Year End Closing Activities in Sap Business One

How To Guide SAP Business One 9

How to Perf rfor orm m Year Year End End in SAP Busi ness One One

Overall Business Processes

ACCOUNTING

Related Business Process

ACCOUNTING

Responsible Department

ACCOUNTING

Involved Departments

ACCOUNTING Last Updated

08/05/2014

Copyright © 2014 Supernova Consulting Ltd. All rights reserved. This content may not be reproduced or transmitted in any fo rm or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without written written permission. Requests for permission should be directed to [email protected], +357-25-817880, or mailed mailed to Supernova Consulting Ltd, P.O. Box 56747, 3309, Limassol, Cyprus

Copyright © 2010 Supernova Consulting Ltd. All rights reserved.

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CONTENTS YEAR END (PERIOD END CLOSING) ................................................................................... ................................... 3

I NTRODUCTION......................................................... ................................................................... .................................. 3 PROCESS FLOW ................................................................... ................................................................... ....................... 3 DESCRIPTION............................................................ ................................................................... .................................. 3 PREPARATION ........................................................ ................................................................... .................................. 4

BACKUP ................................................................... ................................................................... .................................. 4 CHECKING CONTROL ACCOUNTS .................................................................................... .............................................. 4 EXCHANGE R ATE R EVALUATION ......................................................................... ......................................................... 6 FINANCIAL AUDIT ADJUSTMENTS .................................................................................... ............................................. 9 R UN STOCK AUDIT R EPORT ...................................................................... ................................................................... .9 R UN PROFIT AND LOSS STATEMENT .......................................................... .................................................................. 12 YEAR END CLOSING ......................................................... ................................................................... ..................... 13

YEAR E ND CLOSING PROCESS........................................................ ................................................................... .......... 13 EXAMPLES OF POSSIBLE ERROR MESSAGES ................................................................. ................................. 18

DISTRIBUTION R ULE ...................................................................... ................................................................... .......... 18


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Year End (Period End Closing) Introduction The Year-End Closing window enables you to create postings in the accounting system when a fiscal year or posting period ends. This function allows the transfer of previous profit and l oss G/L account balances from one fiscal year or period to another. The procedures described in this function represent a concept that is generally applicable. The character of this document is generic and does not cover special cases.

Process Flow The procedures described in this document must be followed step by step for ac curacy of content or the completeness of the year-end closing. You are ultimatel y responsible for the correct operation of this and providing the necessary documentation to ensure accuracy. Before performing this procedure, it is highly advisable that you discuss the procedure in detail with your audit consultant or the person responsible for your year-end closing (if applicable).

BackUp

Checking Control Accounts

Exchange Rate Revaluation

Audit Adjustments

Run Stock Audit

Year End Closing

Description The Year End Closing function allows companies to easily proceed with the closing of all the profit and loss items and the transferring of the profit or loss result of the year to the reserves account in the balance sheet.

Note: All data, values, amounts and names appear within this document do not represent true figure and are been used for presentation purposes only.


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Preparation Backup Perform a backup of the SAP Business One database before you start the Year End Closing process. This is important because it is not always possible to re-construct a report backdated to the cut-off date in SAP Business One. The status of the previous fi scal year is saved in the backup.

Note: If you are not familiar with the backup procedure please contact your IT administrator or Supernova Support Center.

Checking Control Accounts Checking Control Accounts that are matching the individuals master data balances is a simple process. Please follow the process below for checking the Control Accounts. 1. From Main Menu go to Reports FinancialsFinancialTrial Balance

2. The Trial Balance – Selection Criteria window will open. 3. Select BP indicator and select under Groups field the option ALL. 4. Select Debtors and Creditors Accounts. Copyright © 2010 Supernova Consulting Ltd. All rights reserved.

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5. At the Date field select Posting Date and enter as the date range the first and the last date of the year that you are processing for the Year End. 6. Click OK. 7. The Trial Balance Report will pop up. 8. In this example G/L Accounts are viewed at level 1. 9. Check that Customer’s and Supplier’s totals are equal to the Control Account Balances.

10. You can change the level as shown below to view more details.


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Exchange Rate Revaluation When you maintain a foreign currency (FC) business partner and/or accounts, al l related bookkeeping is conducted in the FC. As the bookkeeping system must also be conducted in local currency (LC), every FC transaction of this nature also is expressed in LC according to the FC exchange rate on the date of transaction. The daily fluctuations in the FC exchange rates create a situation whereby the balances in LC and FC do not match. The automatic exchange rate differences are designed to periodically recalculate the LC and FC balances, according to the exchange rate on the day the differences are calculated. SAP Business One can provide recommendations for executing automatic journal transactions for exchange rate differences in FC business partners and accounts, correct to a given date. The function of the program that calculates the exchange rate differences is to reconcile between the FC card balance and the LC balance, considering the fluctuation in t he FC exchange rate. The exchange rates used for revaluation are those saved in the exchange rate table on the execution date. The current exchange rate that is valid for the valuation must already exist in the exchange rate table before executing the transaction. 1. To access the Exchange Rate Differences function, choose Financials Differences. 2. Select Business Partner.


Exchange Rate

→

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3. Enter Exclude Gains with Due Date After and Execution Date. 4. Enter the G/L Accounts for Gain and Loss. 5. Currently, the execution date is used only to determine the exchange rate from the rate table with this date. The system does not select the open items backdated to this date and it selects the open items based on the s ystem date. Therefore, we recommend that you perform the currency valuation promptly after all transactions for the previous fiscal year have been entered or do a manual comparison with the results of the AGING report. 6. Click Execute. 7. The Exchange Rate Differences window will pop up.


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8. Fill in text fields, check BP’ account differences. 9. Select BP’s and click Add. st 10. In this example, the account of the 1 BP will be debited with 0.05 and the Exchange rate G/L account will credited with 0.05 nd 11. The 2 BP account will be debited with 0.01 and the Exchange rate G/L Account will be credited with 0.01 rd 12. The 3 BP account will be debited with 0.02 and the Gain/Loss Account will be credited with 0.02 13. The system in this example will create three journal entries, one for each BP Account. 14. Some processes must be followed for the General Ledger Accounts as shown below.

15. Click Execute. 16. We recommend that you create an automatic rever se posting on the first day of the subsequent period.


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It is advisable to check the suggested accounts carefully. Very often, you have to differentiate between realized and unrealized exchange rate differences. The system default shows the accounts that are set in the account determination setup and the accounts are normally set for realized exchange rate differences.

Financial Audit Adjustments After audit control you must proceed with the final audit adjustments postings. Note: All financial adjustments must be posted on the last date of each fiscal year

Run Stock Audit Report This report provides an audit trail for the posted s tock transactions in the chart of accounts. You use this report to make comparisons between the accounting view (stock balance accounts) and the logistics view (stock value displayed by the audit report). The report explains the value changes in stock accounts. Inventory Audit Report Go to Modules → Stock Management → Stock Reports • Click to Stock Audit Report. • Select the appropriate G/L Accounts, through Accounts – Selection Criteria, so a user to • be able to see the stock balance.


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• •

Click OK Click Ok


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Trial Balance Go to Modules → Financials → Financial Reports → Financial • Click to Trial Balance. • Select the appropriate G/L Accounts for stock value. If the below section is not appear the • user has to tick the check-box next to G/L Accounts (text)

•

Click Ok.


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Run Profit and Loss Statement Next Step is to Run a Profit and Loss Statement for the corresponding year and make sure the Total Balance of the report is the same with the Profit and Loss Amount extracted by your Auditors. 1. To run the P&L Report choose Reports -> Financials -> Financial - > Profit and Loss Statement.

2. Select the Date Range you would like for the P&L Report to run (the Year End Date Range) 3. Click OK to run the report 4. Check the total Profit or Loss Amount generated; this amount needs to be the same with the amount of P&L derived from your Auditors in order to continue with Year End Closing.


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Year End Closi ng Year End Closing Process To carry forward the balances of the P&L accounts to the corresponding account in the balance sheet (or several different balance sheets), you can use the PERIOD-END CLOSING function. You can store the result initially as a report and then post them at a later stage. If you make postings after the balances carried forward have been entered, you need to restart the period-end closing routine to include these subsequent postings. When the balance is carried forward, the balances of the P&L accounts are posted to a clearing account on the day of carrying forward (the last day of the peri od). Therefore, the balances are reduced to zero. On the first day of the subsequent period, the clearing account is posted to the corresponding balance carried forward to the account in the balance s heet. Unlock Posting Period: •

Unlock the Posting Period of the first and the last month of the Year that you will apply the Year End procedure. Additionally, you should open the first month of the next year. That step will let the system to create the Year End transactions, for the G/L Accounts.

•

Go to Administration → System Initialization → Posting Periods

•

Unlock the appropriate Posting Periods one by one. Click Ok.

•


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Period End Closing: •

Go to Modules

•

Select the Period as year, for this example is the year 2010. In the From and To fields enter the first and the last month of the year as shown above. In the Retained Earnings Account field choose the relevant G/L account to be used as the clearing account in the journal posting made in the accounting s ystem, i.e. Retained Earnings for the Year In the Period End Closing field choose the relevant G/L account to be used as a clearing account to the P&L account, and to the retained earnings ac count, Year Earnings Suspense. Click Execute. The Period-End Closing window will open as shown below.

• •

•

•

Administration → Utilities → Period-End Closing.

→


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• • •

In the Ref 1 and Ref 2 fields, enter required references for the journal entries. In Due Date and Document Date, enter required dates for the journal entries. Click on the Approved column label to select all the accounts and click Execute.

NOTE: For any possible error please refer to the last section of this document. Journal Entries:

After the system finishes the Year End Closing calculations, go back to the journal entry window.

1. Click to Previous button from the toolbar to go the last transaction. Copyright © 2010 Supernova Consulting Ltd. All rights reserved.

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2. You will notice that the system credited the Ret ained Earning B/F account and debited the st Retained Earnings for the Year account using as posting date the 1 date of the new fiscal year.

3. If you go back one more transaction, you will find that the system credited the P/L Account and debited the Retained Earnings B/F account with the same amount as in t he last transaction.

4. Locked the Posting Periods that you have opened before.


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5. These are the transactions that the system records for each P/L Account.

NOTE: Instead of using R/E B/F you can use R/E directly. If you use R/E B/F then you need to manually post Profit / Loss from R/E B/F to R/E


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Examples of Possible Error Messages Distribution Rule Error 1: Distribution Rule •

First possible error, it refers to Distribution Rule restrictions, and it looks like below:

o

G/L account xxxxxx needs DR assignment for dimension 1; fill in DR-related fields

Error 2: Project Rule Second possible error, it refers to Distribution Rule restrictions, and it looks like below: •

o

G/L account xxxxxx needs project assignment; fill in project-related fields

Solution: • For both errors, a user needs to define the two t ypes without distribution rule, as you can see below. Go to Administration → System Initialization → General Settings → Cost Accounting. •


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Copyright © 2014 Supernova Consulting Ltd. All rights reserved. This content may not be reproduced or transmitted in any fo rm or by any means, electronic or mechanical, including photocopy, recording, or any information storage or retrieval system, without written permission. Requests for permission should be directed to [email protected], +357-25-817880, or mailed to Supernova Consulting Ltd, P.O. Box 56747, 3309, Limassol, Cyprus


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Year End Closing Activities in Sap Business One

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