Year-End Closure - Italian Requirements

Before you start

1. For this process to work, 'GL Balance File. Analyze' (GLS940) must not be run in update mode.
2. In this document, the process for external transactions is described. Internal transactions are managed similarly, by running 'General Ledger. Calculate Profit/Loss' (GLS995) sections with the 'Internal transactions' check box enabled instead, and by creating an internal voucher in 'Journal Voucher. Enter' (CAS100) instead of 'Journal Voucher. Enter' (GLS100).

Process explanation

Example

Initial P&L:

Account 892000 after (GLS995) has been run:

GL Voucher for transfer P&L result:

Balance of the suspense account 892000 use for the year-end closure:

Initial situation for balance sheet account in period 12:

If (GLS100) is not run, the balance sheet would be unbalanced for the portion of the gain/loss and therefore the closure procedure would not work. The total of the balance sheet must be zero.

After closure of the balance sheet accounts (GLS995):

Process flow

M3 BE standard process

Italian process

Preliminary check before year-end closure

The following preliminary checks must be made before the year-end closure process can be carried out:

1. Run 'Transaction Work File. Restart Erroneous Jobs' (GLS037) to check if any errors exist.
   1. If errors exist, they are displayed in red for the current division.
   2. You must correct these before continuing the process.
2. Run 'Transaction Work File. Restart Interrupted Jobs' (GLS047) to check if there are any program errors, or any programs running.
   1. You must correct these before continuing the process.
3. Run 'Journal/Voucher. Print Unbalanced' (GLS975) to check for any unbalanced vouchers.
   1. You must correct these before continuing the process.
4. Run 'General Ledger. Print Balance Lists' (GLS510) to check the trial balances for the year on a printed list.
5. Check the balance file using 'GL Balance File. Display' (GLS215) to check the trial balances for the year on screen.
6. Display and check the balance file (GLS215) or, if a report exists for that, print it using 'Report. Open' (RGS600) to check the trial balances for the year.
7. Run 'FAM Function. Open' (CRS405). You must have GL99 and GL01 defined with valid dates for the current year and the coming year. There are From and To dates defined in 'FAM Function. Open Details' (CRS406). For example, if you want to report for 2019, you need to check that the FAM functions are valid for both Dec 31, 2019 and Jan 01, 2020 (at least). Otherwise, the vouchers cannot be created.

Create a dedicated Book of Account (BOA)

It is recommended that a dedicated Book of Account (BOA) for the year-end transactions is created.

(GLIT70) must have been run in 'Update' mode.

The recommendation is to create:

• a BOA for the closure only (value 999: the last BOA printed in the year 31/12)
• a BOA for the opening transactions only (value 001: the first printed at the beginning of the year 01/01).

In this way, when the fiscal journal is printed, the BOA 001 (opening transaction) is printed at the beginning of the report, and the BOA 999 (closing transaction) is printed at the end of the report.

On 'Accounting Identity. Open' (CRS630) ensure that the account 892000 in the example above, is a balance account. This is a mandatory setting.

Profit & Loss closure account

The following steps must be carried out to update the profit and loss closure account:

1. Run 'General Ledger. Calculate Profit/Loss' (GLS995)
   1. The balance account must be set as such in (CRS630).
   2. Run, without checking, the update field and check the result in the proposal report.
2. If all is correct, there are two ways to process the year-end closure:
   1. Run the program using update mode, that is by selecting the update field, and enter the voucher in GL to generate the result (profit or loss) for the year. A GL transaction is created for the P&L account, and the result of the year is added to the balance account.
   2. Propose the (GLS100) entry and run in proposal mode to check. If the GL voucher P&L match, run again in update mode. A GL transaction is created for the P&L account, and the result of the year is added to the balance account. The balance account equals zero.
3. In 'General Ledger. Display Transactions' (GLS210) check the balance amount in the account 892000: with C (A for Italy) in case of profit, or with D in case of loss. If the GL voucher was created before running GLS995, then the balance account 892000 will equal zero.
4. Enter the year-end result by entering a GL transaction using (GLS100). Select the applicable FAM function (check if FAM function is open for the last day of the fiscal year) and enter the last day of the year in the date field. As previously explained, this transaction can be created before running (GLS995).
5. Change the setting for account 892000 from balance account to P&L account in 'Accounting Identity. Open' (CRS630/E). This is not required if the voucher is inserted before year-end closure in the definitive way. That is, by selecting the update check box.
6. Run 'GL Balance File. Start Annual Run' (GLS905) to create the opening transaction in the year NNNN period 00. Enter the year of the year-end closure.
7. Run 'Settings - General Ledger' (CRIT75) to check that the Updated Balance File is zero. If it is not zero, the opening transaction also updates the January file, with the risk of having a double amount in the balance. That is, one for period 00 and one for the opening transaction.

Balance account closure and opening

1. Run (GLS995) in proposal mode, and check that the GL voucher is displayed in the report. That is, the result of the year.
2. If it is correct, run in the definitive way. That is, by selecting the update check box.
3. Two vouchers are created: one for all balance account closures, and one for all opening balance accounts.
4. In the vouchers that have been created, check that the P&L account is not included, and that the closing account and opening account exist.
5. Run (GLS995) again to calculate the correct amount in the balance for the period 00 (for the balance account) using the year of the year-end closure.
6. Once (GLS995) has completed successfully, check the balance sheet in (GLS215) using balance key 1, and the applicable column template.
7. Balance account should have:
   • Period 13 = total of the year (cumulative transaction for the year)
   • Period 00 = 13.

   P&L account should have:

   • Period 13 = cumulative transactions for the year (total)
   • Period 00 = zero.
8. Account 892000 from the original example above should have a zero balance for the new year.
9. Check the year-end closure in (GLS210) by selecting '1' in the field 'Chi'/'Year-End Transactions'.
10. The year-end transactions (closing and opening transactions) are displayed. Without this setting, the year-end transactions (closing and opening transactions) are not displayed, and the new transaction for the year-end has the opening balance.
11. Change the setting for account 892000 from P&L to Balance account in (CRS630).
    Note: If any work is scheduled to recreate the file balances, you must not recreate the year just ended in 'GL Balance File. Update With Outcome' (GLS915) or (GLS905).
12. You can now print the fiscal journal for December (first in a proposal way, then in a definitive way) to show the results of the closing and opening balance sheets.
13. Run (CRIT75) to change the settings as follows:
    • Balance initial = 1
    • Initial row value = checked.
14. Print January fiscal journal (first in a proposal way, then in a definitive way).
15. In (CRIT75) change the settings as shown in step 14 above to 0 and unchecked, before printing February, March, etc.