I have learned that as an SAP fixed asset consultant for more than 12 years, I always know what I will be doing at the beginning of each year — helping my clients through their year-end closing problems. These problems range from easily fixed — such as not opening the new fiscal year correctly — to very difficult — such as reconciliation differences between the fixed asset subledger and the G/L in prior years.

With the proper year-end closing procedure, however, you can avoid most of these problems. As a result, I realized the need for a formal year-end closing guide for fixed assets and put together the following 11 steps. Note that this process is not "one size fits all." It is meant to apply to the greatest number of SAP functional experts.

You may need to add steps depending on the functionality your company uses. For example, if you are using fixed asset features such as interest calculations, revaluations, or periodic postings, you have to insert steps to complete your year-end closing process.

Step 1. Recalculate all asset values. Run program RAAFAR00 (transaction AFAR) to recalculate all asset values (Figure 1). This ensures that the planned asset values (such as depreciation, revaluations, etc.) reflect the most current configuration changes. This step does not create any postings nor will it change already posted values; it simply updates the planned amounts to reflect any configuration changes that may have happened in the past. This is a critical first step and, if omitted, it can lead to the dreaded "depreciation not completely posted" error later on. Note that only open fiscal years can be recalculated.

Figure 1

Recalculate planned values via transaction AFAR

Step 2. Find all incomplete assets. Run program RAUNVA00 (Figure 2), which lists any assets that the system has flagged as incomplete. Should an asset truly be incomplete (e.g., missing cost center even though the field is set to required), it is listed with the missing information. You can double-click on the asset number, which sends you to transaction AS02 (change asset) where you can complete the master record.

Figure 2

Program RAUNVA00 finds incomplete assets

Sometimes assets are listed as incomplete on this report even though they are really not incomplete — for example, an asset was flagged as incomplete because the required cost center was missing but then the cost center field was changed to optional. You can make a correction by clicking on the Corr.incomplete asset button shown in Figure 3.

Figure 3

Correct assets mistakenly listed as incomplete

Tip!
Before you start the year-end closing process, verify that your company code status is set to productive (T093C-XANUEB) and that all prior fiscal years are closed (T093B- ABGJA). This may seem obvious, but I have seen both of these items set incorrectly too many times not to mention it here.

Step 3. Find all unposted assets. Run program RAANLA01 to find all asset master records that have been created but that have not been posted to (Figure 4). These assets may have been created just recently — for example, in anticipation of a settlement or acquisition posting. Or they may have been created a while ago but are not needed anymore — for example, because a project was expensed instead of capitalized. You should find out about all assets on the report, specifically about those that were in the preceding several months. Categorize these assets into two classes (still need them versus not needed anymore).

Figure 4

Directory of unposted assets

Step 4. Delete erroneous master records. If you find assets in the previous step that were created in error or are no longer needed, you should physically delete these master records. You can do this safely via transaction AS06 for individual assets or AS26 for group assets (Figure 5). Remember, however, that you cannot undo this action. This step is not a required technical step but falls under the good housekeeping rule.

Figure 5

Transaction AS06 allows you to delete assets

Step 5. Update your insurance index value. If you calculate insurance replacement values in your system, now is the time to update the insurance index series. Use transaction OAV5 to enter the insurance index value for the new fiscal year. This is normally done in December, at which point you may not have the final index value. (Insurance companies usually publish this in the early part of the new fiscal year.) Go ahead and enter an estimated value for now (Figure 6). You can always recalculate the insurance replacement values once you receive the final index figure.

Figure 6

Update insurance index values via transaction OAV5

Step 6. Run your regular month-end closing process. This step includes the settlement run for capital investment measures and the depreciation run for period 12 for the current year. Make sure that you post all depreciation amounts to the G/L and process any errors before you continue with the next step. After you have performed the final settlement run for the year and have posted depreciation for period 12, make sure that there are no more postings made to internal orders, work breakdown structure (WBS) elements, or assets. Any such posting would require you to re-run the settlement run and repeat the depreciation run.

Step 7. Reconcile the FI-AA subledger with the G/L. While a reconciliation of subledger to the G/L during the year does not make much sense because of the possible differences in posting dates versus asset value dates, it makes perfect sense at the end of the year. At this time, your subledger has to match the G/L to the penny. If it doesn't, you need to correct any differences before moving on to the next step.

To reconcile the two ledgers, you could use one of the standard fixed asset reports — RAHAFA01 (total depreciation) or RABEST01 (asset balance), both available from the standard fixed asset reporting tree. I like to use the total depreciation report with a sort version that includes the G/L account as one of the sort/subtotal levels and compare the report numbers with the G/L account balance display (transaction FS10). Reconcile all asset cost accounts and accumulated depreciation accounts.

Another option for reconciliation is to use transaction ABST. Enter each reconciliation account and let the system find any discrepancies between the subledger and the G/L (Figures 7 and 8).

Figure 7

Run the reconciliation report with transaction ABSTB

Figure 8

Reports shows no reconciliation differences found

Step 8. Change the fiscal year. Run program RAJAWE00 (transaction AJRW) to change the fiscal year (Figure 9). This opens the new fiscal year in Asset Accounting only and has nothing to do with the FI periods. It does enable you, however, to post within the Asset Accounting module and to run reports with the new fiscal year's date. This in itself is a purely technical step, yet it must be executed prior to the new year. Otherwise you won't be able to report values as of the new year.

Figure 9

Year-end change via transaction AJRW

Step 9. Close the fiscal year. Run program RAJABS00 (transaction AJAB) to close the old fiscal year (Figure 10). This step performs the actual close of the year after which you can no longer post to the old year. The program performs a variety of checks. Most importantly, it checks if the posted amounts for all assets equal the planned amounts in posting depreciation areas — an indication that all depreciation has been posted. Should the program report any errors, you have to fix them before you can re-attempt the close again. It is critical that you execute this step prior to the FI close, as otherwise you cannot perform any corrections or reconciliation.

Figure 10

Year-end close via transaction AJAB

Step 10. Reopen the fiscal year if necessary. At this point, you have completed the year- end closing for the fixed assets subledger and you may now proceed to close the G/L (assuming that all other subledgers have been properly closed, too). However, several reasons may force you to re-open the fiscal year for either the entire company code or just for specific depreciation areas. For example, I have seen many clients go through the entire closing process only to realize that the settlement run from projects/WBS has not been performed yet (see step 6). In this case, you would have to re-open the entire fiscal year to allow another settlement run. Use transaction OAAQ to do this (Figure 11).

Figure 11

Open fiscal year for the entire company code via OAAQ

Another common scenario is that the tax department may have corrections to post months after the initial year-end close. In this case, you would open just the specific tax depreciation areas without impacting the book depreciation area. Use transaction OAAR to open specific depreciation areas (Figure 12).

Figure 12

Open the fiscal year for specific depreciation areas via OAAR

Once a depreciation area has been opened, you may post correction entries to this area. If you have opened the fiscal year for the entire company code or for specific depreciation areas only, you have to perform another year-end close.

Step 11. Perform all year-end closing steps in your production support systems, such as your QA and development systems. This step may seem redundant, but it is critical to a smooth operation of your fixed asset system. Case in point, assume you decide to skip this step and never perform a year-end close in your development system. A year later you decide to make a configuration change that impacts a setting in table T093B (rounding rules) and transport this change into your productive environment. This is a dangerous move since table T093B contains not only rounding rules but also the last closed fiscal year. You could transport an old fiscal year inadvertently and thereby open the fiscal year again in production. This happened to one of my clients and proved to be a costly mistake. In addition to ensuring a smooth configuration transport process, an up-to-date development system provides you with a working platform where you can develop solutions for future issues.