IMOS - Monthly Accruals

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🔑  This is a Key Topic, with high value for all users.

Closing accruals keeps an accurate picture of the revenues and expenses of open voyages in the same accounting period. Accrual functionality allows you to allocate revenues and expenses over the period of the voyage and accruals handle deferrals of revenues and expenses over financial periods.

With Monthly Accruals, you can compute the posted-actual for every vessel voyage that is still open and calculate accruals based on the result.

Required Setup

Before running monthly accruals, the following setup is required to achieve accurate results:

1. Complete your Chart of Accounts.

2. Determine if you will be using Accrual By Ops or Accrual By Act.

3. Complete your Accrual Business Rules.

4. Set your accrual basis: always prorate or use an operations basis date (CFGVoyaccAccrualDate).

Running the Monthly Accruals

IMOS supports accruals on a monthly or end-of-period basis by entering the year and month, or a specific date. The system will then generate a list of accrual calculations on a voyage percent-to-complete basis.

Regarding the Voyage P&L and what value is accrued:

1. Estimated column:

   1. The values are generated from the original Estimate of a charterer before it is fixed.

2. Actual column:

   1. The values match the Estimate column when the voyage begins and are continuously updated as a running forecast as invoices are issued and data changes.

3. Posted column:

   1. The values are Actual values that are posted to the General Ledger.

• The accrual value is the difference between the Actual and Posted amounts.

• When a voyage goes beyond the accrual period, IMOS prorates.

Calculating Accruals

Step 1: Open Monthly Accruals

On the Financials menu … → under Period Closing → click Monthly Accruals.

Step 2: Calculating Accruals

When it comes to the filters, they can be set through the configuration flags to ensure that each time the Monthly Accrual is run, it is expected to apply the specific filters consistently for each month.

1. Accruals Year/Month: Enter the month and year for the calculation.

   

   1. IMOS allows accounting periods on a monthly and yearly basis. For example, if the closing period is January 2025, transactions with an accounting date of January 31, 2025, or earlier cannot be posted.

2. Select the accruals Basis - You can calculate based on Recalculation or based on saved Daily Snapshots:

   1. Recalculation: For a standard Monthly Accrual calculation, set the Basis to Recalculation.

      

   2. Daily Snapshots:

i. Specify the snapshot Type and, for non-current snapshots, specify the Date. For journals created using this method, the Invoice Date and Accounting Date are the same as the Accruals Year/Month on this form.

ii. Accruals snapshots appear in the Snapshot and Period Comparison selection lists on the Voyage P&L.

iii. To accurately account for these items based on your company's policies, the following Calculation Options can be used with accruals-based snapshots created with IMOS v7.10 or later: Apply Additional Hire to Period, Apply TC Bunker Adjustment to Period, Apply TC Expenses to Period, Apply Other Revenues/Expenses to Period, Apply Port Expenses to Period.

iv. To take and save a P&L snapshot for every result line, regardless of whether there are accrual items, select the Save Snapshots for All check box.

3. Filter Options:

   1. Options can be configured to fit your accounting methods, such as only running accruals for completed voyages and not a voyage portion percent. This is also true for managing off hire that overlaps an accrual period.

      • Example:

        • Accruals can be run for a specific Company code, Operation Type, or Vessel Name. The accrual data snapshot can also be generated when generating accrual Journal Entries which can be viewed in the Voyage P&L.

      

   2. Use these filters to limit which voyages are included in the accrual. Select filters to limit accruals by Trade Area, Company/LOB, Vessel Fleet, Vessel Type, Operation Type, Pool, or a specific Vessel and Voyage No.

   3. In the case of a Head Company and Subcompany organizational structure, closing periods can also be set up based on a specific Company code.

      1. For organizations with a few fleets, it may not be necessary to set these filters options.

      2. For organizations with large fleets, it is recommended to use these filter options such as Company/LOB, to improve the performance of the run time.

4. Lower Bound Date and Lower Value Limit:

   

   1. Select filters unique to Accruals:

      1. Lower Bound Date

         1. The accruals program will filter out any voyages that commence before this date. If this filter is left empty, all non-closed voyages will be included.

      2. Lower Value Limit:

         1. The accruals program will filter out any individual P&L line items less than this limit. If it is left empty, all line items will be included.

5. Select P&L Calculation Options:

• To apply P&L calculation options, select the appropriate check boxes. Refer to IMOS - P&L - P&L Calculation Options for further details.

6. Click the button to calculate the Monthly Accrual.

Step 3: Validate the Monthly Accrual Result

• To view a record in the Bill Viewer, right-click a line item, and then click Preview Journal to view the details.

  

  
  

• To select the records you want to post, select their S check boxes, or select the Select All check box.

  

  • If a record's S check box is selected, a Journal Entry is generated with two lines, one for accrued revenue, and one for accrued expense. The accrual transaction is generated on the last date of the accounting period (typically the end of the month).

• If the R check box is selected, a reversal of the accrual for the first day of the next month will be generated. If you do not want to create a reversal of the accrual, clear the R check box.

Step 4: Create the Monthly Accrual Journals

• Click the Create Accrual Journals button to do the following three things:

  • The Monthly Closing Accruals report opens which can be downloaded as a PDF and saved for auditing purposes.

  • The system creates both Monthly Accrual journals and Monthly Accrual reversal journals.

  • Note the accounting dates and amounts. A Monthly Accrual journal has an accounting date of the last day of the month, and a Monthly Accrual reversal journal has an accounting date of the first date of the next month; the amounts offset each other.

    

• To view Summary, Details, or Account Analysis reports, click Report.

Step 5: Approve and Post the Monthly Accrual Journals

After you have calculated and created the Accrual journals, it is still necessary to approve and post the journals. Accrual journals will follow your user security settings for approving and posting but also have some convenient functionalities:

• When posting the journal for the end of the accrual period, you will be prompted to post the additional reversal accrual journal for the next day.

• When reversing an accrual journal, you will be prompted if you want to reverse the reversal journal as well. For further details refer to the Monthly Accrual Reversal Procedure section in this article.

• Use the check box on the Post Invoices list to approve and post accrual journals in bulk.

You can find the created journals in the Financials module in Transaction Summary, the Post Invoices list, or in the Voyage Invoice List for a specific voyage.

From the Transaction Summary and Post Invoices lists, you can bulk post the journals or individually post them.

From the Voyage Invoice List, you can click the Post link on the left side of the form and then click Save and Post.

Once both journals and reversals are posted, the Trans No. will end with a ‘N.'

Monthly Accrual Reversal Procedure

If you need to reverse your Accrual and Reverse Accruals, you will need to reverse both items by doing one of the following:

1. Voyage Invoice List:

1. Select specific voyage → Go to the Voyage Invoice List →Click Review on the Monthly Accrual → Click the Reverse Button:

b. After you click OK on the Reverse Invoice window, a confirmation window appears asking whether to reverse the original journal. Click Yes to proceed.

• The Trans No. of the reversed invoice will end with an ‘R.’

• The reversed accruals will remain in the Voyage Invoice List as Pending until a new accrual for the same date is generated.

• Once a new accrual has been generated and the page refreshed, the status will change to Ready to Post.

c. Click Post on the left side of the form → Save and Post.

2. Transaction Summary:

• Go to the Financials Module → Transaction Summary → Filter the list to find your monthly accrual by voyage, vessel, date, transaction type, etc. → Select the check box in front of each invoice → click the Reverse button at the top of the list → Enter Reversal Date, Reversal Invoice No., Reversal Reason, and Reversal Note if required → Click OK to complete the reversal.

  

⚠️ Important Notes⚠️ :

• If you run a second monthly accrual for the same period without reversing the first one, the second accrual overwrites the previous reversal entry. Best practice is to reverse the first accrual before running a new one.

• The reversal date you specify will be the accounting date for the reversal transaction. Make sure the accounting period is open for that date.

• You cannot reverse accruals directly from the Post Invoices list, you must use the Transaction Summary.

Step 6: Fully Close the Account Period

Once everything is done for the month, the Finance team can close the account periods by following the steps below:

1. Enter the last date of the last open month.

2. Select the specific months you want to leave as open month in the Open Month column.

3. Make sure the status is F so that all other months are closed or partially closed:

   1. Finalized (F): All postings are blocked.

   2. Partial (P): All postings are blocked, except accruals and payments.

4. Click on the button.

Step 7: Month End Reporting

After fully closing the month, you can use the Trial Balance, Balance Sheet, and Income Statement reports to help summarize your company’s financial performance. The three financial statements are typically used when IMOS is used as your main accounting system.

For further details, refer to IMOS - Trial Balance, Balance Sheet, Income Statement.

Calculation Method for Accruals (Revenue and Costs)

Accrual journals are generated on a per vessel, per voyage basis. The system calculates month-end results.

• With configuration flag CFGActAccrualBreakdown set to:

  • Y: The calculation is per P&L category.

  • N: P&L categories are consolidated into revenues and expenses.

• With configuration flag CFGVoyaccAlwaysProrate set to:

  • Y: P&L results are prorated according to the number of voyage days in the month.

  • N: Revenues and expenses are recognized in the month in which they occur.

Prorating Voyages

Depending on your configuration, your accrual calculation may be prorated. The prorating of a voyage P&L is based on the voyage days before the end of the month. For example, if a 40-day voyage takes 15 days in April and 25 days in May, we would recognize 15/40 = 37.5% of all expenses and revenues for the end of April, as 15 days were past. For this same voyage, running accruals for May 31, we would recognize 100% of all expenses and revenues, as the voyage was 100% completed before this date.

TCO Voyages

Time Charter Out voyages are all treated the same, regardless of system configuration. Time Charter Out voyages will by default always be prorated. This can be overridden using the Apply TC Hire To Period calculation option on the Accrual form. Additionally, TCO voyages are not accrued until they have commenced.

Uninvoiced Bunker Liftings

When running Monthly Accruals for voyages with Bunker Liftings that are not bound to invoices, IMOS will only accrue the costs of the Bunker Liftings if they have been consumed.