FI-GL-007 Presentation

Version 2.0

Updated: October 28, 2008

Period Management and Closing Operations

FI-GL-007October 29 – 30, 2008

Period Management Period Management and Closing Operationsand Closing Operations

FIFI--GLGL--007007October 29 October 29 –– 30, 200830, 2008

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Ground Rules

Has everybody signed in?

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

Creativity, cooperation, and compromise

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Finance LeadsBeverly Hodges – Finance LeadDrew Thigpen – Finance LeadMary Ramsrud – Consulting Lead

Logistics LeadsBelinda Rogers – Logistics LeadJack Ladhur – Logistics LeadBrad Denham – Consulting Lead

Linear Assets LeadsMark Suarez – Agile Assets LeadCharles Pilson – Consulting Lead

General Ledger

Accts Receivable

Cost Accounting

Grants Mgt

Asset Accounting

Real Estate Management

Accounts Payable

Cash Management

Funds Management

Project Systems

Budget Prep

Project Organization - Functional Teams

Grantor

Pat CaneBabs MyersMary Ramsrud

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GL Workshops

Title Business Process Work Session Date

FI-GL-001 Enterprise Structure July 29

FI-GL-002/004 Finance Account Code – Chart of Accounts and data maintenance July 31

FI-GL-003 Chart of Accounts – GL accounts and master data August 20-21

FI-GL-005 Splitting Rules – supporting balance sheet reporting October 2

FI-GL-006 GL Processing October 8-9

FI-GL-007 Period Management and Closing Operations October 29-30

FI-GL-008 Financial Reporting November 5-6

FI-GL-Validation Review of GL decisions December 16-17

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Work Session Objectives

Month end closing process discussion

Year end closing process discussion

Period control with determination of special periods

Cross module and team integration touchpoints

GL conversion strategy

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Process Overview

OSRAP prepares:• Close work plan – internal OSRAP task list• Close procedures – memo to all agencies• Close time frame document – for OSRAP, OIS, OPB, OSUP,

and OST use

OIS prepares: • Close calendar – first draft used by internal OIS teams, final

draft used by OIS and OSRAP

OSRAP and OIS communicate while all calendars and documents are being prepared

OSRAP approves dates, system hours of availability, security access and lockouts

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As-Is Process

OIS Calendars• June 30 Close• 13th Period Close• Annual Close

OSRAP Documents• Close Work Plan• Close Procedures• Close Timeline

Process Improvement Opportunities

Simplify closing processes

Eliminate reporting complexities

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• 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.

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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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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 possibly one prior period are open. 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.

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SAP Concepts – Special Periods

Use of Special Periods - Example:

Period 13 - Year-End adjustments prior to draft statements

Period 14 - Draft Statements including re-class entries

Period 15 - 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

How will we define the special periods?

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Month-End Closing

January 2007

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Due to statutory requirements and/or company policies, the company’s books may be closed and a new period opened on a monthly basis.

The typical SAP fiscal closing spans 5-8 days after the end of the month. A leading practice 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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Month-End Closing ProcessOpen and Close Posting Periods

(OB52)(OKP1)

Roll Material Master

(MMPV)

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

• Bank Charges and Credits (FB50) •Vendor Checks Issued (FCHR)

Post:• Depreciation• Grants billing• Salaries• Accruals/Deferrals• Month-End Recurring Entries

Perform Cost Center Analysis

(S_ALR_87013612)

Create Financial Statements

(S_ALR_87012284)

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You define posting periods in your fiscal year variants. You can open and 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.

Open and Close Posting Periods

(OB52)

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Special PeriodsPeriod Range

GL Closing a Posting Period and Opening a New One

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You can open and close CO posting periods for posting in addition to the GL period controls. 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.

CO postings that cross fund, business area, functional area, or grant are relevant to FI and are affected by the FI period control as well.

CO Period Lock(OKP1)

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CO Closing a Posting Period and Opening a New One

Typically entire period is locked and unlocked

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Some data (stocks and certain valuation data such as total value, total stock, valuation class, price control indicator, 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.

Close Material Master

(MMPV)

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MMRV provides current status.

MMPV closes Material Master records for the old period and opens a new one.

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This is a single-screen transaction. You can enter, hold, park, and post documents on one screen.

Perform adjusting entries and final

postings(FB50)

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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.

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

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– Settlements – perform asset and AuC settlements– Depreciation – execute depreciation calculation and

posting runs– Salaries – post final payroll and payroll accrual – 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

– Execute Month-End recurring entries– Grants billing– Cost allocations

Month-End Posting (FB50)Or relevant integrated business transaction

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

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.


(S_ALR_87012284)

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Financial Statements

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A cost center is an organizational unit within a controlling area that represents a defined location of cost incurrence.

Use this procedure to display, review, and analyze costs associated with cost centers.

Perform Cost Center Analysis

(S_ALR_87013612)

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Period Management and Closing Operations Month End Schedule (Day 0 to 8)

Review sample month-end closing calendar

Who will manage the monthly closing calendar?Who will execute the opening and closing of the financial and MM periods?Will we reserve for encumbrances as part of the month-end close?Is 8 days a realistic expectation?

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Year-End Closing

June 2007

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Due to statutory requirements and/or internal policies, the State’s books must be closed and a new period opened on a yearly (annual) basis.

The June 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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Conclude June Month-End

Closing

Generate Account Balances for Old

Fiscal Year(S_ALR_87012277)

Block Old Financial Year

(OB52)


(S_ALR_87012284)

Carry Forward Balance for

Receivables/Payables(F.07)


G/L Accounts(FAGLGVTR)

Generate Forward Account Balances for

New Fiscal Year(S_ALR_87012277)

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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)

Generate Account Balances for Old

Fiscal Year(S_ALR_87012277)

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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.


Receivables/Payables(F.07)

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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 2006 with the posting date December 2004 changes the balance carried forward for 2005 and 2006.

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

The program can be started as often as desired.

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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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. This program is used to carry forward the balances of the general ledger or another ledger to the new fiscal year.

The program can be run multiple times.

Normally, the program does not need to be run more than once, since postings to the previous fiscal year are automatically carried forward to the current fiscal year, if the balance carry forward program has already been run.


G/L Accounts(FAGLGVTR)

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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. – Retained earnings account(s) have to be maintained

for the P&L accounts and configured.

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Generate Forward Account Balances for New FY (S_ALR_87012277)

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

Generate Forward Account Balances for

New Fiscal Year(S_ALR_87012277)

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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.


(S_ALR_87012284)

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Block Old Financial Year (OB52)

This is the same transaction as opening and closing posting periods discussed in the month- end closing process.

Block Old Financial Year

(OB52)

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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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General Ledger Account Balance Report

S_PL0_86000030 – this transaction generates a General Ledger account balance report.

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Year EndClose

PreparationSteps

Month EndClose Steps

Year EndClose Steps

AP, AR, GL – Open special periodFM – Open special periodCO – Open special periodAA – Fiscal Year ChangeAA – Year end close stepsMM/FM – Close open items (PR, PO, earmarked funds)FM – Open period for budgetingFM – Carry forward commitments and associated budgetFM – Carry forward residual budgetFM – Carry forward Fund balanceAP, AR, GL – Carry Forward balance

Period Management and Closing Operations Year End Closing (High Level)

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Year End Close Calendar: Conventions and Legend

Conventions

Module Legend

GL – General Ledger

AP – Accounts Payable

AR – Accounts Receivable

AA – Asset Accounting

FM – Funds Management

TR – Treasury

CO – Controlling

MM – Materials Management

HR – Human Resources

Step outside of SAP

SAP step

Month-end process

REDTEXT Question?

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Year-End Closing

Review sample year-end closing calendar

Who will manage the year-end closing calendar?How will we define special period authorization groups?

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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 jobsOn-line programs or transactions that are executed directly from within Schedule ManagerText 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 timeMonitor - functionality provides:

Detailed job status (spool lists, job log) for a given taskView 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

Leading 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 owned by Finance

All adjusting entries should be posted in the ERP system

System should provide extended periods for closing entries

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What specific challenges do we face to ensuring timely month end and year end closings?

Identified Risks to a Timely Close

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Hard month-end closing processes with significant centralized processes

Training for self-service year-end reporting

Realignment of special periods?

Enterprise Readiness Challenges

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Data Conversion Objectives

Populate SAP with the master data needed to run the business

Define processes for managing open items throughout the implementation processes

Minimize the amount of historical data to be converted from existing systems to SAP

Minimize the timeframe to complete the data conversion process

Populate SAP with clean Data

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Data Conversion Types

Master DataIt is often downloaded, converted and uploaded

In-Process Transactional DataOriginates outside SAP and completes in SAP

Point-in-time BalancesPrior to process a business activity in SAP, balances will need to be converted from Legacy systems

Historical DataTransactional Data that has completed its business cycle and is needed only for inquiry and reporting purposes

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Conversion Considerations

The requirements to run the business

The testing effort required

Conversion interdependencies

Effort involved in collection

Choosing the right time and resources

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GL Conversion

Fiscal Year End Go-live Load budget (approved if available, otherwise contingent)Convert Opening G/L Balances by Fund/BAConvert Life-to-Date Rev/Exp (at a summarized level) for Projects & Grants

Mid-year Go-live Load current budgetConvert opening G/L balances by Fund/BA for the beginning of the yearConvert YTD actuals by summarized account assignmentConvert Life-to-Date Rev/Exp (at a summarized level) for Projects & Grants

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GL Balance Conversion Process

Extract balances to be converted

Reconcile extraction file to source system

Map balances via crosswalk tables in SAP

Upload the balances via conversion program

Reconcile loaded data to extraction file

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Conversion Accounts

Conversion requires interim accounts, conversion accounts, to upload the Data

Conversion account are reconciled later to appropriate accounts, the effect zeros out the balances in conversion accounts

Conversion accounts act as intermediary accounts to help maintain accuracy while performing conversion

Conversion General Ledger

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Clean-up of existing Data

Cleansing done prior to loading data in SAP

Loading poor quality data could result in incorrect business decisions

Staff with detailed understanding of Data they are working with, should perform the cleansing process

Conversion Preparation

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Potential Risks

Unavailability of Balances by Funds/BA

Getting all postings in on time – No lag

Offline postings to be completed in AFS for accurate reflection of financials

Mapping Exercises to start now (during realization start populating mapping tables)

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Prepare and send out meeting minutes to invitees.

Draft Design Document is prepared.

Follow up on action items identified during the workshop.

Schedule off-line meeting (s) to discuss areas of special concern

Plan follow on workshops, as required.

Plan validation workshop.

Ensure all to-do’s are appropriately documented

Next Steps

Questions?

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FI-GL-007 Presentation

Documents

Transcript of FI-GL-007 Presentation