Month End Activities in SAP FICO: Streamlining Financial Closing Processes

Month End Activities In Sap Fico

In this tutorial, we will be exploring the SAP month end closing process in detail. Month end closing is a crucial procedure that takes place every month in companies using SAP ERP. It holds significant importance as its timely completion enables employees to post new documents in SAP for the upcoming month. By studying this tutorial, you will gain a comprehensive understanding of the various activities involved in the SAP month end closing process.

The month end activities in SAP FICO can differ from one company to another, as they are tailored according to the specific needs and demands of each business. However, there are several common tasks that are typically performed during this process.

Initially, we will outline the procedures for concluding the previous month and initiating the new month. Subsequently, detailed guidelines will be furnished for each of the aforementioned tasks.

Period Closing/Opening

Prior to conducting month end activities in SAP FICO, it is necessary to close the previous period to avoid any additional postings. Similarly, the new period needs to be opened so that users can carry out transactions seamlessly.

To begin with, if the company has incorporated the (MM) module, execute the material master period closing transaction code MMPV. Fill in the required details on the initial screen as follows:

To initiate the process immediately, click on the execute button. Alternatively, you can schedule the closure as a background task by choosing Program > Execute in Background from the toolbar options displayed below.

Complete the process of closing the period for the initial screen of the material master record.

Finally, it is important to secure the closed period to prevent any further postings. To do this, access the initial screen of transaction code OKP1 and input the required information.

1. Control area in SAP FICO

2. Fiscal year for the periods to be secured

To secure actual postings, simply click on the designated button. Alternatively, you can select a plan version and lock planned postings by clicking on the plan button.

Select the appropriate checkboxes for closing the relevant periods, as illustrated below.

Accruals and Deferrals

One common task during the SAP month end closing is to record accruals and deferrals, ensuring that revenues and expenses are correctly assigned to the appropriate period. Accruals refer to expenses or revenues related to the current period, even if the actual invoice has not been received or issued yet. Typically, these accruals are reversed in the following period. On the other hand, deferrals involve recording expenses or revenues in the present period that actually pertain to a future period.

Accruals and deferrals can be recorded either through manual postings or by utilizing recurring entries.

Enter Manual Accrual/Deferral

As an example of an expense accrual, let’s assume a company has received services from a temporary employee during the month of June. The services are completed, but an invoice has not yet been received. The invoice is expected to be received and paid in July with an amount of 2000 EUR. The company must record an accrual of the expense in the month in June, to record the expense in the same month that the service was rendered. The accrual should be reversed in the following month to make way for the actual invoices posting.

To start with, create the accrual document using transaction code FBS1. Input debit information for the expense account where the final expense will be recognized and credit details for an accrued expense account.

The posting of the document is done on the final day of the month when it is being closed.

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Next, you need to reverse the accrual document at the beginning of the next month in order to prepare for posting the actual invoice. Use transaction code F.81 and input the required details accordingly.

Click the Execute button to initiate the test mode and verify your inputs.

Check the document to verify the suggested reversal. If all is accurate, you have two options: either uncheck the Test Run box and rerun the process, or simply click on the reverse documents button to post directly from this screen.

Post Accrual/Deferral Using Recurring Entry

Recurring entries are frequently utilized during the SAP FICO month end activities to record deferred expenses or prepaids. For instance, if a company receives an invoice of 3000 EUR in January for rental costs covering the first quarter (January, February, and March), they would post the invoice to a prepaid account as the rental expense for February and March should be recognized in those respective months. Deferrals are then recorded through recurring entry transactions.

Next, create a recurring entry document that will serve as a model for the recurring entry program. Access transaction code FBD1 and input the necessary information in the header section to indicate the desired run dates and interval.

Record the monthly deferral amount by debiting the actual expense account and reducing the balance in the prepaid account.

To proceed, initiate the recurring entry program by using transaction code F.14. Fill in the required information on the selection screen as follows:

Click on the Execute button to initiate the process in the background.

Process Batch Input Session

Execute transaction code SM35 to retrieve your batch input session. Highlight the row that has the session name you specified in the previous step and click the Process button. Select the Display errors only radial button and click Process again.

If there are no errors, the system finishes the posting and we can exit the batch input session.

Finally, let’s check the balance of the prepaid rent G/L account via transaction code FS10N. We can see that January’s rent has been deducted from the balance, with the remainder to be recorded by processing the recurring entry program in the coming months.

Automatic Clearing

One of the regular tasks during the SAP month end closing procedure involves clearing accounts such as from, and. To perform this action, you can use transaction code F.13 in SAP and input specific details to complete the process successfully.

You will see a large report with line items depending on the output control settings you selected, grouped by G/L account. An error log is located at the bottom of the report. Items with clearing dates in green are matched and can be cleared, while other items will not be cleared as demonstrated below:

Verify the accuracy of the detailed list findings. If all is accurate, uncheck the Test Run option and proceed to rerun or schedule the closure as a background task by choosing Program > Execute in Background from the toolbar.

Foreign Currency Valuation

In the SAP month end closing process, companies that deal with foreign currencies may need to revalue open items to ensure all financial transactions are aligned in a consistent currency. This valuation step is crucial for accurate financial statements. To learn about the necessary configuration steps for implementing revaluation, you can refer to our tutorial.

Suppose a bill of 5000 USD is recorded in the middle of April 2017. The currency conversion rate applied at the time of recording the invoice is 1.21 EUR to 1 USD. By the end of the month, there is an update in the exchange rate, which becomes 1.185 EUR to 1 USD.

Hence, there is a difference in the value of the invoice when it was initially recorded and the exchange rate at the end of the month. If the payment for the invoice is not made within that same month, a valuation process needs to be carried out.

To initiate the valuation procedure, utilize transaction code FAGL_FC_VAL in SAP FICO. Fill in the necessary details in the General Data Selection section of the selection screen.

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In the Postings section, input the subsequent details:

1. Choose the option to generate postings by ticking the designated box. This will result in the creation of postings, which can either be grouped into a batch or executed immediately. If you wish to first test the valuation process, uncheck this box.

2. Input the reversal posting date as the initial day of the following period. This field contains the date that will serve as the posting date for automatic reversal postings.

3. Enable automatic posting reversals on the specified date by selecting the corresponding checkbox in order for them to be carried out by the system automatically.

Navigate to the Open Items tab and mark the checkboxes to evaluate various categories of outstanding items.

1. Open items in general ledger accounts

2. Outstanding items from vendors

3. Unsettled items from customers

The system evaluates the accounts and records any discrepancies in separate adjustment accounts. A report is then generated, as shown below:

After running the valuation in update mode, the system generates documents. To view the valuation and reversal postings, simply double click on the document number displayed in the output.

What are the final tasks in SAP FICO?

List of Closing Activities:

1. Re-classify: This involves rearranging or reallocating financial transactions within the general ledger to ensure accurate reporting.

2. Evaluation: In this step, data is analyzed and assessed for accuracy, completeness, and compliance with accounting standards.

3. Carry-forward: The process of carrying forward balances from one fiscal year to another is performed during closing activities to maintain continuity in financial records.

Tax Payables

In SAP, it is possible to combine the input and output taxes and record the outcome in a tax payable/receivable account.

Suppose a vendor invoice is entered with an input tax rate of 14%, as depicted above.

Customer Invoice with 10% Output Tax can be accessed through the following menu path: Accounting – Financial Accounting – General Ledger – Reporting – Tax Reports – General – Advance Return for Tax on Sales/Purchases. The transaction code to access this feature is S_ALR_87012357.

Execute the advanced tax return on sales/purchase report using transaction code S_ALR_87012357.

Make a record of the total output tax and input tax amounts. Next, you will need to manually post the transfer posting to the tax payable account using transaction code FB41. Enter the input tax total as a credit in the input tax G/L account and debit the output tax total in the output tax G/L account. The offset should be posted to the tax payable/receivable account, as shown below:

What is the month-end procedure in SAP?

In the SAP month end closing process, one common task is to record accruals and deferrals. This helps ensure that revenues and expenses are accurately recorded in the appropriate period. Accruals refer to expenses or revenues that pertain to the current period but have not yet been invoiced or received physically.

List:

– Posting accruals and deferrals

– Ensuring correct posting of revenues and expenses

– Handling expenses/revenues for the current period without physical invoices

Asset Depreciation

If the company has integrated fixed assets into their system, it is necessary to include the recording of asset depreciation as part of the SAP month end closing activities. To initiate this process, input the required information in the selection screen of transaction code AFAB.

Click on the Execute button to initiate the test mode and verify the depreciation.

A notification box will pop up, informing you that your asset processing is restricted to 1000. This limitation is acceptable for the test run. To continue, click on the Yes option.

The resulting list will display the entire asset inventory that has been taken into account by the program for the depreciation run, as illustrated below.

Review the document for proposed depreciation postings. Click the error log icon to view and resolve errors. If everything is correct, go back and remove the Test Run tickbox. This time, re-execute in the background to include all assets. Select Program > Execute in Background to create the postings.

Understanding the Period End Closing Transaction in SAP

Period-end closing involves making specific entries in the accounting system to indicate the completion of a fiscal year or posting period. It is possible to transfer previous balances of profit and loss G/L accounts from one fiscal year or period to another. The process may differ across various countries.

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1. Specific postings are created in the accounting system.

3. Previous balances of profit and loss G/L accounts can be transferred between different periods or fiscal years.

SAP FICO Month End Activities

The SAP month end closing process includes the creation of a document journal, which consolidates key information from document postings for a specific posting period. To view the document journal, you can use transaction code S_ALR_87012287 and input the necessary details.

To verify the document journal output, click on the Execute button and run it in test mode.

The document journal is created by inputting parameters on the selection screen.

Verify the outcomes of the document log. If all is accurate, return to deselect the Test Run option and perform again.

What is a checklist for the end of the month?

Month-end closing is a set of accounting processes completed at the end of each month to finalize a company’s financial statements. Such tasks include account reconciliation, adjusting journal entries, reviewing financial statements, and preparing reports for management.

Financial Statements

As part of the month end closing process in SAP FICO, it is necessary to generate financial statements for reporting to stakeholders. These statements include the balance sheet and profit and loss statement for a specific period. Depending on the needs of different stakeholders, there may be multiple financial statements generated. To generate these statements, you can use transaction code F.01 in SAP. In the selection screen, you will need to enter certain details as required.

The report follows the structure of the financial statement version that has been set. It can be exported as a PDF or Excel file to share with relevant parties.

If you found this tutorial helpful, we would greatly appreciate your feedback. Please feel free to leave any questions or comments in the section below. Your input is valuable to us and will help us improve our free SAP FI tutorials for you.

What are the accounts payable activities at the end of the month?

To put it simply, the month-end close is an important point in the monthly accounting cycle where all transactions are accounted for, business balances are adjusted and finalized (or the books “closed”), and then reports are created that reflect how the business performed during that month.

SAP activity types: What are they?

Activity types in SAP FICO are used to calculate the quantity-based output of a cost center. They help determine the planned activity quantities for production and service cost centers, which need to be aligned with the master production schedule in logistics. This alignment ensures that the required plan activity quantity and capacity are accurately determined.

During month-end activities in SAP FICO, several tasks related to activity types take place. These include reconciling the planned activity quantities of cost centers with the master production schedule, reviewing any discrepancies, and making necessary adjustments. It is crucial to ensure that all costs associated with activities performed by different cost centers are correctly allocated and accounted for.

To effectively manage month-end activities in SAP FICO, a list of tasks can be followed:

1. Reconcile Planned Activity Quantities: Compare the planned activity quantities recorded for each cost center against those specified in the master production schedule. Identify any differences or inconsistencies and investigate their causes.

3. Cost Allocation: Ensure that all costs incurred by various cost centers due to their respective activities are appropriately allocated within SAP FICO system. Verify that expenses related to labor, materials, utilities, etc., are accurately assigned to relevant accounts.

What does month end closing task entail?

Your month-end close process should include recording incoming cash, checking your AR records and reconciling all accounts, including petty cash. Track all your business transactions, ensure accurate records and mitigate fraud risks. Remain up to date on the financial well-being of your organization.