Year-end closing is an important activity that is practiced by almost all companies sincerely in order to analyze the company growth as well as cash flows. It is basically an updating of the records and transactions which took place in the fiscal year that needs to be recorded in the books.
Same is the case for asset accounting, where year-end closing helps in ensuring the accounting books has been properly maintained. The process needs to evaluate the capital, balance sheet, assets, liabilities, budget and many other books of accounting.
A company’s health depends on how well one keeps an eye on the fiscal year. In this article, we will be covering easy steps to keep up with the critical factors and maintain the data consistency.
PART 1: Preparing oneself for the Year-end Closing Asset Accounting
In order to close the Fiscal year in Financial Accounting (FI), one must complete the year-end closing in asset accounting. Failing to do this can cause mismatched transactions and pending reconciliations. It can consume more time than step-by-step following the procedures.
Step 1: Review the last closed fiscal year in Financial Accounting (FI) as well as in Asset Accounting (FI-AA)
The first and foremost important thing to understand is that FI cannot be larger than FI-AA as it can lead to issues. One becomes unable to recalculate the depreciation. Thus, it is suggested to close the FI-AA before closing the FI. Ensure that FI-AA is constantly being closed and no more than two years are open.
If there are more than two opened years, then you should contact your SAP consultant. Through that you can conduct a thorough ledger evaluation. It may also be helpful if there is a company code that needs to be closed but the currency conversion is becoming an issue.
Step 2: Bring in RACHECKO report for customization support
While closing the FI-AA, it is possible that errors can be made especially while putting the adjustment entries. These adjustments are mostly made in the areas of depreciation, transactions, and period of use. Errors can occur due to the transfer postings, miss outs on account assignments, or while recalculating the depreciations.
In such cases, RACHECKO report can be used to customize the transactions. It needs to be done before the go-live date in order to make all the necessary corrections. With the help of this report, modifications can be made as per the current support package status. It doesn’t change much of the settings, and one needs to make them manually.
Step 3: Check Incomplete Assets
Having incomplete assets can hamper the year-end closing in asset accounting as these become listed as error logs in the system. The incomplete assets can be processed through RAUVA00 report.
Remember that there are two types of assets which are considered incomplete. First, when the asset is incomplete and still can be posted, and second, when the asset is incomplete and cannot be posted. Both of these types need to be corrected before the FI-AA.
The assets are considered incomplete when the user lacks the authorization to use the master data and cannot access the entry in required fields. In such cases, the incomplete assets can still be posted as they are not considered critical issues. Another reason of incomplete assets could be the change in screen layout rule. It happens when a there is a required entry field with the rule of no entry. For this too, the changes can be made easily. You can access the master data and make the necessary changes.
Step 4: Go through the Indexes
Another important step in year end closing in asset accounting is checking the indexes properly. The missing indexes can causes problems such as; missing insurable values, inability to carry out change in fiscal year, flagged assets, error messages like AA609 can appear.
To ensure no such errors, you should input the indexes for figuring out alternative values, or for updating the bottom insurable value, as a part of the arrangements for closing. For this, the AYLS transactions can be used. Once the indexes have been maintained, one must recalculate depreciation.
For insurable values in the fiscal year that have been closed already can be checked through the SAP Note 35721. Remember that the carry forward of indexes only takes place during the fiscal year change and so, if any issue is there you must consult through your expert.
Step 5: Calculating Depreciation
One of the most crucial steps of year end closings in Asset Accounting is calculating the depreciation. Errors in this can lead to incorrect asset values, depreciations between ledger evaluations, asset value issues in the new fiscal year, and so on.
Therefore, start the depreciation calculation by using the company code for which the year-end closing is being done. Execute, text and run the RAAFAROO report. It will help in listing the assets, executing various background options, and issuing the statistical log of the assets. It will show the errors, which can then be corrected.
In case the depreciation keys have been changed, changes in the system which affected the depreciation data, or you need to recalculate the data by using current indexes, it is possible that the changes do not get updated. In such cases, let your expert guide you through.
Step 6: Run the Depreciation Postings
This step is the official start to the year-end closing in asset accounting as well as for the financial year end closing. However, you cannot run the depreciation posting for the recent fiscal year if you haven’t completed this procedure for the previous fiscal year.
So, make sure you are ready for the procedure before running out this step. However, you can start with the RAPOST2000 report in the test mode for the same. It will help you in catch the errors (if any) beforehand. If any error messages appear, get them cleared before the actual report running.
The RAPOST200 report gathers the correct values for the Asset Accounting and gets it summarized as per the set criteria. There is no reverse function for the depreciation postings, so if any changes are made, that needs to be run in the repeat RAPOST2000 report.
Step 7: Move on with the Periodic Posting Program
If the values of balance sheet in the periodic posting are not the same as their current values, they can make it impossible to carry-out the year-end closing procedures. To run the periodic posting program, there is a report by the name RAPERB2000. Make sure all the entries and postings have been made before running the report as it cannot take place afterwards.
Running the periodic posting program is significant from both accounting and technical restrictions. The new G/L functionality allows direct posting for the technical reasons. As for the accounting needs, this process is important to note the depreciations made according to the date on which they were made.
This is an important step before reconciling the ledgers, so make sure that it is made after an year. Remember the date of past year periodic posting for a better result. The RAPERB2000 report helps in catching up with the missing values and reports as well by showing the errors.
Step 8: Compare the General Ledger and Subsidiary Ledger
It is important to reconcile the general and specific ledgers in order to ensure that no pending adjustments are required. In case of the mismatch, the external auditor can refuse to certify the year-end closing. It may also affect the submission of the reports to the tax authorities.
In order for this not to happen, perform a reconciliation of the values reported in the Asset accounting with that of the ones reported in the general ledgers. For this, start the report of RAABST02. It will help in checking the errors. Moreover, you can check the differences by checking the final values reported in the last fiscal year’s reports.
You can also create two asset records by using the following ways:
- Classify the assets in dynamic sections
- Use the sort version 0020
- Check the group totals
- Enter the report dates from past as well as current Fiscal Years
- Make depreciation adjustments if the values doesn’t match
If there are still anything that is stopping you from performing the year end closing in Asset Accounting, look for an expert’s help.
Step 9: Execution of Fiscal Year Change Program
Last but not the least in preparing for the year end closing in Asset Accounting, executing the Fiscal Year. However, it is not a necessary step as per the accounting but it can provide you a technical edge. You can use the RAJAWE00 report to have total segments created for the asset accounting.
It is suggested to carry out this step as it can help you in separately checking the various depreciation accounts including accumulated ordinary depreciation, accumulated special depreciation, planned depreciation of the current year, and more. Once these values have been added, the postings affecting the assets can be added as well.
PART 2: Executing the Year-End Closing Program in Asset Accounting
Once the steps mentioned in Part 1 are successfully completed, one can move on to the final part; that is, execution of the program. Please note that one cannot move on with the closures of general ledgers before getting the asset accounting closings done. If the year end financial closings are done and any error is reported in the asset accounting closures, it can lead to many problems.
For the Asset Accounting Year-end closures, one has to run RAJABS00 report which can be tested first. If the steps mentioned in Part 1 were carried properly, then there will be no problem or error message in this report.
This report helps in taking a final check on the depreciation and year end closing reports of the current fiscal year.
In case the year-end closures have become stressful for you, you can checkout the ways in which you can keep the year-end financial closures burnout at bay.
Written by – Tushar Khurana and Priyanka Rampal
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