Month End Closing Activities in SAP FICO

Closing activities in SAP FICO involve all the month-end and year-end activities for finance and controlling modules. Such as carrying forward the closing balance of ledgers, receivables and payables. Further includes the execution of depreciation run for fixed assets and many more.

This article reflects important closing activities which put an impact on GL and Asset Accounting. It also shows expected errors in year-end postings as part of the periodic closings.

Closing Activities in SAP FICO General Ledgers

Closing activities in SAP GL consist of processes and functions that you perform at the end of the fiscal year. In this, you can process data both from other SAP application components and from external systems.

This includes re-classify, evaluating, and carry-forward.

1. Reclassify

Whenever you receive goods that are yet invoiced, the system posts those transactions to the GR/IR clearing account. (Read it as goods receipt or invoice receipt clearing account).

Similar is the case with invoices for goods that are not yet delivered.

You need to define the G/L account numbers of the adjustment and target accounts.

Furthermore, the reclassification program analyzes the GR/IR clearing account and makes adjustments by posting any outstanding amount to an adjustment account.

Subsequently, this creates the offsetting entry to the account for goods delivered but not invoiced (adjustment account).

Similarly, to the account for goods invoiced but not delivered (Target account).

Related Video: SAP CO Month End Closing Activities

2. Valuate

Foreign currency valuation is an important part of the closing operation. In this, you define valuation methods and valuation areas. Then you assign the valuation areas to accounting principles that have already been assigned to corresponding ledger groups.

Prepare Automatic Postings for Foreign Currency Valuation

You can use this activity to define G/L accounts for automatic postings of exchange rate differences. Further, you use this when evaluating open items and foreign currency balances. Also, when defining the accounts for realized exchange rate difference during open item clearing.

Steps for Currency Valuation

IMG => Financial Accounting ( New ) => General Ledger Accounting ( New)-Periodic Processing => Valuate => Foreign Currency Valuation => Prepare Automatic Postings for Foreign Currency Valuation T.Code- OBA1

On the resulting screen enter the required G/L accounts for the transactions such as KDB, Open Items clearing and balance sheet adjustments KDF.

3. Carry forward

The system uses different balance carry-forward programs to carry forward the balances from the previous to the new Fiscal Year. This includes balances from G/L accounts, customer accounts, and vendor accounts.

When carrying forward the account balances of the balance sheet accounts, the system carries forward all account assignments like a Profit centre.

Functional area etc. is carried forward for P/L accounts and the balance is carried forward to the retained earning accounts.

For G/L accounts, use Transaction Code (FAGLGVTR) to carry forward the balances in retained earning accounts. You need to select the checkbox “Balances in Retained earning account”.

The system updates the carried-forward balance in the new fiscal year automatically whenever you post to the previous fiscal year. For accounts receivable and payable, use T.Code F.07 to carry forward the balances to a new fiscal year.

The processing for closing in Asset Accounting includes carrying out certain tasks and activities for period-end and Year-End closing.

The closing processing normally includes activities like depreciation posting, physical inventory, fiscal year change etc.

Read Related:- Fiscal Year Variant in SAP

SAP FICO Closing Activities in Asset Accounting

1. Depreciation Posting (SAP FICO period-end closing activities)

You need to carry out depreciation posting in Asset Accounting explicitly through periodic depreciation posting runs. This is because the system does not automatically update the depreciation with every asset transaction that is happening in the system.

You can post the Planned depreciation to FI only when you run the depreciation posting run.

SAP Easy Access => Accounting => Financial Accounting => Fixed Asset => Periodic Processing => Depreciation Run => Execute Transaction Code- AFAB

Note

Select Repeat Run if you want to repeat the posting run for the last period that you posted successfully. You may require this when the depreciation terms were changed for individual assets in connection with the year-end closing.

When you repeat the posting run, the system posts only the differences resulting between the first and repeat posting runs. This also ensures that there is no double posting.

When you do repeat runs, you need to specify whether you want to use the “catch-up or smoothing “method of depreciation.

Select the Restart if the earlier posting run was terminated for a technical reason or you have noticed some error during that run.

Related: New Asset Accounting SAP S4 HANA – Core Features

2. Fiscal Year Change

Fiscal Year change is the opening of a new fiscal year for one or more of your company codes. You can use this to enable the system to carry forward the asset values from the previous Fiscal Year.

After the Fiscal Year change, you can post to the asset using value dates in the new fiscal year. You can do this in addition to continuing to post in the previous fiscal year.

Transaction Code – AJRW.

Make the fiscal year change in the background because it may impact system performance otherwise. You can carry out the fiscal year change only for the new fiscal year with the last month of the old fiscal year being the earliest period for undertaking the change.

Also read: What is SAP Controlling and its Sub-Modules

3. Year-End Closing

You can close a fiscal year only when:

• There are no errors during depreciation calculation
• The planned depreciation areas that are posted periodically have been completely posted to the G/L
• All assets acquired in that fiscal year have been already capitalized
• You have completed all incomplete assets from the view of master records, you need to manage the errors.

Expected errors in year-end closing activities in SAP FICO

1. There are errors in depreciation calculation or when you did not post the planned depreciation correctly to G/L. To fix this, you need to repeat the depreciation posting run.
2. Similarly, if you have not posted the balance sheet values completely to G/L, complete the periodic posting of balance sheet values
3. You receive an error to the effect that the asset capitalization date was not set (for assets other than AUC). Here, you set the date manually in the respective asset masters and repeat the depreciation run.
4. Use the special report to analyze the incomplete assets and complete the master records as applicable.
5. There is an error in updating the base insurable value. For this, you just need to maintain the missing index value for the fiscal year that you are trying to close.

This completes our discussion on closing activities on Sub ledgers

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Also Read: Closing Activities in SAP S4 HANA Finance