In SAP S/4HANA, the Year-End Closing process involves various
modules that each play a role in ensuring that financial,
accounting, and operational data are closed out properly for the
fiscal year. Below are the module-wise year-end closing
activities:
1. Financial Accounting (FI)
Activities:
● Close Financial Periods:
○ Lock periods using transaction code OB52.
○ Ensure no further postings can be made for the closed
periods.
● Reconcile General Ledger (GL) Accounts:
○ Perform reconciliations for balance sheet and income
statement accounts.
● Post Accruals & Adjustments:
○ Post necessary accruals and adjustments to close the
year.
● Close Fiscal Year:
○ Execute program F.19 to close the financial year and
carry forward balances to the new year.
● Balance Carryforward:
○ Ensure the balance of open items is carried forward to
the new fiscal year.
● Financial Statement Preparation:
○ Generate financial statements such as the Balance
Sheet, Profit and Loss Statement, and Cash Flow
Statements.
● Year-End Reporting:
○ Ensure that all tax, legal, and statutory reports are run
and compliant with local regulations (e.g., VAT returns,
financial statement reports).
2. Asset Accounting (AA)
Activities:
● Asset Depreciation Run:
○ Run depreciation for all assets using transaction AFAB.
● Post Asset Transactions:
○ Ensure all asset acquisitions, retirements, and transfers
are posted.
● Year-End Closing:
○ Execute the year-end closing for Asset Accounting
using transaction AJAB.
● Asset Reconciliation:
○ Reconcile asset balances with the general ledger.
● Depreciation Simulation:
○ Simulate depreciation for the upcoming fiscal year to
ensure accurate postings.
3. Controlling (CO)
Activities:
● Cost Center Accounting (CCA):
○ Ensure that all cost centers are correctly allocated and
post any necessary period-end adjustments.
● Internal Order Closure:
○ Settle internal orders and close them for the year.
● Profit Center Accounting (PCA):
○ Ensure that profit centers are properly closed, and
transfer balances to the appropriate accounts.
● Run Period-End Allocations:
○ Perform allocation cycles (e.g., distribution,
assessment, and reposting) for cost centers, internal
orders, and other cost objects.
● Variance Analysis:
○ Review and analyze variances in costs and revenues
for the period.
4. Materials Management (MM)
Activities:
● Inventory Close:
○ Complete goods receipts and goods issues for
inventory.
○ Perform an inventory valuation run.
● Stock Reconciliation:
○ Ensure stock and financial inventory balances match
and make any necessary adjustments.
● Post Material Movements:
○ Make sure all material movements, including goods
receipts, goods issues, and stock transfers, are posted
before closing.
● Run Material Ledger:
○ Execute the closing of the Material Ledger for the year,
if using actual costing.
5. Sales and Distribution (SD)
Activities:
● Revenue Recognition:
○ Ensure all billing documents are posted and revenue is
properly recognized in the correct period.
● Close Sales Periods:
○ Ensure that sales periods are properly closed to avoid
further postings.
● Run Sales Reports:
○ Generate year-end sales reports for revenue analysis
and tax compliance.
● Clear Open Items:
○ Clear open items for customer accounts, including
outstanding receivables and payments.
6. Production Planning (PP)
Activities:
● Inventory Valuation:
○ Ensure that finished goods and work-in-progress
inventories are accurately valued.
● Close Production Orders:
○ Complete any open production orders and settle them
to the appropriate cost objects.
● Work Center and Routing Updates:
○ Review work centers and routing data for accuracy and
update them for the new fiscal year.
7. Bank Accounting (FI-BL)
Activities:
● Bank Statement Reconciliation:
○ Reconcile all bank statements and ensure all entries
are posted.
● Clear Open Items in Bank Accounts:
○ Clear any open items in the bank accounts to ensure
accurate bank balance reporting.
8. Tax Management (FI-TAX)
Activities:
● Tax Returns:
○ Generate and review tax reports, including VAT, GST, or
other applicable tax reporting.
● Year-End Tax Adjustments:
○ Post any required year-end tax adjustments or
provisions.
● Tax Reconciliation:
○ Reconcile tax accounts with financial statements and
ensure proper posting for the closing year.
9. Human Resources (HR) / Payroll (PY)
Activities:
● Year-End Payroll Run:
○ Process the final payroll run for the year, including
bonuses, leave balances, and tax withholdings.
● Tax Reporting for Employees:
○ Generate employee tax reports (e.g., W-2 forms, P60
forms) and ensure compliance with local tax
regulations.
● Accruals and Adjustments:
○ Post any accruals or adjustments to the payroll or
employee-related liabilities for the year.
10. Project System (PS)
Activities:
● Project Settlement:
○ Settle all projects to the relevant cost objects.
● Close Projects:
○ Ensure that all open items for projects are cleared, and
close completed projects for the year.
● Run WIP (Work In Progress) Closing:
○ Ensure that work in progress for projects is correctly
adjusted and closed for the year.
11. SAP S/4HANA Analytics and Reporting
Activities:
● Generate Year-End Reports:
○ Run SAP Fiori apps or embedded reports to generate
year-end reports, such as financial statements, tax
reports, and compliance reports.
● Data Archiving:
○ Archive older year data to improve system performance
and compliance.
● Performance Review:
○ Review and ensure that the reporting system is set up
to provide accurate, up-to-date information for the new
fiscal year.
12. Closing & System Maintenance
Activities:
● System Backup:
○ Ensure that all data is backed up before starting the
new fiscal year.
● Unlock New Periods:
○ Open periods in the new fiscal year (transaction OB52),
so new transactions can be posted.
● Data Archiving:
○ Archive closed year data and ensure compliance with
local data retention policies.
● Run System Checks:
○ Perform necessary system checks to ensure data
integrity for the new year.
Summary of Key Activities by Module:
● FI: Close financial periods, reconcile accounts, generate
financial reports.
● AA: Depreciation run, asset reconciliation, year-end closing.
● CO: Close cost centers, internal orders, profit centers, and
run allocation cycles.
● MM: Inventory valuation, stock reconciliation, close material
movements.
● SD: Close sales periods, clear open items, recognize
revenue.
● PP: Close production orders, settle costs, update work
centers.
● HR: Year-end payroll, tax reporting, accruals.
● PS: Settle projects, close projects, run WIP closing.
● Bank: Reconcile bank accounts, clear open items.
● Tax: Generate tax reports, perform year-end adjustments.
By following these module-specific activities, organizations can
ensure a smooth, compliant, and efficient year-end closing
process in SAP S/4HANA.
