Closing Accounting Periods in NetSuite

A common complaint with QuickBooks is that users can mistakenly post transactions in periods for which they did not intend.  NetSuite supports two types of accounting period locking depending on how the system has been configured to help minimize this problem:

1. Explicit Fiscal Periods
2. No Fiscal Periods

Defining explicit fiscal periods is how most accounting departments will configure their systems.  For example, if your accounting department uses a calendar month reporting cycle, you will define these accounting periods within a fiscal period.  NetSuite supports a mechanism to define which of these periods are open or closed for AP/AR and GL type transactions.  You can close a past period to keep new transactions from posting to periods that have been reconciled and reported on.  You have, as an administrator, the capacity to post into these closed periods should you need to. 

This does not mean that you can prevent posting a transaction to an unintended future period.  NetSuite uses the transaction date as the posting date.  You don’t specify explicitly the posting period when you create transactions.  If you use a transaction date that  is beyond the current posting period, you will end up with future transaction.  Some may view this as a feature; others may not.

Likewise, the “No Fiscal Periods” definition mimics the way QuickBooks is setup.  Here, you don’t have specific interim periods besides your fiscal year definitions.  NetSuite, like QuickBooks, supports a feature to prevent posting to the past utilizing a “Lock Transactions” on or before a specified date mechanism.

Our recommendation is to use :close period” or “lock transaction” features in your practice.  However, it should be augmented with a practice (or control) to look for transactions that may have been posted to a future period.  The practice can be part of the regular reconciliation and reporting cycle (e.g., monthly).   The control can easily be done using a financial reporting function based on future dates.  If any unintended transactions are found posted to a future period, you can modify them to fit the appropriate periods by changing their transaction dates.  You are not required to reverse out the transactions.    Also, NetSuite supports a full audit trail to track how transactions have evolved.

Marty Zigman

Holding all three official certifications, Marty is regarded as the top NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 30 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.

More Posts - Website - Twitter - Facebook - LinkedIn - YouTube