UPDATED IN JANUARY 2019 TO REFLECT THE MOST ACCURATE END-OF-YEAR PROCESS FOR MRI SYSTEMS.
If you’re like many of our clients, you’re beginning the year-end close of your MRI system. Our question to you is, do you have a reliable process?
In our eyes, a solid year-end process uses information from both inside and outside of your MRI system to ensure that all of the data that could be entered has been entered—and correctly—with the right period and transaction, then transferred to the General Ledger. This permits preliminary review and system balancing, correction of errors, and re-review prior to closing each module and producing your final reporting package for the owner.
Here’s a rundown of how we recommend you execute your year-end close process.
Start with Accounts Receivable
We echo MRI’s advice and suggest that you begin the close process with your Accounts Receivable module—because MRI has the potential to create transactions from RM or CM to Accounts Payable for items like security deposit and rent refunds. If you close Accounts Payable first, these A/R transactions would be forced into the next Accounts Payable period causing these modules to be out of balance for the period due to a timing difference.
When preparing to close Accounts Receivable, you consider several factors identical to those outlined in our month-end MRI checklist.
Move on to Accounts Payable
When you’ve completed the Accounts Receivable module, we recommend moving on to Accounts Payable. Spend time verifying all invoices for the current period have been entered into the system and coded to the correct account. You can also compare your payables to the property budget.
For a detailed look at what to do next with your Accounts Payable module, check out our month-end MRI checklist which outlines your moves step by step.
Now Balance the System
To balance your system, we recommend using MRI_GENLEDG and MRI_TRBAL reports.
Use MRI’s Bank Reconciliation program to clear items in the system and reconcile to the bank statement; close the period and issue final financial statements. Be sure to close Commercial Management or Residential Management first. If you have both, closing either first works just as long as they are done before Accounts Payable. Next, close Accounts Payable; and finally, close the General Ledger last.
Don’t Forget Housekeeping
Your year-end close is a great time for housekeeping. While you can complete two of the three tasks we’ll be highlighting below at any point in time, most of our clients choose year-end to get them done for two reasons: It’s a logical time to organize and tidy up, and completing these tasks at the same time every year helps them keep to a more defined maintenance schedule.
Here’s a list of our top three year-end housekeeping tips.
Make Unused Vendors Inactive with Our Simple Query
Year-end is a great time to perform maintenance on your vendor list in MRI. While the process of inactivating a vendor is easy, determining which vendors to inactivate is a bit more challenging. Most MRI reports focus on the vendors you use, not which ones we don’t. Typically, you want to inactivate vendors you haven’t used in a while or don’t use at all.
We’ve come up with a query that will help you make this selection. The logic behind this query is to identify the active-status vendors who have not been used after a specified date. In this example, we have used a two-year timeframe based on the Invoice Date field in Accounts Payable Invoice Entry. Note: You can modify the date to suit your business needs by changing the 12/31/2015 date to a different value. Be sure to keep the single quotation marks around the date if you make this change.
SELECT VENDID, VENDNME1 FROM VEND WHERE VENDID NOT IN (SELECT VENDID FROM INVC WHERE INVCDATE>'12/31/2015') AND STATUS='A' ORDER BY VENDID
This query will return the Vendor ID and Vendor Name 1 from the VEND table. You can review the list and manually inactivate the vendors via the user interface. With a quick change you can turn this into an UPDATE query and set the status field value to “I” for Inactive for all of the vendors returned.
UPDATE VEND SET STATUS=’I’ WHERE VENDID NOT IN (SELECT VENDID FROM INVC WHERE INVCDATE>’12/31/2015’) AND STATUS=’A’
Remember: If you change the date value in the SELECT query, you should also change it in the update query.
In MRI for Web, the Vendor lookup in Invoice Entry is automatically filtered to only show Active vendors. This will prevent your users from selecting a vendor that you no longer wish for them to use.
Inactivate General Ledger Accounts
If you are using MRI X.4 or later, year-end is the perfect time to take advantage of the new Active status field in the Chart of Accounts. By default, all accounts in every ledger code are set to a status of Active indicated by a check mark in the Active column shown below.
You can make an account inactive by removing the check mark. Doing so will remove that account from any data entry list that performs a lookup to the chart of accounts, preventing further use of the account for data entry purposes like Accounts Payable invoices or General Ledger Journal Entries. It will not remove the account from mappings or reports, which may still require the account for historical purposes.
This same feature is also available in X.4 on the ENTITY table.
Setting an Entity record as inactive will prevent its use in data entry and remove the entity from data entry lookup lists. Users will still be able to run reports on the entity if needed.
Prepare Your 1099s
January 31, the deadline for 1099 delivery to vendors, is rapidly approaching. Make the filing process go a little more smoothly with the proper prep. Here are a few important tips to keep in mind:
Review your Charts of Accounts: A 1099 will only be processed if a vendor has been invoiced from an account that has a check in the 1099-MISC column in the Chart of Accounts. Review your chart now and set this flag as appropriate to your company’s business practices.
Review your Vendors: The Name field in the header of the Vendor record should correspond to the Federal ID Number for that vendor. It’s important that you use the fields in the Vendor table for the purpose in which they are intended. Otherwise, you may not get the results you expect on the 1099 form.
Remember: The 1099 Required box must be checked for the MRI system to process a 1099. Additionally, the vendor’s invoice must have been expensed to a General Ledger account that has 1099-MISC checked AND the vendor must have had payments in excess of $600.00 The system looks at the Check Date to determine which payments to include.
Preview Your 1099s: The 1099 Preview Listing (MRI_1099LST) report, just as its name implies, will give you a preview of the 1099s that MRI expects to print for the 1099 year specified at run-time. Give yourself ample time to review this report and make corrections. Some things to check for:
Missing or inaccurate Federal ID Numbers: When you check the 1099 Required check box for a vendor, MRI requires the entry of a Federal ID number. Many users circumvent this requirement with 99-9999999 or some other entry. Make certain you convert these to valid values before processing.
“Duplicate” vendors: The Vendor ID is the unique identifier in the MRI Vendor table. This will prevent a user from creating two vendors with the same ID. It will not prevent a user from creating two records for John’s Plumbing with two different vendor IDs! This is a good time of year to mark one of those plumbers as inactive. You can use MRI’s 1099 Worksheet functionality to move the activity from the inactive John’s Plumbing to the active one for 1099 processing. Going forward, only the active John’s Plumbing will appear in data entry pick lists. Discuss with your team how you can alter your business processes to prevent these situations in the future!
Whew! We know this blog was a doozy, but we hope that you find this year-end close checklist for MRI users helpful. Make sure to read our end-of-month checklist for additional guidance and to download our complimentary end-of-month checklist—which is also applicable for your year-end close—to help you stay on task during this process.