Introduction/ Issue: How to define Auto reversal journal setup
Purpose of Auto Reversal:
Auto Reversal in Oracle Fusion is used to automatically reverse journal entries that need to be cancelled in a future accounting period—commonly used for accruals and temporary adjustments.
Why we need to do / Cause of the issue:
Purpose of Auto Reversal – Why we need to do it
- Clean Monthly Closing Process
- At month-end, you might book temporary accruals (e.g., expenses incurred but invoices not received).
- These need to be reversed at the start of the next month to avoid duplication once the actual transaction is recorded.
- Prevent Double Counting
- Without reversal, both the accrual and the actual invoice would be posted, overstating expenses/liabilities.
- Save Time and Reduce Errors
- Automating the reversal process eliminates the need to manually search for and reverse each entry, ensuring accuracy.
- Compliance & Audit Trail
- Auto reversals help maintain clear audit documentation showing that accruals were temporary and properly reversed.
How do we solve: Best Practices:
- ✅Use meaningful categories (e.g., “Accruals”) to tag auto-reversible entries.
- ✅Test reversal behaviour in non-production first.
- ✅Align period-end processes with journal reversal scheduling.
Conclusion:
Auto Reversal ensures that temporary or period-end adjustment entries (like accruals) are automatically reversed in the next accounting period. This prevents double counting, keeps financial statements accurate, speeds up the close process, and maintains a clean audit trail — making it an essential control in month-end accounting
