A recent article was posted on the Online Community discussing the pros and cons of performing a “hard close” in your MIP Fund Accounting system. After all, closing the fiscal year is NOT required in order to begin entering transactions in the new year. So let’s take a look.
By the way if you haven’t already visited the Online Community, we encourage you to check it out today at http://forum.abila.com. It’s a fantastic resource that’s chock full of articles, news, tips, tricks, and customer forums to help you make the most of your system.
I Don’t Want to “Lock In” Inaccurate Entries
For many, the thought of closing the books at fiscal year end is intimidating. Uncertainty about inaccurate journal entries that may need to be reversed, potential audit adjustments, and the fear of locking the year up with a hard close is enough for most organizations to work well into the following year without closing the previous year. And we’re here to tell you that’s just fine. Closing the fiscal year in MIP Fund Accounting is not required in order to begin entering transactions in the new year. In fact, you can leave several years open without any impact on the accuracy of your database or financial reports.
The Close Pros
If old habits are hard to break and you’re simply uncomfortable until the fiscal year is officially closed and behind you, here is some information you can sink you’re teeth into:
- Financial statements will run faster because they don’t have to simulate a year end close in order to produce accurate values.
- Open fiscal years are much more susceptible to inadvertent and erroneous changes.
- Certain processes (like purging payroll history) may have to be put on hold because they require the year to be closed.
When you’re certain the books are golden, closing the year is simple. Make sure everyone is logged off and you have exclusive use of the database, and then:
- In the Accounting module, select Activities > Close Fiscal Year
- Follow the onscreen prompts, make sure you’ve completed all the items in the checklist, then click OK at the bottom of bottom of each screen.
Back Up Before You Move Forward
Before beginning any year end processing task, always always always (did we say always?) execute a complete back up of your MIP Fund Accounting database. You should also test the back up to ensure it was successful and the data is readable. Without a reliable back up, there is no way to restore your system to its original state should you need to undo a significant year end processing mistake. It’s also a good idea to make another back up after a successful year end close.