Year-End Close — Core Modules Microsoft Dynamics GP Year-End Close — Core Modules December 115, 2016

Presenter Rod Carsten Supervisor RSM Technology Management Consultant

Objectives This presentation will provide a detailed approach to year-end closing procedures for Microsoft Dynamics GP We will discuss changes from last year and provide year-end procedures for GP2013, GP2015 and GP2016 It’s also important to note that the year-end updates for GP2013, GP2015 and GP2016 the following changes: - 1099-INT and 1096 Summary forms changes - Changes to the Luxury Auto Maximum Depreciation Deduction in FA We recommended that all companies utilizing payroll install the year end updates.

Modules should be closed in the following order: Close order Modules should be closed in the following order: Inventory Receivables Payables Fixed assets General ledger Since many transactions begin in one module and flow to another, it is important that each module be closed in the correct order.

Please note There are no GP specific year-end closing routines for the following modules: Multicurrency Bank reconciliation Purchase order processing Sales order processing

The importance of backups Backups are a mission-critical step in the year-end close process Full SQL backups of data are strongly suggested Discuss the backup plan with your IT team as part of the planning for your year-end close Year-end backups should be archived, i.e. not recycled back into the backup rotation Users should not be posting or entering transactions once the backup is made and while the year-end closing is in process I can’t stress the importance of backups enough. Should you get into the process and something goes wrong you’ll wish you had them. In my opinion you can’t perform too many backups.

Considerations for closing inventory Inventory has a fiscal year-end only – no calendar year- end close Close results: Transfers all summarized current-year quantity, cost and sales amounts to transaction history Updates the amount in the item’s Beginning Quantity field to the Quantity On Hand field at each site. Certain reports, such as the Turnover Report, use the amount in the Beginning Quantity field for report calculations Resets quantity sold to zero in the Item Quantities Maintenance window for each site When should I close inventory? Once all transactions have been entered for the current year and before any transactions are entered for the next year. Inventory has a fiscal year end only, no calendar year end. What does the close process do for inventory? All summarized information for the current year is moved to last year Resets quantity sold to zero in the Item Quantities Maintenance window for each site Updates beginning quantities from the quantity on hand field for certain reports such as the Turnover Report

Considerations for closing inventory OPTIONAL: Remove discontinued items*, sold purchase receipts or sold lot attributes for items that have a zero balance OPTIONAL: Update the standard cost for items with LIFO or FIFO Periodic valuation methods *If you want to remove discontinued items, consider this in advance and be sure to mark the items as discontinued One consideration during close is whether or not to maintain discontinued items. There is a process required to mark items as discontinued so think about this ahead of time and how you want to handle these items. There’s also an option to update your item’s standard costs. If you select this option, each item’s standard cost will be set equal to its current cost.

Preparation for inventory close Post all transactions and perform period-end procedures specific to your company Perform inventory reconcile This process ensures a solid relationship between all the inventory tables. If any discrepancies are found, quantities will be adjusted and reflected on the Reconcile Report Can be done a few days prior to the year-end close Inventory Page > Tools > Utilities > Reconcile NOTE: If you are using POP, reconcile purchasing documents before reconciling inventory! Period End Procedures: Confirm all transactions are posted including those from other modules Includes invoicing, sales order processing, purchase order processing, inventory controls, & bill of materials Perform Reconciliation Utilities. It’s important these are done in order due to the interrelation of transactions across modules. First reconcile sales order processing, next purchase order processing, and then lastly inventory This ensures all connections between the transactions remain in tact and nothing is lost. Reconciliation is under the utilities tile of each module. All adjustments will be reflected in the reconciliation reports.

Preparation for inventory close Physical inventory To reconcile the actual item quantities with those recorded in Dynamics GP Ensures accurate financials by recording the appropriate adjustments to inventory quantities and values Posts adjustments for variations Print reports Activity reports Stock status report Purchase receipts report Analysis reports Turnover report History reports Transaction history report Serial/Lot reports Serial number list report Lot number list report There are two ways in which you can perform your year end inventory counts: Print the Physical Inventory Checklist, complete the stock count, and input any necessary adjustments. Stock Count Method A more formal process that utilizes count sheets, entering counts in GP, and reviewing/posting any adjustments. We recommend printing several reports. If you’re doing serial or lot tracking there are reports for those as well.

Inventory Year-End Closing Inventory Page > Tools > Routines > Year-End Close Determine whether to remove certain records and update standard costs Before closing the year, make a backup! The last step is to perform the year-end close process. Navigate to the window. Be sure to consider the additional options of handling discontinued items and updating standard costs. Finally, click process only once. GP does not generate a closing report. To summarize, we: Posted all of our transactions including those from other modules that affect inventory Reconciled our modules including SOP, POP & Inventory Performed our physical inventory and posted all adjustments Printed all of our reports Made a backup! Closed the year

Inventory close summary Perform all period-end procedures Reconcile inventory quantities Perform annual physical count and post adjustments (if appropriate) Print reports Make a backup Run Inventory Year-End closing Close the fiscal period for the inventory series - Enter and post all POP, SOP and inventory transactions for the current year. - If you are also using SOP and POP, the reconciliation order should be SOP, POP, Inventory

Considerations for closing receivables Receivables has both calendar and fiscal year-end close processes Calendar year result Transfers YTD finance charges to last year Fiscal year result Transfers all YTD amounts except finance charges to last year When should close be done? Calendar close should be done at the end of the calendar year prior to posting any transaction in the next calendar year. Fiscal close should be done at the end of the fiscal year prior to posting any transaction in the next fiscal year. What does closing receivables management do? Calendar year close clears the Calendar YTD finance charges to the Last Year column in the Amounts Since Last Close view Visible in the Customer Finance Charge Summary window Only available on a calendar year basis Fiscal Year close transfers all YTD amounts other than calendar YTD finance charges to the Last Year column in the Amounts Since Last Close view in the Customer Summary Window The Fiscal and Calendar Year views are date sensitive and will be correct regardless of whether or not you close the fiscal or calendar years.

Preparation for receivables close Perform period-end close procedures Post all transactions and perform period-end procedures specific to your company Period-end close procedures include posting all transactions for the current calendar and/or fiscal year before closing the year. There are some features of receivables management that is date sensitive and others that are not; therefore it is important to close the year on time. Other period-end close procedures include aging, processing finance charges, run statements, and perform paid transaction removal.

Receivables Year-End Closing Sales page > Tools > Routines > Year-End Close Select to close fiscal or calendar year, or both Select Print Report (Optional – can be a very large report) Before running the close process consider running a backup. Once complete you’ll notice that several of the inquiry screens have no year to date activity; rather it’s been moved to last year or life to date. To recap, our process is to perform all of our period-end procedures, make a backup and close the year.

Receivables management summary Perform your period-end procedures Make a backup Close the year Close the fiscal period for the sales series

Considerations for closing payables Payables has both calendar and fiscal year-end close processes Fiscal year result Transfers all amounts, other than 1099 amount, to last year Calendar year result Transfers the 1099 amounts to last year When should these be done? - Fiscal year end should be run at the end of the fiscal year prior to posting transactions in the new year. - Calendar year end should be run at the end of the calendar year prior to posting transactions in the new year. What does the close process do? - The calendar year end close process transfers 1099 amounts from the year to date column to the last year column in the Amounts Since Last Close view in the Vendor Yearly Summary window. - The fiscal year end close transfers all other amounts from the YTD column to the last year column in the Amounts Since Last Close view in the Vendor Yearly Summary window. The Fiscal and Calendar Year views are date sensitive and will be correct regardless of whether or not you close the fiscal or calendar years.

Preparation for payables close Perform period-end close procedures Post all transactions and perform period-end procedures specific to your company Period end procedures includes posting all transaction before closing. As with receivables there are some areas that are date sensitive and others that are not so we recommend that you process your year end routines at the actual year end. Please note that 1099 information will not auto-populate if the transactions were not processed as 1099 transactions at the time of posting.

Payables Year-End Closing Payables page > Tools > Routines > Year-End Close Select to close fiscal or calendar year, or both Select Print Report (Optional – can be a very large report) Before closing the year consider backing up your database. Again Fiscal year close transfers all YTD numbers to last year except for 1099 amounts Calendar year close transfers YTD 1099 amounts to last year.

Payables management summary Perform your period-end procedures Make a backup Close the year Close the fiscal period for the purchasing series Print 1099s and 1096 (GP 2013 R2) The ability to print the 1096 Summary form was added in GP2013R2

Verify 1099 vendor information Use SmartList to verify vendors’ 1099 information (add Tax ID Number to standard SmartList) By utilizing SmartLists you can verify all of your vendors’ 1099 information. For example, you can create a Smartlist to include tax id numbers of all vendors flagged as 1099 vendors. You can utilize this list to reach out to those vendors you are missing information for and make those requests. A 1099 Address ID was added to vendor cards in GP2015. If you are running that version or later, make sure that the proper address ID is being used.

Update 1099 Information Use the Update 1099 Information utility to correct vendors with the wrong Tax Type This will update the vendor’s Tax Type and change their transactions to be included or excluded from the 1099 totals. This can also be used to update specific transactions

Edit 1099 Transaction Information Use the Edit 1099 Transaction Information window to update 1099 information at the transaction level. Transaction–specific 1099 information can be changed in this window. Clicking the Process button updates the transactions in the open and history tables.

Edit 1099 amounts Edit the 1099 YTD amounts in the Vendor 1099 details window (If necessary) Edit the 1099 amounts by specific box number and 1099 type (you must edit it by month, yearly is not allowed) You can update tax type and box information both at the vendor level and the transaction level if needed. To edit the dollar amount information by box number navigate to the 1099 Details window.

1099 details window One thing to keep in mind when reconciling payables; if you have made any changes via the 1099 Details window they will be removed if you ever run the Reconcile Payables Accounts utility unless you select to exclude 1099 amounts.

Print 1099 edit list Verify information by printing the 1099 Edit List from the Print 1099 window (Print button on toolbar) Do not use SmartList to verify your vendor 1099 information. The 1099 Amount YTD column available on the standard Vendors Smartlist is from the Amounts Since Last Close view and may not be accurate.

Print 1099’s Print Forms (Print button on left) Payer’s Federal ID Number – defaults from company setup > Tax Registration field

Print 1096 Print Forms (Print button on left) Print option at bottom left – change to 1096 Form

Optional: Close the sales/use tax year Administration page > Routines > Company > Tax Year- End Close (Actions > Process) Effect: The YTD amounts in the Tax Detail Maintenance window are transferred to last year’s totals Print tax year-end closing report to show YTD and last year’s tax amounts(Optional) Must be done before posting any documents in the new year. This is suggested as part of both the payables and receivables year end closing procedures. It is not necessary to run the process twice.

Considerations for closing fixed assets Fixed assets only has a fiscal year-end close Year-end routine can be performed at different times for each book, or all at once Close Result: General Information window YTD maintenance amount is cleared Quantity is copied to the Begin Quantity field Book Information window The YTD Depreciation Amount is cleared Cost Basis is copied to Begin Year Cost field Life to Date Depreciation is copied to Begin Reserve field Salvage Value is copied to Begin Salvage field Book Setup window The Current Fiscal Year is incremented You must close the year for all books. All books must be closed before processing depreciation for the new year. In GP2015, a Year End Closing Report was added to the year-end close process. The report prints per book and lists all the assets impacted by the close process.

Preparation for Fixed Assets close Close Payables Management Enter all FA activity for the current fiscal year Run depreciation on all assets through the last day of the current fiscal year Complete the GL Posting (GL interface) routine Print reports Ensure the Fixed Assets Calendar is built correctly Verify quarters are set up correctly for all fiscal years Make a backup

Suggested reports to run at year-end: Fixed assets reports Suggested reports to run at year-end: Annual activity Additions Retirements Transfers Property ledger Fixed assets to GL reconciliation Lists of asset additions and retirements are available through SmartLists

Verify fixed asset calendars – Year/quarter Ensure your fixed assets calendar is built correctly Your fixed asset calendar may not be the same as your fiscal calendar, particularly if you have added a closing period or periods.

Asset Year End Financial Page > Routines > Fixed Assets > Year End Select book(s) you wish to close

Fixed Assets Summary Perform period-end procedures Print Reports Verify Fixed Asset Calendar Make a Back-up Close the year

Considerations for closing general ledger General ledger has a fiscal year-end close only Close Result: Transfers all YTD information to account and transaction history and prepares the system for a new fiscal year Transfers current-year P&L amounts to the retained earnings account(s) Rolls balances forward for Balance Sheet accounts as the accounts’ beginning balance for the new fiscal year Resets unit account balances for unit accounts that have the Clear Balance During Year-End Close checkbox marked GP2013 R2 allows you to re-open prior historical years The option to Reverse Historical Year is available in versions GP2013R2 and later Do not use this option to attempt to reverse a failed year end close. Best option is to restore from backup

Post final adjusting entries (optional) If final entries are not yet available, you can still close the GL. Entries can posted in GL for the most recent historical year. EXAMPLE: If you close 2016, then 2016 will be your most recent historical year. You will be able to post entries to the GL for 2016 until 2017 is closed You can post adjusting entries later and run updated TB and financial statements at that time Post all available GL entries

Verify GL setups Financial Page > Tools > Setup > Financial > General Ledger Verify you are maintaining history Verify Retained Earnings account

Verify account posting types Use SmartList Accounts, include column for posting type

Verify/Set up new fiscal year Set up new fiscal year, if not already complete Administration page > Tools > Setup> Company > Fiscal Periods

Update unit and posting accounts Check that all applicable unit accounts are marked to clear Mark accounts you want to delete as inactive Only inactive accounts with zero balances will be deleted. If you elect to maintain inactive accounts you can also decide whether to maintain all inactive accounts or only those with budget amounts.

Suggested reports to run at year-end Financial reports Suggested reports to run at year-end Summary Trial Balance

BACKUP MAKE A BACKUP!!!

Year End Closing Financial Page > Tools > Routines > Financial > Year- End Closing Verify the retained Earnings account Accept/Change the starting journal entry number

Suggested reports to run after close Financial reports Suggested reports to run after close Summary Trial Balance for 1st day of new year Validate all P&L balances are zero Validate all Balance Sheet account balances rolled forward

Close all fiscal periods Confirm all fiscal periods are closed in all modules for the year to prevent posting, and that the year is marked as Historical (The historical year is checkbox is marked during the year-end close process)

General ledger summary Close all other modules in proper order first Verify sufficient disk space exists on the server Post all batches & adjusting entries in GL if available Verify GL Setups: Maintain history Retained Earnings account defined Verify account posting types – CRITICAL Verify/Set up the new fiscal year Complete unit and posting account maintenance Make a backup Print reports Close the year Close all fiscal periods in the Fiscal Period Setup window Make a final backup

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