Prior Year Items to be reviewed before Closing a Year
During the Closing Process at the end of the company’s year, any entries to the Cash Accounts that have not been cleared during the Bank Reconciliation process are rolled over to the new year as open items. These items has a capital letter P in front of them with the original Journal Record number, the date, the Payee (if available) and the dollar amount.
The closing process makes these checks available to be cleared on a future bank reconciliation, usually sometime within the next month or two. This is true for AP checks, Payroll checks, Fees, Deposits, and any other item that has been posted to the Cash account.
At the close of the next company year, if these items from the prior year (with the letter P in front of them) have not cleared the bank, they must be adjusted prior to the next year end closing. If the item is a check, contact the Vendor or Employee to re-issue the funds that are due to them. If they cannot be contacted, please review the rules and guidelines for each state regarding Unclaimed Property (Illinois rules available at
). If the item is a duplicate payment – perhaps made on-line and with a check – an adjustment is required prior to the closing.
If your company is on a calendar year, this can be reviewed after the November bank reconciliation is complete prior to the year end close. For non-calendar Fiscal Year ends, review the open items after performing the bank reconciliation for the eleventh month of the Fiscal Year. Check all open items to see if any have the letter P in front of them indicating they are from the Prior Year. Review each item to determine if they should be re-issued or an adjusting entry should be made.
After all the adjustments have been made, return to the Bank Reconciliation screen (1-5), enter the Cash Account GL number and the Statement Ending Date for the last day of the eleventh month of the year. Clear the original item from the prior year against the adjusting entry for a net of zero. Confirm that the Statement Beginning Balance and Statement Ending Balance are the same. Trial Save and Print. After a successful print out has been made and the balances are confirmed, Final Save to clear these items from the Bank Reconciliation. The Beginning and Ending Balance must be the same and should match the Eleventh Month ending bank statement.
In general, Master Builder will allow an open item to roll forward only one year. The item becomes a Prior Year record. If the item is still open at the end of the next year, it will not roll over again as a Prior-Prior Year. Instead, it drops off the bank reconciliation requiring additional effort prior to completing the next Bank Reconciliation. Make appropriate adjustments prior to the year end close to avoid the items ‘dropping off’ the list. (cmw)