Awareness between ledger settlement and year-end close

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In Microsoft Dynamics 365 Finance, the Awareness between ledger settlement and year-end close functionality, along with its associated features Automate ledger settlement process and Post foreign currency realized gains/losses for ledger settlements, are found on the General Ledger parameters, specifically on the Ledger settlement page. These features are managed through the Enable advanced awareness options, Enable process automation for ledger settlement, and Enable post currency realized gains/losses for ledger settlements parameters.

The default setting for Enable advanced awareness options is No. Its activation depends on the Enable ledger settlements parameter, which you must set to Yes to activate it. The other two parameters, Enable process automation for ledger settlement and Enable post currency realized gains/losses for ledger settlements, depend on the status of Enable advanced awareness options. If you set Enable advanced awareness options to Yes, you can enable these parameters.

Note

Don't revert Enable advanced awareness options to No after you set it to Yes, as doing so might impact the period-end close process.

During general ledger year-end close, ledger transactions that have been settled will no longer be included in the opening balance of the next fiscal year. This enhancement ensures that only unsettled ledger transactions are included in the opening balance. It's important when general ledger foreign currency revaluation is run. Foreign currency revaluation is run only for ledger transactions that have a status of Not settled. However, before enabling the Enable ledger settlements parameter, the opening balance summarized both transactions that have a status of Settled and those that have a status of Not settled, and the status of the summarized amount was set to Not settled.

The second enhancement lets you post detailed opening balance transactions during general ledger year-end close. If you set the Keep detail during year-end close option to Yes, a separate opening balance is created for each ledger transaction that isn't settled. You define this setting for each main account in the ledger settlement setup. By keeping detailed transactions for the opening balance, you greatly improve the ability to settle the unsettled ledger transactions in the next fiscal year.

To support the new enhancements, changes were made to ledger settlement and year-end close.

Changes to ledger settlement

Ledger settlement must be done within a fiscal year.
You must complete ledger settlement for transactions in a single main account. The main account is now a required filter on the Ledger settlement page.
You can't complete ledger settlement or the reversal of ledger settlement for transactions that are posted within a closed fiscal year (in other words, the year-end close has been run).

Changes to year-end close

A year-end close can't be reversed if any opening balance transactions have been settled in the next fiscal year. This change applies when a year-end close is reversed, or when a year-end close is rerun and the Delete existing year-end entries when re-closing the year option is set to Yes in General ledger parameters.
If the Keep detail during year-end close option is set to Yes for any balance sheet account in the ledger settlement, more detailed opening balance transactions are created for that main account.

Before you enable the Enable advanced awareness options parameter

Because of the changes in functionality and the data model, it's important that you consider the following points before you enable the Enable advanced awareness options parameter:

Because only settled transactions are brought forward into the opening balance, you must unsettle transactions from the current fiscal year that are settled with transactions in the previous fiscal year. The transactions must be resettled against transactions within the current fiscal year. This can be done through an adjusting entry in the current fiscal year. The adjustment reverses the summarized opening balances and offsets with the detailed transaction necessary to settle the ledger entries in the current year.

Important

If this isn't done, you receive an out-of-balance error when you run the year-end close for the current fiscal year. If it's not possible to unsettle and resettle the ledger transactions with the same fiscal year, don't enable this Enable advanced awareness options parameter until after the year-end close is complete. Enable the Enable advanced awareness options parameter immediately after year-end close is complete and before any new ledger transactions are settled in the next fiscal year.
All transactions that have been marked for settlement but haven't been settled are automatically unmarked when the Enable advanced awareness options parameter is enabled. To prevent any loss of work, settle all marked transactions before you enable the Enable advanced awareness options parameter.
Some organizations run the year-end close multiple times for the same fiscal year. Don't enable the Enable advanced awareness options parameter if the year-end close has already been run once and will be run again for the same fiscal year. The Enable advanced awareness options parameter must be enabled before you process the first year-end close or after you process the last year-end close for the fiscal year.

If you want to enable the Enable advanced awareness options parameter, but the year-end close is already run once, you must reverse the year-end close before you can enable the Enable advanced awareness options parameter.
Because settlement across main accounts is no longer permitted, adjust your chart of accounts or processes as required to ensure that ledger settlement can be done in the same main account.
You can't enable the Enable advanced awareness options parameter if the public sector year-end close process is being used.

Set up ledger settlement

After you enable the Enable advanced awareness options parameter, and before you run the next year-end close, each organization must determine if it will keep the transaction details during the year-end close. The choice has no impact on opening balance postings from previous year-end close processes.

The Keep detail during year-end close option is set for each main account on the Ledger settlement setup page.

Go to General ledger > Ledger setup > General ledger parameters.
On the Ledger settlements tab, select Ledger settlement accounts.

-or-

Go to General ledger > Periodic tasks > Ledger settlements.
Select Ledger settlement accounts.

Two columns are added to the Ledger settlements page:

Main account type – This column is for informational purposes only. It shows the type that you assign to the main account.
Keep detail during year-end close – By default, the option is set to No. You can set it to Yes only if the value in the Main account type column is Balance sheet, Asset, or Liability. When the option is set to No, opening balances are posted in summary, as is typical during year-end close. If you set it to Yes, opening balances are created in detail for each ledger transaction that isn't settled for the main account.

Year-end close

When you run the year-end close by going to General ledger > Period close > Year end close, the process creates the opening balances for the main accounts that you define for ledger settlement. The process creates the opening balances in either summary or detail, depending on the ledger settlement setup. The process excludes ledger transactions that are settled, regardless of whether you post the opening balance for each main account in summary or in detail.

For example, multiple transactions are posted to main account 130100 in fiscal year 2021.

Journal number	Voucher	Date	Type	Ledger account	Account name	Description	Currency	Amount in transaction currency	Amount	Amount in reporting currency
20853	FTV-3000	12/3/2021	Operating	130100-001-	Accounts receivable	Service fee	USD	100	100	100
20855	FTV-3004	12/5/2021	Operating	130100-002-	Accounts receivable	Utilities	USD	175	175	175
20854	CMV-4000	12/16/2021	Operating	130100-001-	Accounts receivable	Refund	USD	-100	-100	-100
20851	ARP-8000	12/20/2021	Operating	130100-002-	Accounts receivable		USD	-0.88	-0.88	-0.88
20853	ARPM0004	12/20/2021	Operating	130100-002-	Accounts receivable		EUR	-127.11	-174.12	-174.12
20856	CMV-4010	12/21/2021	Operating	130100-002-	Accounts receivable	Credit on account	USD	-175	-175	-175
20857	FTV-3011	12/28/2021	Operating	130100-001-	Accounts receivable	Utilities	USD	400	400	400
20910	FTV-3020	12/29/2021	Operating	130100-002-	Accounts receivable	Service	USD	300	300	300

Of these transactions, three are settled during ledger settlement.

There's an invoice for 175 US dollars (USD 175). This invoice is paid by a payment in euros (EUR), and a cash discount is taken.

Journal number	Voucher	Date	Type	Ledger account	Account name	Description	Currency	Amount in transaction currency	Amount	Amount in reporting currency
20855	FTV-3004	12/5/2021	Operating	130100-002-	Accounts receivable	Utilities	USD	175	175	175
20851	ARP-8000	12/20/2021	Operating	130100-002-	Accounts receivable		USD	-0.88	-0.88	-0.88
20853	ARPM0004	12/20/2021	Operating	130100-002-	Accounts receivable		EUR	-127.11	-174.12	-174.12

The results for main account 130100 depend on whether the Enable advanced awareness options parameter is enabled before the year-end close is run. If the Enable advanced awareness options parameter is enabled, the result also depends on the setting of the Keep detail during year-end close option.

The Enable advanced awareness options parameter isn't enabled

The year-end close creates three opening balance transactions for main account 130100 in 2022. The sum of the transactions in the accounting currency is USD 525.

Journal number	Voucher	Date	Type	Ledger account	Account name	Currency	Amount in transaction currency	Amount	Amount in reporting currency
20910	YEC_2021	1/1/2022	Opening	130100-002-	Accounts receivable	USD	299.12	299.12	299.12
20910	YEC_2021	1/1/2022	Opening	130100-001-	Accounts receivable	USD	400	400	400
20910	YEC_2021	1/1/2022	Opening	130100-002-	Accounts receivable	EUR	-127.11	-174.12	-174.12

Even though the payment's transaction for EUR -127.11 was ledger settled, the transaction still comes forward as a beginning balance.

Enable advanced awareness options parameter is enabled and Keep detail during year-end close = No

The year-end close creates two opening balance transactions for main account 130100 in 2022. The sum of the transactions in the accounting currency is still USD 525, but the ledger-settled transactions are excluded from the opening balance. The total amount for account 130100-002- is USD 125 instead of USD 299.12, and the transaction for EUR 127.11/USD 174.12 is excluded.

Journal number	Voucher	Date	Type	Ledger account	Account name	Description	Currency	Amount in transaction currency	Amount	Amount in reporting currency
20910	YEC_2021	1/1/2022	Opening	130100-002-	Accounts receivable		USD	125	125	125
20910	YEC_2021	1/1/2022	Opening	130100-001-	Accounts receivable		USD	400	400	400

Enable advanced awareness options parameter is enabled and Keep detail during year-end close = Yes

The year-end close creates five opening balance transactions for main account 130100 in 2022. A separate opening balance transaction is created for each of the five transactions that weren't settled. The sum of the transactions in the accounting currency is still USD 525.

Journal number	Voucher	Date	Type	Ledger account	Account name	Description	Currency	Amount in transaction currency	Amount	Amount in reporting currency
20910	YEC_2021	1/1/2022	Opening	130100-001-	Accounts receivable	Service fee	USD	100	100	100
20910	YEC_2021	1/1/2022	Opening	130100-001-	Accounts receivable	Refund	USD	-100	-100	-100
20910	YEC_2021	1/1/2022	Opening	130100-002-	Accounts receivable	Credit on account	USD	-175	-175	-175
20910	YEC_2021	1/1/2022	Opening	130100-001-	Accounts receivable	Utilities	USD	400	400	400
20910	YEC_2021	1/1/2022	Opening	130100-002-	Accounts receivable	Service	USD	300	300	300

When transaction details are kept, the original detailed transactions aren't affected. They remain posted and unsettled in the fiscal year that's being closed. A copy of those transactions is created for the opening balance. The following values from the original transactions are copied to the opening balance transactions.

Ledger account (the main account and all financial dimensions)
Amounts in the transaction, accounting, and reporting currencies
Description
Posting layer
Posting type

Note

No other opening balance transactions are assigned a posting type. Therefore, you can use the posting type to differentiate opening transactions that you brought forward in detail.

Some fields from the original transactions must change in the opening balance detailed transactions. The date of opening balance transactions is always the first day of the next fiscal year. The journal number must change, and the voucher number changes to the value that you enter in the year-end close dialog box.

You can find information from the original transactions on the Ledger settlement page. Each detailed opening balance transaction shows the Original transaction date column in the grid. This column can help you match transactions in the new fiscal year. In Microsoft Dynamics 365 Finance version 10.0.33, you can view the Original document and Original document date columns. You can select View original voucher to drill back to the full original voucher.

Settle transactions

To settle ledger transactions, follow these steps:

Go to General ledger > Periodic tasks > Ledger settlements.
Set the filters at the top of the page.
1. Select a date range. Alternatively, select a date interval code to automatically fill in the date range.
  - The date range can't cross fiscal years. If the date range crosses fiscal years, no transactions appear when you select Display transactions.
  - If the date range is in an open fiscal year, transactions can be settled, and the settlement can be reversed. If the date range is in a closed fiscal year, or if the year-end close is completed, transactions are shown, but they can't be settled or unsettled. You can unmark transactions only in a closed fiscal year. If the date range is in a closed fiscal year, the Mark selected, Settle marked transactions, and Reverse marked transactions buttons are unavailable.
2. Select the main account to show transactions for. This field is required. The lookup shows only the main accounts that you select on the Ledger settlement page for the company's chart of accounts.
3. Select the posting layer. You can't settle transactions that are in different posting layers.
4. To show the main account and dimensions in separate columns, select a financial dimension set.
Select Display transactions to show all the transactions that match the filters that you set. If you change any of the filters or the dimension sets, you must select Display transactions again.
Select lines for settlement. The value in the Selected amount field at the top of the page increases or decreases to reflect the total amount on the selected lines.
When you finish selecting transactions, select Mark selected. For each selected transaction, a check mark appears in the Marked column. Additionally, the value in the Marked amount field above the grid increases or decreases to reflect the total amount on the marked lines.
When the value in the Marked amount field is 0 (zero), select Settle marked transactions.
- Partial settlement isn't permitted. For example, you can't settle a $100 debit transaction against a $90 credit transaction. The remaining $10 credit transaction must also be marked for inclusion in the settlement.
- Enter a settlement date. The date must be on or after the latest date of the transactions that are marked for settlement.

The status of the marked transactions is updated to Settled.

Important

All transactions that you've marked for settlement for the active legal entity and the selected main account will be settled. The transactions don't have to appear on the page. They'll be settled even if they're hidden because of a filter.

Some processes, such as reversal of a transaction, automatically settle ledger transactions. For example, a payment and invoice are settled in Accounts receivable, and the settlement generates a realized gain or loss. The settlement of the payment and invoice doesn't settle any ledger transactions, such as transactions for the Accounts receivable ledger account. However, if you unsettle the payment and invoice in Accounts receivable, the reversing accounting entry that was posted during the reversal of the Accounts receivable settlement causes the original and reversing accounting entries to be ledger settled in General ledger. When the Enable advanced awareness options parameter is enabled, the ledger settlement of a reversal doesn't automatically occur if the reversing date is in a different fiscal year.

Use Excel for ledger settlement

Transactions that are shown on the Ledger settlement page can be exported to Excel. In Excel, you can further filter transactions to determine which transactions to mark for settlement. Both ledger settlement entities export ledger transactions only for the main account that you select on the Ledger settlement page. Although you can mark or unmark transactions for closed fiscal years by using Excel, you can't settle them. Additionally, you can't reverse settled transactions for that fiscal year.

Make transactions easier to find

The Ledger settlements page includes capabilities that make it easier to view the transactions that you require for settlement.

Use the Marked filter to filter transactions based on whether the Marked checkbox is selected.
Use the Status filter to filter transactions based on their status.
Select Sort by absolute amount to sort the amounts by absolute value. By using this sorting method, you can group debits and credits that have the same amount.

Reverse a settlement

You can reverse a settlement that you made by mistake.

Follow steps 1 through 3 in the Settle transactions section to show the transactions that you're interested in.
In the Status filter, select Settled.
Select lines for reversal.
Select Reverse marked transactions. The status of all transactions that have the same settlement ID is updated to Not settled.