About regularization accounts
To comply with regional reporting requirements, you can now set up regularization accounts. A regularization account is an account that can be classified as either an asset or a liability on the balance sheet.
The account classification depends on the account balance at the time that the financial report is run. If the account's balance does not match its normal balance, the account is eligible to be reclassified.
You set this up by designating an account as a regularization account and then selecting the related reclassification account. One should be an asset account and the other a liability account.
You can run the GL regularization account reclassification report that shows which accounts need to be reclassified for regularization compliance.
After running the report, you have the option to let Intacct create two journal entries for each account that needs to be reclassified.
The reclassification works by moving the balance from the original account to the reclassification account. When you run the report, you can select the option to create draft journal entries to handle the reclassification. If you select this option, Intacct creates two draft journal entries for each account that's eligible to be reclassified:
-
A journal entry to move the balance
-
A second journal entry to reverse the first one on the first day of the next reporting period
Then you complete the process by posting the two draft journal entries.
For example:
-
Account 1005--Sterling Bank checking is an asset account, and it's designated as a regularization account.
-
You then select account 2117--Sterling Bank liability as the reclassification account for account 1005.
-
When you run the Regularization account reclassification report at the end of the reporting period, if account 1005 has a negative balance, you can reclassify it. It then appears on the balance sheet as account 2117.
Inter-entity accounts
Regularization accounts are not recommended for reclassification of inter-entity receivable or payable accounts. First, consider the existing IET mapping and the entire workflow for consolidations and inter-entity eliminations. Use cases might not be fully supported because reclassification is only possible within an entity, using the location and department dimensions, based on accrual reporting books. It is best practice to disallow direct posting for IET accounts and journals if you have enabled automated IET to ensure data integrity. Journals that have disallow direct posting enabled cannot be used with this feature.
Regional availability
Regularization account reclassification is generally available in all regions. However, you should enable the feature only if required by your region's financial reporting compliance guidelines.
