Document Reversal Introduction
Document Reversal Introduction
Fergus is aware that setting up a new process often leads to some mistakes in postings that will need to be corrected. To fix these mistakes, Fergus wants to set up the system to handle these journal entries that need to be reversed.
He’s aware that the accountants use reversal reasons already in place to identify the source of errors and categorize the corrective documents.. He would like to further investigate how he can customize this feature to see if a unique code should be created for the new travel expenses process he's setting up.
More specifically, the accounting team has alerted him that the accounting date of the reversal document can cause an issue under certain conditions. They would prefer if the debit and credit balances weren't affected by posting mistakes and their corrections.
Let’s explore with Fergus the options to configure accounting documents reversal reasons in the system.
Reversal Reason Configuration
Accounting users may occasionally input incorrect data while creating general ledger accounting documents, necessitating their modification. Keeping a record of these modifications requires undoing the changes made to the incorrect document. After that, if required, they can repost a new document with the accurate entries.
Reversal reason codes categorizing the type of error made are mandatory to support the reversal process. The system is delivered with several reason codes that can be modified, or additional ones can be customized to meet each organization's specific requirements.
The implementation activity ‘Define Reasons for Reversal’ enables editing the reversal reasons, which are then shared across all company codes.
When creating a reversal reason, besides defining its code and a description, two settings should be considered:
Negative Posting
Alternative posting date
Negative Posting
Negative posting activates an optional method of displaying reversal journal entries. It allows incorrect journal entries to be reversed without increasing the underlying debit and credit balances, as the incorrect journal and the negative postings sum up to zero.
The final result in the ledger is that when you correct a posted journal entry with a negative posting, a new posting is created on the same affected side with a minus sign.
On the other hand, a reversal without negative posting affects the balance on both the credit and the debit.
The use of negative postings is dependent on local regulations. To enable negative postings, the following prerequisites must be fulfilled:
The company code permits negative postings
The reversal reason must be configured to allow negative postings
Negative posting will be applied only when these two configuration elements permit it. Otherwise, the standard reversal posting will be applied.
Alternative Posting Date
By default, the reversal document will be posted on the same exact date as the erroneous document. In certain cases, this can lead to a problem. For example, if you need to correct a journal entry some months after it was entered, and the posting period is closed.
The alternative posting date indicator enables the user to modify the posting date manually in the reversal document to handle this kind of situation. Therefore, they will be able to choose a date in the currently open posting period.