found, enables you to experience
Epicor functionality in action but does not affect data in your live, production environment.
The following steps must be taken to successfully complete the workshops in this course.
1.

Verify the following or ask your system administrator to verify for you:
Your Epicor training icon (or web address if you are using Epicor Web Access) points to your
Epicor training environment with the Epicor demonstration database installed. Do not complete
the course workshops in your live, production environment.
Note It is recommended that multiple Epicor demonstration databases are installed. Contact
Support or Systems Consulting for billable assistance.
The Epicor demonstration database is at the same service pack and patch as the Epicor
application. Epicor's education team updates the Epicor demonstration database for each service pack
and patch. If your system administrator upgrades your Epicor application to a new service pack or patch,
he or she must also download the corresponding Epicor demonstration database from EPICweb > Support
> Epicor > Downloads and install it. If this is not performed, unexpected results can occur when completing
the course workshops.
Your system administrator restored (refreshed) the Epicor demonstration database prior to
starting this course. The Epicor demonstration database comes standard with parts, customers, sales
orders, and so on, already defined. If the Epicor demonstration database is shared with multiple users
(that is, the database is located on a server and users access the same data, much like your live, production
environment) and is not periodically refreshed, unexpected results can occur. For example, if a course
workshop requires you to ship a sales order that came standard in the Epicor demonstration database,
but a different user already completed this workshop and the Epicor demonstration database was not
restored (refreshed), then you will not be able to ship the sales order. Epicor's education team has written
the course workshops to minimize situations like this from occurring, but Epicor cannot prevent users
from manipulating the data in your installation of the Epicor demonstration database.

2.

Log in to the training environment using the credentials manager/manager. If you are logged into your
training environment as a different user, from the Options menu, select Change User.

3.

From the Main menu, select the company Epicor Education (EPIC06).

4.

From the Main menu, select the Main site.

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Year End Processing and Procedures Course

Overview

Overview
This course is intended to help you understand important accounting items to review, execute and report on
prior to your company's fiscal year end. Notable prerequisites, activities and housekeeping procedures are organized
into four basic cycles typical to a manufacturing environment. Each business cycle addressed concludes with
specific action items surrounding the general ledger (GL).
Cycles include:
Sales and Collection
Acquisition and Payment
Payroll and Personnel
Manufacturing and Inventory
At the end of this course a checklist is included to assist your company in identifying important questions to ask
before the fiscal year end.

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Business Cycles - Year End

Year End Processing and Procedures Course

Business Cycles - Year End


At the beginning of a new fiscal year, accountants prepare for the approaching tax season. Companies are closing,
cleaning up their books, and making important decisions to ultimately determine the success of their business.
These events most commonly take place between the months of January and April, the busiest time of year for
both accountants and financial software support representatives.
Although it is an accountant's job to balance a company's books and decide what needs to be posted, deleted,
adjusted or voided, financial software support representatives must be ready to point their customers in the right
direction.
At the time of posting, transactions are stamped with the following characteristics:
Apply Date
Book
Fiscal Calendar, Year and Period
Chart of Accounts
Debit Account
Credit Account
Amount (in book currency)
Every companys period end close and housekeeping procedures include action items unique to their business
practices and operations. This course should be used only as a starting point to assist you in developing procedures
for your company. It should not be interpreted as the sole listing of effective methods.

Sales and Collection Cycle


The Sales and Collection Cycle is made up of all processes that lead to a company's total revenue intake. Because
this is such an important cycle in a manufacturing environment's day-to-day business practices, several items
must be reviewed before the fiscal year is marked as closed.

To verify whether all project milestones, shipments, invoices, credit memos, adjustments and cash receipts for
the current fiscal year were properly accounted, use the following prerequisites, activities and mandatory records.
Prerequisites
For each period, verify the following:
All pending shipments have been recorded and flagged as Shipped.
All invoices have been generated for project milestones.
All invoices for shipments have been recorded and posted.
Miscellaneous invoices have been recorded and posted.
Any credit memos for open return material authorizations (RMAs) have been processed and posted.
All cash receipts have been recorded and posted.
Any AR adjustments and write offs have been recorded.

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Year End Processing and Procedures Course

Business Cycles - Year End

Activities
Process customer statements for any customers requesting year end statements.
Reconcile Receivables accounts.
Reconcile the AR clearing account.
An AR clearing account can optionally be used as a pending account between Inventory/WIP and Cost of
Sales (COS). If defined, this account is used to track products that have been shipped but not invoiced. At the
time of shipment, costs post to this clearing account instead of moving directly to the COS accounts. Once
the shipment is invoiced, costs move from the AR clearing account to the COS accounts. This transaction can
be viewed as an unposted transaction on the Inventory WIP Reconciliation report until the Capture COS/WIP
activity is executed. The inventory transaction type is recorded as Invoice. (See Mandatory Reports - Shipped
Not Invoiced for more info on reconciling this account).
Reconcile Deferred Revenue and Prepayment accounts.
Mandatory Reports
Generate these mandatory reports after you complete all prerequisite activity and before you enter any future
period transactions.
Aged Receivables Report
This report serves as the subsidiary ledger to the company's Receivables accounts. This report should be aged by
Invoice Date and selected by Apply Date. Furthermore, the date listed in the Aged As Of field should reflect
the last date of the last fiscal period of the year you wish to close. The report total should reconcile to the ending
balance of the Receivables account. If you find an out of balance condition, it may be beneficial to print an Aged
Receivables Report for each individual period's date range.
If your company uses multiple Receivables accounts, you are able to filter the Aged Receivables report by AR
Account GL control code. This makes it easier for reconciliation to each individual receivables account.
Shipped Not Invoiced Report
This report serves as the subsidiary ledger to the company's AR clearing account. The To date on this report
should reflect the last date of the last fiscal period of the year. The report total on this listing should reconcile to
the ending balance of the AR Clearing account as long as all inventory transactions have been committed to the
GL.
Advanced Billing/Deposit Balance Report
This report serves as the subsidiary ledger to the Prepayment and Deferred Revenue accounts (if the Deferred
Revenue Accounting module is not used). The Balance As Of date should reflect the last day of the last fiscal
period.
Note If any Advanced Billing Invoices were posted directly to Sales (cleared Deferred Revenue box on the
invoice header) this report will not reconcile.
Optional Records
The following reports are not necessarily used to reconcile the ending balance of any GL account. Rather, they
are helpful when trying to identify activity details that transpired during the time period specified and can assist
with any inconsistencies found.
GL Distribution Report filtered by:
Sales
Cash Receipts
Adjustments
AR Invoice Balance

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Business Cycles - Year End

Year End Processing and Procedures Course

Housekeeping Items
Verify the accuracy of the Scheduled Shipments Listing. Close any outstanding orders that have in fact been
shipped complete.
Verify the accuracy of the Sales Backlog Report. Close any outstanding orders that are no longer valid.
Verify the accuracy of shipments not yet invoiced. Any packing slip created but not flagged as ready to invoice
is a candidate for future reconciliation if the AR clearing account feature is not being used.
Any invoice in an open AR invoice entry group may be a candidate for future reconciliation.

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Year End Processing and Procedures Course

Business Cycles - Year End

Acquisition and Payment Cycle


The Acquisition and Payment Cycle is comprised of all procedures involved in the purchase and receipt of goods
as well as cash disbursements to a company's suppliers and subcontractors.

To verify all receipts, invoices, debit memos, adjustments and cash disbursements for the current fiscal year were
properly accounted for, use the following prerequisites, activities and mandatory records.
Prerequisites
For each period, verify the following:
All receipts have been recorded.
All invoices received to date for receipts have been recorded and posted.
Miscellaneous invoices have been recorded and posted.
Any debit memos for open discrepant material returns (DMRs) have been processed and posted.
Cash disbursements have been recorded and posted.
All manual checks have been recorded and posted.
Bank adjustments and fees have been posted.
Activities
Reconcile AP Clearing account(s).
Reconcile Payables account(s).
Reconcile Prepayment account(s).
Reconcile Bank Statement(s).
Prepare a reversing journal entry to accrue any miscellaneous payables.
Mandatory Reports
Generate these reports after you complete all prerequisite activity and before you enter any future period
transactions.
Aged Payables Report
This report serves as the subsidiary ledger to the Accounts Payable account. The Aged As Of date should reflect
the last date of the last fiscal period. The report total on this listing should reconcile to the ending balance of the
Payables account.
If your company uses multiple Payables accounts you are able to filter the Aged Payables report by AP Account
GL control code. This makes it easier for reconciliation to each individual payables account.
This report can also be run for Pre-Payments only. If your company posts pre-payments via AP Payment Entry,
this report can be used to reconcile the Prepayment account(s) to which you post.
Received but not Invoiced Report

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Business Cycles - Year End

Year End Processing and Procedures Course

This report serves as the subsidiary ledger to the AP Clearing account. The cut off date should reflect the last
date of the last fiscal period. The report total on this listing should reconcile to the ending balance of the AP
Clearing account.
Advanced Payment Balance Report
This report serves as the subsidiary ledger to the Advance Payment account(s). The Balance As Of date should
reflect the last day of the last fiscal period in the fiscal year you wish to close. The report total should be reconciled
to the ending balance of the Advanced Payment account(s).
Optional Records
The following reports are not necessarily used to reconcile the ending balance of any GL account. Rather, they
are helpful when trying to identify activity details that transpired during the time period specified and can assist
with any inconsistencies found.
GL Distribution Report filtered by:
Purchases
Cash Disbursements
Adjustments
Check Register
Discount Analysis
Housekeeping Items
Generate the Open PO report and close any outstanding orders that have been received complete.
If all invoices received in the mail on the last day of the period have been entered, there is no need to keep
AP open. The accrual for receipts not yet invoiced has already occurred. It is based on the receiving transaction.
Any invoice in any open group in AP may be a candidate for future reconciliation.

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Year End Processing and Procedures Course

Business Cycles - Year End

Payroll and Personnel Cycle


The Payroll and Personnel Cycle highlights all the procedures involved in a company's employee payment process.

To verify all labor has been recorded and payroll runs for the year have been processed, use the following
prerequisites, activities and mandatory records.
Prerequisites
For each period, verify the following:
All labor has been recorded and edited.
All payroll check runs for the year have been processed and posted.
Activities
Reconcile payroll deduction and tax accrual accounts.
Prepare a reversing journal entry to accrue wages earned but not yet paid.
Reconcile supplier deposits account(s).
Prepare a reversing journal entry to accrue for all other wages earned but not yet paid. Types of wages to
consider include paid time off (PTO), holiday, sick time.
Reconcile payroll bank account (if separate from your main bank account).
Mandatory Reports
Generate these reports after completing all prerequisite activity and before entering any future period transactions.
Payroll registers
Employee Earnings
Quarterly Tax Report
W2 Records
Optional Records
GL Distribution Report filtered by:
Payroll
Deduction Report
Workers' Compensation Report
Housekeeping Items
Maintain Payroll Employee Maintenance for inactive or terminated employees.
Verify the accuracy of system users.

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Business Cycles - Year End

Year End Processing and Procedures Course

Inactivate terminated employees.


Update vacation and sick time balances for each employee.

Manufacturing and Inventory Cycle


Throughout the Manufacturing and Inventory Cycle, procedures from prior cycles are reviewed. There are also
additional routines to complete before the fiscal year can close.

Prerequisites
For each period, verify the following:
All receipts have been recorded.
This activity should have been completed as part of the prerequisites for the Acquisition and Payment Cycle.
All pending shipments have been recorded and flagged as Shipped.
This activity should have been completed as part of the prerequisites for the Sales and Collection Cycle.
All labor has been recorded.
This activity should have been completed as part of the prerequisites for the Payroll and Personnel Cycle.
All materials that need to be issued to jobs have been entered.
All receipts from manufacturing have been entered.
All jobs that are candidates for closing have been closed.
Activities
Capture COS/WIP activity.
Select both check boxes - Post to General Ledger and Post Cost Of Sales/MFG Variance. If you select the
Post to General Ledger check box and do not select the Post Cost of Sales/MFG Variance check box, most
transactions will still post to the GL. The only transactions that will not post are shipments from WIP (MFG-CUS)
and variances (MFG-VAR).
The ending date should reflect the last date of the last fiscal period in the year you are closing.
Reconcile all Inventory accounts.

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Year End Processing and Procedures Course

Business Cycles - Year End

Mandatory Reports
Generate these reports after completing all prerequisite activities and before entering any future period
transactions.
Stock Status Report
This report serves as the subsidiary ledger to the Inventory account. The cut off date should reflect the last date
of the last fiscal period in the company's fiscal year. The report total on this listing is your inventory value using
the valuation method identified for each part. This total should reconcile to the ending balance of the inventory
account(s).
It is desirable to select the report options Include Non-Stock Items and Negative On-Hand Balances when
running this report for reconciliation purposes.
Work In Process Report
This report serves as the subsidiary ledger to the Work In Process (WIP) account(s). The cut off date should reflect
the last date of the last fiscal period. The report totals on this listing should reconcile to the ending balance of
the Work In Process account(s).
Open DMR Status
This report serves as the subsidiary ledger to the DMR account. It includes subtotals for each DMR and a grand
total of the value of all open DMRs. The report total on this listing should reconcile to the ending balance of the
DMR account.
Receipt Inspection Pending
This report serves as the subsidiary ledger to the Inspection account. It lists all items that have been received to
inspection through the receipt entry program and are awaiting inspection. The report total on this listing should
reconcile to the ending balance of the Inspection account.
Optional Records
Inventory WIP Reconciliation
Inventory Journal
Housekeeping Items
Review the Job Status Report. Address any jobs showing delinquent days that may have been put on hold or
cancelled.
Move Shop Warnings to history.

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Close the General Ledger

Year End Processing and Procedures Course

Close the General Ledger

Prerequisites
Verify all subsidiary ledgers have been generated and reconciled to corresponding accounts.
Activities
Verify and post recurring journal entries.
Process and post remaining GL allocations.
Enter and post general journal entries for:
Accruals
Depreciation
Commissions
Inventory Reserves
Allowances
Reconcile all suspense accounts. Re-classify any transactions to the appropriate account(s).
Post adjustment entries to the appropriate period(s) or closing period(s).
Use Close Fiscal Period/Year to close the fiscal year in each relevant GL book.
Transfer opening balances to the new fiscal year in each relevant GL book.
Records
All reports in the GL can be generated on demand. The book, fiscal year, and fiscal period control the data that
prints on these reports.
Financial Statements
The year end financial statements are the most important reports a company processes. More than any other
monthly reports you prepare throughout the year, these statements are used for tax preparation, future
reference, and decision making. For that reason, companies spend a lot of time making sure their financial
statements contain and reflect accurate information.
General Ledger Report
Trial Balance Report
Annual Total Journal Report

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Year End Processing and Procedures Course

Close the General Ledger

GL Journal Listing(s)
GL Segment Report (if balances are maintained on segments other than the natural segment or if dynamic
segments are in use.)

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Year End Accounting Checklist

Year End Processing and Procedures Course

Year End Accounting Checklist


Consider the suggestions included on this checklist for each business you are working with to ensure year end
books are accurate.

Tip The last step of the year end process is to check your Sales, Cost, and Expense accounts. Compare
the account balances to those of prior years to see if any increase or decrease is reasonable.
Year End Checklist
Are there any accounts receivables that are worthless and should be written off?
Is my balance in Allowance for Bad Debts a reasonable estimate of potential write-offs?
Have we recorded all payables?
Does my general ledger bank balance reconcile to the bank statement?
Is the company's inventory balance correctly stated?
Are there inventory items that cost more than their worth and should be written down to their market value?
Are there any prepaid items that need to be adjusted such as prepaid insurance?
Have all assets been reviewed for accuracy?
Do the payroll tax liabilities coincide with our quarterly reports?
Do the balances in the notes payable accounts (loans) agree with what the banks say we owe?
Are there other debts that have not been included on the books?
Are there debts on the books that no longer exist because of forgiveness or oversight?
Is my depreciation correctly recorded for fixed assets still in the company's possession?
This item is only important if your company has the Asset Management Module licensed.
Are any increases or decreases reasonable to my Sales, Cost, and Expense account balances when compared
to those of prior years?

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Year End Processing and Procedures Course

Conclusion

Conclusion
Congratulations! You have completed the Year End Processing course.

Epicor ERP | 10.0.700.2

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