SAP Year End Closing Process

Author  Written by  Ben Adams  and last updated on  Posted onSeptember 26, 2017.

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In SAP Financial Accounting, an organization must close out each fiscal

year according to the fiscal year variants and calendars configured during system implementation.
Depending on the functionality and specific custom programs and processes each organization uses, the
activities required will vary. However, there are typical standard processes that organizations universally
use in SAP Financial Accounting for closing the core submodules. This tutorial will take a brief look
at SAP Year End Closing Process and show you the transactions and program screens used for each step.

It is recommended to read SAP Month End Closing Process tutorial before studying this tutorial about
SAP Year End Closing Process.

SAP Year End close is typically done by performing a standard period end close for the last fiscal period
of the year, and then processing the year end close using special reports, transactions, and procedures
to clear final year end entries and carry balances forward to the new year. Often due to timing concerns
related to calendar changes and system times, final period end close is meshed with year-end close and
is processed together in a step by step plan coordinated between financial accountants and SAP
functional and basis support staff. There are many specific activities that occur that lead up to final close
that we will not get into here, but as a reference, these may include:

 Review and status correction of IDoc interface programs

 Pre-close activities in FI such as booking of final accruals, running reports on open payables and
receivables, bank reconciliation duties, etc.

 Final entry of all logistics documents that impact Materials Management, Sales and Distribution,
etc.

 Activities on orders such as overhead being booked, statuses marked as technically complete,
orders settled, etc.

 Other activities in Controlling such as processing of assessments and distributions, period locks

and unlocks, etc.
  Materials Management period change

With an understanding that there are many variables involved leading up to SAP year end close in FI, this
tutorial will review the major activities for the core submodules of general ledger, accounts payable,
accounts receivable, and fixed assets.

General Ledger

As discussed above, there are many pre-close activities that may be required in the general ledger
module as part of FI close, but here we will look at two of the core activities: foreign currency
revaluation and balance carry forward.

Foreign Currency Revaluation

Given that you have configured valuation methods, defined valuation areas, and prepared your system
for automatic postings for foreign currency valuation for booking gains and losses, you can use the
Foreign Currency Valuation program to revalue open items at the end of the year with the latest
exchange rates to determine a precise financial standing at year end.

To access this program, use transaction code FAGL_FC_VAL or follow menu path:

SAP Easy Access Menu > Financial Accounting > General Ledger > Periodic Processing > Closing > Valuate
> Foreign Currency Valuation (New)

Program screen will appear as follows.

SAP FI Foreign Currency Revaluation Program

There are many options for running the program. Notice the general selection screen at the top
for company code, valuation key date, and valuation area. Use this as a start in selecting items to
revalue, then use the tabs below to get more specific on what you want to select. Generally, what the
program will accomplish is to post differences in valuation between currencies as gains or losses to
a P&L account with the offset to a balance sheet adjustment account. Keep in mind that valuation can
only be executed once per key date or valuation area. If there are errors, you must reset valuation and
reprocess.

G/L Balance Carryforward

To carry balances forward to the new year in the general ledger, use transaction code  F.16 (for classic
G/L) or FAGLGVTR (if using the new G/L), or follow menu path:

SAP Easy Access Menu > Financial Accounting > General Ledger > Periodic Processing > Closing >
Carrying Forward > F.16  OR  FAGLGVTR
Here we will look at FAGLGVTR. The screen will appear as follows.

SAP G/L Balance Carryforward

Using this program, you can carryforward balances within which ever ledger you choose to the new
fiscal year. Although it can be repeated, this program is typically executed just one time. Balance sheet
accounts will be carried forward with their account assignments, and P&L accounts will be rolled up and
transferred to the retained earnings accounts you have configured during implementation.

Accounts Receivable and Accounts Payable

To close accounts receivable and accounts payable for the fiscal year, the same program is used to carry
balances forward to the new year. To access the carry forward program, use transaction code F.07 or
follow menu path:

SAP Easy Access Menu > Financial Accounting > Accounts Receivable  OR  Accounts Payable > Periodic
Processing > Closing > Carry Forward > Balance Carry Forward
The screen will appear as follows:

SAP Year End Closing Carryforward of Receivables / Payables

To execute this program, simply enter the company code or company code range, the new fiscal year,
the customers or vendors you want to carry forward, and your processing parameters.

Note: Be aware when reviewing balances in A/R (transaction code FD10N) and A/P (transaction
code FK10N) accounts to compare to the log of this program, there may be a mismatch. A simple
explanation is that vendor and customer balance reports show the total balance of the account,
whereas the log of the carryforward report will show the difference of what is being carried forward and
what has already been carried forward. For more information, see SAP Note 37529.

Fixed Assets

To close the Fixed Assets submodule for the year, following the last depreciation recalculations, review
of incomplete assets, settlement of assets under construction, capitalization of any low value or
remaining assets, asset account reconciliations, and final posting of periodic depreciation, there are two
standard close programs that must be executed – the year end closing program and the fiscal year
change program.

To run the year-end close program, use transaction code AJAB or follow menu path:

SAP Easy Access Menu > Accounting > Financial Accounting > Fixed Assets > Periodic Processing > Year-
End Closing > Execute

The screen will appear as follows.

SAP Year End Closing in Asset Accounting

This program will lock the prior year in the asset accounting submodule (close the annual values) so that
no further postings can be made. It is highly recommended that this program is first executed in test
mode to review for possible errors, then upon satisfactory review, executed in productive mode as a
background job.
The other program you will need to execute is to open the new fiscal year. To do this, use transaction
code AJRW or follow menu path:

SAP Easy Access Menu > Accounting > Financial Accounting > Fixed Assets > Periodic Processing > Fiscal
Year Change

The screen will appear as follows.

Asset Fiscal Year Change Program

Input your company codes and the new fiscal year and execute in test mode. Upon satisfactory review,
execute the program as a background job. This is just a technical step that carries balances forward and
allows you to run reports in the new year.

Other
A couple of other common steps for year-end closing in financial accounting are to lock company code
posting variants by account type for the previous year and open them for the new year and to copy
number ranges to the new year.

Changing the posting periods by account type is a routine period close activity, but critical enough to be
mentioned here in the year end close tutorial as a reminder. Remember that the posting period variant
is configured and assigned to the company code in the global parameters of the company code in the
IMG. In this task, you will update the posting period variant to reflect the open year and period. To carry
out this task, use transaction code OB52 or follow menu path:

SPRO  > SAP Reference IMG > Financial Accounting > Financial Accounting Global Settings > Document >
Posting Period > Open and Close Posting Periods

The screen will appear as follows.

Change Periods and Year for Posting Period Variant Assigned to Company Codes Being Closed
Scroll to the posting period variant assigned to the company codes you are closing, and change the
“from” and “to” periods for both regular posting periods and special posting periods to the new period
and year.

The next task is to copy document number ranges to the new fiscal year. Carry out this task by using
transaction OBH2, or follow menu path:

SPRO  > SAP Reference IMG > Financial Accounting > Financial Accounting Global Settings > Document >
Document Number Ranges > Copy to Fiscal Year

The screen will appear as follows.

Copy Document Number Ranges to Fiscal Year

Enter the company code, number range, source year, and target year and execute.

Note: If you are using the new general ledger, this will be a two-step process in which you copy the
document ranges for entry view and general ledger view separately. This is found under the Financial
Accounting Global Settings (New) menu in the SPRO transaction.

Conclusion
This tutorial reviewed the most common and required steps used in each submodule of Financial
Accounting for SAP Year End closing process. Remember that the year-end process is tightly meshed
with the fiscal period end process and there are many other programs that may be required depending
on the organization’s implementation. There are also steps in other modules that must be executed, of
which examples were given in the first part of this document.