Year End Closing & Inventory Closing in AX 2009 - Part III

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When a company finalizes its accounts for a particular year using Microsoft Dynamics AX and doesn't want to make any further changes in that year, it can then close that year by using 'Fiscal Year Close'. At that point, the records of that year will be available only for view. No more changes are possible in that year. If you have filed your returns for any particular year and don't need to make any changes, you can close that year. You can close individual years only serially. i.e., the record of the first financial year will be closed first and then the next. You can't close a recent year if any of the previous years is not closed. But, not surprisingly, it's all more complicated than that. Here are suggestions to close the previous fiscal year and prepare for the new one:
Pre-Requisites : 1.    Complete month-end and other period closings in all modules other than General ledger.
2.    Reconcile the modules and the ledger.
3.    Print the Trial balance, Account statement, Financial statement, and required reconciliation reports.
4.    Set appropriate periods to Stopped for the current fiscal year.
5.    Update the company currency value of balances and transactions in foreign currencies in ledger accounts with current exchange rates in the Exchange adjustment form.
6.    Click General ledger > Periodic > Sales tax payment > Sales tax payment to calculate the sales tax that is due for a specific period.
7.    Back up your company's data. Related General Ledger Parameters for Fiscal Year Close:

Delete close-of-year transactions during transfer:

If this check box is selected, opening transactions and system-generated closing transactions that exist for the year to be closed are deleted when the transfer is processed again (process is repeated), in the Opening Transactions form.
So with this selection, you can process the transfer multiple times, if needed, while Opening entry will be only one.
It may be noted that, after you post the final closing adjustments, you can use the Opening transactions form to generate new opening balances that contain the sum of the original opening balance. Several opening transactions now can exist on a single account. Create closing transactions during transfer: If this check box is selected, the system creates closing transactions when running the Opening Transactions job. In that case, the system posts closing transactions to all profit and loss accounts and all balance accounts, although Opening Transactions are posted on balance accounts only. Set period status to year closed: If this check box is selected, the system displays a status of year closed for all fiscal periods for the year that is being closed (when you run the Opening Transactions job). Care should be taken while selecting this check box, as you may have to run Opening Transactions job several times. Voucher number must be filled in: If this check box is selected, a voucher number must be entered when opening transactions are created for a new fiscal year.
Limited number of open fiscal years:
Enter the number of open fiscal years you want to have in the system. So if the number of the currently open fiscal years plus the new fiscal year (that you just have created) will exceed this number, an error message is displayed and the new fiscal year is not created.
Note: For this purpose a fiscal year is not open if it has the status year closed in periods form. Modules Closing: 1.    Post all open journal vouchers for the  year in all relevant modules
2.    Complete any batch posting routines in Accounts receivable and Accounts payable.
3.    Calculate interest.
4.    Create collection letters.
5.    Process exchange adjustments in the Exchange adjustment form.
6.    Process payment jobs in Accounts receivable and Accounts payable.
7.    Complete closing and adjustment processes in Inventory management.
8.    Post and adjust Project transactions.
9.    You also can print reports, such as account statements and aging      reports.
10.  You should also reconcile your bank accounts Procedure to Close Fiscal Year: Create new fiscal year The first step in the year-end closing process is to create a new fiscal year. It is important because the year-end close usually does not occur immediately and you can enter the next year's transactions even if the previous year has not been closed.
You can create the new year by clicking General Ledger >> Setup >> Periods and then create a new Fiscal year. Control transactions in a closing period It is necessary to control or stop transactions from updating the ledger accounts during the closing process. When a period is closed, the system displays a warning message that requires a confirmation to indicate the period actually should be closed because the action is irreversible. Steps to stop or close a period:

1.                Click General Ledger >> Setup >>  Periods >> Periods
2.                Click the period to edit, and then drop down the status field
3.                Select either stop or close in the status field. By setting a  period to stopped in order to stop the postings in that periods.

Note: Keep in mind that you can reopen a stopped period but you cannot reopen a closed period
Change Module status in a period During the closing period you should close all the modules in order to stop postings from the modules or you can allow specific user groups to enter transactions and leave the period open. Steps to change the module status in a period 1.                Click General Ledger >> Setup >> Period >> Periods
2.                Click the period to edit and then click the module status tab
3.                In the module status field, specify either none if you want to deny everyone to access the selected module or user group if your want to give access to a specific user group. Create a closing sheet

You should print the trial balance in order to look for any variations and make adjustments before closing the period. You can either use general journal entries for the adjustment or you can use the closing sheet.

o       Closing sheet shows an advanced view of the balances on accounts,and you can perform year-end posting directly from it.

o       The postings to it typically occur in the closing period of the fiscal year.
o       You can create several specific closing sheets for revenue, expenses and so on and then load the balances from the General Ledger into the closing sheet. After you load the transactions, make transfers from once account to another.

o       Closing sheet resembles a journal because you can create as many new closing sheets as needed.
Steps to create Closing Sheet

o       Click the general Ledger >> Periodic >> Fiscal year close >> Closing Sheet.
o       Press Ctrl + N to create a new record
o       Specify a unique identifier ( id ) in the closing sheet field and a Name
o       Select the posting layer for the closing sheet
o       Select the period code either Normal or Closing. In the closing sheet, you cannot make transactions to the opening period because it is used for the beginning balances.

Functions you can perform from the closing sheet Define Dates:

Define dates is used for entering the date ranges for the closing sheet. On the general tab of the close form, enter the start date of the Fiscal year closing in the From field and the end date of the fiscal year in the To field. Enter post date of the transactions. It is the date on which the transactions would be posted in the system.

Load Balances:
Follow these steps to load the account balances into the closing sheet            
1.    From the close form click the Closing accounts button
2.    Click the load balances button to identify the accounts to include. The system totals all the transactions in each account when balances load from a company.
3.    Click the select button to select specific ledger accounts.
4.    Click OK when you select the ledger accounts to transfer into the worksheet. This process may take time depending upon the number of transactions in the database. Make adjustments or transfers between accounts: This process is used to make any adjustments or transfer between the accounts
1.    From the closing accounts form, select an account, and then click the Transfers button to make adjustments or transfers between ledger accounts after the balances are transferred into the work sheet.
2.    Enter the description in the Transaction text field
3.    Enter an amount, and the Offset Account to transfer the amount to
4.    After you add all the transfers for the selected account, close the form Post the closing sheet: After the transfers and adjustments are complete, click the post button from the closing account form to post the closing sheet. The closing sheet only posts to the closing period. Also run reports and verify results before you close the period and transfer the ending balances into the new year as opening balances. To post the closing sheet you must open the closing period in the periods form. Transfer opening balances

In the opening transactions process
o       The system creates a line for the opening transaction which makes up the opening balance for the new year.
o       The system also creates a transaction for each currency and dimension. It is necessary to maintain this to keep statistics and financial reporting. You can transfer balances as frequently as needed during the year-end close process.

Steps to transfer the opening balances:
1.    Click General Ledger, click periodic, click Fiscal year close, and then click Opening transactions
2.    Enter the end date of the fiscal year
3.    Profit and loss accounts are always reset by the system. You must specify the transfer method for the balance sheet accounts. In the balance accounts fields, you should specify one of the following two options:
    * Reset:  Reset the balance accounts and enters the opening balances for the balance sheet accounts manually.
    * Closing > Opening: continues with the balance sheet accounts, and has the opening transactions created automatically by the system.
4.    Enter the account for transfer of year-end result in the system account.
5.    Enter the voucher number for the opening transactions that are created automatically.
6.    Click OK when all the fields are entered. This process may take several minutes, depending on the amount of data. When the process is complete, check the account balances or print the Trial balance. You can run the year-end job as many times as needed. The opening balances will update correctly. If the chart of accounts for the new year differs from the previous year, you can create the opening transactions directly on the new accounts. This is made possible through the option to setup a different opening account for each account on the Chart of Accounts.

Inventory Closing in AX 2009 - Part II

Imparted from Here

Five Steps to Complete Your Microsoft Dynamics AX Inventory Close for 2009, and Prepare for 2010:

1. Prepare to run the inventory close:
Before you perform the inventory close, the following tasks are recommended:  --Make sure that the inventory model assigned to the item on the Inventory model tab of the Inventory model groups form is accurate. Inventory close will settle transactions to each other based on the current inventory valuation method assigned to the item. --View or print the Open quantity report by clicking Inventory management > Periodic > Closing and adjustment > Close procedure > 1. Check open quantities. This report will print a list of inventory transactions that will remain open after the inventory close is performed. For example, you have an item that includes the following transactions:

• Inventory physical receipt for a quantity of 10
• Inventory financial issue for a quantity of 3

In this case, the report will show an open quantity of 3, since this financial issue cannot be settled to any transactions. The Open quantity report also includes a Show receipts option that lets you view all the physical receipts posted for an item and all the open quantities that will remain after an inventory close for the date specified. --Print or view the Investigation of cost price for receipts report by clicking Inventory management > Periodic > Closing and adjustment > 2. Check cost prices. This report allows you to enter a maximum deviation percentage. Items that appear on this report will be only those exceeding  the maximum deviation percentage. The deviation is based on the item cost price, item or median cost price, or median. 2. Complete the inventory close :Inventory close will settle issue transactions to receipt transactions based on the inventory model you have selected in the item's inventory model group setup. You also have to choose the general ledger updated to reflect the adjustments created. To close the inventory: --Inventory management > Periodic > Closing and adjustment > Close procedure> CloseTo open the Close inventory form. --In the Close inventory up to field, type or select the end date up to which you want to close inventory. --Select the Run recalculation after closing check box if you want to run a recalculation up to the current date after the closing has completed. --Set any other options you want to choose for this inventory close. --Click OK. After inventory close has completed, the results will be reported in the Closing and adjustment form. Steps that are performed by the Inventory Close routine: When you run the Close routine, Microsoft Dynamics AX performs the following steps: --Checks whether any Recalculations were run after the date that you choose for your Close. Microsoft Dynamics AX will cancel any of those later Recalculations before the Close can start. --Puts all the items that are to be processed into a queue. These items are stored in the InventCostListtable.
Note:  While a Close or Recalculation is processing, you can click Calculation/Calculation List from the Close & adjustment form to view the data in the InventCostList table. This shows which items are still to be processed by the Close or Recalculation process. --Process each item from that queue sequentially. Microsoft Dynamics AX performs the following for each item:

• Settles individual receipts and issues against one another for the item according to the Inventory Model Group such as FIFO, Weighted Average.
• Makes any required cost adjustments to the issue that was settled based on the cost of the receipt(s) against which the issue was settled.
• Updates the inventory transactions to show the settlement and cost adjustment data.
• Writes the settlement data into the Inventory Settlement table. The data will include records that show explicitly which Receipt(s) were settled to each Issue in addition to any cost adjustment that is made to the Issue that is settled.

--As soon as all possible transactions are processed for that item, Microsoft Dynamics AX looks for any transactions that are fully settled, and then updates those transactions to "Closed" --As soon as all the items are processed, the settlement records that were created are read and sorted by General Ledger Account. Then, Microsoft Dynamics AX summarizes all the cost adjustments that were made, and a General Ledger Journal is created and posted. --If you select the Run recalculation after closing check box in the Close dialog box, a Recalculation will be run for all items up to today's date. 3.  Handle the Inventory Recalculation Process :
The recalculation process matches inventory receipts and issues for the transactions that are not financially matched through inventory dimensions in order to determine the real value of the on-hand inventory. To recalculate the inventory, follow these steps: -- Click Inventory management > Periodic > Closing and adjustment > Recalculation to open the Recalculation form. -- If you want to select specific items or item groups to be recalculated, click Select. Your selection displays in the Items field group. --  In the Recalculate inventory up to field, type or select a date up to which you want the inventory to be recalculated. -- Fill in the remaining fields as required. -- Click OK to start the recalculation.
The Inventory Recalculation routine performs a similar job to the Inventory Close routine. However, there are a few differences. When you run the Recalculation routine, Microsoft Dynamics AX performs the following steps: --Checks whether any Recalculations were run after the date that you choose to run your Recalculation up to. Microsoft Dynamics AX will cancel any of those later Recalculations found before your Recalculation routine can start. --Puts all the items that are to be processed into a queue, and then store the queue in the InventCostList table. --Process each item from that queue sequentially. Microsoft Dynamics AX performs the following for each item:

• Makes a "virtual" settlement between individual receipts and issues for the item according to the Inventory Model Group such as FIFO, Weighted Average. This is a "virtual" settlement because it occurs in the Recalculation's calculations. However, the detailed settlement data that shows the explicit matching of each issue to the various receipts is not stored in the InventSettlement table. The only data that is stored is the cost adjustment that is made to the issue.
• Makes any required cost adjustments to the issue that was settled based on the cost of the receipt(s) against which the issue was settled.
• Writes a single settlement record for any cost adjustment that is made for that Issue into the Inventory Settlement table.

--As soon as all the items are processed, the cost adjustment settlement records that were created are read, sorted by General Ledger Account, and summarized and posted in a General Ledger Journal. --Along with recalculation, you can also perform the following functions from the same window:

• Cancel later Recalculations. This process indicates that any existing recalculations dated after the close inventory up to or recalculate inventory up to date will be automatically cancelled or reversed before you continue with the closing or recalculation.
• Recalculate inventory up to. The system date will be proposed by default. You can change this date, but only to a date after the latest closing. 
• You can also pause and resume the recalculation.

4. Distinguish between recalculate and close :
--Inventory recalculation results in adjustments that match inventory receipts to issues. Unlike inventory close, it will not make a settlement and close a transaction. --The same parameter settings are available for inventory recalculation as for inventory close, but inventory recalculation can be performed on a subset of inventory items. Inventory close must be performed on all inventory items. --Since inventory recalculation can be run on a subset of items, and because inventory recalculation will not make an adjustment for less than the throughput amount, it is not as accurate as an inventory close and should not be relied on to replace inventory close.
5. Determine if cancellation required :
The latest closing, recalculation, on-hand or transaction adjustment made can be cancelled. This may be necessary if, for accountancy purposes, you need to make transactions in the inventory in a closed period. The closing is canceled, but it can still be viewed on the overview tab of the closing and adjustment. Only cancellation of the last closing made is allowed. Because closings are in effect up to a particular date, if closings are canceled in periods between two other closings, there would be gaps in the closing. Reverse completed recalculation: In some cases, you may need to reverse a completed inventory recalculation, returning adjustments to the state they held before adjustments were made. Reverse a completed closing: In some cases, you may need to reverse a completed inventory close, returning settlements to the state they held before adjustments were made. When you reverse a completed inventory close, inventory is also reopened to allow for posting in the valid period. Leveraging the inventory close process to your ongoing advantage: -- Going forward in 2010, run inventory closes on a monthly basis in order to make the Fiscal year process simple on the year end. -- Try to record inventory data sequentially i.e. Receipts followed by issues date-wise -- Inventory close is the first step in the fiscal year close process, so try to do it ASAP -- You can still record transactions for the next year even if annual inventory close has not been run.
-- Finally, and perhaps most obviously, year-end inventory values should be accurate.

Inventory Closing in AX 2009 - Part 1

Imparted from Here

Eight Tips for Handling Inventory Close with Microsoft Dynamics AX 2009

As the year draws to a close, it's time to do inventory closing with Microsoft Dynamics AX 2009. From an accounting perspective, this means settling transactions between issues and receipts, as items can be issued at one value and received at another value. 

While inventory close is no longer required when using the standard cost method, it is required for other costing methods.  With standard close, differences between the item's standard cost (used for issues) and receipt transactions will post to variance accounts, as determined, resulting in inventory always valued at the standard cost.

So the following points apply to all costing methods except standard costing:

• Inventory values are based on the running calculated average cost when financially posted.
• Before a receipt is invoiced (financially posted), there can be a difference between the actual (physical) receipt cost and the expected (financial) cost. When this occurs, the receipt value is known as the floating value.
• Inventory close settles the initially posted average cost to an item cost based on the inventory model selected (i.e. FIFO, LIFO, Weighted average, etc.). Dynamics AX attempts to match issues to receipts based on the inventory model. If a match cannot be made, an adjustment on the issue will occur to match the receipt cost.
• When not using the standard cost method, there can be a link made between the item receipt and item issue cost. Marking is performed to create this link and is considered by inventory close when settling. Transactions "marked" inventory dimensions can control the settlement process within a specific dimension, i.e. an item issued in an inventory dimension cannot be settled against another inventory dimension. To control within a specific dimension, the financial inventory parameter must be selected on the dimension. This control does apply to the Marking functionality.

With the previous points in mind, this checklist can be used in closing a fiscal year:

1. If you are using Inventory Management, run the Inventory Close process through the end of your fiscal year. (Inventory Management | Periodic | Closing and Adjustment)

The Inventory Close process will take into account the Inventory Valuation selection you have selected on the Inventory Model Group from the Weighted Average Method that is used during the month.
2. Create a new Fiscal Year. (General Ledger | Setup | Periods | Periods)

Create the next Fiscal Year that you will be creating transactions for. This step may have been done previously if the Fiscal Year is not closed right at Year End.
3. Set the appropriate Periods to Stopped in the current Fiscal Year. Also Open the Closing Period to allow posting of the Closing Entries. (General Ledger | Setup | Periods | Periods)

Change the status of any period that should not have further transactions posted to it to Closed.
Note - That a Closed Period may not be reopened.
4. Backup Data.

Backup the Dynamics AX data.
5. Make Adjusting Entries. (General Ledger | Periodic | Fiscal Year Close | Closing Sheet)

Use the Closing Sheet to enter any Adjusting Entries you or your auditor has deemed necessary.
6. Print final Financial Statements. (General Ledger | Reports | Periodic | Financial

Print your Final Financial Statements. This would include the Cash Flow Statement, Statement of Stockholder's Equity, Profit and Loss Statement (Income Statement), and Balance Sheet. If you have any other reports that you require, print those at this time as well.

7. Transfer Opening Balances into the new Fiscal Year. (General Ledger | Periodic | Fiscal Year Close | Opening Transactions)

Use this job to move the Balance\Asset Account Balances forward into the New Fiscal Year. This job will also move the balances of your Profit & Loss\Cost\Revenue accounts to the Year-end Result account which is set up in the System Accounts (General Ledger | Setup | Posting | System Accounts).
8. Reset Number Sequences (optional). (Basic | Setup | Number Sequences | Number Sequence)