MEP - Month End Procedures
What is MEP
MEP can be activated from MEPACT to run as a delayed background program or it can be actioned online.
Although the program performs several functions, the user only interacts by starting it. When activated the program "knows what to do". MEP performs the preparation of ITAS ledgers for the next accounting period, this entails three actions:
1) The closing of the oldest accounting period currently open (the number of open accounting periods allowed is a fixed number defined upon ITAS set-up), as soon as the period is closed, no further posting can be made to that period.
2) The next period is opened, thus enabling ledger posting. If the period being closed is period 12 then the 13th accounting period for Year End Adjustments (ADJ) is also opened.
3) MEP archives all Nominal Ledger transactions (database transfer between tables) and all matched Client Ledger transactions. WIP accounts can be marked as requiring partial archive; if the closing period currency balance is zero then all of the transactions will be removed from current table to archive. This archiving is transparent to the user as all the information is still readily available.
During the operation of MEP, it is important not to use any kind of maintenance program (accounting databases need to be static). The posting process (PP) is automatically suspended. It is best practice that all other users cease using ITAS in that company and the user running MEP should exit the company, after MEP completion..
Note1: Before starting MEP checks that the next accounting period can be opened and that there are frozen MEP exchange rates (FXR task with MMMYY date) for the period being closed. It is important to create specific MEP rates that are kept for perpetuity so that any BAL/PLR can be rerun in the future to produce the same results.
Note2: Archiving of accounting transactions can be delayed by a number of month by application of the S01 switch (ctrl02_delayfiscalarchive), e.g. MEP on JUN00 and delay setup = 2 will result in records with accounting period of APR00 and previous being archived. This is useful where CASH matching sometimes needs to be unmatched some considerable time after the match!
Note3: MEP has a feature to restrict execution IF the automated P&L SS process has not been previously actioned for the period to be closed (S01 – ctrl02-plss<>N)
Note4: MEP has a feature to restrict execution IF non FISCAL currency P&L balances exist for the period to be closed. This check is activated by setup in S01 of P&L transfer accounts (ctrl02_fxbs + ctrl02_fxplr). A right-click process in MEPACT ‘Transfer Ccy/Dept’ will prompt for P&L clearance Journals to be created, with the balances re-instated for the following accounting period. This process complements the YEP clearance.
MEP will fail to activate if period 1 of a new financial year is to be opened AND this would necessitate more than 2 fiscal years being open. If this occurs, the Year End Procedures (YEP) must be applied to close the oldest Year and this will then allow an activation of MEP to roll the month successfully.
Run the Month End Process (accounting period rolling).There is no specific moment when you must run MEP. Every company decides when they need to close and open their accounting periods. The only restriction is the number of open accounting periods permitted. This is a fixed number (from 2 to 9) defined upon ITAS set-up. If wanting to post to the next accounting period and the limit of open accounting period has been reached, you will need to run MEP to close the oldest period and open the one you are wanting to post to.
On entering the MEP program you can usually only perform one action: close the oldest open accounting period. To close the period, press the Click to Close button. The next time this program opens, the button will name the next oldest accounting period. (e.g. If you enter MEP and the Click to Close button says Click to Close JUN 1998, if clicked, the next time you open MEP, the button will read Click to Close JUL 1998).
There is an optional control for restricting user authorisation of accounting entries named ‘Last Closed Period For Operations’. This control period is updated with a right-click Save command. This control stops non-authorised personnel affecting the fiscal close procedures being agreed by the accountants, prior to the formal MEP close.
Here is an useful list of suggested procedures that a company may apply before it’s activation of MEP;
a) FXR for MEP exchange rates;
b) Check your afloat list of contracts for correct status using TRAFREP;
c) Reconcile bank statements using BREC;
d) Produce aged debtor/creditor list using CCR;
e) List unpaid sales invoices (USI);
f) Client statements (CSP);
g) Reconcile Stocks (WIPLIST and TRAFREP);
h) Check FX uncovered list (REPORT and TRADEQ);
j) Reconcile currency exposure (CCYEXP);
k) Close/liquidate any WIP accounts that are due for closure (WIP);
l) Insurance declaration (REPORT);
m) Accrual from Trading databases for Un-realised P&L (MEPACCRUE). This would need the FREEZE procedures to have been actioned at calendar month-end;
n) Profit and Loss report (PLR);
p) Balance sheet (BAL);
q) Produce EC Intrastat Report (ECSALE and INTRAS);
r) Check VAT (VTR) and transfer results to clearance account (DOCENT) ready for payment/receipt. Note if 1st quarter/month after yearend , suggest use start period of ADJnn in VTR to collect any yearend late postings.
NOTE there is no need to keep a month/period open for the collection of late invoice arrival. When those documents do arrive they are entered with their correct tax point/document date and are administrated in the oldest period that is open. Similarly when period 12 is ready for closure, close it and the special ADJustment period is automatically opened for late invoices and any audit adjustments.