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Accounting Periods & Period Close Locks

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Accounting Periods & Period Close Locks

Quick Summary: GAAPx implements cryptographic accounting period locks to ensure historical financial reports cannot be mutated after books are closed. Any subsequent contract amendment, billing correction, or credit memo automatically posts adjustments to the earliest open accounting period via ASC 606 cumulative catch-up rules.

The Period Close Lifecycle​

stateDiagram-v2
    [*] --> Open: New Month Started
    Open --> InReview: Period Close Checklist Triggered
    InReview --> SoftLock: Variance Review & Draft JEs
    SoftLock --> HardLock: Controller Approval & ERP Sync
    HardLock --> [*]: Closed & Audited

Step-by-Step Period Close Workflow​

1. Month-End Reconciliation Check​

Navigate to Admin > Accounting Periods:

  1. Select the closing period (e.g. 2026-09).
  2. Run the Automated Tie-Out Diagnostic:
    • Compares total contracted value against active POB amortizations.
    • Flags any unmatched invoices or unallocated Standalone Selling Prices.
    • Verifies debit/credit balance across all generated Journal Entry lines.

2. Post Closing Journal Entries to ERP​

  1. Review generated monthly Journal Entries:
    • Deferred Revenue Amortization: DR Contract Liability / CR Revenue
    • Unbilled Accruals: DR Contract Asset / CR Revenue
    • Usage Revenue Recognition: DR Accounts Receivable / CR Usage Revenue
  2. Click Sync to ERP to automatically push journal entries to NetSuite, QuickBooks Online, or Sage Intacct.

3. Apply Hard Period Lock​

  1. Once entries are confirmed in the GL, click Lock Period.
  2. When a period is in Hard Lock state:
    • No user or API token can edit contracts, invoices, or manual entries in that date range.
    • Historical reports generated for that period are frozen and permanently auditable.

Handling Mid-Contract Amendments in Locked Periods​

If a contract modification or customer upgrade occurs for a contract active during a locked period:

  • GAAPx preserves all historical recognized amounts without alterations.
  • The modification logic calculates the differential and books a Cumulative Catch-Up entry in the current open period.
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