Internal Controls for Reports

When source documents are finalized, the corresponding accounting entries are automatically generated and posted to the specified GL accounts. Accounting rules that you establish determine these GL accounts. The following controls ensure the accuracy of financial reports:

GL area cutoff. After the GL area cutoff, accounting entries automatically stop generating for the period. After the GL area cutoff, you can enter only manual journal entries, or you can manually backdate a source document only if the period remains open. These restrictions help to maintain control over the balances in financial reports.
Accounting validation. Before you close a GL area, you must validate the accounting entries in it. This validation identifies exceptions in accounting entries. You cannot close a GL area until you clear these exceptions. After a GL area is closed, you cannot change it without re-opening it. You can establish a formal internal process for granting approval to re-open a GL area. To learn more, see Accounting Validation.
Reconciliation reports. When all the GL areas and the GL are closed, you can close the period. Then you can run the reconciliation for the GL accounts for a final time for the period. You use this reconciliation report to verify that the accounting entry amounts associated with source documents and manual entries are correct and match the GL amounts. The reconciliation report details the activity in GL accounts. To learn more, see Reconciliation Reports.
Timestamps. When you close a GL area or period, the close is time stamped. Reconciliation reports are also time stamped. Timestamps act as a monitoring control, and tell you the last time the GL was validated and reconciled. If the time and date of the final reconciliation is after the time and date of the period close, you know you are viewing the latest information. To ensure the reconciliation report is up-to-date, verify that the timestamp on the reconciliation report is later than the timestamp for the last time the GL was closed.
Change tracking. All changes are recorded, and each change is displayed as a separate line on the relevant accounting entry so that you can track every change to any GL area in any period.
User Security. You can set security requirements so that only approved individuals can:
- Re-open a GL area or period.
- Backdate a source document.

Accounting Validation

Accounting validation verifies certain aspects of source documents and accounting entries. It occurs at the following levels:

Source document level. When a source document is finalized, it is automatically verified to determine if it is complete. A completed source document has all of the required information, such as an amount, a transaction date, a transaction currency, a company, and a period. When the source document is automatically verified to determine if it is complete, all finalized fields are locked. You can then manually generate the accounting entry for the source document. You can also allow the scheduled batch job to run and generate the accounting entry. The accounting entry is automatically generated and posted to a GL account according to accounting rules. A history of all subsequent changes to the source document is automatically maintained.
GL area level. When you close a GL area, the accounting entries are automatically regenerated, and the regenerated accounting entries are compared to the existing accounting entries. An exception is displayed for any difference or for an issue with a specific entry, such as missing information. Although it is not required, Kenandy recommends that you clear these exceptions before you run the reconciliation report.
Note: You can validate a GL area at any time without closing the GL area.

Some examples of accounting validation exceptions follow:

Accounting entries with missing or incorrect segments (company, department, GL account, and so on).
Accounting entries with GL accounts not assigned to the right period.
Accounting entries with incomplete source document information. This exception can occur when a source document is updated, but the accounting is not regenerated.

After you clear the issue associated with the exception, the exception is not displayed, and the associated accounting entry is replaced with the correct accounting entry. Accounting entries with no exceptions are not replaced.

Reconciliation Reports

A reconciliation report details the change in a GL account balance for a period. When you run a reconciliation report, the accounting entry amounts for a GL account are automatically compared to the associated source document amounts to verify if the amounts are the same. A reconciliation report also verifies that the accounting rules are correct—for example, that customer receipts are posted to the correct GL account and that calculations are correct. Exceptions are included in the reconciliation report. You cannot close a GL area or a period until you clear these exceptions. To learn more, see Aging Reports.

After you clear every exception and validate and close every GL area, validate and close the GL. When the GL closes, the period is automatically closed. Then you run the reconciliation report for a final time for the period. The timestamp for this final reconciliation report is later than the timestamp of the period close, and indicates that the numbers for the period in the GL are final. The ending balance of each period is the beginning balance of the next period. When you close the final period of the year, the year is automatically closed.