As the calendar turns, a new year full of opportunities awaits. But for accounting professionals, the excitement often comes with a familiar challenge: the year-end close. This critical process, with its complex reconciliations, stringent reporting requirements, and ever-present compliance needs, can feel overwhelming.
Fear not. With the right tools, guidance, and a proactive approach, you can turn year-end closing into a manageable and even empowering experience. Whether it's resolving discrepancies, crafting precise reports, or maintaining compliance, Kinetek is here to ensure your success every step of the way.
From Deltek’s comprehensive Year-End Guide for Costpoint to our expert consulting support and on-demand how-to video playlists, Kinetek provides the resources and expertise to tackle year-end challenges with confidence. Together, we’ll ensure your financial records are audit-ready, accurate, and positioned for a strong start to the new year.
The fiscal year-end is a pivotal moment for organizations. With Deltek Costpoint’s robust features and Kinetek’s expertise, you can streamline this complex, time-intensive process, ensuring compliance, accuracy, and efficiency. Let us help you close the books on this year—and set the stage for a prosperous year ahead.
Understanding the Year-End Closing Process in Deltek Costpoint
Deltek Costpoint provides a structured, systematic approach to closing the fiscal year.
Key modules involved:
• General Ledger: Central hub for summarizing financial transactions.
• Accounts Payable/Receivable: Ensures accurate management of payments and collections.
• Fixed Assets: Manages depreciation schedules and asset valuations.
• Inventory: Finalizes inventory records for accurate valuation.
Key milestones for success:
1. Completing reconciliations for all accounts.
2. Proactively addressing data discrepancies.
3. Generating financial reports to support compliance and audits.
Proactive planning is crucial to prevent operational disruptions and ensure timely, accurate reporting of company financials.
Timing the Fiscal Year Close
Effective timing is vital to a smooth fiscal year-end. Begin the process only after completing all period-end tasks. Pro-tip: Many organizations will leave the last accounting period open temporarily to accommodate adjustments and audits. This ensures financial accuracy while allowing uninterrupted processing into the new fiscal year.
Fiscal Year Closing Step-by-Step Guide
1. Begin Reconciliations
You should complete all reconciliations listed in Closing the Accounting Period. It is particularly important to reconcile the project ledger to the General Ledger (see steps 2 and 3 below). Otherwise, contract-to-date costs will not be correct on the project reports when project balances are rolled forward.
2. Run the Compare Project Ledger to General Ledger Utility
The Compare Project Ledger to General Ledger utility compares amounts in the GL_POST_SUM tables to those in the PROJ_SUM table. The Compute Burden Cost process updates the project ledger with amounts from the general ledger. If post amounts to the general ledger after you run the Compute Burden Cost process, the PROJ_SUM table will not contain the new data unless you run the Compute Burden Cost process again. The PROJ_SUM table determines what is rolled forward to the new year during the fiscal year closing process. The PROJ_SUM table amounts must be correct when the roll-forward occurs. This Compare Project Ledger to General Ledger utility can help account for differences.
3. Run the Display Invalid Pools in Project Ledger Utility
The View Invalid Pools in Project Ledger screen compares the ALLOC_APPLIC table to the PROJ_BURD_SUM table. The ALLOC_APPLIC table contains a map of the current pool structure. This utility reviews that structure and determines if any amounts are improperly burdened in the PROJ_BURD_SUM table. Because the PROJ_BURD_SUM table is rolled forward to the next fiscal year and becomes the basis for contract-to-date information, the PROJ_BURD_SUM table amounts must be correct when the roll-forward occurs. If this utility identifies a problem, run the Repair Invalid Pools in Project Ledger utility to correct the problem.
4. Create Backups
Perform a complete backup of the database and the applications before you roll any of the balances forward. Keep this backup until you are sure that the roll-forward process was successful.
5. Print the Trial Balance
Print a Trial Balance report, so you can compare the ending balances this year to the beginning balances of the new year after you roll balances forward.
6. Print General Ledger Detail Reports
Print any General Ledger Detail reports for which you need printed copies for your files. Although you can run these reports at any time, it is recommended that you run a preliminary report before you roll balances forward.
7. Update General Ledger Beginning Balances
Use the Update General Ledger Beginning Balances process to roll the balances forward based on the account type of the accounts. For each account with an account type of Asset, Liability, or Stockholders' Equity, the process rolls its balance forward as the beginning balance for the next fiscal year. If you have multiple companies set up in your Costpoint database, run the Update General Ledger Beginning Balances process separately for each company.
8. Compare the Beginning Trial Balance to the Ending Trial Balance from the Previous Year
Print a Trial Balance report for the first period of the new fiscal year and compare that report to the Trial Balance you printed in step 5 to make sure that your roll-forward has gone as planned. Do this immediately after you roll the balances forward, so that you can make corrections and repeat the process, if necessary, before continuing with the closing process. You may want to consider also running a balance sheet for comparison with the previous year's balance sheet.
9. Retained Earnings Presentation
If you use a Current Year Retained Earnings account, zero out the beginning balance for that account and add that amount to the balance of the Prior Year Retained Earnings account. Use the Manage Non-Project Beginning Balances screen to update these balances. This step enables you to show the correct income or loss for the new fiscal year on the Current Year Retained Earnings line on financial statements.
10. Run the Assign Account Function Codes Utility
Each row in the project ledger has an account function code that indicates how to treat that cost. The Assign Account Function Codes utility ensures that each row in the project ledger has an account function code and that the code is correct. If the account function code is not correct, the project balances will not roll forward properly.
11. Roll Forward Project Balances
Run the Update Project Prior Year History process. This process inserts information from the PROJ_SUM and PROJ_BURD_SUM tables into the PSR_PY_SUM and PSR_PY_BURD_SUM tables. These costs then form the basis for the contract-to-date costs. If you completed all of the preceding steps, the balances that come forward should be correct.
12. Run the Update Project Status Report Table Process and the Update Other Project Report Tables Process for the New Year
Run the Update Project Status Report Table process and the Update Other Project Report Tables process after the year-end closing to create a reference. You will use these figures in step 13.
13. Compare Project Status Reports and Revenue Summaries
Compare the "contract-to-date" columns on the Project Status Reports and Revenue Summaries that you generated at the end of the prior fiscal year to the "prior year" columns on the current year's Project Status Reports and Revenue Summaries. If the amounts are different, try running the Assign Account Function Codes utility again (step 10) to make sure that all accounts have codes. If you do that, you must also repeat step 11 to roll the project balances forward again.
14. Close Your Leave Year
Close the leave year with the following steps:
• Verify the dates in the Leave Period Data group box:
• Ensure the Current Start Date and Current End Date correspond to the last period of your current leave year.
• Ensure the Next Start Date and Next End Date correspond to the first period in your new leave year.
• Select the Include Inactive Employees checkbox if you want inactive employees to appear on the report.
• Select the Base Beginning Balances on New Leave Year Hourly Rate checkbox if you want beginning balances to reflect the hourly rate for the new leave year. If not selected, the system uses the hourly rate from the old leave year.
• Confirm whether reconciliation was completed before closing the leave year:
• If completed, Costpoint uses actual balances from the employee leave table.
• If not, Costpoint uses the employee's hourly rate to create the G/L Adjustment.
• Select the fiscal year, period, and subperiod to which leave balance adjustments will post (due to excess over ceiling).
• Execute the Close Leave Year process.
15. Close Your Payroll Year
Complete these steps to close the payroll year:
Before Closing:
• Print the Social Security and Medicare Reconciliation report. Verify the correct Social Security and Medicare amounts were withheld and accrued.
• Make any adjustments on the current paycheck for taxes owed from the reconciliation report or other known transactions.
• Process all paychecks dated December 31 or earlier and post them to the General Ledger.
• Add the Pay Period Schedule for the new year to all pay cycles.
• Verify the Ceiling Method option on the Manage Deductions screen and adjust as needed.
After Closing:
• Under Payroll » Federal Taxes » Manage Federal Taxes, insert a new line with the new payroll year information.
• Update any deductions or contributions that have changed for the next payroll year in Payroll » Deductions » Manage Deductions.
Breaking down the Year-End Process into 4 Buckets
Breaking the process into smaller buckets will help maintain accuracy and compliance:
1. Preliminary Reviews and Reconciliations
• Reconcile cash, receivables, and payables accounts.
• Verify transactions are recorded and categorized accurately.
• Ensure imported data from subsidiary systems is error-free.
2. Closing Subledgers
• Process final invoices and payments in Accounts Payable and Receivable.
• Perform physical inventory counts and reconcile discrepancies.
3. Adjusting Journal Entries
• Record adjustments such as depreciation, accruals, and allocations.
• Resolve reconciliation discrepancies proactively.
4. Generating Financial Reports
• Produce trial balances, income statements, and balance sheets.
• Generate and validate reports for auditors and stakeholders.
Costpoint’s built-in tools facilitate these tasks, but our expert oversight can help avoid inefficiencies and errors.
After Closing the Fiscal Year
Once the fiscal year is closed, perform the following procedures before you begin processing in the new fiscal year:
1. Set Up New Fiscal Year Information on the Manage Fiscal Years, Manage Accounting Periods, and Manage Subperiods Screens
Complete these tasks before doing any processing in the new year. (If you have entered this information, you can skip this step.) Make sure that the entry edit status for your transaction screens is set to Open so that you can begin entering transactions.
2. Set Up Allocation Group One for the New Fiscal Year
Update the Allocation Group Number field to 1 on the Manage Allocation Groups screen to reflect pool structure changes in order to calculate indirect rates in the new fiscal year. You must perform this step before you can clone your pools.
3. Clone Cost Pools
Clone all cost pools so that you can calculate indirect rates in the new fiscal year. Keep in mind that you should clone the first screen of the cost pool (the Manage Cost Pools screen) and use the Save/Continue option on the File menu to clone the subtasks. If you do not do this, the result is partially cloned pools. However, you should generally not clone the Pool Rates subtask because rates are usually different between fiscal years. You will set up your pool rates in the next step. See our Cost Pools Reconciliation guide below for more detailed information on cloning cost pools.
Note: The Clone function does not copy Service Center subtask information.
Deltek recommends that you keep the same pool numbers from one fiscal year to the next because the pool numbers are used for printing purposes on the Project Status Report. Do not reuse a pool number, in a subsequent year, for a different kind of indirect expense.
4. Enter Target and Provisional Rates in the Pool Rates Subtask
You should not have cloned this subtask (on the Manage Cost Pools screen) in the previous step because rates typically change for a new year. For the new cost pools that you created in step 3, enter the target and provisional rates for the new fiscal year.
5. Billing Prior Year Costs
If you incurred costs in a prior year that you need to bill in the current year, Costpoint applies the correct provisional rates based on the year in which you incurred the costs. If you want to bill these costs on the same invoice, they will be properly burdened. You may, however, want to bill them separately so that it is easy to determine the rates that were applied. Retroactive billings for rate revision purposes are available in Costpoint Billing.
6. Burden Ceilings/Overrides
Clone your burden ceilings and overrides on the Burden Cost Ceilings screen in Manage Project User Flow. Because these records are tied to a specific fiscal year, you need to set up a new fiscal year for each project, as necessary, and add the new fiscal year's ceiling and override data.
7. Billing Formats
Check your billing formats on the Manage Generic Billing Formats screen to see if you listed any fiscal years in the Accounts subtask. If you did, add new lines with the new fiscal year. You can leave the Fiscal Year column in this subtask blank to include all fiscal years. If you did, you can skip this step.
8. Budgets
If you use budgets, enter new budgets and choose a new default budget revision so you can include budget information on project reports.
9. Set New Goals
Assess how the year-end close process went, identify opportunities for improvement, and set goals for next year’s financial close process, including which steps you’ll want to complete early next year.
Addressing Other Common Challenges
The year-end close can present challenges such as:
• Data Discrepancies: Misaligned ledgers or inaccurate roll-forwards can disrupt operations. Tools like Costpoint’s "Compare Project Ledger to GL Utility" help identify issues.
• Process Delays: Lack of expertise or system inefficiencies may slow progress. Automation and expert support mitigate these delays.
• Structural Changes: Proper timing for updates, such as rate changes or allocation group adjustments, is critical.
The process can also present opportunities:
If you are planning to make structural changes to your system setup, the timing of those changes can be critical.
For instance, if you want to change project account groups, owning organizations for projects, revenue levels or formulas, or organization structures, do not make those changes until after you compute the final revenue for the fiscal year being closed! Making changes at the wrong time could result in incorrect calculations in the current fiscal year.
There are many other considerations when you make these types of critical structural changes but this is a great time to revisit your Costpoint setting screens and processes. Check our Costpoint Health Check to learn more!
How Kinetek Simplifies Year-End Closing with Costpoint
Kinetek delivers tailored solutions to streamline your year-end close. Key services include:
1. Customized Training for Costpoint Users
• Tailored training programs ensure proficiency in Costpoint’s year-end functionalities, reducing errors and boosting productivity.
2. Automation and Optimization
• Kinetek implements tools to automate repetitive tasks like sub-ledger closures and financial reporting, saving time and minimizing errors.
3. Expert Troubleshooting and Support
• Kinetek provides real-time assistance to address discrepancies, resolve technical issues, and configure system settings.
4. Strategic Advisory Services
• Beyond operational support, Kinetek offers strategic guidance to align financial processes with regulatory and industry standards.
The Bottom Line
The year-end close in Deltek Costpoint is a multi-step process requiring meticulous attention and expertise. With Kinetek’s tailored solutions and Costpoint’s robust capabilities, your organization can achieve a seamless, efficient close, setting a strong foundation for the upcoming fiscal year.
Take the first step toward a smooth year-end close partner with Kinetek today!
Additional Resources
• Deltek Costpoint Cost Pools Reconciliation Checklist
• Deltek Costpoint Month-End Close Accounting Checklist