Period Management and Closing Operations General Ledger

L3.F. GL2 Session

October 12, 2006

Agenda
Ground Rules & Introduction Project Timeline Work session Objectives SAP Terms Glossary Business Process Review
AS-IS process flow Process Improvement opportunities SAP concepts & functionality Business process flow Best practices & Benefits realization Organizational Impacts

Next Steps Action items Questions

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Ground Rules
Everybody participates blueprint is not a spectator sport Silence means agreement Focus is key please turn off cell phones and close laptops Challenge existing processes and mindsets Offer suggestions and ideas Think Enterprise Ask questions at any time One person at a time please Timeliness returning from break

Introduction
Roles
Process Analyst and Functional Consultant lead and facilitate the discussions and drive design decisions Documenter take detailed notes to support the formal meeting minutes to be sent by the Process Analyst to all participants for review and feedback Team Members provide additional support for process discussions, address key integration touch points Subject Matter Experts advise team members on the detailed business process and participate in the decisions required to design the future state business process PRM Team Members transition assistance, controls documentation, and risk assessment

Round the Room Introductions Name Position Department or School

What is BRITE?
BRITE Browards Innovative Tool for Education

Our Vision One Business System for Broward Schools

Our Mission Adopt best practices and involve end users to create one business system in SAP Want to know more:
Visit our website at: http://web/erp

http://www.broward.k12.fl.us/erp

Project Phases
Five Key Phases

Realization

Preparation

Preparation

Business

Blueprint

Strategy & Approach Defined Project Team Training

Development & Unit Testing Integration Testing End-User Training Materials

Go-Live Support Performance Tuning

Business Process Definition Development Requirements

User Acceptance Technical Testing End-User Training Conversion

Go Live and Support

Project

Final

Project Timeline
Waves Wave 1 Wave 2 Wave 3 Process Areas Finance/Budget HR/Payroll Procurement Finance Plant Maintenance Specific Modules GL, AP, FM, CO, SEM-BPS PA, OM, PY, TM, TEM, e-Rec, BN, ESS, PD, Payroll MM, IM GM, CFM, AA, AR, PS, PBC PM

BCPS mySAP Implementation mySAP Waves

2006 Process Areas

2007

2008

2009

Feb M ar A prM ayJun Jul A ugSep OctNo vDec Jan Feb M ar A prM ayJun Jul A ugSep OctNo vDec Jan Feb M ar A prM ayJun Jul A ugSep OctNo vDec Jan Feb M ar A prM ayJun Jul A ugSep OctNo v

Enterprise Blueprint

All Functional Areas

Blueprint

Wave 1
GL, AP, FM, CO, SEMBPS,PA, OM, PY, TM, TEM, eRec, BN, ESS, PD, Payroll, MM, IM

Final Prep

Go Live

Finance/Budget, HR/Payroll, Procurement

Realization

Final Prep

Blueprint

Go Live

Wave 2
GM, CFM, AA, AR, PS, PBC

Finance

Realization

Final Prep

Blueprint

Go Live

Wave 3
PM

Plant Maintenance

Realization

Project Organization Functional Teams

Project Management Melissa Grimm (Project Mgt) Leah Williams (Project Mgt)

Finance/Budget Leads Tom Campbell Finance Lead Colleen Casey Budget Lead Mary Ramsrud Consulting Lead

HR/Payroll Leads Susan Rockelman HR Lead Debbie Bouhenguel Payroll Lead Patsy Burns Consulting Lead

Operations Team Leads Robert Peinado Operations Lead Jeetendra Kumar MM Consulting Lead Bob Thomasson PM Consulting Lead Cindy Wade Sheeraz Iqbal

General Ledger Accounts Payable Accts Receivable Cash Management Cost Accounting Funds Management

Grants Mgt
Project Systems Asset Accounting Budget Prep (BPS)

Position Budget (PBC)

Blueprint Objectives
Review and discuss the current or As-Is business processes Which helps to drive out the Business requirements As well as the integration points with other processes Define Master Data Address key integration points Support organizational requirements Consistent and appropriate use of data fields Define Future or To-Be business processes based on: Best Practices inherent in SAP Intellectual capital from other SAP implementations The BCPS business requirements Identify development requirements Which could result in the need for a form, report, interface, conversion, or enhancement (FRICE) Understand and communicate any organizational impacts / Change Management Gather system security authorizations and district-wide training requirements
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Work Session Objectives

Month End closing process

Year End closing process

Period Control with determination of special periods Cross Module and team integration

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AS-IS Controls Environment

Examples of existing controls around current business processes:
Authorization / approvals Management approves purchases. Reconciliation Bank reconciliations System Configuration Three-way matching occurs in system Data Interfaces, exception / edit reports Rejected data is isolated, analyzed and corrected in a timely manner. System Access Access to post Journal Entries is restricted to authorized personnel Management Review Large and unusual cash disbursements are reviewed by management. Segregation of Duties Access to pay vendors is segregated from access to create vendors.

Period Management and Closing Operations

As-Is Process Flow

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Period Management and Closing Operations

As-Is Process Flow

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Period Management and Closing Operations

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

Pre-Close activities ensure that all necessary entries have been posted in the General Ledger (G/L), including entries from feeder systems/sub ledgers and accruals and recurring entries posted directly to the G/L. Pre-close activities occur in both the old and new months. Managerial Close activities involve the reassignment of costs throughout the entire organization, using the allocation and settlement functionality provided within Controlling Financial Close activities include final adjustments to valuations and balances prior to the final close and preparation of reports. Adjustments from the cost flows recorded in the managerial closing activities are updated to FI through the reconciliation ledger posting.

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Period Management and Closing Operations

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Period Management and Closing Operations

The closing of a period is performed in three sets of steps: pre-closing, managerial closing, and financial closing. Pre-Close activities ensure that all necessary entries have been posted in the General Ledger (G/L), including entries from feeder systems/sub ledgers and accruals and recurring entries posted directly to the G/L. Pre-close activities occur in both the old and new months. Managerial Close activities involve the re-assignment of costs throughout the entire organization, using the allocation and settlement functionality provided within Controlling Financial Close activities include final adjustments to valuations and balances prior to the final close and preparation of reports. Adjustments from the cost flows recorded in the managerial 16 closing activities are updated to FI through the reconciliation ledger posting.

Period Management and Closing Operations

To separate business transactions into different periods, a fiscal year with posting periods has to be defined. The fiscal year is defined as a variant which is assigned to the company code. The fiscal year variant contains the definition of posting periods and special periods . Special periods are used for postings which are not assigned to time periods, but to the process of year-end closing. In total,16 periods can be used. The system derives the posting period from the posting date. When the posting date falls within the last normal posting period, the transaction may be posted into one of the special periods. Example: Above you see a fiscal year with 12 posting periods and 4 special periods. If the posting date falls in the 12th period, the transaction can instead be posted in one of the four special periods. Standard fiscal year variants are already defined in the system and can be used as templates. Note: The fiscal year variant does not include the information as to whether a period is open or closed; this is maintained in another table. The fiscal year variant only defines the amount of periods and their start and finish dates.

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Period Management and Closing Operations

Use of Special Periods
Period 13 - Year-End adjustments prior to draft statements
Period 14 - Draft Statements including re-class entries Period 15 - School Board generated adjustments for Audit purposes Period 16 - Final statements including audit adjustments Special periods need extra care when posting to them Access to posting in the special periods should be limited to key staff

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Period Management and Closing Operations

DAY 0 - last day of the month DAY 1 DAY 2 DAY 3 DAY 4

Open next month's posting period for FI-GL, AR, AP & AA Open next month's posting period for CO Open next month's posting period for FM Complete and verify daily interfaces and batch jobs Run & Verify MRP

Post all parked entries (AP, AR, GL) Complete all goods receipt of the reporting month (MM) Record payroll accrual Perform Purchasing closing steps (e.g. contracts, etc) Perform Inventory closing steps Investment and debt postings (interest accrual, allocations, market valuation) Load last electronic bank statement (EBS) for the month (Wave2)

Post final AP invoices

Record recurring expenses

Perform FI reposting

Maintain GR/IR account

Transfer CATS time sheet postings for activity allocation Run CO assessments, distributions, settlements Effect all fixed asset transfers Settle capital projects to AuCs and final assets Run asset depreciation

Run assessments for Grant Resource related Billing for reporting month

Bank reconciliations (to final hardcopy (Wave1) Complete Customer billings for reporting month

Record accrued expenses, assets and liabilities

Roll MM period

EOD: Close A/P period

EOD: Close AA period

EOD: Close A/R period

Review Schedule Manager tasks

Review Schedule Manager task status

Late pm: Run pre-close financial reports (eg.Trial Balance for Fund, Grant, Project, etc 19

Period Management and Closing Operations

DAY 5 Review pre-close reports

DAY 6 Run Financial Accounting comparative analysis Post final adjusting/ reclass journals

DAY 7 Enter Agency Trial Balances in SAP

DAY 8 Reverse accrual for interest on investments and debt (Wave 1) Reverse accruals in the new reporting period

DAY 9

Reconcile fund-level cash to investments & cash on hand Complete bank reconciliations Perform variance analysis, as required Transfer encumbrance from FM to FI Calculate and post adjustments, if any

EOD: Close CO period

5pm: Close G/L period

EOD: Close FM period for reporting month Inform all end-Users that Reporting month is closed for postings

Late pm: Run final financial reports Late pm: Verify BW extracts & reports

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Period Management and Closing Operations

POSTING PERIOD
Posting periods are defined in the fiscal year variant. To prevent documents from being posted to a wrong posting period, desired periods can be closed. Usually the current posting period is open and all other periods are closed. At the end of a period it is usually closed and the next period is opened. A period is opened by entering a range into the posting period variant which encompasses this period. It is possible to have as many periods open as desired. The posting period variant controls whether or not it is possible to post to a given period or periods within either a single company code or a group of company codes.
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Period Management and Closing Operations

Month-End Closing

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Period Management and Closing Operations

Due to statutory requirements and/or company policies, the companys books may be closed and a new period opened on a monthly basis. The typical SAP fiscal closing spans 5-7 days after the end of the month. The goal is to eventually reduce it to 5 days The month-end closing process, using SAP transactions, is provided in the following section.

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Period Management and Closing Operations

Month-End Closing Process

Open and Close Posting Periods (OB52) Close Material Master (MMPV) Generate List of Stock Values (MB5L)

Reconcile: Daily Journal Entries (FB50) Daily Deposits (FB50) Weekly Journal Entries Bank Charges and Credits (FB50) Vendor Checks Issued (FCHR)

Post (FB50): Depreciation Amortization Salaries Accruals/Deferrals Month-End Insurance and Rent

Create Financial Statements (S_ALR_87012284)

Perform Cost Center Analysis (S_ALR_87013612)

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Period Management and Closing Operations

You define posting periods in your fiscal year Open and Close variants. You can open Posting Periods and (OB52) close these posting periods for posting. As many periods as you require can be open for posting simultaneously. Usually, only the current posting period is open for posting, all other posting periods are closed. At the end of this posting period, the period is closed, and the next posting period is opened.
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Period Management and Closing Operations

Closing a Posting Period and Opening a New One

Period Range Special Periods

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Period Management and Closing Operations

Close Material Master (MMPV)

such total stock, class, price control and price unit) is managed by period. For values and goods movements to be posted to the correct period, the period must be set whenever a new period starts.

Some data (stocks and certain valuation data as total value, valuation indicator,

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Period Management and Closing Operations

MMPV closes Material Master records for the old period and opens a new one. MMRV provides current status.

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Period Management and Closing Operations

Generate List of Stock Values (MB5L)

This list provides total stock count and respective

values.

Totals

Details

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Period Management and Closing Operations

Reconcile: Daily Journal Entries (FB50) Daily Deposits (FB50)

Reconcile Daily Journal Entries (FB50)

Use this transaction to enter G/L account postings on a daily basis.

Reconcile Daily Deposits (FB50)

The same transaction is used to reconcile daily, lockbox, and credit card deposits.

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Period Management and Closing Operations

This is a single-screen transaction. You can enter, hold, park, and post documents on one screen with a minimum amount of entries.

Debit Credit

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Period Management and Closing Operations

Reconcile Weekly Journal Entries Bank Charges and Credits (FB50) Vendor Checks Issued (FCHR)

Bank Charges and Credits (FB50)

Use the same transaction used for daily reconciliations. This transaction is used to post bank charges, credits, and other miscellaneous charges.

Vendor Checks Issued (FCHR)

Use this procedure to reconcile and post vendor checks that have been issued. Perform this procedure when the bank statement verifies payment to vendor.

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Period Management and Closing Operations

Month-End Posting (FB50

Using the same transaction used to perform daily and weekly reconciliations, at month-end, post the following: Depreciation - allowance made for a loss in value of property Amortization - the reduction of the value of an asset by prorating its cost over a period of time Salaries the fixed compensation for services paid to a person on a regular basis Accruals the accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include accounts payable, accounts receivable, goodwill, future tax liability and future interest expense Deferrals payments deferred to a later date Month-End Insurance and Rent insurance and rent payments
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Period Management and Closing Operations

Perform this procedure when you need to determine/report the results of the balance sheet and profit and loss statement.

Create Financial Statements (S_ALR_87012284)

Balance Sheet Invoice-based closing for a group at a specific point in time (financial statements key date) in the form of a comparison of assets and capital (liabilities and owner's equity). Assets and capital reflect the same total value. This is expressed in the balance sheet (assets = capital). Profit and Loss Statement Comparison of revenue and expenditure of a period to determine the results for the company and the sources of these results.

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Period Management and Closing Operations

A cost center is an organizational unit within a controlling area that Perform Cost Center Analysis represents a defined location of (S_ALR_87013612) cost incurrence. Use this procedure to display, review, and analyze costs associated with cost centers.

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Period Management and Closing Operations

Year-End Closing

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Period Management and Closing Operations

Due to statutory requirements and/or company policies, the companys books must be closed and a new period opened on a yearly (annual) basis. The December month-end closing process must be completed prior to performing the year-end closing process. The year-end closing process, using SAP transactions, is provided in the following section.

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Period Management and Closing Operations

Conclude June Month-End Closing Generate Account Balances for Old Fiscal Year (S_ALR_87012277)

Carry Forward Balance for Receivables/Payables (F.07)

Carry Forward Balance for G/L Accounts (FAGLGVTR)

Generate Forward Account Balances for New Fiscal Year (S_ALR_87012277)

Create Financial Statements (S_ALR_87012284)

Block Old Financial Year (OB52)

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Period Management and Closing Operations

Generate Account Balances for Old Fiscal Year (S_ALR_87012277)

The G/L account balance list shows the following figures:

Balance carried forward at the beginning of the fiscal year Total of the period or periods carried forward Debit total of the reporting period Credit total of the reporting period Debit balances or credit balances at the close of the reporting period (optional)
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Period Management and Closing Operations

Carry Forward Balance for Receivables/Payables (F.07)

This program calculates the balance carried forward for customers and/or vendors. The balances of the previous year are carried forward to the new year. If the account has not yet been posted in the new year and no balance carried forward has been carried out for this account, the account is opened in the new year with the 1st balance carried forward; otherwise, the balance carried forward of the account is stored in the new year if changes result.
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Period Management and Closing Operations

When posting into a previous year, the system carries forward the balance automatically. This is independent of whether the program has already run or not. "posting to a previous year" means that the posting date of the document has an earlier year than the entry date. This automatic carrying forward also occurs accumulatively over several years that means a posting in January 1993 with the posting date December 1991 changes the balance carried forward for 1992 and 1993.

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Period Management and Closing Operations

Carry Forward Balance for Receivables/Payables (F.07)

When posting into a previous year, the system carries forward the balance automatically. This is independent of whether the program has already run or not. "posting to a previous year" means that the posting date of the document has an earlier year than the entry date. This automatic carrying forward also occurs accumulatively over several years that means a posting in January 1993 with the posting date December 1991 changes the balance carried forward for 1992 and 1993.
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Period Management and Closing Operations

Carry Forward Balance for Receivables/Payables (F.07)

SAP recommends that the program is run at the beginning of the new fiscal year. If the program is already run at the end of the last fiscal year, postings which are posted after this to the last fiscal year, do not result in automatic adjustment of the balance carried forward because it is not a "posting to a previous year". In such a case, it is necessary to let the program run again after these postings to carry forward the postings entered later.
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Period Management and Closing Operations

Carry Forward Balance for Receivables/Payables (F.07)

The program can be started as often as desired. Nevertheless, you can post to the new year if the program has not yet run. When posting, the accounts, however, with a balance carried forward of greater than zero are opened. Postings in the previous year do increase this balance carried forward, but do not carry forward the total of the items already posted in the old year to the new year; the balance carried forward only has the items posted by the new year into the previous year, but not the items posted in the previous year itself.
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Period Management and Closing Operations

Carry Forward Balance for G/L Accounts (FAGLGVTR)

Carry Forward Balance for G/L Accounts (FAGLGVTR)

This process involves carrying forward account balances into the new fiscal year. The balance to be carried forward is shown in the account balance display. To carry forward balances, you can use separate programs for G/L accounts, and for customer and vendor accounts. You therefore do not even have to carry out the balance carry forward manually if you have already posted to the new fiscal year.
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Period Management and Closing Operations

Carry Forward Balance for G/L Accounts (FAGLGVTR)

The transaction is executed as follows: Balance Sheet and Customer and Vendor Accounts The balances on the balance sheet accounts are simply carried forward into the new fiscal year. Additional account assignments are transferred. Profit and Loss Accounts Profit and loss accounts are carried forward to retained earnings accounts. The balances of the profit and loss accounts are set to 0. Additional account assignments are not transferred. Transaction currencies are no longer applicable and the profit and loss accounts are summarized in local currency.
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Period Management and Closing Operations

Generate Forward Account Balances for New FY (S_ALR_87012277)

Generate Forward Account Balances for New Fiscal Year (S_ALR_87012277)

This is the same transaction as generating forward account balances for old fiscal year.

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Period Management and Closing Operations

Create Financial Statements (S_ALR_87012284)

Create Financial Statements (S_ALR_87012284)

As part of the year-end closing, individual companies create financial statements according to country-specific regulations. This is the same transaction as creating external reports discussed in the month-end closing process.

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Period Management and Closing Operations

Block Old Financial Year (OB52)

Block Old Financial Year (OB52)

This is the same transaction as opening and closing posting periods discussed in the monthend closing process.

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Period Management and Closing Operations

Profit and Loss Statement Report

S_PL0_86000028 this transaction executes the Profit and Loss statement and provides information for actual/actual comparisons.

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Period Management and Closing Operations

General Ledger Account Balance Report

S_PL0_86000030 this transaction generates a General Ledger account balance report.

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Period Management and Closing Operations

Additional Closing Transaction

Use the work instruction to perform this additional Closing transaction.
T-Code
ACACCARRYFORWA RD

Report Title
Accrual Carry Forward

Use this transaction to

Carry forward already posted accruals from the accrual engine. After data carry forward, accruals can be posted in the same year. This transaction can be run in test mode.

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Period Management and Closing Operations

Additional Closing Reports
Using the reporting features provided in the SAP Basics and Navigation Course, you can execute and use the following additional reports when needed.
T-Code S_ALR_87012026 S_ALR_87011981 S_ALR_87012006 S_ALR_87012394 Report Title Depreciation Forecast Physical Inventory List Depreciation Statement Record of Use and Sales Taxes (USA) Document Journal Compact Document Journal Line Item Journal Use this transaction to Run a report on depreciation. Display inventory of assets in company code. Display all depreciation postings for selected assets to a specific date. Display customer/vendor types totaled by jurisdiction code and tax base amount along with total tax. Display all posting periods with reference to documents (created monthly). Display the most important data from document headers and items in a table format for selected documents. Display a journal report at the line item level for selected posting documents.

S_ALR_87012287 S_ALR_87012289

S_ALR_87012291

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Period Management and Closing Operations

Additional Closing Reports (continued)
T-Code
S_ALR_87012293

Report Title
Display of Changed Documents Gaps in Document Number Assignment G/L Accounts List Invoice Numbers Allocated Twice Gaps in Document Number Assignment Recurring Entry Documents

Use/Results
Display a list of charges made to various documents. Selection is by company code, document number, year, etc. Display a gap in the document number assignment and documents assigned more than once.

S_ALR_87012342

S_ALR_87012333 S_ALR_87012341 S_ALR_87012342

Display a list of G/L accounts by company code or Chart of Accounts. List of Invoices applied twice for a vendor Document Numbers Missed by System

S_ALR_87012346

List displays all recurring entry documents

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Period Management and Closing Operations

Schedule Manager
Schedule Manager can be used as the central tool to schedule and monitor all transactions and processes related to the closing process. It provides a good overview of the status of the closing and contains various means of automating and providing reminders for tasks. The following main areas will be explored and utilized: Task List components available in the task list are used to structure the period closing process Workflow (to schedule series of jobs, which need to be run sequentially) Background jobs On-line programs or transactions that are executed directly from within Schedule Manager Text reminders for non-SAP tasks, e.g. reconcile fund-level cash to investments and cash on hand. Scheduler - shows tasks that have been completed on a specified day, or where action needs to be taken. The calendar requires entries to be made for a given day at a certain time. Monitor - functionality provides: Detailed job status (spool lists, job log) for a given task View messages related to given tasks Work List - better handling of errors. Faulty objects do not go through to the next step, but are logged for review. Ownership of this tool should rest with the Controllers Office, since this office bears ultimate responsibility for ensuring that the books are closed on an accurate and timely basis. One person, with a backup, should be designated to run the Schedule Manager and monitor the status of the tasks. 55

Period Management and Closing Operations

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Period Management and Closing Operations

Best Practices
Perform monthly and annual close

Develop and communicate comprehensive monthly and annual closing schedules

Establish monthly cutoffs to facilitate timely monthly closings Closing should be centrally controlled and managed to ensure that all steps are completed timely and in sequence Closing schedule includes the closing of all modules and the closing should be controlled by Finance All adjusting entries should be posted in the ERP system System should provide extended periods for closing entries

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Next Steps

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Questions?
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ?? ? ?? ? ? ? ? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ? ? ? ? ? ? ? ? ? ? ? ? ?