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Closing Operations (User's Guide)

In this last section on the SAP user guide we look at the closing operations, here we
will look at reducing the manual effort involved in individual closings. All closing
operations revolve around the financial statement, which consists of the balance sheet
and profit and loss statement, the financial statement compares resources (assets) with
claims (liabilities and owners equity), liabilities and owners equity (the debit side of
the balance sheet) provides information about the enterprises sources of funds,
whereas assets (the credit side of the balance sheet) provides information about the
disposition of funds.
The balance sheet can be broken down as below

We can breakdown each further each displaying the possible G/L accounts, however
every company is different.

In addition to the external year-end closing (i.e. the annual balance sheet and profit
and loss statement), internal documentation, planning and reconciliation calculations
are often prepared. These are only used internally within the enterprise and are
particularly flexible because they are not subject to legal restrictions. Closings can be

prepared for various periods, for example for a month, a quarter or a year (year-end
closings), they serve the following purposes

Calculate tax liability


Determine investment potential
Calculate sale value

Here are some examples of what may need to be performed regarding closing, I will
be covering most of these in this section

Day-end Closing

Month-end
Closing

Year-end
Closing

update exchange rates, either manually or through an interface via Reuters or any other
information system
Review gaps in document number assignments, which can be done via a report
Display the compact document journal, this then shows transactions and their offsets which
allows you to validate the accuracy of these transactions

open and closing posting periods


enter recurring entries
post recurring entries
run batch input session
automatic clearing of GR/IR account special process
automatic/manual clearing
post adjustment entries
foreign currency evaluation
post tax payable
record of sales and use tax report
comparative analysis
close previous accounting period
comparison documents and transaction figures
financial statement

create factory calendar for new year


carry forward AP/AR balances and carry forward GL balances
re-grouping receivables and payables
balance confirmation receivable and balance confirmation payable
final close and release financial reporting
close previous accounting period
display document journal
print 1099 MISC forms

I have a period-end master checklist which you can obtain the transaction codes and
whether the task is daily, monthly or yearly, however you may have your own
procedures in place.

A fast close is an accelerated closing of the enterprise's books on a key date. Events
that become known after the year-end closing cannot be incorporated. All enterprises
have their own closing procedure document to help complete the closing as quickly
and efficiently as possible. I will at the end of this section show you one of the many
closing documents that are out on the web, feel to use and adapt this as you wish.
I will be covering the following closing procedures in this section, it does not cover
everything but it is a good start

Management of parked documents


Maintenance of the goods receipt and invoice receipt account
Posting of provisions
Accrual and deferral postings
Settlement of assets under construction (AuC)
Asset inventory
Depreciation posting run
Individual and flat-rate value adjustments
Foreign currency valuation
Interest calculation
Manual and technical reconciliation
Intercompany reconciliation
Reclassification
Balance confirmation
Reconciliation
Advanced return of tax on sales and purchases
Period control
Control and monitoring of the closing process
Balance carry-forward

If you use parallel accounting principles you can speed up the closing process, if you
do programs such as the depreciation posting run for complex fixed assets, the foreign
currency valuation of your receivables, flat-rate value adjustment and reclassification
are called numerous times and help you calculate or post valuations automatically, for
example for local law, IFRS and US-GAAP.
You can see the SAP general ledger closing transactions below

check/count - refers to the process of comparing ledgers to ensure that they


reconcile with each other, the program called reconciliation of
receivables/payables in group cross-system helps you to reconcile the customer
documents and vendor documents of the affiliated companies in the group. It
reads the open items of selected companies on the specified key data and helps
you identify documents causing discrepancies
valuate - you must perform a foreign currency valuation before you can
generate your financial statements, this valuation allows you to revalue foreign
currency balance sheet accounts. It also allows you to revalue the balances of
the general ledger accounts that are not managed on an open item basis but are
valuated in a foreign currency and have open items that were posted in a
foreign currency
reclassify - allows you to reclassify GR/IR balances based on predefined rules
rollup - allows you to summarize the data from one or multiple ledgers to one
rollup ledger and helps you eliminate the dimensions you do not need for
reporting
allocation - allows you to distribute and perform assessments of amounts and
quantities from sender objects to receiver objects
document - allows you to generate audit trails for documents and is typically
used by auditors to trace origins of account balances

report - allows you to generate financial statements, account balances and


item-level details, along with the various tax reports (the post tax payable
report and the transferring deferred tax report)
carry forward - this transaction is done at the end of the year and allows you
to move the open balance sheet account balances to new fiscal years, including
for subledger's like accounts payable, accounts receivable and asset accounting
opening /closing - this is applicable in specific countries (Italy, Slovakia,
Turkey, Columbia, Romania and Portugal), where you need to generate
opening and closing entries

Account Determination Analysis


Not strictly a closing operation but there are times when you want to find out if
accounts have been assigned, there is now a Account Detective Report which can
help, the new report lists all the accounts in a company code or chart of accounts,
along with there master data settings, the report gives you the option of finding out
where they have been assigned, we will transaction code S_ALR_87101048, the filter
screen (left-hand screenshot) you can narrow down your search, the right-hand
screenshot is the results, if you notice you can see that account 1000 is assigned to
tables T095 and T095B (these are the tables for asset account determination) you may
find that is it also assigned to table CSKB (cost elements table). If you double-click on
the tables you can then view the table entries, which means you can obtain the account
assignment details in the below right-hand screenshot, in some cases you can use the
transaction codes OMSK (valuation class) and transaction code OBYC (general
modification key) to see in more detail the account assignment fields.

No Activity Accounts
There may be an instance where you want to list all accounts that have no activity, it
might even block them to stop accidental postings to them, or you may want to
archive them. You can use transaction S_ALR_87010043 (you can
use S_ALR_87012186 for customers) and select the accounts with no
purchases checkbox, the results back should display all the accounts with no activity.

Management of Parked Documents


You would save (park) documents for content checks to confirm account assignment
by more qualified employees, also SAP uses authorization concept to support the
posting function up to a defined amount and then switches to document parking as of
this limit, what I am saying is that the account clerk is not authorized to post

documents over a certain amount and can only save (park) these document instead, the
content is then checked and the document is posted.
Regardless on your enterprises situation it is advisable to check the list of parked
documents at the end of the posting period, this is to determine whether these
documents belong to the current period for the purpose of calculating profits for the
valid accounting period. If the period is technically closed the posting date that has
already been entered in the parked document usually has to be changed manually, to
view the parked documents we can use transaction code FBV0, on the initial screen
you select on the document list button, then a filter screen appears, here you can
narrow down your searches

When run, a display appears with all the parked documents, in my case only one, you
can see if the document has been blocked or being released by looking at
the status or released by columns,

You can double-click on the document and it will take you directly to the screen for
editing the parked document, from here you can change or post the document.

Remember a document cannot be included in the balance sheet evaluations until


it has been posted.
If you have many parked documents this can have a impact on providing an accurate
representation of an enterprises assets, financial situation and performance, try and
close as many parked documents as you can.
Automatic Maintenance of the GR/IR account
At the end of the posting period the open transactions in the goods receipt/invoice
receipt account must be processed correctly for the financial statement. We can
distinguish between three scenarios
1. Both goods and receipts exist, both items in the GR/IR clearing account
balance out to zero and can be cleared
2. The vendor has delivered the goods but has not submitted the invoice, this
incomplete transaction leads to an increase in the current assets on the credit
side of the balance sheet without showing a payable on the debit side.
3. Another possibility scenario involves the reverse of this situation, in the case
the vendor has submitted the invoice but the goods have not yet been received,
this results in a payable on the debit side, without a corresponding disposition
of funds on the credit side.

The GR/IR account, the line item must be enabled to make sure that each transaction
can be evaluated, you can use open item management which means that documents
need to be cleared which makes this easier to detect incomplete transactions (see
screenshot below). The sort key is essential for clearing, the entry 014 (purchase
order) copies the purchase order number and item identified in the MM module to the
assignment sort field, this serves as a criterion for automatic balancing of goods
receipt items and invoice receipt items. Below is G/L account 191100 is a correctly
configured GR/IR account

Manual clearing is generally avoided owing to the number of items involved, we can
use the automatic clearing function using transaction code F.13, you can select the test
run checkbox to check before you actually clear the items, when you run the
automatic clearing a log appears detailing the documents that where cleared.

The relevant line items in the GR/IR account must be analyzed for all others business
transactions, which are still incomplete. A goods receipt for no invoice exists
(scenario 2) must be shown as a debit item (delivered but no invoice) on the balance
sheet. An invoice receipt for which no goods receipt exists (scenario 3) must be
shown as a credit item (invoiced but not delivered) on the balance sheet. The posting
procedure is shown below

Because the GR/IR clearing account is not to be posted to directly in the key date
valuation, a GR/IR adjustment account is required, the GR/IR and the adjustment
account are shown in the same balance sheet item in the notes to the consolidated
financial statements. This practical posting procedure results in a zero-balance line
item. In the above example both the debit and credit amounts equal 100.

Incomplete transactions can be reclassified automatically for the balance sheet using
transaction code F.19, this time I will use company code 1000, I have unselected
the create postings so that I can check what is happening before we post (kindly test
run), we would save the postings in the RFWERE00 batch input session, when the
report is run you get the GR/IR analysis log, based on open items the program
attempts to group the documents so that complete transactions can be easily identified.

If you select the postings in the log you get an overview of reclassifications as shown
below

You can view the reclassification saved in the session that has been just generated.

If the GR/IR account master data is configured correctly, the line items, OI
management and sort keys the system is capable not only of clearing complete
business transactions automatically but also of correctly mapping incomplete
transactions on the debit or credit side of the financial statement using GR/IR clearing
postings.
You can also use transaction code MR11 which is used for maintaince, this
transaction clears quantity discrepancies between the goods and receipt and its related
invoice. These quantity variances remain as balances in monetary value in the GR/IR
account. When configuring the transaction you can choose a tolerance level (which is
the maximum amount of a variance that can be written off) that the quantity variance
should be equal to less than for the variance to be cleared. The reason for this is that if
the goods receipt has not been invoiced because the vendor has not yet sent the
invoice, then you may not want to clear this amount, as it will be cleared at some
point in the future when the invoice receipt is posted. In the initial screen you can

specify the clearing section which is about the third of the way down, you should run
this transaction at period end for purchase orders that are at least three months old.
That way if you do clear a goods receipt amount whose invoice was never posted, it is
probably likely that the vendor as paid in some manual form. When documents are
posted they will create open items in the GR/IR that are the equal but opposite value
to the discrepancies that are written off. The assignment field of these documents will
contain the purchase order and line item number, so next time you run the automatic
clearing transaction, these items should be matched and cleared.

Transfer of Salaries and Wages


The HR department posts salaries and wages at the end of the month, this can be done
via an interface using non-SAP software, you can also transfer payroll results to FI
and CO using the SAP ERP Human Capital Management (HCM), because the the
sensitive information the SAP system uses extensive authorizations to protect this
data. Transaction code FB03 can be used to find the documents related to HR payroll,
using HRPAY in the reference transaction we can find the payroll documents (righthand screenshot)

You can see all the G/L accounts that have been posted too plus the cost center, profit
center, business area. Normally you will not allowed from this point unless you are
authorized as it is possible to find what an employee earns, We double-click on the
one of the documents to view the document details, we first highlight the first entry

Then we select environment -> document environment -> original document

The below screen will then appear, if we double-click on the salary item we can see
who the payments are for

Here we can see the salary payments to employees with numbers 1721 and 1722,
using the HR component we could find out who these employees are

If you double-click on one of the above lines you can see additional details of the
portion of the gross amount that is payable, you also can see income tax that is to be
paid.

Provisions
We will start with distinguishing between the various types of provisions and
probabilities of occurrence, because of the type of provision involved, provisions for
foreseeable losses owning to unsecured payables, threatened losses from waving
business or warranties that are not legally enforceable must be created on the basis of
local law and international accounting principles. Provisions for operating expenses
on the other hand can only be created subject to certain conditions based on
international financial reporting standards (IFRS) or United States Generally
Accepted Accounting Principles (GAAP).Valuation variances arise in parallel
accounting owing to different provisions types and probabilities.
If a provision for foreseeable losses such as a warranty case is regarded as probable it
is included in the financial statement in accordance with US-GAAP, according to
IFRS accounting standard an event is regarded as probable if is probability is
categorized as greater then 50%. If its probability is between 30% and 70% a
provision ban applies under US-GAAP because the event is then categorized as
reasonably probable.
Owing to the nature of provision postings, automatic valuation procedures cannot be
used, the system has virtually on points of reference for performing a mathematical
calculation in this context. In practice calculations are usually made outside the SAP
system (for example excel) and then assigned manually as a G/L posting at the end of
the period. We will use transaction code F-02, we can fill in the header details
however we will select the acct model button, if we drill down we can see all the
account assignment models we will use GL-SL03, we can also use the accounting

assignment models for parallel accounting, with parallel accounting the accounts
approach must evaluate data based on each of the accounting principles.

The account assignment model proposes all of the relevant accounts for both local law
(8xxxxxx) and IFRS (9xxxxxx), account assignment models help prevent such errors
of obmission in data entry.

In the below screenshot we can see a provision of 30,000 EUR is created for local law
and 20,000 EUR created in accordance with IFRS principles. Because this represents

a allocation to provisions an additional account assignment is made for the balance


sheet account with transaction type 520, any unused lines are removed then you hit
enter (you may get a warning message).

With account numbers and different financial statement versions allow you to express
items differently in local and IFRS financial statements, you can transaction
code SA38 or select system -> services -> reporting, we will use report RFBILA00
which can filter on the chart of accounts (or RFBILA10 this uses G/L and company
code)

We will use company code DD11 and select the financial statement version CAUS
(you may have your own financial statement versions), as I have only one accounting
year we cannot compare accounting years

The provisions can be find in the liabilities in the financial statement, adjustments for
an IFRS financial statement must not affect this and must therefore be expressed
below the balance sheet items in the other item section.

A provision history sheet is not currently provided in the SAP standard system, we
can use transaction code GRR3 display report (or GGR2 change report) to provide an
overview of the report painter reports, in folder ZF1 there is provided a basis for
creating your own provision history sheet as seen in the screenshot below

We then are taken to a filter screen

The results of the report are then displayed, you should then see the postings made
earlier.

Periodic Accruals and Deferrals

The difference between accruals and deferrals are as below

with an accrual the current service transaction is followed by a subsequent


payment transaction, for example rent that has to be paid at a later date for
example at the end of the quarter ("other payables")
the term deferrals on the other hand is used if the current payment transaction is
followed by a subsequent service transaction, for example insurance coverage
for a year is provided after an insurance premium is paid ("other receivables")

We can map these transaction in two ways

with a recurring entry document


with the accrual engine

Using the recurring entry approach the posting key, account and amounts are
unchained, the posting documents are then generated automatically on a regular basis,
however the posting is not immediate but instead a batch input session is generated
which has to be processed subsequently.
The Accrual Engine is available in SAP ERP and has better flexibility than recurring
entry documents for accrual and deferral postings, with the accrual engine which are
not defined on the basis of set values are calculated automatically. If you adjust the
values in the original documents adjustments are made automatically for all periods,
you can even simulate future accruals and deferrals. The new accrual engine which
has a extensive information system, offers an alternative to conventional recurring
entries.
We will start with the recurring entry method, first we will create a recurring entry
document as a template, you must remember that a recurring entry document is not an
accounting document and it therefore does not change the account balance. You can
use transaction code FBD1 or the easy SAP access menu

This is similar to the previous document entries we have encountered before except
that we have details on the recurring run dates, fill in the recurring entry
run information

First run on - the earliest date on which an actual document is to be generated


Last run on - the latest date on which an actual document is to be generated
Interval in months/run date - if posting is to be executed periodically the
dates for the generation of actual documents are defined in these fields
Run schedule - if postings is to be executed at regular intervals rather than on
specific dates, a run schedule must be defined in customizing, this schedule
specifies the individual dates for postings.

Next we fill line item one details and enter the next line details, notice the "=rent" in
the text field, this is a dynamic field and it will be replaced with 08/2013, again on
other runs the date will be changed to reflect the month and year.

Lastly we enter item line two details and then save.

Next we can list all the recurring entry documents either using transaction
code F.15 or the SAP easy access menu

We can see the recurring document entry we made plus an already existing recurring
document template,

You can execute a recurring document by using transaction code F.14, we can filter
the recurring documents to be run, by specifying a calculation period you let the
system know which recurring documents are to be included, if the date of the next
posting run saved in the recurring entry document matches the calculation date
entered or falls within the date range specified the program places the data for the
postings in the specified batch input session. A single accounting document is created
for each recurring entry document in each program run. Therefore a very long
calculation period does not result in the generation of a large number of accounting
documents. We select the hold processed session to prevent the batch input session
from being reorganized immediately.

This will generate a batch session, we now need to execute the session, by
selecting system -> services -> batch input -> sessions

We can then see the batch session, we select the RENT line and press F8 to execute,
we get the dialog box on the right-hand screenshot, we select to run in the foreground

You will then be given the chance to check the document before posting, notice the
dynamic field has now been replaced with the date

Because we selected to hold the processed session we can then see it in


the processed tab, if we double-click on the RENT line and examine the log we can
see the postings

The log details that two postings were completed (I run it twice),

We can look at the document using transaction code FB03, where we can confirm the
posting

The accrual engine is a general tool for calculating and generating periodic accrual
and deferral postings, each of its application components is based on specific accrual
and deferral scenarios, examples include

Manual accruals in financial accounting


Provisions relating to employee stock options
Leasing accounting
Intellectual property management

There is no customer development in the accrual engine as SAP delivers everything


you need, the best way to learn the accrual engine is the way of an example, first we
will create an accrual object, we will use the SAP easy access menu

We create insurance accrual object as below, we state a category, add some


descriptive text and identify the person responsible, we then select the item data and
create the object, we will be using accounting principle 90 as company code DD11
uses this principle, we have also specified an accrual type called INSURA, you can
also assign additional parameters like cost code in the acct assgts tab.

Again you can check and simulate the above, when you save you get the dialog box
below (left-hand screenshot), you can specify a key date of your choice for the
simulation, once you save you get the right-hand screenshot detailing the document
posted.

The screenshot show what the accrual engine would do as from the 01.08.2013 to
calculate the accrual for the amount of 1,200 (see calculated accruals tab), as you can
see for the next 5 months 240.00 will be posted per month.

However in the postings tab only a single annual amount of the insurance premium
that has been posted is shown, the list of the actual postings grows each month,

You can double-click on the posting to display the document, account 99000 (accrued
income/deferred expenses) contains the total amount which is reduce by $240 each
month, for this to be posted automatically you need to schedule a program for periodic
postings as a background job. We will use start periodic accrual run from the SAP
easy access menu

We start by filling in a filter screen, here we enter the company code and the key date
for accruals as a minimum, the program will then search for any accruals that need to
be posted, notice that I have selected the test run checkbox to confirm possible
accruals.

The results indicate a number of accruals (I have already created some additional
ones), but you notice the one we have just created, the report states that this was a test
run and no postings were generated, you can double-click on any line which will take
you to the accrual edit screen above.

When you do post you will get the same report below, however we can see that this
was an actual run and 5 postings were completed.

You now have two choices either recurring entry postings or using the accrual engine,
if you have very few recurring documents then use the recurring document method,
but if you have large numbers of deferral postings the accrual engine would be more
benefit to you but it does require more configuring.
Also if you come across accrual number range problems use the below transaction
codes

ACEPS_AWREF
ACEPS_ACEDOCNR

Other useful transaction codes are


Enter accrual/deferral
document

FBS1

Reverse accrual/deferral
document

F.81

Asset Accounting
Lots of closing processes relate to the FI-AA (asset accounting) subledger, we will
cover the following

Assets under Construction (AuC)


Asset inventory
Depreciation posting run
Asset history sheet

As we have discussed already complex fixed assets are mapped in asset accounting,
depreciation reduces acquisition costs owing to wear and tear on the asset and its
expected obsolescence (and cost of investing in a replacement). Assets under

Construction (AuC) are incomplete assets that are still in the process of being
completed when the financial statement is prepared. Only when completed are they
are the disposal of the enterprise and can be depreciated.
During the closing process AuC's are normally checked and their status changed if
necessary, lets look at an example

We start by creating a AuC, we select class 4000 assets under construction, this is
similar to creating a normal asset

We enter the asset details (left-hand screenshot) and check the depreciation areas
(right-hand screenshot)

Then we use transaction code F-90 to create a acquisition for purchase with vendor,
again this all very similar to a normal asset, the net amount is 50,000 (the middle
screenshot was changed to 50,000 as this was a limit), we use posting key 70 and
transaction type 100 (acquisition) in the master record, note that the value date or
capitalization date is not required which is not the normal in asset accounting.

We can check the document before posting, the account determination for AuC 4000
for acquisition postings refers to G/L account 32000, the total amount of 50,000
would also appear in that account on the balance sheet date, provided that the status of
the AuC did not change.

We now presume that a check run was performed at the end of the period that
determined that the building can be used as of August, as a result the status and value
must be changed, using the SAP easy access menu or transaction code AIAB, we can
define distribution rules for the subsequent settlement of the asset in our example

A line item exists for AuC 400001 (building) in the asset class 4000, you can at this
point (although not essential) to define a separate settlement rule for each transaction.
It may be useful to differentiate between settlement rules at the document level for
example if the assets are intangible assets such as software for which only certain
internal activities can be capitalized. You use the enter button to create settlement
rules, in the right-hand screenshot you can see the AuC is to be 100% capitalized,
asset 400000 (building 1) receives 70% and asset 400001 (building 2) receives 30%,

this has the same effect by using a ratio of 7:3, when you save the icon in the left-hand
screenshot it will turn green.

Now we need to settle to close the operations, we again use either the SAP easy
access menu or transaction AIBU, fill in the initial screen, you can perform a test run
and a simulation (right-hand screenshot), at 19th august the AuC is credited and two
new assets are debited at the same time. An amount of zero balance on the key date in
the AuC balance sheet item and depreciation now starts for the two new assets,

You can use the asset explorer to see inter-company asset transfers, here you can see
the asset being retired and a new asset being created.

Asset Inventory
The asset inventory is used to see if assets are still at the disposal of the enterprise,
this check determines if changes are need to made to cost centers, business areas or
locations, in the master data fields, if fixed asset are no longer exist owing to theft an
extraordinary asset retirement without revenue must be posted.

Here you can find various reports, there are various ways to manage assets

Each asset is assigned its own asset number - this ensures transparency and
trace ability, it is time consuming because a separate master record has to be
created and maintained for each asset
Collective management - this approach all assets are managed in a single
master record, the challenge is to ensure that each asset is uniquely identifiable

An example of collective management would be if we have 20 computers that are


allocated to a cost manager, this all could be managed under one asset, however it
becomes a problem when you want use some of the PC's in other areas.
To speed up the asset input process you can have barcodes that are attached to the
assets and then use it to identify each asset, this helps in auditing equipment owned by
the enterprise, a hand scanner can be used to make the whole process very quick, the
user reads the barcode identifies the asset and confirm the location and other details in
the system. The other possible solution is to use employee self service, this is where a
employee receives an email to a portal that allows them to enter the details of any
equipment that they are using.
Asset Reconciliation
There may be times when the asset subledger is different from the general ledger
balance, you will need to know if there are any imbalances between them, using
transaction code ABST2 (see below screenshot) , the program reads all the
transactions in the asset value fields table ANLC for the current fiscal year,
summarizes the values per general ledger account and writes them to the totals table
EWUFIAASUM, you need to make sure that the current fiscal year is open
(transaction code AJAB) and that the fiscal year change program for the previous year
has been run (transaction code AJRW)

You can also analyze the difference between the value updates of a specific general
ledger account in an asset account and SAP general ledger, use transaction
code ABST, here you can enter the company code, fiscal year, depreciation area and
the reconciliation account, in my case the G/L account did not have line item enabled.

Lastly you can also perform manual reconciliation between fixed asset and general
ledger accounts by using the asset history sheet and the general ledger balance display
reports, first go to the asset history history sheet (transaction code AR01) and enter
the data, then using transaction FGLB03 (general ledger balance display) enter the
corresponding asset reconciliation accounts (configured in transaction codeAO90) and
execute the transaction to display and compare the balances.
Depreciation Posting Run
The depreciation posting run is performed periodically within asset accounting, it
involves the transfer of valuations from FI-AA to general ledger accounting, where
they can be used for balance sheet evaluations. Depreciations for tangible assets need
to be distributed systematically across the useful life of the asset and the depreciation
method used must correspond to the enterprises consumption of the assets economic
usefulness. As mention before there are two types of depreciation
Ordinary Depreciation

refers to the reduction in the value of an asset over time owing to wear and tear, the range of
methods can be used for this type of depreciation, these include straight-line, the decliningbalance method and the unit-of-production method of depreciation.

Unplanned Depreciation

exceptional events, such as damage (flood, fire) that result in a long-term reduction in the value
of an asset are mapped in the system using planned depreciation.

Let go through a complete example, first lets create an asset (delivery van) using
transaction code ABZON, we enter the van details and then save thus capitalizing the
asset which means that it can be depreciated

The system will confirm the completed asset entry

We can see the various valuation approaches in the asset master record, depreciation
area 01 the asset is subject to straight-line depreciation over a period of 5 years in
accordance with US-GAAP specifications, numerous parameters are defined to
determine whether interest is to be calculated for the cost accounting area and whether
depreciation below zero is permitted. If revaluation (indexing) is permitted in a
depreciation area, an index series can be defined in the asset or asset class for
calculating the replacement value per fiscal year. The system calculates the
replacement value and posts the depreciation together with the interest in the periodic
depreciation posting run.

You can configure the index series using the SAP easy access menu (left-hand
screenshot), you can see the existing series that I have created in the right-hand
screenshot.

In the example above the useful life in depreciation area 01 is 5 years and therefore an
annual depreciation of 20% of $10,000 is $2,000, however lets say that we had a cost
center depreciation area with 7 years which means the depreciation would be $1,428
per year. An example of this is in the below asset notice the difference between the
useful life of the asset between the different depreciation areas.

Now we move on to the depreciation run, using transaction code AFAB, we fill in the
details, notice the section reason for posting run, here you can start a planned posting
run, or a unplanned posting run, you can repeat or restart a previous posting run. Also
notice that there is a test run checkbox which allows to to check the depreciation run
before posting, you can select the list assets checkbox to see the assets.

When we perform the test run we have a 1000 asset limit (this limit is also included in
the proper posting run)

The results are returned and as you can see I have a number of deprecations, we can
also see the delivery van we created earlier, if you also notice you can see some
ordinary and unplanned depreciations

To actually run the deprecation we return to the main screen, remove the test run and
then run it in the backgroup by selecting program -> execute in background (left-hand
screenshot), the print parameter dialog will appear, here I select the defaults

Next the schedule dialog box appears here you can setup a schedule, or in my case we
will immediate run it

SAP confirms that the job has been scheduled

Now lets take a look at the job, we select system -> services -> jobs -> job overview

And then using the defaults select the execute button, (you may have to change a few
options to reflect your environment, for example the username)

A list of all the jobs will appear, I sorted by start time making my job at the top, select
the spool icon and then drill down into the job

Eventually you will get to the deprecation log

The other way to look at the log is to use transaction code AFBP, the initial screen is
a filter screen (left-hand screenshot) and the when enter the depreciation log will
appear (right-hand screenshot)

If we look at the asset using the asset explorer (transaction code AW01N), you can
see the 08/2013 posting (bottom red box), the ordinary depreciation is now at 166.80
and the net value has depreciated to 9,833.20, when you run this each month the
ordinary depreciation will increase and the net book value will decrease until zero
where the asset can then be retired, however you may choose to sell the asset before
reaching zero.

Unplanned depreciation of an asset is used when something negative happens to the


asset, for example a motorway may be built next your building, a flood or fire at the
offices may happen, in which a asset becomes depreciated more quickly, you can use
transaction code ABAA or the SAP easy access menu

The initial screen requires some details such as the asset number and date information,
we are using transaction type 650 (unplanned depreciation on new assets data) as the
asset was created in the current year, you could use 640 (unplanned depreciation on
old assets data) for older assets that were acquired in previous years.

The next screen details the value adjustment amount, you can optionally enter some
text as to the reason.

When you post the document an entry has to be made in all depreciation areas, so you
will see the below screenshot for each area that you have configured for the asset, just
select the green tick for each entry, finally the adjustment will be posted (right-hand
screenshot)

We can then take a look at the asset using the asset explorer (transaction
code AW01N), you can see that book value has decrease by the new unplanned dep.
value (top red box), you can also see a record of the unplanned depreciation in the
transactions section (bottom red box)

Asset accounting also creates an asset history sheet, which is essential for the financial
statement in accordance with legal requirements, you can use transaction
code S_ALR_87011990 or the SAP easy access menu

The initial screen is a filter screen, here I have entered the minimum required

The report is very detailed (I have changed the column layout), we can see the assets,
when it was acquired, capitalized and retired, the depreciation for the year and the
current net book value, there are many columns that you can use. You can doubleclick any asset and you will will be taken to the asset explorer detailing that asset.

Value Adjustments
At the end of a posting period an enterprise must determine the value in real terms the
receivables that have been posted, there may be instances where the customer is
unable to pay due to insolvency, this means a value adjustment needs to be made, in
the context of closing operations a distinction is therefore made between individual
value adjustments and flat-rate value adjustments.
We will start with value adjustments, this is where the customer is insolvent and
payment in full can no longer be expected for a delivery or a service provided. This
receivable must be classed as a doubtful receivable and according to the prudence
concept the year-end closing must take in account of the risks and losses of which the
enterprise is aware when preparing the annual financial statement.
In the SAP system value adjustments requires a manual posting, it may be the case
where a portion of the outstanding receivable may be paid, because the quota is still to
be clarified when the value adjustment is performed the tax amount must not be
adjusted, the receivables are written off with a tax code of 0%. As soon as the
allocation quota is clarified the individual value adjustment is reversed. The open item
is cleared by a cash receipt or depreciation of the remaining amount. The tax on sales
and purchases is adjusted at this point.
Lets look at an example, before we begin lets look at the invoice that wont be paid

We will use transaction code F-21 (transfer without clearing), the original invoice
remains in the account and its value is negated by an individual value adjustment, we
will use posting key 19 which creates a credit item in the customers account and
enables account assignment via a special G/L transaction. It must not be posted to the
usual customer clearing account, instead an alternative clearing account is selected
with special G/L transaction "E" (reserved for bad debit)

We can then simulate and check that everything is OK

Once posted if we look at the account balance we see that an entry of -2,046,88 has
been posted which negates the 2,046.88 posted on the 09.07.2013, this is then
reflected in the balance.

Flat-rate value adjustments do not involve missed payments or insolvency, there are
two methods

manual flat-rate value adjustment - this is based on an estimate entered as a


manual G/L account posting with the "Expense flat-rate value adjustment to
value adjustment" posting record. this method is flexible but error-prone
flat-rate individual value adjustment - this term refers to a group of
customers whose receivables are to be devalued as a batch using a predefined
set of rules, the method is execute automatically. The program for flat-rate
individual value adjustments selects a group of receivables, calculates the
required adjustments on the basis of empirical values or the reliability of the
accounting standard and automatically assigns these receivables to an account.

Before receivables can be automatically valuated the master data record of the
customer has to be updated, as seen in the screenshot below,

The value adjustment key can be user defined using the IMG (left-hand screenshot), if
you look at the DN value adjustment key (right-hand screenshot) you can see that
after 10 days overdue receivables are devalued by 3%, after 20 days this increases to
4% and receivables that are overdue by 30 days or more are devalued by 5%.

Now that we have looked at the configuration of the value adjustment key we can
move onto the valuation, you can use transaction code F107 or the SAP easy access
menu

This is similar to the payment run and dunning run, we start by entering a the run date
and a unique identifier, then we have to setup some parameters by selection
the maintain button

The parameter screen is self explaining, we will be using valuation method 3 (flat-rate
individual value adjustment), the amount valuated is to be posted to the accounts for
the US accounting standard on the key date of 21.08.2013 and automatically reversed
by the program on 01/01/2014.

Using the selection option button we can specify the company code and the accounts
to which the value adjustment are to be posted.

Once you have enter the parameters, select the save icon (disk icon) and then you are
ready to run the valuation, you then select the dispatch button, you can schedule the
job to run later, in my case we will run immediately

Keep hitting the green tick button, the valuation will change from running (left-hand
screenshot) to finished (middle screenshot), like the payment and dunning run it
produces a proposal first, here you can check the customers and open items that were
selected in the background and a value adjustment requirements that were determined
on the basis of the defined parameters. Here you can change the parameters and rerun,
delete the proposal, view the proposal (see below for log), look at a sample posting (
right-hand screenshot) and ultimately transfer the valuations by executing the run
(forward button).

The value adjustment log

Other useful adjustments transaction codes


Inflation adjustment of
general ledger accounts

FJA1

Change last adjustment


dates

FJA2

Foreign Currency Valuation


The currency in which your independent accounting unit (company code) draws up its
financial statements is known as the local currency, postings entered in a different
currency need to be valuated on the relevant key date, the regulations for doing this
may also differ depending on the accounting principles are applied. Under the IFRS
and US-GAAP standards the key date principle involves valuation using the exchange
rate that is valid on the key date. This may conflict with local regulations that permit
devaluation and prohibit upward revaluation.
The report which you need is SAPF100, which you can access from system ->
services -> reporting, the program will perform the following

Calculation of valuation differences based on a proposal list


Key date valuation with subsequent reversal
Update of document information

I will explain what steps are involved with foreign currency valuation with an
example, first lets view the exchange rate currency either using transaction
code S_BCE_68000174/S_B20_88000153 or the SAP easy access menu

The translation rates can be seen in the left-hand screenshot, and the currency
exchange rates using a worklist can be seen in the right-hand screenshot. You can
either copy an existing rate in the translation rates screen (left-hand screenshot) and
modify or change an existing one, here I have changed the top line rate to 1.66730
which we will see later.

If you double click on a worklist (I have covered worklists in my FI section) you can
enter the details, in the below example we can see that it takes $1.40 to buy 1 euro,
or 0.71 is the price to buy $1.

Once you have created your working lists then you need to set the working list to
complete, by selecting the green tick with a pencil icon. The status icon should change
from red to green.

Once the foreign exchange rates have been configured we can run the foreign
currency valuation, you can use transaction code FAGL_FC_VAL or use the SAP
easy access menu

I have keep the details to a minimum but you can filter as much as you need, there are
a number of tabs that can refine the filtering, the valuation method specifies how the
valuation is to be executed, one of three methods is normally selected, I have already
discussed the principles in my parallel accounting section.

Valuation in principle (key date principle)


Lowest value principle
Strict lowest value principle

We will examine the three principles we mentioned above, a receivable posted on


April 30 at an exchange rate of 1.60/$1 is to be valuated on the relevant key dates for
the valuation areas US (US-GAAP), IA (IFRS) and LO (local GAAP) using the
various methods available, the interest rates on the key dates are

04/30 - 1.50/$1
10/30 - 1.60/$1
11/30 - 1.70/$1

Valuation Area

Valuation Method

09/30

10/30

11/30

US

Valuate in principle

1.50

1.60

1.70

IA

lowest value principle

1.50

1.60

1.60

LO

strict lowest value principle

1.50

1.50

1.50

The postings are entered in a P&L account or adjustment account for receivables or
payables because you cannot directly post to a reconciliation account. The values are
therefore posted to an adjustment account that is expressed in the same balance sheet
item as the relevant reconciliation account.
When the report is run we get the results screen below, we can see that there is a 2.98difference (remember I changed the exchange rate to 1.66730),

We can see that there are two postings the first document is automatically reversed on
01.09.2013. remember these are open items and the exchange rate may change again,
hence the reserve posting, until the items are cleared in which case the exchange rate
will be valuated then. In some countries you are not permitted to reverse a valuation at
the end of a fiscal year, in this case the valuation difference must be updated in the
open item, to do this select the valuation for balance sheet preparation checkbox in the
program SAPF100.

You can also valuate differences using the transaction code FBL5N and selecting
the valuation difference field

I just want to finish off by mentioning that you can translate your account balances
from local currency into group currency, this translation is performed in accordance
with FASB 52 (U.S. GAAP) or IAS. You can use transaction
code FAGL_FC_TRANS

Item Interest Calculation

Interest calculations have a relatively minor significance in the context of closing


operations, however SAP provides functions for calculating and automatically posting
interest based on account balances or line items. I have already covered balance
interest calculation in my G/L accounting configuration section, now we will take a
look at item interest calculation, We will use an employee loan example, first we must
update the customer (employees) master data, we set the interest indic and interest
cycle fields, also note the last key date field we will discuss this shortly

Once the master data has been updated, we create a invoice for the employee which is
a loan of $5,000

Next we configure the item interest calculation using the IMG

I have split the screen across to screenshot as it is to large to fit on one, there is not too
much to configure here, we select the open items and define the number range (use
transaction code FBN1) and select the post interest checkbox, there are other options
which I will leave you to explore.

Now the configuration part is completed we perform the item interest


calculation using transaction code FINT or the SAP easy access menu (left-hand
screenshot), the initial screen is a filter screen, here I have entered the minimum, if
you notice we can perform a test run, that way you can check the results before
posting. I am going to calculate the interest for just over the month for the employees
loan that we create a moment ago

The results screen is as below, you can see that it picked up the loan amount for
$5,000 and applied the interest rate of 3% calculating on 38 days interest.

You can get more details about the process by looking at the log, the last icon

When you do post you will get a detailed screen of the outcome, you can see my run
at the top, if there are any errors SAP will indicate the problem, mostly it will be to do
with the indicator not being setup correctly of a missing number range.

For information on how to configure the time-dependent interest terms see balance
interest calculation in my G/L accounting configuration section. because interest rates
are highly susceptible to fluctuations you can make changes before you post, using
transaction code S_ALR_87002510 you see the selection of defined interest
indicators and also currency-dependant and time-dependant interest terms.

If we double-click on a time-dependant interest term (in our case 01 USD seq no 1),
we can see where the 3% interest rate came from.

You can view the interest calculation runs using transaction FINTSHOW, the initial
screen is a filter screen which is self-explaining, the results of the log can be seen
below.

When you run a interest calculation the master data of the customers record will be
updated, as you can see below the employee record has been updated to the date of the
last run.

Lastly if we look at the customers (employee) line items we can see that the interest as
be posted to the account, so the balance now reflects the loan and the interest.

Reconciliation Measures
Financial accounting influence business decisions, share price, performance-based
remuneration, etc. You need to make as accurate report on assets, profitability and
over financial situation, reconciliation measures are intended to check figures and
ensure that they are correct. We will discuss two types of reconciliation measures

Manual checking of postings


Technical reconciliation of transactions figures

We will start with manual checking of postings, the larger the company the more
posting errors we expect, these can have a negative influence on the information value
of financial accounting figures, however we cannot check every posting, a balance
must be achieved between the costs and benefits of reconciliation measures, you could
restrict the checks to certain accounts or amounts posted. We can use transaction
code FBL3N, which we have used a number of times, this time we will select a
number of different accounts, using the multiple section tool (the right pointing arrow
to the the right of G/L account), here I enter a number of G/L accounts

The results screen returns the line items, here I have sorted on the amount in local
curr, now lets presume that something may be wrong with the first three line items, so
we will get another accountant to check

We select the three line items lines and then list -> send

We enter some text description for the accountant and select one or more recipients
(mistake in the screenshot user should be vallep),

We also select the express document checkbox, which means the accountants will be
informed immediately

When the accountant does anything in his/her screen, a pop dialog box appears,
select choose

The message then appears on the screen with a link (or you can use
the attachments tab) to see the list of line items

When the user selects the G/L account line item display link you will see the three line
items we asked to be checked.

Next we look at the technical reconciliation of transactions figures, this procedure


involves comparing the debit and credit postings of the individual documents with the
transaction figures from the relevant periods in accounts receivable accounting,
accounts payable accounting and general ledger accounting. The results of the
analysis report are saved in historical management records. This allows you to
document the details of when the reconciliation was performed and the accuracy of
the reconciliation measures. This analysis identifies differences that are not permitted
by accounting standards which must then be eliminated as soon as possible. We will
use transaction FAGLF03 the left-hand screenshot (F.03 was the old transaction code
seen in the right-hand screenshot),

Any differences will be reported in the results screen,

You can view the historic logs and their outcome, by selecting the display log option,
here we can see that there we reconciliation problems on the 21.05.2007

You can also check the reconciliation between companies using the SAP easy access
menu, there are a number of different reports

Here I use transaction code FBICR3L, to display the intercompany open items, you
can then use transaction code FBICA1 and/or FBICR1 to clear the documents and
reconcile the accounts.

Reclassification

It is necessary to sort receivables and payables based on their validity periods, on the
balance sheet it may be a case that there are outstanding payables to be made to
customers and receivables to be paid by vendors, regrouping is required to accurately
represent these customers with credit balances and vendors with debit balances in the
financial statement. A special program is provided to automatically perform this task
of sorting by due date and regrouping which is referred to as reclassification. We can
use transaction code FAGLF101, there are three tabs that you can use to refine the
selection, we leave thegenerate postings checkbox unticked as this is a test run. The
SAP sort method is configured so that receivables and payables are categorized as
follows

Due within one year


Due within one to three years
Due within more than three years

Sort methods can be configured differently to give a more general or precise


classification, the valuation area linked to the account determination for parallel
accounting. The middle screenshot details the account type D (customers) and only
select customer 3477, the last screenshot indicates the selected customers are to be
grouped together in a group posting in this case. The valuation type 5 (transaction of
balances) means that payables and receivables are to be sorted on the basis of their
due dates and are to be reclassified.

You can check the postings before you actually run for real. When posted the balances
for the account is reclassified.

You can view a precise representation in the balance sheet, you can see where the G/L
account is represented in the balance sheet by using transaction code FS00 and
selecting the G/L account, here you can select the edit financial statement version. In
the below screenshot you can see that this G/L account is used in the CAUS financial
statement version, it could also be used in other financial statements as well.

Selecting the green tick we are taken to the position in the financial statement
(CAUS).

Balance Confirmations
After the balance carryforward has been technically completed and the old fiscal years
has been blocked, balance confirmations must be sent. The purpose of these letters to
confirm with your trading partners the figures for the relevant receivables and
payables. Letters are sent to the customers and vendors with figures based on the
accounts, a standard reply letter is to be completed by the customer or vendor to speed
up the process (confirmation or rejection), the letter is then sent back to a audit
department to confirm in the system, a check list is performed an results tables is
formed. We can use transaction codeF.17 (A/R) and F.18 (A/P), the initial screen is a
filter screen, here I have enter the minimum amount of data

When you run the report you will be shown the printed balance confirmation letters,
here I have two screenshot's as the letter is too large to capture in one screenshot.

To ensure complete and comprehensive documentation you can print the list of
parameters used for selection shown earlier, as a fraud avoidance measure, balance
confirmation forms part of the overall corporate governance concept.

You can also use transaction code FK10N (vendor) or FD10N (customer) to see
balance display reports.
Period Control
For documents to be posted the period must be technically open, in other
circumstances you may want to prevent postings in a certain period once specific
activities have been completed, for example the advanced return for tax on sales and
purchases or auditor certification of the balance sheet, these tasks are the
responsibility of period control, which represents both technical and business
functionality, period control is not only used on FI but in other modules as well CO
and MM, we can use transaction code S_ALR_87003642 or use the SAP easy access
menu

You can see the posting periods detailed below, I have covered in detail posting
period variant in my FI configuration and setup section. When you fill in a document
header the date will be checked to confirm that period is open, SAP will notify you if
it is not, you can open periods for specific account types (customers, vendors, assets,
etc). If you notice we also configure the special periods as well these are posting
periods 13 to 16, again I discuss this in my posting period variant section.
The AuGr (Authorization Group) column is used to restrict users to alter the control
table, it is only possible for a user defined in the authorization concept (object
F_BKPF_BUP) to enter postings in the interval, this allows you to limit the number of
users involved in the closing operations.

Tax on Sales and Purchases


There are a number of reports that can help with input and output tax on sales and
purchases, at the period end these amounts must be checked and totaled and the
balance reported to the tax authorities as a receivable or payable. The program for
advanced returns for tax on sales and purchases (which is provided in many countryspecific versions) posts the balance of input and output tax to a tax payable account,

generates a log and if required provides an electronic data record for the authorities, I
have already discussed tax in my FI configuration and setup section which I have a
whole section on. We can use transaction code S_ALR_87012357 or use the SAP
easy access menu.

The initial screen is a filter screen, I am using company code 1000, and some past
dates, to capture some data, you can even group company codes, in addition to the
selection criteria, posting criteria must also be defined for the program. The accounts
for input and output tax that are associated with the tax codes are cleared in a
procedure that involves posting the balance to a defined tax payable account for
receivables or payables due from or to the tax authorities, this can be saved to a batch
input session using the tax payable posting tab. You can increase or decrease the
logging output as displayed in the below screenshot.

The results screen details the documents and calculates the balance of input and
output tax based on the tax code. The program then creates a batch input session for
tax payable postings, generates a file for electronic communication with the
authorities and outputs the overall results in a log.

Once the receivable is posted the relevant data must be communicated to the tax
authorities, we can use transaction code FOTV or use the SAP easy access menu,

The initial screen is a filter screen, if there are any tax returns SAP will display these,
the tax on sales and purchases payable can be classified as either a system amount (in
other words an amount calculated by the Advanced Return for Tax on Sales/Purchases
program) or an external amount. You can change the values before sending the report
to the tax authorities (transfer data F8), again SAP will confirm if the data sent was
successful or not.

Balance Carryforward
When the fiscal years closes several activities must be completed in the SAP system,
one of these is the balance carryforward, the year-end closing means that the closing

balance of the balance sheet accounts also serves as the initial balance in the next
fiscal year.
Things are more complicated for income statements accounts, in the new fiscal year
the opening balance in these accounts is always zero (they start with a clean sheet),
this is certainly true of the profit and loss accounts at least. When the fiscal year
changes its balance is posted to one or more special retained earnings accounts. In
most countries the carryforward in the balance sheet and profit and loss statement
accounts is not implemented as a posting in the SAP system. Instead the balance of
the last posting period is carried forward as the balance in period 0 of the new fiscal
year without a posting record. An opening entry is only possible in certain countries
where this is legally permitted. We can use transaction code FAGLB03, we enter the
account and company code details

At the start of the year we can see the 60,000 in period 0, which is the opening
balance for this account, it is possible to post items if there is no balance
carryforward, the balance carryforward only influences the cumulative balance.

To carryforward the balance we can use transaction code F.16 or FAGLGVTR (new
G/L), or F.07 to carry forward the balances of accounts payable and account
receivable.

The initial screen is a filter screen, if you notice we can perform a test run before we
actually carryforward the balance.

You get a detailed log, here you can see that some accounts have been identified, we
can use both the balance sheet accounts and retained earnings accounts buttons to
display more details

The left-hand screenshot you can see the balance sheets, the right-hand screenshot
displays the retained earnings accounts.

When you carry out the carryforward balance, check the accounts for the new fiscal
year to confirm that the carryforward has been carried forward.
I have also discussed the closing cockpit which can help with period closing and year
end tasks.
Period-End Master Checklist
#

Description

Transaction Code

Application

Day

Month

update exchange ranges

S_BCE_68000174

FI

ensure movements are


complete

VL10A

SD

ensure inventory

VL10A

PS

Year

movements are complete goods issue (PS)


4

ensure inventory
movements are complete goods issue

VL10

CS

record purchase-orderrelated AP transactions

MIRO

MM

record purchase-orderrelated AP transactions

MIRO

CS

release blocked invoices

MRBR

MM/PS

release blocked invoices

MRBR

CS

X
X

X
X

X
X

incomplete SD documents

V_UC

SD

10

blocked SD documents

VKM1

SD

11

collective proc.analysis
(Deliv)

V_SA

SD

12

review sales documents


blocked for billing

V23

SD

13

review billing due list

VF04

SD

14

review failed billing


document creation after
billing due list (VF04)
execution

V.21

SD

15

release billing documents


for accounting

VFX3

SD

16

failed goods movement

COGI

PP

17

reprocessing incorrect
information

CO16N

PP

18

gaps in document number


assignment

S_ALR_87012342

FI

19

invoice numbers allocated


twice

S_ALR_87012341

FI

20

open period for material


master records

MMPV

MM

21

open new MM period (PS)

MMPV

PS

22

open new MM period

MMPV

CS

23

open and closing periods

OB52

FI

24

actual overheads
calculation prod. order

CO43

CO

25

preliminary settlement for


co-product

CO8A

CO

26

WIP calculation PP order

KKAO

CO

27

calculation of work in
process (WIP)

CI8G

PS

28

display work in process

KKAQ

CO

29

review WIP calculations

KKAJ

PS

30

prod. and process order


variance calculation

KKS1

CO

31

product cost collector


variance calculation

KKS5

CO

32

settlement PP order

CO88

CO

33

PP order (close)

CO02

PP

34

product order changes


(status)

COOIS

PP

35

enter recurring document

FBD1

FI

36

Post recurring document

F.14

FI

37

post recurring document


with BI

SM35

FI

38

automatic GR/IR clearing

F.13

MM

39

analysis GR/IR clearing


accounts

F.19

FI

40

automatic GR/IR clearing

F.13

FI

41

manual clearing general


ledger

F-03

FI

42

manual clearing account


receivable

F-32

FI

43

manual clearing accounts


payable

F-44

FI

44

post adjustment entries

FB50

FI

45

foreign currency
revaluation

FAGL_FC_VAL

FI

46

reposting of unassigned
functional area

KB61

FI

47

order settlement (asset


under construction)

AIAB

FI-AA

48

depreciation run

AFAB

FI-AA

49

periodic asset posting

ASKBN

FI-AA

50

depreciation simulation

S_ALR_87012936

FI-AA

51

open and close FI period


asset

OB52

FI-AA

52

recording of statistical key


figures

KB31N

CO

53

assessment cycle cost


center accounting

KSU5

CO

54

assessment cycle cost


center account (quality
costs)

KSU5

CO

55

accrual calculation

KSA3

CO

56

order settlement (internal


order)

KO8G

CO

57

settlement service orders

KO8G

CS

58

close completed service


orders (business view)

CO99

CS

59

close completed projects


(business view)

CJ20N

PS

60

generate settlement rule

CJB2

PLM

61

settling the project

CJ8G

PLM

62

closing the project

CJ20N

PLM

S_ALR_87013531

PLM

actual settlement project


to profitability analysis
(CO-PA)

CJ8G

PS

65

run profitability report

KE30

PS

66

assessment cycle cost


center to COPA

KEU5

CO

67

stock valuation

MRN0

FI/CO/MM

68

copy actual to plan version


3

KP98

CO

69

assign depreciation for


depreciation area 15

S_ALR_87099918

CO

70

delete depreciation from


depreciation area 20 in
version 3

KP90

CO

71

activity price planning


(version 3)

KP26

CO

72

activity price planning


tariff (version 3)

KSPI

CO

73

inventory costing

CK11N

CO

74

price update

CK24

CO

75

stock market adjustment

FB50

FI

76

period lock

OKP1

CO

77

create intrastat/extrastat
periodic declaration

ENGR

SD

78

advanced return for tax on


sales and purchases

S_ALR_87012357

FI

79

post tax payable

FB41

FI

80

EC sale list

S_ALR_87012400

FI

81

foreign trade regulation


reports Z4

S_ALR_87012405

FI

82

foreign trade regulation


reports Z5A

S_ALR_87012162

FI

83

comparison
documents/transaction
figures

FGLF03

FI

84

balance interest
calculation

F.52

FI

85

compact document journal

S_ALR_87012289

FI

86

document journal

S_ALR_87012287

FI

87

cash position & liquidity


forecast

FF7A

FI

88

open and close posting


periods

OB52

FI

89

run profitability report

KE30

CO

90

financial statements

S_ALR_87012284

FI

91

create factory calendar for


new year

SCAL

cross

63

project reporting

64

X
X

92

controlling maintain
versions

93

costing run

94

define percentage
overhead (actual)

95
96

S_ALR_87005830

CO

CK40N

CO

S_ALR_87008275

CO

recalculating values

AFAR

FI-AA

account reconciliation

ABST2

FI-AA

97

fiscal year change

AJRW

FI-AA

98

year-end closing asset


accounting

AJAB

FI-AA

99

carry forward AP/AR


balances

F.07

FI

100

carry forward general


ledger balances

FAGLGVTR

FI

101

regrouping
receivables/payables

FAGLF101

FI

102

balance confirmation
receivables

F.17

FI

103

balance confirmation
payables

F.18

FI

104

close previous account


period

OB52

FI

105

financial statements

S_ALR_87012284

FI

106

document journal

S_ALR_87012287

FI

Miscellaneous
This section we will cover tools like the schedule manager and the closing cockpit,
which enables you to fast-track some of the periodic and recurring complex business
processes such as period end closings (such as month-end closing), we will also cover
the factory calendar, the schedule managers functionality can help with a number of
repetitive tasks in the system, the FI closing cockpit helps the closing operations in
financial accounting by reducing the lead time required to closing the accounting
books.
Factory Calendar
Calendar maintenance (including public holiday calendar and factory calendar) is used
in several applications areas, including bank accounting, Logistics and MRP
calculations in Production Planning, SAP Learning Solution and Training and Event
Management. The standard system comes delivered with country-specific factory
calendars and common public holidays (together with the public holiday rules). The

factory calendar helps maintain the working days (numbered serially) thereby
enabling the scheduling of activities like plant shutdown and training. You need to
assign a public holiday calendar to the factory calendar both of which depend on the
validation of each other. we can use transaction code SCAL, there are three calendars,
public holidays, holiday calendar and the factory calendar which you can change, you
can even create new calendars which you would copy an existing one and making
changes.

On the first overview screen you have the below

factory calendar id - self-explaining


holiday calendar ID - here you enter the public holiday calendar ID define for
that particular country,
factory start date - if you have already used a factory calendar and want to
continue the numbering from that calendar, you can enter that number "+1" and
the system will make this the first working day for that year, when left blank
the system treats this as 0 and starts the numbering the first factory working day
as 1.
workdays - here you select the working days
special rules - this button can maintain certain specified days as working days.

From the change factory calendar, you can review a year overview of a factory
calendar by selecting the factory calendar row and using the calendar button.

You will see the number of workdays and number of free days and the cumulative
numbering of factory workdays in the day column. You can select the year button to
view the details for the selected year including the month-specific calendar showing
the holidays and the list of public holidays

Next we define the factory calendar per currency which allows the system to arrive at
the correct value date taking the public holidays into considerations we will
transaction code F8BC,

You can then assign the factory calendar to the plant of the company code using
the IMG,

Lastly we specify the factory calendar that you are using for the company code in the
settings required for managing room reservations in the time and event management
sub-module using transaction codeOOFK,

Schedule Manager
The schedule manager helps with repetitive tasks (like period-end closing) more
efficiently and easily with central monitoring, the interface to the schedule manager is
easy to use, to access the user interface we use transaction code SCMA, there are four
main windows to the schedule manager

user notes window (1) - you can toggle this screen on and off, you will see
information on the scheduler, processes, scenarios and help functions, here you
will see text explaining how to create the business transactions, a task list, etc.
task list overview window (2)- here you can see all the tasks that have been
created, scheduled and monitored, a task list is made up of one or more tasks
(processes) that will be executed periodically, and that may require more than
one user to complete the entire chain of processing. The whole process is at the
top with one or more tasks or tasks lists attached in a tree-like structure, you

can define four types of tasks, flow-definition representing a job chain that you
normally execute in the background, programs/transactions that you will
execute online, programs/jobs that you will execute in the background using
variants and notes that are not schedule to be processed but appear as
placeholders, you need to schedule and release a task using the appropriate
functions. For each tasks you can see the owner, technical description, the last
run date and time, planned start time, next expected runtime and offset days.
daily overview window (3) - from this window you can see the tasks
scheduled for that particular day, in the organizer window you can see the time,
description of the task, status, user, task owner and start time of the scheduled
task (see screenshot for the status icons).
calendar window (4) - displays all the tasks both scheduled and processed by
month, the dates are marked in different colours (red, yellow and green) which
display the visual clues of the processing status of the tasks that have been
scheduled for that particular day. Green that the task completed with no errors,
yellow indicates that there were warnings encountered when processing that
task, red means that there were errors. you can double-click on a particular day
to bring up the tasks for that day.

The schedule manager is made up of four individual components


1. Flow definition - is a graphical summary of individual steps which represents
the tasks in a task list.

2. Scheduler - use the scheduler to execute and monitor complex business


processes as well as to define tasks and task lists.
3. Monitor - used to monitor of view the information on the active or completed
tasks that have been scheduled in the scheduler.
4. Workflow - with multilevel work list in schedule manager you generate a work
list for an entire sequence of processing steps (rather than for a single
processing step).
Closing Cockpit
The closing cockpit is a special schedule manager, that execute and schedule complex
processes that recur periodically, such as month-end/year-end closings, you can model
the cockpits layout to support the processes within the organizational structures like
company code and company code/controlling area. You can build complex business
process with dependencies between tasks and processes plus you can assign roles and
responsibilities.
The main difference between the schedule manager and the closing cockpit is that the
schedule manager is more client specific and the closing cockpit can be used in a
distributed landscape, including a web environment.
The closing cockpit objects are the same as the components as the schedule manager it
also has

Organizational hierarchies (such as company codes and controlling area, that


are involved in the closing processes)
Task list templates (based on the organizational hierarchy selected)
Task lists (containing tasks that are required for processing and are derived
from the task template)
Characteristics values of hierarchy levels used in the task templates
Dependencies (conditions that are prerequisites for processing subsequent
individual tasks)
Monitor (graphical representation of processing together with the dependencies
and also critical paths)
Detailed information (settings of tasks and information on background jobs
such as spool, job log, etc)
Connection options (if closing cockpit is to be used in a distributed landscape)

In an ABAP environment you can use the below transaction codes

create task templates and task lists - transaction code CLOCOC


release the tasks - transaction code CLOCOT

overview of the closing cocking - transaction code CLOCOS


closing cockpit - transaction code CLOCO

You can also access these from the SAP menu -> accounting -> financial accounting > general ledger -> periodic processing closing -> closing cockpit

You need to complete the below settings to configure the closing cockpit for
automatic processing of closing operations, first we create a task list template using
transaction code CLOCOC,

You then need to assign the individual tasks encompassing the entire processing to the
task list template, the tasks can represent a transaction, program or a flow definition,
you need to register all the transactions in the table SCMATRANSACT and all the
programs in the table SCMAPROGRAMS before you can include them in the closing
cockpits tasks list.
1. select from the menu template/task list and select the option other template task
list
2. select a template and then use the change button to allow you to add a task
3. on the resulting screen enter the details (see screenshot below), you can select
task type program, transaction, notes, flow definition or even remote task
4. Enter the scheduling information in the task time block

You need to define the dependencies between tasks that are included in the task-list
template in order to model the business-process dependencies when you process the
task in a chronological sequence. The dependencies are in the right-hand bottom
screen, you can drag and drop the tasks from the left pane and drop then into the
dependencies screen.

The last step is to derive the task list and release it for processing, select from the
menu template/task list and select the option create periodic task list, fill in the details
as per the below screenshot, fill in the required details like key date, closing type,
posting period, fiscal year, status, etc.

When completed you will end up with a closing cockpit as per the one below

Maintaining Worklists
It is common to have several account-related objects that you want to process or
display together in a transaction such as vendors, customers, the geenral ledger and
exchange rates, this is not normally possible unless you enter the individual values or
ranges manually in the field section, however using worklists allows you to work on
multiple object at one time,

Select one of the worklists and the inital screen will request whether to create a
company code, customers, vendors or G/L account worklist (left-hand screenshot),
selecting one of the options takes you to the middle screenshot, here you can see
several worklists that have already created, selecting one of the worklists (right-hand
screenshot), you can then enter the customers in this case

To activate the worklists in line item display reports and open processing you can use
transaction FB00, select the open item and line item tabs and then select the worklist
checkboxes as per the screenshot below

Now when using the reports you will see a activate worklist box, or when clearing
open items (transaction code F-32) you can simply enter the worklist, this can also be
applied to F-28 (process incoming payments), F-31 (process outgoing payments)
and F-26 (incoming payment fast entry).

Worklist can help with exchange rates which mornally exist in table TCURR, using
the IMG we can define worklists for enter exchange rates

You enter the worklist name, text and the frequency of maintainance of the exchange
rates, you can also enter a tolerance for how much the new exchange rate can deviate
from the previous one

You then assign the worklist to exchange rate, for each exchange rate type and
currency pair you assign the created worklist and specify whether you will use direct
or indirect maintainance

We can see the worklist being used below, I have already discuss foreign currency
valution in my FI user guide section.

Accounting Editing Options


You can setup transaction screens to have only the preset fields and settings that are
relevant to you, thus you can customize a users settings using transaction code FB00,

documents only in local currency - this means you can only enter documents
where the currency is equal to the local currency, the foreign currency amount
field is hidden
documents must be completed for parking - you can park a document only if
all the required fields have been validated and the balance of the document
comes to zero

no company code proposal - makes the system issue a pop-up box (for enjoy
transactions only) asking you to enter a company code rather than defaulting a
company code
selected items inititally inactive - items that are proposed for clearing are not
automatically selected, instead you need to double-click on the proposed item
to select it.
sorting by amount without +/- sign - sort the open items by treating the
values as absolute amount that is without taking the +/- signs in to account.

You can can a users parameter list using transaction code SU01 and selecting
the parameters tab

Closing Operations (User's Guide)


In this last section on the SAP user guide we look at the closing operations, here we
will look at reducing the manual effort involved in individual closings. All closing
operations revolve around the financial statement, which consists of the balance sheet

and profit and loss statement, the financial statement compares resources (assets) with
claims (liabilities and owners equity), liabilities and owners equity (the debit side of
the balance sheet) provides information about the enterprises sources of funds,
whereas assets (the credit side of the balance sheet) provides information about the
disposition of funds.
The balance sheet can be broken down as below

We can breakdown each further each displaying the possible G/L accounts, however
every company is different.

In addition to the external year-end closing (i.e. the annual balance sheet and profit
and loss statement), internal documentation, planning and reconciliation calculations
are often prepared. These are only used internally within the enterprise and are
particularly flexible because they are not subject to legal restrictions. Closings can be
prepared for various periods, for example for a month, a quarter or a year (year-end
closings), they serve the following purposes

Calculate tax liability


Determine investment potential
Calculate sale value

Here are some examples of what may need to be performed regarding closing, I will
be covering most of these in this section

Day-end Closing

Month-end Closing

Year-end Closing

update exchange rates, either manually or through an interface via Reuters or any other informa
Review gaps in document number assignments, which can be done via a report
Display the compact document journal, this then shows transactions and their offsets which allo
of these transactions

open and closing posting periods


enter recurring entries
post recurring entries
run batch input session
automatic clearing of GR/IR account special process
automatic/manual clearing
post adjustment entries
foreign currency evaluation
post tax payable
record of sales and use tax report
comparative analysis
close previous accounting period
comparison documents and transaction figures
financial statement

create factory calendar for new year


carry forward AP/AR balances and carry forward GL balances
re-grouping receivables and payables
balance confirmation receivable and balance confirmation payable
final close and release financial reporting
close previous accounting period
display document journal
print 1099 MISC forms

I have a period-end master checklist which you can obtain the transaction codes and
whether the task is daily, monthly or yearly, however you may have your own
procedures in place.
A fast close is an accelerated closing of the enterprise's books on a key date. Events
that become known after the year-end closing cannot be incorporated. All enterprises
have their own closing procedure document to help complete the closing as quickly
and efficiently as possible. I will at the end of this section show you one of the many
closing documents that are out on the web, feel to use and adapt this as you wish.
I will be covering the following closing procedures in this section, it does not cover
everything but it is a good start

Management of parked documents

Maintenance of the goods receipt and invoice receipt account


Posting of provisions
Accrual and deferral postings
Settlement of assets under construction (AuC)
Asset inventory
Depreciation posting run
Individual and flat-rate value adjustments
Foreign currency valuation
Interest calculation
Manual and technical reconciliation
Intercompany reconciliation
Reclassification
Balance confirmation
Reconciliation
Advanced return of tax on sales and purchases
Period control
Control and monitoring of the closing process
Balance carryforward

If you use parallel accounting principles you can speed up the closing process, if you
do programs such as the depreciation posting run for complex fixed assets, the foreign
currency valuation of your receivables, flat-rate value adjustment and reclassification
are called numerous times and help you calculate or post valuations automatically, for
example for local law, IFRS and US-GAAP.
You can see the SAP general ledger closing transactions below

check/count - refers to the process of comparing ledgers to ensure that they


reconcile with each other, the program called reconciliation of
receivables/payables in group cross-system helps you to reconcile the customer
documents and vendor documents of the affiliated companies in the group. It
reads the open items of selected companies on the specified key data and helps
you identify documents causing discrepancies
valuate - you must perform a foreign currency valuation before you can
generate your financial statements, this valuation allows you to revalue foreign
currency balance sheet accounts. It also allows you to revalue the balances of
the general ledger accounts that are not managed on an open item basis but are
valuated in a foreign currency and have open items that were posted in a
foreign currency
reclassify - allows you to reclassify GR/IR balances based on predefined rules
rollup - allows you to summarize the data from one or multiple ledgers to one
rollup ledger and helps you eliminate the dimensions you do not need for
reporting
allocation - allows you to distribute and perform assessments of amounts and
quantities from sender objects to receiver objects
document - allows you to generate audit trails for documents and is typically
used by auditors to trace origins of account balances

report - allows you to generate financial statements, account balances and


item-level details, along with the various tax reports (the post tax payable
report and the transferring deferred tax report)
carry forward - this transaction is done at the end of the year and allows you
to move the open balance sheet account balances to new fiscal years, including
for subledger's like accounts payable, accounts receivable and asset accounting
opening /closing - this is applicable in specific countries (Italy, Slovakia,
Turkey, Columbia, Romania and Portugal), where you need to generate
opening and closing entries

Account Determination Analysis


Not strictly a closing operation but there are times when you want to find out if
accounts have been assigned, there is now a Account Detective Report which can
help, the new report lists all the accounts in a company code or chart of accounts,
along with there master data settings, the report gives you the option of finding out
where they have been assigned, we will transaction code S_ALR_87101048, the filter
screen (left-hand screenshot) you can narrow down your search, the right-hand
screenshot is the results, if you notice you can see that account 1000 is assigned to
tables T095 and T095B (these are the tables for asset account determination) you may
find that is it also assigned to table CSKB (cost elements table). If you double-click on
the tables you can then view the table entries, which means you can obtain the account
assignment details in the below right-hand screenshot, in some cases you can use the
transaction codes OMSK (valuation class) and transaction code OBYC (general
modification key) to see in more detail the account assignment fields.

No Activity Accounts

There may be an instance where you want to list all accounts that have no activity, it
might even block them to stop accidental postings to them, or you may want to
archive them. You can use transactionS_ALR_87010043 (you can
use S_ALR_87012186 for customers) and select the accounts with no
purchases checkbox, the results back should display all the accounts with no activity.

Management of Parked Documents


You would save (park) documents for content checks to confirm account assignment
by more qualified employees, also SAP uses authorization concept to support the
posting function up to a defined amount and then switches to document parking as of
this limit, what I am saying is that the account clerk is not authorized to post
documents over a certain amount and can only save (park) these document instead, the
content is then checked and the document is posted.
Regardless on your enterprises situation it is advisable to check the list of parked
documents at the end of the posting period, this is to determine whether these
documents belong to the current period for the purpose of calculating profits for the
valid accounting period. If the period is technically closed the posting date that has
already been entered in the parked document usually has to be changed manually, to
view the parked documents we can use transaction code FBV0, on the initial screen
you select on the document list button, then a filter screen appears, here you can
narrow down your searches

When run, a display appears with all the parked documents, in my case only one, you
can see if the document has been blocked or being released by looking at
the status or released by columns,

You can double-click on the document and it will take you directly to the screen for
editing the parked document, from here you can change or post the document.

Remember a document cannot be included in the balance sheet evaluations until


it has been posted.

If you have many parked documents this can have a impact on providing an accurate
representation of an enterprises assets, financial situation and performance, try and
close as many parked documents as you can.
Automatic Maintenance of the GR/IR account
At the end of the posting period the open transactions in the goods receipt/invoice
receipt account must be processed correctly for the financial statement. We can
distinguish between three scenarios
1. Both goods and receipts exist, both items in the GR/IR clearing account
balance out to zero and can be cleared
2. The vendor has delivered the goods but has not submitted the invoice, this
incomplete transaction leads to an increase in the current assets on the credit
side of the balance sheet without showing a payable on the debit side.
3. Another possibility scenario involves the reverse of this situation, in the case
the vendor has submitted the invoice but the goods have not yet been received,
this results in a payable on the debit side, without a corresponding disposition
of funds on the credit side.

The GR/IR account, the line item must be enabled to make sure that each transaction
can be evaluated, you can use open item management which means that documents
need to be cleared which makes this easier to detect incomplete transactions (see
screenshot below). The sort key is essential for clearing, the entry 014 (purchase
order) copies the purchase order number and item identified in the MM module to the
assignment sort field, this serves as a criterion for automatic balancing of goods
receipt items and invoice receipt items. Below is G/L account 191100 is a correctly
configured GR/IR account

Manual clearing is generally avoided owing to the number of items involved, we can
use the automatic clearing function using transaction code F.13, you can select the test
run checkbox to check before you actually clear the items, when you run the
automatic clearing a log appears detailing the documents that where cleared.

The relevant line items in the GR/IR account must be analyzed for all others business
transactions, which are still incomplete. A goods receipt for no invoice exists
(scenario 2) must be shown as a debit item (delivered but no invoice) on the balance
sheet. An invoice receipt for which no goods receipt exists (scenario 3) must be
shown as a credit item (invoiced but not delivered) on the balance sheet. The posting
procedure is shown below

Because the GR/IR clearing account is not to be posted to directly in the key date
valuation, a GR/IR adjustment account is required, the GR/IR and the adjustment
account are shown in the same balance sheet item in the notes to the consolidated
financial statements. This practical posting procedure results in a zero-balance line
item. In the above example both the debit and credit amounts equal 100.
Incomplete transactions can be reclassified automatically for the balance sheet using
transaction code F.19, this time I will use company code 1000, I have unselected
the create postings so that I can check what is happening before we post (kinda test
run), we would save the postings in the RFWERE00 batch input session, when the
report is run you get the GR/IR analysis log, based on open items the program
attempts to group the documents so that complete transactions can be easily identified.

If you select the postings in the log you get an overview of reclassifications as shown
below

You can view the reclassification saved in the session that has been just generated.

If the GR/IR account master data is configured correctly, the line items, OI
management and sort keys the system is capable not only of clearing complete
business transactions automatically but also of correctly mapping incomplete
transactions on the debit or credit side of the financial statement using GR/IR clearing
postings.
You can also use transaction code MR11 which is used for maintaince, this
transaction clears quantity discrepancies between the goods and receipt and its related
invoice. These quantity variances remain as balances in monetary value in the GR/IR
account. When configuring the transaction you can choose a tolerance level (which is
the maximum amount of a variance that can be written off) that the quantity variance
should be equal to less than for the variance to be cleared. The reason for this is that if
the goods receipt has not been invoiced because the vendor has not yet sent the
invoice, then you may not want to clear this amount, as it will be cleared at some
point in the future when the invoice receipt is posted. In the initial screen you can
specify the clearing section which is about the third of the way down, you should run
this transaction at period end for purchase orders that are at least three months old.
That way if you do clear a goods receipt amount whose invoice was never posted, it is
probably likely that the vendor as paid in some manual form. When documents are
posted they will create open items in the GR/IR that are the equal but opposite value
to the discrepancies that are written off. The assignment field of these documents will
contain the purchase order and line item number, so next time you run the automatic
clearing transaction, these items should be matched and cleared.

Transfer of Salaries and Wages

The HR department posts salaries and wages at the end of the month, this can be done
via an interface using non-SAP software, you can also transfer payroll results to FI
and CO using the SAP ERP Human Capital Management (HCM), because the the
sensitive information the SAP system uses extensive authorizations to protect this
data. Transaction code FB03 can be used to find the documents related to HR payroll,
using HRPAY in the reference transaction we can find the payroll documents (righthand screenshot)

You can see all the G/L accounts that have been posted too plus the cost center, profit
center, business area. Normally you will not allowed from this point unless you are
authorized as it is possible to find what an employee earns, We double-click on the
one of the documents to view the document details, we first highlight the first entry

Then we select environment -> document environment -> original document

The below screen will then appear, if we double-click on the salary item we can see
who the payments are for

Here we can see the salary payments to employees with numbers 1721 and 1722,
using the HR component we could find out who these employees are

If you double-click on one of the above lines you can see additional details of the
portion of the gross amount that is payable, you also can see income tax that is to be
paid.

Provisions
We will start with distinguishing between the various types of provisions and
probabilities of occurrence, because of the type of provision involved, provisions for
foreseeable losses owning to unsecured payables, threatened losses from waving
business or warranties that are not legally enforceable must be created on the basis of
local law and international accounting principles. Provisions for operating expenses
on the other hand can only be created subject to certain conditions based on
international financial reporting standards (IFRS) or United States Generally
Accepted Accounting Principles (GAAP).Valuation variances arise in parallel
accounting owing to different provisions types and probabilities.
If a provision for foreseeable losses such as a warranty case is regarded as probable it
is included in the financial statement in accordance with US-GAAP, according to
IFRS accounting standard an event is regarded as probable if is probability is
categorized as greater then 50%. If its probability is between 30% and 70% a

provision ban applies under US-GAAP because the event is then categorized
asreasonably probable.
Owing to the nature of provision postings, automatic valuation procedures cannot be
used, the system has virtually on points of reference for performing a mathematical
calculation in this context. In practice calculations are usually made outside the SAP
system (for example excel) and then assigned manually as a G/L posting at the end of
the period. We will use transaction code F-02, we can fill in the header details
however we will select the acct model button, if we drill down we can see all the
account assignment models we will use GL-SL03, we can also use the accounting
assignment models for parallel accounting, with parallel accounting the accounts
approach must evaluate data based on each of the accounting principles.

The account assignment model proposes all of the relevant accounts for both local law
(8xxxxxx) and IFRS (9xxxxxx), account assignment models help prevent such errors
of obmission in data entry.

In the below screenshot we can see a provision of 30,000 EUR is created for local law
and 20,000 EUR created in accordance with IFRS principles. Because this represents
a allocation to provisions an additional account assignment is made for the balance
sheet account with transaction type 520, any unused lines are removed then you hit
enter (you may get a warning message).

With account numbers and different financial statement versions allow you to express
items differently in local and IFRS financial statements, you can transaction
code SA38 or select system -> services -> reporting, we will use report RFBILA00
which can filter on the chart of accounts (or RFBILA10 this uses G/L and company
code)

We will use company code DD11 and select the financial statement version CAUS
(you may have your own financial statement versions), as I have only one accounting
year we cannot compare accounting years

The provisions can be find in the liabilities in the financial statement, adjustments for
an IFRS financial statement must not affect this and must therefore be expressed
below the balance sheet items in the other item section.

A provision history sheet is not currently provided in the SAP standard system, we
can use transaction code GRR3 display report (or GGR2 change report) to provide an
overview of the report painter reports, in folder ZF1 there is provided a basis for
creating your own provision history sheet as seen in the screenshot below

We then are taken to a filter screen

The results of the report are then displayed, you should then see the postings made
earlier.

Periodic Accruals and Deferrals


The difference between accruals and deferrals are as below

with an accrual the current service transaction is followed by a subsequent


payment transaction, for example rent that has to be paid at a later date for
example at the end of the quarter ("other payables")
the term deferrals on the other hand is used if the current payment transaction is
followed by a subsequent service transaction, for example insurance coverage
for a year is provided after an insurance premium is paid ("other receivables")

We can map these transaction in two ways

with a recurring entry document


with the accrual engine

Using the recurring entry approach the posting key, account and amounts are
unchained, the posting documents are then generated automatically on a regular basis,
however the posting is not immediate but instead a batch input session is generated
which has to be processed subsequently.
The Accrual Engine is available in SAP ERP and has better flexibility than recurring
entry documents for accrual and deferral postings, with the accrual engine which are
not defined on the basis of set values are calculated automatically. If you adjust the
values in the original documents adjustments are made automatically for all periods,

you can even simulate future accruals and deferrals. The new accrual engine which
has a extensive information system, offers an alternative to conventional recurring
entries.
We will start with the recurring entry method, first we will create a recurring entry
document as a template, you must remember that a recurring entry document is not an
accounting document and it therefore does not change the account balance. You can
use transaction code FBD1 or the easy SAP access menu

This is similar to the previous document entries we have encountered before except
that we have details on the recurring run dates, fill in the recurring entry
run information

First run on - the earliest date on which an actual document is to be generated


Last run on - the latest date on which an actual document is to be generated
Interval in months/run date - if posting is to be executed periodically the
dates for the generation of actual documents are defined in these fields
Run schedule - if postings is to be executed at regular intervals rather than on
specific dates, a run schedule must be defined in customizing, this schedule
specifies the individual dates for postings.

Next we fill line item one details and enter the next line details, notice the "=rent" in
the text field, this is a dynamic field and it will be replaced with 08/2013, again on
other runs the date will be changed to reflect the month and year.

Lastly we enter item line two details and then save.

Next we can list all the recurring entry documents either using transaction
code F.15 or the SAP easy access menu

We can see the recurring document entry we made plus an already existing recurring
document template,

You can execute a recurring document by using transaction code F.14, we can filter
the recurring documents to be run, by specifying a calculation period you let the
system know which recurring documents are to be included, if the date of the next
posting run saved in the recurring entry document matches the calculation date
entered or falls within the date range specified the program places the data for the
postings in the specified batch input session. A single accounting document is created
for each recurring entry document in each program run. Therefore a very long
calculation period does not result in the generation of a large number of accounting
documents. We select the hold processed session to prevent the batch input session
from being reorganized immediately.

This will generate a batch session, we now need to execute the session, by
selecting system -> services -> batch input -> sessions

We can then see the batch session, we select the RENT line and press F8 to execute,
we get the dialog box on the right-hand screenshot, we select to run in the foreground

You will then be given the chance to check the document before posting, notice the
dynamic field has now been replaced with the date

Because we selected to hold the processed session we can then see it in


the processed tab, if we double-click on the RENT line and examine the log we can
see the postings

The log details that two postings were completed (I run it twice),

We can look at the document using transaction code FB03, where we can confirm the
posting

The accrual engine is a general tool for calculating and generating periodic accrual
and deferral postings, each of its application components is based on specific accrual
and deferral scenarios, examples include

Manual accruals in financial accounting


Provisions relating to employee stock options
Leasing accounting
Intellectual property management

There is no customer development in the accrual engine as SAP delivers everything


you need, the best way to learn the accrual engine is the way of an example, first we
will create an accrual object, we will use the SAP easy access menu

We create insurance accrual object as below, we state a category, add some


descriptive text and identify the person responsible, we then select the item data and
create the object, we will be using accounting principle 90 as company code DD11
uses this principle, we have also specified an accrual type called INSURA, you can
also assign additional parameters like cost code in the acct assgts tab.

Again you can check and simulate the above, when you save you get the dialog box
below (left-hand screenshot), you can specify a key date of your choice for the
simulation, once you save you get the right-hand screenshot detailing the document
posted.

The screenshot show what the accrual engine would do as from the 01.08.2013 to
calculate the accrual for the amount of 1,200 (see calculated accruals tab), as you can
see for the next 5 months 240.00 will be posted per month.

However in the postings tab only a single annual amount of the insurance premium
that has been posted is shown, the list of the actual postings grows each month,

You can double-click on the posting to display the document, account 99000 (accrued
income/deferred expenses) contains the total amount which is reduce by $240 each
month, for this to be posted automatically you need to schedule a program for periodic
postings as a background job. We will use start periodic accrual run from the SAP
easy access menu

We start by filling in a filter screen, here we enter the company code and the key date
for accruals as a minimum, the program will then search for any accruals that need to
be posted, notice that I have selected the test run checkbox to confirm possible
accruals.

The results indicate a number of accruals (I have already created some additional
ones), but you notice the one we have just created, the report states that this was a test
run and no postings were generated, you can double-click on any line which will take
you to the accrual edit screen above.

When you do post you will get the same report below, however we can see that this
was an actual run and 5 postings were completed.

You now have two choices either recurring entry postings or using the accrual engine,
if you have very few recurring documents then use the recurring document method,
but if you have large numbers of deferral postings the accrual engine would be more
benefit to you but it does require more configuring.
Also if you come across accrual number range problems use the below transaction
codes

ACEPS_AWREF
ACEPS_ACEDOCNR

Other useful transaction codes are


Enter accrual/deferral
document

FBS1

Reverse accrual/deferral
document

F.81

Asset Accounting
Lots of closing processes relate to the FI-AA (asset accounting) subledger, we will
cover the following

Assets under Construction (AuC)


Asset inventory
Depreciation posting run
Asset history sheet

As we have discussed already complex fixed assets are mapped in asset accounting,
depreciation reduces acquisition costs owing to wear and tear on the asset and its
expected obsolescence (and cost of investing in a replacement). Assets under

Construction (AuC) are incomplete assets that are still in the process of being
completed when the financial statement is prepared. Only when completed are they
are the disposal of the enterprise and can be depreciated.
During the closing process AuC's are normally checked and their status changed if
necessary, lets look at an example

We start by creating a AuC, we select class 4000 assets under construction, this is
similar to creating a normal asset

We enter the asset details (left-hand screenshot) and check the depreciation areas
(right-hand screenshot)

Then we use transaction code F-90 to create a acquisition for purchase with vendor,
again this all very similar to a normal asset, the net amount is 50,000 (the middle
screenshot was changed to 50,000 as this was a limit), we use posting key 70 and
transaction type 100 (acquisition) in the master record, note that the value date or
capitalization date is not required which is not the normal in asset accounting.

We can check the document before posting, the account determination for AuC 4000
for acquisition postings refers to G/L account 32000, the total amount of 50,000
would also appear in that account on the balance sheet date, provided that the status of
the AuC did not change.

We now presume that a check run was performed at the end of the period that
determined that the building can be used as of August, as a result the status and value
must be changed, using the SAP easy access menu or transaction code AIAB, we can
define distribution rules for the subsequent settlement of the asset in our example

A line item exists for AuC 400001 (building) in the asset class 4000, you can at this
point (although not essential) to define a separate settlement rule for each transaction.
It may be useful to differentiate between settlement rules at the document level for
example if the assets are intangible assets such as software for which only certain
internal activities can be capitalized. You use the enter button to create settlement
rules, in the right-hand screenshot you can see the AuC is to be 100% capitalized,
asset 400000 (building 1) receives 70% and asset 400001 (building 2) receives 30%,

this has the same effect by using a ratio of 7:3, when you save the icon in the left-hand
screenshot it will turn green.

Now we need to settle to close the operations, we again use either the SAP easy
access menu or transaction AIBU, fill in the initial screen, you can perform a test run
and a simulation (right-hand screenshot), at 19th august the AuC is credited and two
new assets are debited at the same time. An amount of zero balance on the key date in
the AuC balance sheet item and depreciation now starts for the two new assets,

You can use the asset explorer to see inter-company asset transfers, here you can see
the asset being retired and a new asset being created.

Asset Inventory
The asset inventory is used to see if assets are still at the disposal of the enterprise,
this check determines if changes are need to made to cost centers, business areas or
locations, in the master data fields, if fixed asset are no longer exist owing to theft an
extraordinary asset retirement without revenue must be posted.

Here you can find various reports, there are various ways to manage assets

Each asset is assigned its own asset number - this ensures transparency and
trace ability, it is time consuming because a separate master record has to be
created and maintained for each asset
Collective management - this approach all assets are managed in a single
master record, the challenge is to ensure that each asset is uniquely identifiable

An example of collective management would be if we have 20 computers that are


allocated to a cost manager, this all could be managed under one asset, however it
becomes a problem when you want use some of the PC's in other areas.
To speed up the asset input process you can have barcodes that are attached to the
assets and then use it to identify each asset, this helps in auditing equipment owned by
the enterprise, a hand scanner can be used to make the whole process very quick, the
user reads the barcode identifies the asset and confirm the location and other details in
the system. The other possible solution is to use employee self service, this is where a
employee receives an email to a portal that allows them to enter the details of any
equipment that they are using.
Asset Reconciliation
There may be times when the asset subledger is different from the general ledger
balance, you will need to know if there are any imbalances between them, using
transaction code ABST2 (see below screenshot) , the program reads all the
transactions in the asset value fields table ANLC for the current fiscal year,
summarizes the values per general ledger account and writes them to the totals table
EWUFIAASUM, you need to make sure that the current fiscal year is open
(transaction code AJAB) and that the fiscal year change program for the previous year
has been run (transaction code AJRW)

You can also analyze the difference between the value updates of a specific general
ledger account in an asset account and SAP general ledger, use transaction
code ABST, here you can enter the company code, fiscal year, depreciation area and
the reconciliation account, in my case the G/L account did not have line item enabled.

Lastly you can also perform manual reconciliation between fixed asset and general
ledger accounts by using the asset history sheet and the general ledger balance display
reports, first go to the asset history history sheet (transaction code AR01) and enter
the data, then using transaction FGLB03 (general ledger balance display) enter the
corresponding asset reconciliation accounts (configured in transaction codeAO90) and
execute the transaction to display and compare the balances.
Depreciation Posting Run
The depreciation posting run is performed periodically within asset accounting, it
involves the transfer of valuations from FI-AA to general ledger accounting, where
they can be used for balance sheet evaluations. Depreciations for tangible assets need
to be distributed systematically across the useful life of the asset and the depreciation
method used must correspond to the enterprises consumption of the assets economic
usefulness. As mention before there are two types of depreciation
Ordinary Depreciation

refers to the reduction in the value of an asset over time owing to wear and tear, the range of methods ca
depreciation, these include straight-line, the declining-balance method and the unit-of-production method

Unplanned Depreciation

exceptional events, such as damage (flood, fire) that result in a long-term reduction in the value of an ass
using planned depreciation.

Let go through a complete example, first lets create an asset (delivery van) using
transaction code ABZON, we enter the van details and then save thus capitalizing the
asset which means that it can be depreciated

The system will confirm the completed asset entry

We can see the various valuation approaches in the asset master record, depreciation
area 01 the asset is subject to straight-line depreciation over a period of 5 years in
accordance with US-GAAP specifications, numerous parameters are defined to
determine whether interest is to be calculated for the cost accounting area and whether
depreciation below zero is permitted. If revaluation (indexing) is permitted in a
depreciation area, an index series can be defined in the asset or asset class for
calculating the replacement value per fiscal year. The system calculates the
replacement value and posts the depreciation together with the interest in the periodic
depreciation posting run.

You can configure the index series using the SAP easy access menu (left-hand
screenshot), you can see the existing series that I have created in the right-hand
screenshot.

In the example above the useful life in depreciation area 01 is 5 years and therefore an
annual depreciation of 20% of $10,000 is $2,000, however lets say that we had a cost
center depreciation area with 7 years which means the depreciation would be $1,428
per year. An example of this is in the below asset notice the difference between the
useful life of the asset between the different depreciation areas.

Now we move on to the depreciation run, using transaction code AFAB, we fill in the
details, notice the section reason for posting run, here you can start a planned posting
run, or a unplanned posting run, you can repeat or restart a previous posting run. Also
notice that there is a test run checkbox which allows to to check the depreciation run
before posting, you can select the list assets checkbox to see the assets.

When we perform the test run we have a 1000 asset limit (this limit is also included in
the proper posting run)

The results are returned and as you can see I have a number of deprecations, we can
also see the delivery van we created earlier, if you also notice you can see some
ordinary and unplanned depreciations

To actually run the deprecation we return to the main screen, remove the test run and
then run it in the backgroup by selecting program -> execute in background (left-hand
screenshot), the print parameter dialog will appear, here I select the defaults

Next the schedule dialog box appears here you can setup a schedule, or in my case we
will immediate run it

SAP confirms that the job has been scheduled

Now lets take a look at the job, we select system -> services -> jobs -> job overview

And then using the defaults select the execute button, (you may have to change a few
options to reflect your environment, for example the username)

A list of all the jobs will appear, I sorted by start time making my job at the top, select
the spool icon and then drill down into the job

Eventually you will get to the deprecation log

The other way to look at the log is to use transaction code AFBP, the initial screen is
a filter screen (left-hand screenshot) and the when enter the depreciation log will
appear (right-hand screenshot)

If we look at the asset using the asset explorer (transaction code AW01N), you can
see the 08/2013 posting (bottom red box), the ordinary depreciation is now at 166.80
and the net value has depreciated to 9,833.20, when you run this each month the
ordinary depreciation will increase and the net book value will decrease until zero
where the asset can then be retired, however you may choose to sell the asset before
reaching zero.

Unplanned depreciation of an asset is used when something negative happens to the


asset, for example a motorway may be built next your building, a flood or fire at the
offices may happen, in which a asset becomes depreciated more quickly, you can use
transaction code ABAA or the SAP easy access menu

The initial screen requires some details such as the asset number and date information,
we are using transaction type 650 (unplanned depreciation on new assets data) as the
asset was created in the current year, you could use 640 (unplanned depreciation on
old assets data) for older assets that were acquired in previous years.

The next screen details the value adjustment amount, you can optionally enter some
text as to the reason.

When you post the document an entry has to be made in all depreciation areas, so you
will see the below screenshot for each area that you have configured for the asset, just
select the green tick for each entry, finally the adjustment will be posted (right-hand
screenshot)

We can then take a look at the asset using the asset explorer (transaction
code AW01N), you can see that book value has decrease by the new unplanned dep.
value (top red box), you can also see a record of the unplanned depreciation in the
transactions section (bottom red box)

Asset accounting also creates an asset history sheet, which is essential for the financial
statement in accordance with legal requirements, you can use transaction
code S_ALR_87011990 or the SAP easy access menu

The initial screen is a filter screen, here I have entered the minimum required

The report is very detailed (I have changed the column layout), we can see the assets,
when it was acquired, capitalized and retired, the depreciation for the year and the
current net book value, there are many columns that you can use. You can doubleclick any asset and you will will be taken to the asset explorer detailing that asset.

Value Adjustments
At the end of a posting period an enterprise must determine the value in real terms the
receivables that have been posted, there may be instances where the customer is
unable to pay due to insolvency, this means a value adjustment needs to be made, in
the context of closing operations a distinction is therefore made between individual
value adjustments and flat-rate value adjustments.
We will start with value adjustments, this is where the customer is insolvent and
payment in full can no longer be expected for a delivery or a service provided. This
receivable must be classed as a doubtful receivable and according to the prudence
concept the year-end closing must take in account of the risks and losses of which the
enterprise is aware when preparing the annual financial statement.
In the SAP system value adjustments requires a manual posting, it may be the case
where a portion of the outstanding receivable may be paid, because the quota is still to
be clarified when the value adjustment is performed the tax amount must not be
adjusted, the receivables are written off with a tax code of 0%. As soon as the
allocation quota is clarified the individual value adjustment is reversed. The open item
is cleared by a cash receipt or depreciation of the remaining amount. The tax on sales
and purchases is adjusted at this point.
Lets look at an example, before we begin lets look at the invoice that wont be paid

We will use transaction code F-21 (transfer without clearing), the original invoice
remains in the account and its value is negated by an individual value adjustment, we
will use posting key 19 which creates a credit item in the customers account and
enables account assignment via a special G/L transaction. It must not be posted to the
usual customer clearing account, instead an alternative clearing account is selected
with special G/L transaction "E" (reserved for bad debit)

We can then simulate and check that everything is OK

Once posted if we look at the account balance we see that an entry of -2,046,88 has
been posted which negates the 2,046.88 posted on the 09.07.2013, this is then
reflected in the balance.

Flat-rate value adjustments do not involve missed payments or insolvency, there are
two methods

manual flat-rate value adjustment - this is based on an estimate entered as a


manual G/L account posting with the "Expense flat-rate value adjustment to
value adjustment" posting record. this method is flexible but error-prone
flat-rate individual value adjustment - this term refers to a group of
customers whose receivables are to be devalued as a batch using a predefined
set of rules, the method is execute automatically. The program for flat-rate
individual value adjustments selects a group of receivables, calculates the
required adjustments on the basis of empirical values or the reliability of the
accounting standard and automatically assigns these receivables to an account.

Before receivables can be automatically valuated the master data record of the
customer has to be updated, as seen in the screenshot below,

The value adjustment key can be user defined using the IMG (left-hand screenshot), if
you look at the DN value adjustment key (right-hand screenshot) you can see that
after 10 days overdue receivables are devalued by 3%, after 20 days this increases to
4% and receivables that are overdue by 30 days or more are devalued by 5%.

Now that we have looked at the configuration of the value adjustment key we can
move onto the valuation, you can use transaction code F107 or the SAP easy access
menu

This is similar to the payment run and dunning run, we start by entering a the run date
and a unique identifier, then we have to setup some parameters by selection
the maintain button

The parameter screen is self explaining, we will be using valuation method 3 (flat-rate
individual value adjustment), the amount valuated is to be posted to the accounts for
the US accounting standard on the key date of 21.08.2013 and automatically reversed
by the program on 01/01/2014.

Using the selection option button we can specify the company code and the accounts
to which the value adjustment are to be posted.

Once you have enter the parameters, select the save icon (disk icon) and then you are
ready to run the valuation, you then select the dispatch button, you can schedule the
job to run later, in my case we will run immediately

Keep hitting the green tick button, the valuation will change from running (left-hand
screenshot) to finished (middle screenshot), like the payment and dunning run it
produces a proposal first, here you can check the customers and open items that were
selected in the background and a value adjustment requirements that were determined
on the basis of the defined parameters. Here you can change the parameters and rerun,
delete the proposal, view the proposal (see below for log), look at a sample posting (
right-hand screenshot) and ultimately transfer the valuations by executing the run
(forward button).

The value adjustment log

Other useful adjustments transaction codes


Inflation adjustment of
general ledger accounts

FJA1

Change last adjustment


dates

FJA2

Foreign Currency Valuation


The currency in which your independent accounting unit (company code) draws up its
financial statements is known as the local currency, postings entered in a different
currency need to be valuated on the relevant key date, the regulations for doing this
may also differ depending on the accounting principles are applied. Under the IFRS
and US-GAAP standards the key date principle involves valuation using the exchange
rate that is valid on the key date. This may conflict with local regulations that permit
devaluation and prohibit upward revaluation.
The report which you need is SAPF100, which you can access from system ->
services -> reporting, the program will perform the following

Calculation of valuation differences based on a proposal list


Key date valuation with subsequent reversal
Update of document information

I will explain what steps are involved with foreign currency valuation with an
example, first lets view the exchange rate currency either using transaction
code S_BCE_68000174/S_B20_88000153 or the SAP easy access menu

The translation rates can be seen in the left-hand screenshot, and the currency
exchange rates using a worklist can be seen in the right-hand screenshot. You can
either copy an existing rate in the translation rates screen (left-hand screenshot) and
modify or change an existing one, here I have changed the top line rate to 1.66730
which we will see later.

If you double click on a worklist (I have covered worklists in my FI section) you can
enter the details, in the below example we can see that it takes $1.40 to buy 1 euro,
or 0.71 is the price to buy $1.

Once you have created your working lists then you need to set the working list to
complete, by selecting the green tick with a pencil icon. The status icon should change
from red to green.

Once the foreign exchange rates have been configured we can run the foreign
currency valuation, you can use transaction code FAGL_FC_VAL or use the SAP
easy access menu

I have keep the details to a minimum but you can filter as much as you need, there are
a number of tabs that can refine the filtering, the valuation method specifies how the
valuation is to be executed, one of three methods is normally selected, I have already
discussed the principles in my parallel accounting section.

Valuation in principle (key date principle)


Lowest value principle
Strict lowest value principle

We will examine the three principles we mentioned above, a receivable posted on


April 30 at an exchange rate of 1.60/$1 is to be valuated on the relevant key dates for
the valuation areas US (US-GAAP), IA (IFRS) and LO (local GAAP) using the
various methods available, the interest rates on the key dates are

04/30 - 1.50/$1
10/30 - 1.60/$1
11/30 - 1.70/$1

Valuation Area

Valuation Method

09/30

10/30

11/30

US

Valuate in principle

1.50

1.60

1.70

IA

lowest value principle

1.50

1.60

1.60

LO

strict lowest value principle

1.50

1.50

1.50

The postings are entered in a P&L account or adjustment account for receivables or
payables because you cannot directly post to a reconciliation account. The values are
therefore posted to an adjustment account that is expressed in the same balance sheet
item as the relevant reconciliation account.
When the report is run we get the results screen below, we can see that there is a 2.98difference (remember I changed the exchange rate to 1.66730),

We can see that there are two postings the first document is automatically reversed on
01.09.2013. remember these are open items and the exchange rate may change again,
hence the reserve posting, until the items are cleared in which case the exchange rate
will be valuated then. In some countries you are not permitted to reverse a valuation at
the end of a fiscal year, in this case the valuation difference must be updated in the
open item, to do this select the valuation for balance sheet preparation checkbox in the
program SAPF100.

You can also valuate differences using the transaction code FBL5N and selecting
the valuation difference field

I just want to finish off by mentioning that you can translate your account balances
from local currency into group currency, this translation is performed in accordance
with FASB 52 (U.S. GAAP) or IAS. You can use transaction
code FAGL_FC_TRANS

Item Interest Calculation

Interest calculations have a relatively minor significance in the context of closing


operations, however SAP provides functions for calculating and automatically posting
interest based on account balances or line items. I have already covered balance
interest calculation in my G/L accounting configuration section, now we will take a
look at item interest calculation, We will use an employee loan example, first we must
update the customer (employees) master data, we set the interest indic and interest
cycle fields, also note the last key date field we will discuss this shortly

Once the master data has been updated, we create a invoice for the employee which is
a loan of $5,000

Next we configure the item interest calculation using the IMG

I have split the screen across to screenshot as it is to large to fit on one, there is not too
much to configure here, we select the open items and define the number range (use
transaction code FBN1) and select the post interest checkbox, there are other options
which I will leave you to explore.

Now the configuration part is completed we perform the item interest


calculation using transaction code FINT or the SAP easy access menu (left-hand
screenshot), the initial screen is a filter screen, here I have entered the minimum, if
you notice we can perform a test run, that way you can check the results before
posting. I am going to calculate the interest for just over the month for the employees
loan that we create a moment ago

The results screen is as below, you can see that it picked up the loan amount for
$5,000 and applied the interest rate of 3% calculating on 38 days interest.

You can get more details about the process by looking at the log, the last icon

When you do post you will get a detailed screen of the outcome, you can see my run
at the top, if there are any errors SAP will indicate the problem, mostly it will be to do
with the indicator not being setup correctly of a missing number range.

For information on how to configure the time-dependent interest terms see balance
interest calculation in my G/L accounting configuration section. because interest rates
are highly susceptible to fluctuations you can make changes before you post, using
transaction code S_ALR_87002510 you see the selection of defined interest
indicators and also currency-dependant and time-dependant interest terms.

If we double-click on a time-dependant interest term (in our case 01 USD seq no 1),
we can see where the 3% interest rate came from.

You can view the interest calculation runs using transaction FINTSHOW, the initial
screen is a filter screen which is self-explaining, the results of the log can be seen
below.

When you run a interest calculation the master data of the customers record will be
updated, as you can see below the employee record has been updated to the date of the
last run.

Lastly if we look at the customers (employee) line items we can see that the interest as
be posted to the account, so the balance now reflects the loan and the interest.

Reconciliation Measures
Financial accounting influence business decisions, share price, performance-based
remuneration, etc. You need to make as accurate report on assets, profitability and
over financial situation, reconciliation measures are intended to check figures and
ensure that they are correct. We will discuss two types of reconciliation measures

Manual checking of postings


Technical reconciliation of transactions figures

We will start with manual checking of postings, the larger the company the more
posting errors we expect, these can have a negative influence on the information value
of financial accounting figures, however we cannot check every posting, a balance
must be achieved between the costs and benefits of reconciliation measures, you could
restrict the checks to certain accounts or amounts posted. We can use transaction
code FBL3N, which we have used a number of times, this time we will select a
number of different accounts, using the multiple section tool (the right pointing arrow
to the the right of G/L account), here I enter a number of G/L accounts

The results screen returns the line items, here I have sorted on the amount in local
curr, now lets presume that something may be wrong with the first three line items, so
we will get another accountant to check

We select the three line items lines and then list -> send

We enter some text description for the accountant and select one or more recipients
(mistake in the screenshot user should be vallep),

We also select the express document checkbox, which means the accountants will be
informed immediately

When the accountant does anything in his/her screen, a pop dialog box appears,
select choose

The message then appears on the screen with a link (or you can use
the attachments tab) to see the list of line items

When the user selects the G/L account line item display link you will see the three line
items we asked to be checked.

Next we look at the technical reconciliation of transactions figures, this procedure


involves comparing the debit and credit postings of the individual documents with the
transaction figures from the relevant periods in accounts receivable accounting,
accounts payable accounting and general ledger accounting. The results of the
analysis report are saved in historical management records. This allows you to
document the details of when the reconciliation was performed and the accuracy of
the reconciliation measures. This analysis identifies differences that are not permitted
by accounting standards which must then be eliminated as soon as possible. We will
use transaction FAGLF03 the left-hand screenshot (F.03 was the old transaction code
seen in the right-hand screenshot),

Any differences will be reported in the results screen,

You can view the historic logs and their outcome, by selecting the display log option,
here we can see that there we reconciliation problems on the 21.05.2007

You can also check the reconciliation between companies using the SAP easy access
menu, there are a number of different reports

Here I use transaction code FBICR3L, to display the intercompany open items, you
can then use transaction code FBICA1 and/or FBICR1 to clear the documents and
reconcile the accounts.

Reclassification

It is necessary to sort receivables and payables based on their validity periods, on the
balance sheet it may be a case that there are outstanding payables to be made to
customers and receivables to be paid by vendors, regrouping is required to accurately
represent these customers with credit balances and vendors with debit balances in the
financial statement. A special program is provided to automatically perform this task
of sorting by due date and regrouping which is referred to as reclassification. We can
use transaction code FAGLF101, there are three tabs that you can use to refine the
selection, we leave thegenerate postings checkbox unticked as this is a test run. The
SAP sort method is configured so that receivables and payables are categorized as
follows

Due within one year


Due within one to three years
Due within more than three years

Sort methods can be configured differently to give a more general or precise


classification, the valuation area linked to the account determination for parallel
accounting. The middle screenshot details the account type D (customers) and only
select customer 3477, the last screenshot indicates the selected customers are to be
grouped together in a group posting in this case. The valuation type 5 (transaction of
balances) means that payables and receivables are to be sorted on the basis of their
due dates and are to be reclassified.

You can check the postings before you actually run for real. When posted the balances
for the account is reclassified.

You can view a precise representation in the balance sheet, you can see where the G/L
account is represented in the balance sheet by using transaction code FS00 and
selecting the G/L account, here you can select the edit financial statement version. In
the below screenshot you can see that this G/L account is used in the CAUS financial
statement version, it could also be used in other financial statements as well.

Selecting the green tick we are taken to the position in the financial statement
(CAUS).

Balance Confirmations
After the balance carryforward has been technically completed and the old fiscal years
has been blocked, balance confirmations must be sent. The purpose of these letters to
confirm with your trading partners the figures for the relevant receivables and
payables. Letters are sent to the customers and vendors with figures based on the
accounts, a standard reply letter is to be completed by the customer or vendor to speed
up the process (confirmation or rejection), the letter is then sent back to a audit
department to confirm in the system, a check list is performed an results tables is
formed. We can use transaction codeF.17 (A/R) and F.18 (A/P), the initial screen is a
filter screen, here I have enter the minimum amount of data

When you run the report you will be shown the printed balance confirmation letters,
here I have two screenshot's as the letter is too large to capture in one screenshot.

To ensure complete and comprehensive documentation you can print the list of
parameters used for selection shown earlier, as a fraud avoidance measure, balance
confirmation forms part of the overall corporate governance concept.

You can also use transaction code FK10N (vendor) or FD10N (customer) to see
balance display reports.
Period Control
For documents to be posted the period must be technically open, in other
circumstances you may want to prevent postings in a certain period once specific
activities have been completed, for example the advanced return for tax on sales and
purchases or auditor certification of the balance sheet, these tasks are the
responsibility of period control, which represents both technical and business
functionality, period control is not only used on FI but in other modules as well CO
and MM, we can use transaction code S_ALR_87003642 or use the SAP easy access
menu

You can see the posting periods detailed below, I have covered in detail posting
period variant in my FI configuration and setup section. When you fill in a document
header the date will be checked to confirm that period is open, SAP will notify you if
it is not, you can open periods for specific account types (customers, vendors, assets,
etc). If you notice we also configure the special periods as well these are posting
periods 13 to 16, again I discuss this in my posting period variant section.
The AuGr (Authorization Group) column is used to restrict users to alter the control
table, it is only possible for a user defined in the authorization concept (object
F_BKPF_BUP) to enter postings in the interval, this allows you to limit the number of
users involved in the closing operations.

Tax on Sales and Purchases


There are a number of reports that can help with input and output tax on sales and
purchases, at the period end these amounts must be checked and totaled and the
balance reported to the tax authorities as a receivable or payable. The program for
advanced returns for tax on sales and purchases (which is provided in many countryspecific versions) posts the balance of input and output tax to a tax payable account,

generates a log and if required provides an electronic data record for the authorities, I
have already discussed tax in my FI configuration and setup section which I have a
whole section on. We can use transaction code S_ALR_87012357 or use the SAP
easy access menu.

The initial screen is a filter screen, I am using company code 1000, and some past
dates, to capture some data, you can even group company codes, in addition to the
selection criteria, posting criteria must also be defined for the program. The accounts
for input and output tax that are associated with the tax codes are cleared in a
procedure that involves posting the balance to a defined tax payable account for
receivables or payables due from or to the tax authorities, this can be saved to a batch
input session using the tax payable posting tab. You can increase or decrease the
logging output as displayed in the below screenshot.

The results screen details the documents and calculates the balance of input and
output tax based on the tax code. The program then creates a batch input session for
tax payable postings, generates a file for electronic communication with the
authorities and outputs the overall results in a log.

Once the receivable is posted the relevant data must be communicated to the tax
authorities, we can use transaction code FOTV or use the SAP easy access menu,

The initial screen is a filter screen, if there are any tax returns SAP will display these,
the tax on sales and purchases payable can be classified as either a system amount (in
other words an amount calculated by the Advanced Return for Tax on Sales/Purchases
program) or an external amount. You can change the values before sending the report
to the tax authorities (transfer data F8), again SAP will confirm if the data sent was
successful or not.

Balance Carryforward
When the fiscal years closes several activities must be completed in the SAP system,
one of these is the balance carryforward, the year-end closing means that the closing

balance of the balance sheet accounts also serves as the initial balance in the next
fiscal year.
Things are more complicated for income statements accounts, in the new fiscal year
the opening balance in these accounts is always zero (they start with a clean sheet),
this is certainly true of the profit and loss accounts at least. When the fiscal year
changes its balance is posted to one or more special retained earnings accounts. In
most countries the carryforward in the balance sheet and profit and loss statement
accounts is not implemented as a posting in the SAP system. Instead the balance of
the last posting period is carried forward as the balance in period 0 of the new fiscal
year without a posting record. An opening entry is only possible in certain countries
where this is legally permitted. We can use transaction code FAGLB03, we enter the
account and company code details

At the start of the year we can see the 60,000 in period 0, which is the opening
balance for this account, it is possible to post items if there is no balance
carryforward, the balance carryforward only influences the cumulative balance.

To carryforward the balance we can use transaction code F.16 or FAGLGVTR (new
G/L), or F.07 to carry forward the balances of accounts payable and account
receivable.

The initial screen is a filter screen, if you notice we can perform a test run before we
actually carryforward the balance.

You get a detailed log, here you can see that some accounts have been identified, we
can use both the balance sheet accounts and retained earnings accounts buttons to
display more details

The left-hand screenshot you can see the balance sheets, the right-hand screenshot
displays the retained earnings accounts.

When you carry out the carry forward balance, check the accounts for the new fiscal
year to confirm that the carry forward has been carried forward.
I have also discussed the closing cockpit which can help with period closing and year
end tasks.
Period-End Master Checklist

#
1

Description
update exchange
ranges

Transaction Code

Application

Day

Month

S_BCE_68000174

FI

ensure movements are


complete

VL10A

SD

ensure inventory
movements are
complete - goods issue
(PS)

VL10A

PS

ensure inventory
movements are
complete - goods issue

VL10

CS

MIRO

MM

MIRO

CS

MRBR

MM/PS

MRBR

CS

V_UC

SD

VKM1

SD

V_SA

SD

V23

SD

VF04

SD

V.21

SD

VFX3

SD

COGI

PP

CO16N

PP

5
6
7
8
9
10
11
12
13

14

15
16

record purchase-orderrelated AP
transactions
record purchase-orderrelated AP
transactions
release blocked
invoices
release blocked
invoices
incomplete SD
documents
blocked SD documents
collective
proc.analysis (Deliv)
review sales
documents blocked for
billing
review billing due list
review failed billing
document creation
after billing due list
(VF04) execution
release billing
documents for
accounting
failed goods
movement

X
X

X
X

17

reprocessing incorrect
information

18

gaps in document
number assignment

S_ALR_87012342

FI

19

invoice numbers
allocated twice

S_ALR_87012341

FI

MMPV

MM

MMPV

PS

20
21

open period for


material master
records
open new MM period
(PS)

Year

22
23

open new MM period


open and closing
periods

MMPV

CS

OB52

FI

24

actual overheads
calculation prod. order

CO43

CO

25

preliminary settlement
for co-product

CO8A

CO

26

WIP calculation PP
order

KKAO

CO

27

calculation of work in
process (WIP)

CI8G

PS

KKAQ

CO

KKAJ

PS

KKS1

CO

28
29
30

display work in process


review WIP
calculations
prod. and process
order variance
calculation

31

product cost collector


variance calculation

KKS5

CO

32

settlement PP order

CO88

CO

33

PP order (close)

CO02

PP

34

product order changes


(status)

COOIS

PP

FBD1

FI

F.14

FI

35
36

enter recurring
document
Post recurring
document

37

post recurring
document with BI

SM35

FI

38

automatic GR/IR
clearing

F.13

MM

39

analysis GR/IR clearing


accounts

F.19

FI

40

automatic GR/IR
clearing

F.13

FI

41

manual clearing
general ledger

F-03

FI

42

manual clearing
account receivable

F-32

FI

43

manual clearing
accounts payable

F-44

FI

44

post adjustment
entries

FB50

FI

45

foreign currency
revaluation

FAGL_FC_VAL

FI

46

reposting of
unassigned functional
area

KB61

FI

47
48
49
50

order settlement
(asset under
construction)
depreciation run
periodic asset posting
depreciation
simulation

AIAB

FI-AA

AFAB

FI-AA

ASKBN

FI-AA

S_ALR_87012936

FI-AA

51

open and close FI


period asset

OB52

FI-AA

52

recording of statistical
key figures

KB31N

CO

53

assessment cycle cost


center accounting

KSU5

CO

54

assessment cycle cost


center account
(quality costs)

KSU5

CO

55

accrual calculation

KSA3

CO

56

order settlement
(internal order)

KO8G

CO

KO8G

CS

CO99

CS

CJ20N

PS

CJB2

PLM

61

settlement service
orders
close completed
service orders
(business view)
close completed
projects (business
view)
generate settlement
rule
settling the project

62

closing the project

63

project reporting

64

57
58
59
60

CJ8G

PLM

CJ20N

PLM

S_ALR_87013531

PLM

actual settlement
project to profitability
analysis (CO-PA)

CJ8G

PS

65

run profitability report

KE30

PS

66

assessment cycle cost


center to COPA

KEU5

CO

67

stock valuation

MRN0

FI/CO/MM

68

copy actual to plan


version 3

KP98

CO

69

assign depreciation for


depreciation area 15

S_ALR_87099918

CO

70

delete depreciation
from depreciation area
20 in version 3

KP90

CO

71

activity price planning


(version 3)

KP26

CO

72

activity price planning


tariff (version 3)

KSPI

CO

73

inventory costing

CK11N

CO

74

CK24

CO

FB50

FI

OKP1

CO

ENGR

SD

S_ALR_87012357

FI

79

price update
stock market
adjustment
period lock
create
intrastat/extrastat
periodic declaration
advanced return for
tax on sales and
purchases
post tax payable

FB41

FI

80

EC sale list

S_ALR_87012400

FI

81

foreign trade
regulation reports Z4

S_ALR_87012405

FI

82

foreign trade
regulation reports Z5A

S_ALR_87012162

FI

83

comparison
documents/transaction
figures

FGLF03

FI

F.52

FI

S_ALR_87012289

FI

S_ALR_87012287

FI

75
76
77
78

84
85
86

balance interest
calculation
compact document
journal
document journal

X
X

87

cash position &


liquidity forecast

FF7A

FI

88

open and close posting


periods

OB52

FI

89

run profitability report

KE30

CO

90

financial statements

S_ALR_87012284

FI

91

create factory
calendar for new year

SCAL

cross

92

controlling maintain
versions

S_ALR_87005830

CO

93

costing run

CK40N

CO

94

define percentage
overhead (actual)

S_ALR_87008275

CO

95

recalculating values

AFAR

FI-AA

96

account reconciliation

ABST2

FI-AA

97

fiscal year change

AJRW

FI-AA

98

year-end closing asset


accounting

AJAB

FI-AA

99

carry forward AP/AR


balances

F.07

FI

100

carry forward general


ledger balances

FAGLGVTR

FI

101

regrouping
receivables/payables

FAGLF101

FI

102

balance confirmation
receivables

F.17

FI

103

balance confirmation
payables

F.18

FI

104

close previous account


period

OB52

FI

105

financial statements

S_ALR_87012284

FI

106

document journal

S_ALR_87012287

FI