Oracle Fusion Receipt Accounting: Understanding Open, Adjust, and Audit Accrual Balances

 

Understanding the Difference Between Open Accrual Balances, Adjust Accrual Balances, and Audit Receipt Accrual Clearing Balances in Oracle Fusion

In Oracle Fusion, Receipt Accounting plays a critical role in bridging the gap between Procurement, Payables, and the General Ledger (GL). Whenever goods or services are received with inventory or expense destinations, the accrual entries are generated to recognize the liability even before the supplier invoice arrives.

Managing these accruals is essential to ensure that your books reflect accurate liabilities, and that mismatches between receipts, invoices, and GL are resolved on time.

Below mentioned are critical tasks available in Oracle Fusion for this purpose:

• Open Accrual Balances
• Adjust Accrual Balances
• Audit Receipt Accrual Clearing Balances

Although they sound similar, each serves a unique purpose. Let’s break down what they mean, when to use them, and how they fit together in the month-end close process.

These terms are related to Receipt Accounting accrual reconciliation in Oracle Fusion Procurement/Costing. They look similar, but their purposes are different.

1. Open Accrual Balances

• What it shows:
• It lists all unmatched accrual balances - i.e., receipts that have been accounted for but are not yet matched to an invoice.
• Use case - Why it matters?
• This helps you track the outstanding accruals (Goods received Not invoiced) that are pending resolution.
• This information highlights all outstanding accrual liabilities that need to be cleared once invoices are matched and accounted.
• Finance teams can quickly identify what remains open, helping in month-end accrual validation and ensuring no liabilities are overlooked.
• Example:
• You received goods worth $10,000, accounting entries posted to accrual account, but the supplier invoice hasn’t been matched yet — this will appear here.
• You receive goods worth $10,000 on a Purchase Order.
• Receipt Accounting creates an accrual entry:
• Dr Receiving Inspection $10,000
• Cr Accrual $10,000
• The supplier has not yet submitted the invoice.
• Until the invoice is matched and accounted, this $10,000 remains in Open Accrual Balances.

2. Adjust Accrual Balances

• What it does:
• Provides the option to manually adjust accrual balances when system matching is not possible or differences need to be corrected.
• This feature allows you to manually clear or write off accrual balances when invoices will not be received or when permanent mismatches occur.
• This can be done manually as well as automatically.
• Use case- Why it matters?
• This is used when there are partial receipts, invoice corrections, or accounting discrepancies that require manual write-off/adjustment to clean up the accrual balance.
• Not all accrual balances will eventually be matched with invoices. Some may linger due to cancelled POs, supplier disputes, or clerical errors.
• If left unadjusted, they will distort the financials.
• Example:
• If an old PO receipt will never be invoiced (supplier closed, PO cancelled, etc.), you can adjust/write off that balance to clear it.
• A PO was created, and goods were received worth $5,000.
• Later, the PO was cancelled, and no invoice will ever be received.
• The accrual entry remains open, overstating liabilities.
• Using Adjust Accrual Balances, Finance can write off the $5,000 to clear the books.

 

·       Adjust Receipt Accrual Balances screen shows Open Accrual balances where PO's Accrue on receipt flag is set to Yes.

·       PO's whose accrue on receipt flag is set to No will be taken care in period end accruals. Uninvoiced Receipt Accrual Report will show such POs details.

·       If the accrual balance is cleared assuming no further receipts, and subsequently if receipts are recorded, you must manually reverse the accrual clearing for the accrual account to reconcile.

 

3. Audit Receipt Accrual Clearing Balances

• What it shows:
• Provides a reconciliation report between Receipt Accounting and the General Ledger accrual account balances.
• Use case-Why it matters?
• Used by auditors and accountants to confirm that balances in Receipt Accounting tie back to GL and to identify discrepancies.
• It provides a detailed audit trail, showing how accrual balances flow from Procurement transactions into Receipt Accounting and then into the GL.
• Example:

o   The GL shows $1,000,000 in accrual liability at month-end.

o   The Audit Receipt Accrual Clearing Balances report provides the breakdown of all receipts, invoices, and adjustments that make up that $1,000,000.

 

The task 'Audit Receipt Accrual Clearing Balances' - screen shows matched purchase orders/receipts and payable invoices, after process 'Match Receipt Accruals' has been run.

 

You can review and audit the final accounting distributions generated by Receipt Accounting.

Best Practices:

1. Review Open Accrual Balances regularly.
• Review outstanding accruals at least weekly or bi-weekly to avoid surprises at period close.
2. Use Adjust Accrual Balances with caution.
• Always confirm with Procurement / AP teams before clearing balances to prevent premature write-offs.
3. Include Audit Receipt Accrual Clearing Balances in month-end close cycle.
• Make it a standard step for Finance teams to reconcile subledger with GL.
4. Collaborate across teams.
• Many accrual mismatches are operational.
• Engage Procurement, Receiving, and AP teams to resolve issues early.
5. Document adjustments
• Maintain proper approvals and audit trails whenever accruals are adjusted or written off.

 

Conclusion:

Accrual management in Oracle Fusion is not just about accounting entries — it’s about ensuring accurate financial reporting and smooth audits.

In simple terms:

• Open Accrual Balances help you identify what’s still unmatched.
• Adjust Accrual Balances let you clean up what will never be matched.
• Audit Receipt Accrual Clearing Balances ensure that what’s in Receipt Accounting ties perfectly with your GL (audit trail).

By understanding and using these tasks effectively, organizations can streamline their month-end close process, improve financial accuracy, and reduce audit risks.