Hi All,

most of us who worked on the Oracle financial modules such as Accounts Payables and Accounts Receivables, must be aware of the period close process and its importance.

The Thumb Rule for the Subledgers is that, you must account all the transactions recorded in your subledger and transfer it to your General ledger in order to close the period successfully. If there are unaccounted transactions, system would not allow a complete period close.

In case of payables, unaccounted transactions can be swept to the following month so that current open period can be closed.In case of receivables, which does not have a sweep option (Not sure why??), we can close the period with status as Closed Pending indicating there are unresolved issues pertaining to that period which are required to be fixed.

Everything I have stated above is known to every one, what I am getting at is that why the above thumb rule does not apply to Fixed Asset Module ...??

Be it 11i or R12, accounting has always been optional in Fixed Asset Module and there is no dependency between Accounting and period close in fixed assets module.In 11i and R12, when you run depreciation with period close checkbox enabled, the current open period is closed and next period is opened automatically.In 11i, you would run "Create Journal Entries" program for generating accounting entries for the fixed asset module, later run the "Transfer to General Ledger" program for transferring the journal entries from fixed assets to general ledger module.In R12, you would run "Create Accounting" program for generating accounting entries for the fixed asset module with the option for transferring the same to general ledger module.

If you see the sequence of steps one does in fixed asset module it is exactly the reverse ... system allows one to calculate depreciation and close the period, without any need to perform accounting operation as a pre-requisite. If we justify and appreciate the design of period close process in payables and receivables as Best business practice, how are we supposed to justify the design followed by Fixed Assets....?

The common workaround suggested by the Implementers is that to run the depreciation without closing the period, then perform accounting for the transactions along with transfer to GL, and finally again rerun the depreciation with closing the period option enabled.... this way it looks like you are closing the period after creating accounting entries and transferring them to General Ledger. However system cannot enforce this workaround as a process in the system, it is atthe discretion of the end user ...

So what happens if an organization did not run create accounting for their Fixed assets module, since it is not mandatorily forced by the system ??

When assets are created from payables, the asset clearing accounts would have been accounted and transferred to general ledger by payables, but the subsequent journals which would offset the clearing account are available in the Asset module, unless that gets transferred to general ledger, the journal entries would remain to be unreconciled with open amounts.The data available in General Ledger will not be complete as a result any report that extracts data from General Ledger would not reflect the true/correctness of the business.

How Fixed Assets Module is different from Accounts Payables, Accounts Receivables etc ...??

Even though fixed asset module is a subledger, it is lot different from others as it is not linked to an operating unit or legal entity, it works at the Ledger / Set of Books level. Also it is not a transaction processing module like Payables or receivables where the frequency of transactions are high in volume. Purchase of assets are recorded in Payables and/or Purchasing module, only asset related data are sent to Fixed Asset Module...

To conclude ( in my view), the process in which period close for a module would be done depends on at which Level of Multi org structure that module functions from, say if a module operates from Operating unit level then it is most likely that it would follow the similar process for period close such as, perform accounting entries prior to closing the period ...if the module is not at the operating unit level, then the period close process may undergo a change ... such as Fixed assets which is at the Ledger Level in the Multi org structure.... hence it would be purely due to the system design and not due to any business reason....

Views, Opinions, Criticisms are most welcome ......

Regards,Ivruksha