How do the Sub-ledgers and General Ledger fit together?
The Best ERP Software, SYSPRO, allows your company to determine whether or not they want their sub-ledgers to be integrated to the General Ledger (GL). Each module can be integrated in detail; each line is posted, summary; a group entry for a batch of transactions or non-integrated. If a module is integrated the company has increased flexibility in determining expense and revenue accounts entries. Numerous control accounts can be setup for each module as per your company’s requirements. Such as Accounts Payable branch/location (liability control), Accounts Receivable branch/revenue (asset control).
Specific ledger process control accounts are utilized in your SYSPRO installation, "Forced Balance" and "Retained Earnings". The Forced Balance account is used to correct out-of-balance conditions in the GL. This is done by posting an entry to correct the imbalance. The value posted, then is journalized to the correct ledger code.
The Retained Earnings account is used if you select to close-out expense and revenue accounts at year-end (net-earnings). The account is updated with the net income/loss for the company's operating fiscal year when the year-end function is run in GL.
In SYSPRO, the sub-ledgers journals automatically post to the general ledger. This feature supports financial auditing, sub-ledger activity monitoring, capex expenditure management and overal corporate alignment to conformance and compliancy requirements.
Generic Day End Processes for All Modules
Due to the fact that sub-ledger transactions do not post automatically to the GL a company needs to put procedures in place to update their ledger. Updating the GL is generally termed as a day end, although these programs can be run as often or as infrequently as required. A month end will involve a similar process as a day end, with the added task of running the month end program. The yearend requires the running of a yearend program.
In SYSPRO all the modules have very similar functions to update the GL. There are a series of reports which ara avilable and may be stored or printed, these update data and post the sub-ledger into the GL.
- Balance function
- Journal (Register) reports
- Distribution Reports
- Post into the GL
Prior to posting any entries to the GL you should run a balance function. A copy of the report should be kept as this firstly confirms the balance of the sub-ledger and secondly any errors will be recorded on this report, it is very difficult to trace the source of errors if they have not been printed. The balance function (part of the Period End program) performs several tasks which ensure the integrity of your data.
• The balance will check to see if there are any journals in process and change their status to complete. As users post transactions it is possible for the transaction not to be set as complete after the user has finished – users logging out of the system prematurely can cause this. If these transactions are not set as complete they will not be picked up by the journal reports and will therefore not get posted to the GL.
• The balance function calculates the balance of a module by looking at the detailed transaction files. This total is then compared to a control total – the two should be the same. If they are not, you will get a balance correction error. The first time the system calculates the balance correction a report will be generated detailing where the problem is, for example the customer and invoice. In all cases, this should be investigated, and the cause determined. Balance corrections are not normal and may indicate a serious problem with the integrity of your system data.
Journal Reports and Registers
Some modules have a journal report and in others you also print a register. Although different names these reports do essentially the same thing; post financial data to the General Ledger.
A journal report is essentially an audit trail of a transaction. Many companies prefer to print these at the time of posting transactions and filing (paperless-printing preferred) the report as confirmation of transactions. If printed as part of the day end the report may also be filed, a print-to-disk file is preferred.
In SYSPRO the main purpose of the journal is to write to the GL-distribution file. At this stage your GL integration will be used to determine what ledger codes/accounts the transaction is going to post into the ledger.
The distribution report is the easiest report to use if you want to see what entries are posting into the GL. The report basically prints as a set of “T” Diagrams showing which ledger accounts will be updated by a transaction.
The distribution report writes to the GL Group Entries file, and a separate group will be created each time the distribution is run. This is a holding file prior to posting into the GL. The distribution reports will write to the group entries regardless of what period the GL is in compared to the sub-ledger.
Post Entries to General Ledger
The final stage of updating your GL is by posting the entries in the group entries file into the GL. (SYSPRO 6.1 has automatic/live GL Posting which does not require this step)
- You will not be able to post transactions which are in a period later than the GL is currently operating.
- If a sub-ledger transaction or group is out of balance, or is missing a ledger code it will not post – you must correcting the entry first.
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