Closing Operations in FI

7/27/2019 Closing Operations in FI

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Closing Operations

Purpose:

Closing operations are periodic tasks and can be subdivided in FI as follows:• Day-end closing

• Month-end closing

• Year-end closing

The closing operations component helps you prepare and carry out the activitiesrequired for day-end, month-end, and year-end closing. For this purpose, thesystem provides a series of standard reports that you can use to generateevaluations and analyses directly from all of the posted account balance. Thesystem helps you carry out the following:

• (Time-based) accruals/deferrals of expenses and revenues

• Creating the balance sheets and P&L statements

• Documenting the posting data

Audience:(Who need to understand the closing procedure and are involved in the closing

process)

AR/AP Data Controllers, CO Budget Analysts, Cost Analysts, Plant Analysts,Inventory Analysts, Asset Mgt. Analysts, GL Accountants, GL Master Data

Controllers, GL Supervisors, PCA Analysts, and other Corporate Accounting employees who need to understand the month end closeprocess.

Prerequisites :

To carry out the closing operations in G/L accounting, you first need to carry outthe closing operations in the subledger accounting areas you are using. Theseinclude:

• Accounts receivable and accounts payable accounting

• Inventory accounting

• Asset accounting

• Payroll accounting (get posting data)



Closing: Day-end

Day-end closing includes all the activities required at the end of the day to checkthat all of the business transactions posted on that day have been correctlyprocessed.

No additional postings are required for day-end closing

Day-End Checklist:

The following things should be followed for day-end closing and for documentingthe posting data:

• Correspondence with business partners (very Important)

• Document journal

• Evaluation of the documents that have not been posted

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Closing: Month End

The closing of a period is performed in three sets of steps: pre-closing,managerial closing, and financial closing.

Pre-Close (Old Month):

• Open new period

• Preparatory Posting• Close Sub ledgers and feeder systems ( )

• Preliminary close of the old period

Pre-Close activities ensure that all necessary entries have been posted in theG/L, including entries from feeder systems/sub ledgers and accruals andrecurring entries posted directly to the G/L.Pre-close activities occur in both the old and new months.

Managerial Close and Financial Close (New Month):

Managerial Close:

• Controlling

Reposting

Cost allocations/Settlements

• Re-open G/L for adjustment postings

Financial Close:

• CO reconciliation posting to FI

• Business area/profit center/profitability segment adjustments

• Final Close of old period

• Reporting

Managerial Close activities involve the re-assignment of costs throughout theentire organization, using the allocation and settlement functionality providedwithin Controlling (CO).Financial Close activities include final adjustments to valuations and balancesprior to the final close and preparation of reports. Adjustments from the cost flows

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recorded in the managerial closing activities are updated to FI through thereconciliation ledger posting.

General Steps for Month-end closing:

Open/Close periodReverse accruals (prior month)

Post Common Documents Enter accruals (current month)

Enter Recurring Entries Enter Manual documents Check for parked

documents Ready to close.

Month-end closing includes all the activities involved in closing a posting periodfor the month and opening a new period for the next month.

Operations carried out for month-end closing:

• Open and close posting periods

You close one or more posting periods in the past for posting, and permitposting to be made to one or more current or future posting periods.(Typically, you will leave two periods open. The prior period is open to allow

period-end adjustments and a new open period is open for customer and vendor postings.)

• Create external reports

You can use report programs to create the following reports, for example:

• Financial statements

• Sales tax report from the External Tax program

• Withholding tax report

• Document the posting data

Report generation and study of the following:

• Compact journal

• Balance audit trail

• Accounting reconciliation

• Account balances

• Open item list

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1. CO Period End Closing in Cost Center Accounting & Internal Orders

2. CO Period End Closing in Product Costing, Profitability Analysis, ProfitCenter Accounting

3. Period End Closing in MM, AA, AP,AR, GL

4. Period End Closing Reporting

Things to check out for :

Fixed Assets

• Execute the depreciation run and update the batch input session (SAP FI-AA)

Inventories

• GR/IR clearing account – clarify any differences and correct them if

necessary (SAP LO-MM)• Clear the GR/IR clearing account (SAP FI)

• Prerequisite: Accounts have already been maintained by MM

• MM Period closing program (SAP LO-MM)

• Settle the work in process (WIP) (SAP FI-CO)

• Post the reconciliation ledger (SAP FI-CO)

Receivables and Other Asset Items

• Check whether all the billing documents have been posted (SAP LO-SD)

Accruals and Deferrals

• Post accruals/deferrals (SAP FI-TR + SAP FI)

Internal Closing (SAP FI-CO)

Internal order and project-related tasks:

• Transfer postings, surcharges, project interest calculation, settlement

Product and production-related tasks:

• Release a standard cost estimate, perform inventory costing, transfer

postings, surcharges

• Variance calculation, results analysis, and settlement

Cost center-related tasks:

• Transfer posting, distribution, assessment, activity allocation, transfer key

figures, cost center variance, price calculation

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Results-related tasks

• Evaluate actual postings, transfer external data, distribution, assessment,

transfer balance sheet items to PCA

Additional Requirements (FI)

• Check whether the accrual/deferral documents have to be reversed

• Carry out recurring entries and update the batch input session (SAP FI)

• Reconcile cost of sales accounting/period accounting/profit center ledger

(SAP FI/SAP FI-CO)

• Close the posting period (SAP FI)

• Run the reconciliation program

(This program checks the documents and transaction figures in the R/3 System.You can only execute this run if you do not intend to carry out any

postings for the period, otherwise reconciliation differences will occur. Youcan schedule the job to run in the background)

Printing Reports :

• Balance sheets and P&L statements

• Sales tax report from the External Tax program

• Account balances (SAP FI), Journals (SAP FI)

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Year- End Closing

Year-end closing is split into two phases:

• At the beginning of the new fiscal year, you open new posting periods and

carry forward the balances from the previous year.

• You then prepare and create the financial statements, document the

business transactions using the balance audit trail, and archive thosedocuments you no longer need online.

The first posting in the fiscal year automatically opens that fiscal year. You must,however, have opened the relevant posting period first. The SAP System offers a range of reports with which you can carry forwardbalances into the new fiscal year. During this process, the profit and lossaccounts are carried forward to one or more retained earnings accounts. Thebalances of the balance sheet accounts are simply carried forward into the newfiscal year. You do not have to create special opening financial statements.

Any postings you make in the old fiscal year automatically adjust the relevantcarry-forward balance. You do not have to close the old fiscal year and carry outthe closing postings before opening the new fiscal year.

As with month-end closing, you can create all the external reports required,document the posting data, and carry out the internal evaluations.

Things to look for:

Assets

• Settle the AuC (SAP FI-AA)

• Execute the depreciation run and update the batch input session (SAP FI-AA)

• Run the fiscal year change in Asset Accounting (SAP FI-AA)

(This process creates the balance carryforwards for Asset Accounting. Werecommend that you execute this run on the first day of the new fiscal year.Note: by this time, you should have completed year-end closing for Asset

Accounting for the previous year.)

• Carry out inventory postings

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Inventories

• GR/IR clearing account – clarify differences and correct them if necessary

(SAP LO-MM)

• Clear the GR/IR clearing account (SAP FI)

(Prerequisite: The accounts have already been maintained by MM.)

• Run the foreign currency valuation for the open items

• Period closing program (SAP LO-MM)

• Settle the work in process (WIP) (SAP FI-CO)

• Post the reconciliation ledger (SAP FI-CO)

• Valuate the inventory (SAP LO-MM)

• Post the valuation difference manually (SAP FI)

Receivables and Other Asset Items

• Check whether all the billing documents have been posted (SAP LO-SD)

• Clarify the open items and differences

• Print the balance confirmations (SAP FI)

• Settle the rebates(SAP LO-SD), accruals

• Calculate the interest for interest-bearing receivables (SAP FI)

• Reconcile the cash journal/print out the journal (SAP FI)

Accruals and Deferrals

• Post accruals/deferrals (SAP FI + SAP FI-TR)

Accruals

• Accruals for rebates, discounts, and commissions (SAP LO-SD)

Payables

• Payroll accounting

Internal Closing (SAP FI-CO)

Internal order and project-related tasks:

• Transfer postings, surcharges, project interest calculation, settlement

Product and production-related tasks:

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• Release standard cost estimate, perform inventory costing, transfer postings,

surcharges, variance calculation, results analysis, and settlement

Cost center-related tasks:

• Transfer posting, distribution, assessment, activity allocation, transfer key

figures, cost center variance, price calculation

Results-related tasks

• Evaluate actual postings, transfer external data, distribution, assessment,

transfer balance sheet items to PCA

Additional Closings and Tasks (SAP FI)

• Post accruals/deferrals (SAP FI)

• Check whether the accrual/deferral documents have to be reversed

• Carry out recurring entries and update the batch input session (SAP FI)

• Carry forward the balance

• Check the balances carried forward against the closing balances of the

previous year

• Start carrying forward the balance, if necessary (SAP FI)

• Reconcile cost of sales accounting/period accounting/profit center ledger

(SAP FI/SAP FI-CO)

•

Reconcile the asset history sheet and account balances• Close Asset Accounting (SAP FI-AA)

• Close the posting period (SAP FI)

• Run the reconciliation program

(This program checks the documents and transaction figures in the R/3System. You can only execute this run if you do not intend to carry out any

postings for the period, otherwise reconciliation differences will occur. Youcan schedule the job to run in the background.)

• Balance audit trail (SAP FI)

Printing Reports and Notifications:

• Asset history sheet (SAP FI-AA)

• Balance sheets and P&L statements (monthly and annual reports using

Financial Statement version 0010)

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