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QUESTION: We are ready to close off the year end in Acumin after receiving the final statements and am at the point where previously in our former system, I used to manually create entries where I would clear the Draws to Capital and then Capital to Retained Earnings.
Then we would run the final year end automated entry to move all expenses for the year into retained earnings and change the date to the next fiscal year.
Do I still need to do the manual entry for the Draws to Capital and then Capital to Retained Earnings entry in Acumin or does the system know to do it by itself as part of year end close?
When I am ready to finally close the YE and move the expenses to retained earnings, where and how do I run this in Acumin?
RESPONSE: We believe that the process for journalizing draws into the capital accounts is based on internal decisions on how to present capital statements to the partners, therefore likely a continued requirement moving forward. You can complete this step before or after the year end process. We would recommend afterwards, as this would give you the opportunity to work with prior year journal entries - a secured option.
Many of our clients do not journalize the draws into the capital account because they use licensed subaccount logic equal to member functionality coupled with a non-chargeable personal matter structure to generate readily available capital reports to their partners on a regular basis. If this license and structure is of interest to the firm, please let us know and project development will reach out with next steps.
The process for closing the year is simple, however before you proceed with your first-year end-close, we invite you to review the prior year permissions granted to each security group in your organization and confirm that the limitations currently set will meet your expectations once the year is closed. It is better to take a conservative approach and manage individual situations on a case-by-case basis.