There are several important procedures to note in running the accounts payable subsystem; although some installations may wish to modify these instructions to suit a particular circumstance, this should be done only with a full understanding of the reason for the procedure.
At the close of each day, the normal procedure is to print the aprons for that day's A/P entries and then post the A/P entries to general ledger. Although the system will function correctly with posting to G/L as infrequently as once a month, good accounting control calls for posting each day. This makes error detection much simpler, since it is relatively easy to check the daily posting report against the source documents.
The aprons should be attached to the source documents before filing; this provides a complete record of the entry, including expense distribution of invoices. The posting reports should be filed in the journal entry file along with those from A/R and the G/L aprons; this provides a complete audit trail of all general ledger activity, filed in journal entry number sequence.
The monthly procedure is divided into two phases. The first phase must be completed before the monthly procedure for G/L is started; the second phase is optional and may be done after the G/L sequence has been started.
Phase I - Prepare for G/L Closing1. Make sure all paperwork for the month has been entered.
2. Complete a daily cycle to ensure that all activity has been posted to the general ledger.
3. Run the aged trial balance; this will be used to confirm the account balance in the general ledger accounts payable control account. After it is used for this purpose, it should be returned to the accounts payable department for their use.
4. Notify the person responsible for the general ledger closing that A/P is closed for the month. Do not make any entries to the month after this. You may, however, continue work on activity for other months.
Phase II - A/P Internal Processing
Normally, the end of the month is the time for running purchase journals, expense journals, and the check register. These may be run as desired, without any effect on the general ledger closing process.
The only year-end procedure required is the running of the 1099 reports if there are any vendors requiring them. It is a good idea to run the report first on plain paper for proofreading, checking for missing tax id numbers, obsolete addresses, etc.
The year end is also a good time to delete the closed items from the database with the purge process. This is typically done after any audit is completed, in case additional reports are required to support the audit.