Congratulations! Your firm has survived to cross the finish line of a year for the history books. Now it’s time to run through your regular period-end procedures, then close the fiscal year in Costpoint.
But your staff is probably ready for some holiday R&R. No one desires any late-night or weekend crunch sessions cranking out the year-end close.
We’ve got just the thing to make your season merrier—the first set of tips from a two-part playbook to help you stay ahead of the fiscal year closing game and get better situated for December 31. Although some of the details in the guidelines below pertain specifically to Costpoint enterprise resource planning software, the basic year-end tasks apply to any GovCon.
If the close-out process has your accounting staff bogged down in the weeds, send us an SOS. CAVU accountants are GovCon specialists who can help you welcome the new year with your financials in order.
Here are 15 crucial steps to close out the year:
Step 1: Complete Reconciliations
Make sure your general ledger ties to your sub-ledgers. Complete all reconciliations listed in Closing the Accounting Period. Pay special attention to reconciling the project ledger to the general ledger (see Steps 2 and 3 below). Otherwise, contract-to-date costs will not be correct on the project reports when you roll project balances forward to the new year.
Step 2: Run the Compare Project Ledger to General Ledger Utility
The Compare Project Ledger to General Ledger utility compares amounts in the GL_POST_SUM tables to those in the PROJ_SUM table.
The PROJ_SUM table determines what is rolled forward to the new year during the fiscal year closing process. The PROJ_SUM table amounts must be correct when the roll-forward occurs. The Compare Project Ledger to General Ledger utility can help account for differences.
The Compute Burden Cost process updates the project ledger with amounts from the general ledger. If you post amounts to the general ledger after running the Compute Burden Cost process, the PROJ_SUM table will not contain the new data unless you rerun the Compute Burden Cost process.
Step 3: Run the View Invalid Pools in Project Ledger Utility
The View Invalid Pools in Project Ledger screen compares the ALLOC_APPLIC table to the PROJ_BURD_SUM table. The ALLOC_APPLIC table contains a map of the current pool structure. This utility reviews that structure and determines if any amounts are improperly burdened in the PROJ_BURD_SUM table.
This process is critical because the PROJ_BURD_SUM table is rolled forward to the next fiscal year and becomes the basis for contract-to-date information. The table amounts must be correct when the roll-forward occurs. If the utility identifies a problem, you can correct it by running the Repair Invalid Pools in Project Ledger utility.
Step 4: Back Up Before You Roll Forward
Perform a complete backup of the database and the applications before you roll any of the balances forward. Keep this back up until you’re sure that the roll-forward process is successful.
Step 5: Print the Trial Balance Report
Print a Trial Balance report so you can compare the ending balances for 2020 to the beginning balances of the new year after you roll balances forward.
Step 6: Print Out General Ledger Detail Reports
Print any General Ledger Detail reports if you need hard copies for your files. Although you can run these reports any time, we recommend that you run a preliminary report before you roll balances forward.
Step 7: Run the Update General Ledger Beginning Balances Utility
Use the Update General Ledger Beginning Balances process to roll balances forward based on the account type. For account types labeled Asset, Liability, or Stockholders’ Equity, the utility rolls the balance forward as the beginning balance for the next fiscal year. If you have multiple companies set up in your Costpoint database, run the Update General Ledger Beginning Balances utility separately for each company.
Step 8: Compare the Beginning Trial Balance to the Ending Trial Balance from the Previous Year
Print a Trial Balance report for the first period of the new fiscal year and compare that report to the Trial Balance you printed in step 5 to make sure that your roll-forward has gone as planned. Do this immediately after you roll the balances forward so that you can make corrections and repeat as necessary before continuing with the closing process. It’s also a good idea to compare balance sheets from each year.
Step 9: Zero Out Retained Earnings If Necessary
If you use a Current Year Retained Earnings account, zero out the beginning balance and add that amount to the Prior Year Retained Earnings account balance. Use the Manage Non-Project Beginning Balances screen to update these balances. This step enables you to show the correct income or loss for the new fiscal year on the Current Year Retained Earnings line of financial statements.
Step 10: Run the Assign Account Function Codes Utility
Each row in a project ledger has an account function code that indicates how to treat that cost. The Assign Account Function Codes utility ensures that each row in the project ledger has a correct account function code. This step is important because the project balances will not roll forward properly if the account function code is not correct.
Step 11: Roll Forward Project Balances
Run the Update Project Prior Year History utility. This process inserts information from the PROJ_SUM and PROJ_BURD_SUM tables into the PSR_PY_SUM and PSR_PY_BURD_SUM tables. These costs then form the basis for the contract-to-date costs. If you completed all of the preceding steps, the balances that come forward should be correct.
Step 12: Run the Update Project Status Report Table Process and the Update Other Project Report Tables Process for the New Year
Run both of these utilities after the year-end closing to create a reference. You will use these figures in step 13.
Step 13: Compare Project Status Reports and Revenue Summaries
Compare the contract-to-date columns on the Project Status Reports and Revenue Summaries generated at the end of the prior fiscal year to the prior year columns on the current year’s Project Status Reports and Revenue Summaries. If the amounts differ, run the Assign Account Function Codes utility again (step 10) to ensure that all accounts have codes. Then repeat step 11 to roll the project balances forward.
Step 14: Close Your Leave Year
You are now set to close the leave year with the following steps:
- Check the dates in the Leave Period Data group box.
- Make sure that the Current Start Date and Current End Date are for the last period of your Current Leave Year.
- Make sure that the Next Start Date and Next End Date are for the first period in your New Leave Year.
- Select the Include Inactive Employees check box if you want employees who are marked as inactive to appear on the report.
- Select the base beginning balances on the new leave year hourly rate check box if you want the beginning balances of your new leave year to be based on the hourly rate that corresponds with your new leave year. If you don’t select this box, the system will use the hourly rate associated with your old leave year for the beginning balance in your new leave year.
- For Costpoint 7.1.1, select reconciliation done prior to closing the leave year if you completed reconciliation before closing the leave year.
- If you have completed reconciliation, Costpoint will use actual amount balances from the employee leave table.
- If you have not completed reconciliation, Costpoint uses the employee’s hourly rate to create the G/L Adjustment.
- Select the Fiscal Year, Period, and Subperiod to which leave balance adjustments (due to excess over ceiling) will be posted when you run the Close Leave Year process.
- Execute Close Leave Year.
Step 15: Close Your Payroll Year
Before you close the payroll year:
- Print the Social Security and Medicare Reconciliation report and verify that the correct amount of Social Security and Medicare has been withheld and accrued.
- Make any adjustment on the current paycheck for taxes owed from the results of the Print Social Security and Medicare Reconciliation report or other transactions you know must be accounted for at this time.
- Enter (process) all paychecks to be dated December 31 or earlier and post to the General Ledger.
- Add the Pay Period Schedule for the new year to all Pay Cycles.
- Check the Ceiling Method option on the Manage Deductions screen and make changes if needed:
After you close the payroll year:
- Insert a new line under Payroll » Federal Taxes » Manage Federal Taxes with the new Payroll Year information.
- In Payroll » Deductions » Manage Deductions, update any deductions or contributions that have increased or decreased for the next payroll year.
See Part 2 of our series on year-end closing for advice on the steps to take before you begin processing in the new fiscal year.
Meanwhile, feel free to contact CAVU’s experienced team to guide you through the details of your year-end process so your team can carve out more time for more peace on Earth and goodwill.
Happy Holidays to you and yours!