Objective:

In this training article we will understand all about Payables to General Ledger reconciliation report and the points needs to be considered while running the report.

What is Payable to General Ledger Reconciliation Report?

Payable to General ledger Reconciliation Report facilitates the reconciliation of payables data to the general ledger. It has an interactive reporting capability which provides both summarized and detailed reconciling data for review. The Summary report help us to see payables and accounting beginning and ending balances, as well as summarized activity for the period and how this activity was accounted. We can drill down to any amount in the Summary report Difference column in order to get the Differences Detail report for that item. The Differences Detail reports display the real-time details that make up balances from the Summary report, and indicate potential causes for differences between actual and reconciling amounts.

Points to be considered while using Payable to General Ledger Reconciliation Report:

We need to consider the following points while using the Payables to General Ledger Reconciliation report:

• Differences Between Transactional and Accounted Amounts
• Differences Between Summary and Detail Amounts
• Differences Between the Reconciliation Report and Other Payables Reports
• Differences Due to Rounding
• Variances Due to Transactions not Validated

Let us discuss the above points one by one.

Differences between Transactional and Accounted Amounts:

Ideally the Summary report should display no differences between payables transactional amounts and accounted amounts. In addition, the Payables Begin Balance - Accounting Amount and the Payables End Balance - Accounting Amount should agree with the Payables Trial Balance report run with the Liability Account As-of Date on the last day of the previous period, and the last day of the period being reconciled, respectively.

Any differences that we find need further investigation and correction. Common reasons for differences between transactional amounts and accounted amounts include:

• Transactions that are not accounted.
• Transactions with subledger accounts that fall outside the account range of the report.
• Transaction amounts that do not agree with the subledger journal line amounts.
• Journals posted to the subledger or general ledger that did not come from Payables.
• Subledger journals that are not transferred or posted to general ledger.

After finding and correcting discrepancies, we must rerun the Extract Reconciliation Data from Payables to General Ledger program and review the Summary report. Its worth noting that the Summary report may contain variance amounts if the Payables Begin Balance plus the period activity differ from the Payables End Balance. This applies to both the Payables Amount and the Accounting Amount.

Differences between Summary and Detail Amounts:

The Non-Payables Begin Balance amount is the portion of a general ledger liability account beginning balance that did not originate from Payables transactions. We can drill down on this amount to see a list of general ledger journal lines that have an accounting date that falls within the current fiscal year, but prior to the period of the reconciliation report, and that have an account combination that falls within the account range of the report. The drill down page does not include non-Payables journal lines dated in previous fiscal years, which means that these journal lines may not match the Non-Payables Begin Balance amount. The drill down page is only intended to provide current fiscal year journals that might have posted erroneously to the payables account. The journal source for these journals is typically not Payables. However, we may see manual subledger journal entries that were entered for the Payables source directly into the subledger, but not necessarily linked to a specific Payables transaction. Most of these entries represent adjustment journal entries.

Manual subledger journals created during the current reconciling period display in the Summary report under Other Accounting, and become part of the Non-Payables Begin Balance amount in subsequent periods. Manual general ledger journals that may affect payables accounts are created directly in the general ledger and does not display under Other Accounting on the Summary report, but display instead under the Non-Payables Activity amount.

Summary amounts may not reflect totals on detail pages due to the reason that the data was modified after the data extract was run for a given accounting period. If transactions or accounting were created or modified between the time the extract was executed, and the moment you drill down from a summary amount to its detail amounts, the summary amount will not reflect the detail page totals.

To limit discrepancies between the summary and detail reports, we need to set the Payables accounting period status to Closed or Permanently Closed. Its to be noted that there may still be discrepancies if accounting activities take place in the subledger or general ledger after the extract is run. It is therefore advisable to perform these accounting activities prior to closing the Payables period and running the extract.

Security rules in the setup may restrict you from seeing data from certain business units or segment values. It is recommended that appropriate security be given to users for all business units and accounting flexfield segment values that each user is responsible for reconciling.

Differences between the Reconciliation reports and Other Payable Reports:

There can be differences between the data displayed in the Payables to General Ledger Reconciliation report and other Payables reports. The reports and reasons for the differences are as follows:

* Intercompany Transactions: We cannot exclude intercompany transactions from the Payables Aging report. If you run the Payables to General Ledger Reconciliation report to exclude intercompany transactions or show intercompany transactions only, then the Payables to General Ledger Reconciliation report and the Payables Aging report will not display compatible data.

* Dates: The Payables to General Ledger Reconciliation report displays Payables balances for the first and last date of a period. You can run the Payables Aging report only for the current date.

* Payables Invoice Register and Payables Payment Register: We cannot exclude intercompany transactions from the Payables Invoice and Payment Registers. When we run the Payables to General Ledger Reconciliation report to exclude intercompany transactions or show intercompany transactions only, then the Payables to General Ledger Reconciliation report and the Payables Invoice and Payment Registers will not display compatible data.

Differences due to Rounding:

Because of rounding, the sum of the invoice distribution base amounts and the invoice payment base amounts for a fully paid invoice may not match. Any rounding differences between the original invoice liability amount and the sum of the corresponding payment liabilities are written off by Payables when the final payment, or prepayment application, against the invoice is accounted. Therefore, the total accounting amount of the invoice and payment liability for a fully paid invoice always match. However, because the payables amounts are taken from the invoice distributions and invoice payments, rounding differences can show up in the Payables variance Payables Amount section of the Payables to General Ledger Reconciliation Report.

Differences due to Transactions not Validated:

The Payables Begin Balance and Payables End Balance amounts only include validated transactions. If the current period contains unvalidated transactions, the unvalidated transactions are reported as a Payables Variance. Unvalidated transactions are transactions that are incomplete or that have validation issues, such as invalid accounts or amount variances, that must be corrected.

For example, if there is $ 500 of unvalidated invoice transactions in the current period, the report would show the following:

Payables Begin Balance = $ 15,000

Invoices = $ 2,500

Payables Variance = $ 500

Payables End Balance = $ 17,000

Anjan Mukerji

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