1. Introduction
This blog will try to provide an understanding of what is Shorten Fiscal Year (SFY). It also covers finance related configurations and ends by giving an overview of stages in a SFY project.
Shortened Fiscal Year is a fiscal year that contains less than twelve months/periods.
A Shortened Fiscal Year will be required during;
2. Illustration
For better understanding of the concept we will consider following case (illustration) throughout.
A Ltd. (Company Code 5000) is currently following Fiscal Year form 1st September to 31st August. However, effective 1st January, 2018 it has decided to change to Calendar Fiscal Year i.e., from 1st January to 31st December. Company Code 5000 is using fiscal year variant FY.
Fiscal year is required to be changed from current non-calendar fiscal year to calendar fiscal year. Hence, Fiscal year 2018 need to be Shortened Fiscal Year which begins on 1st of September 2017 and ends at 31st of December 2017, with only 4 posting periods. Subsequent Fiscal Years will be identical to the calendar year.
3. Pre-requisites
4. Immediate Safeguards
Ensure that in the company codes for which Shortened Fiscal Year is introduced, posting periods that are omitted by the shortened fiscal year and in the fiscal years succeeding the shortened fiscal year are not open and will remain closed until the customizing for the shortened fiscal year is in the productive system. (Transaction OB52)
Illustration
Ensure that in company code 5000, posting periods 05 to 16 of fiscal year 2018, fiscal year 2019 and fiscal years succeeding fiscal year 2019 are not open and will remain closed until the customizing for the shortened fiscal year is in the productive system.
5. FI Configuration
Fiscal Year Variant
A new Fiscal Year Variant for the Shorten Fiscal Year can be created and assigned to organizational structures OR changes can be made in the current Fiscal Year Variant and continue to use the same.
It is best practice to change the current Fiscal Year Variant to perform the shortened fiscal year. This activates the shortened fiscal year automatically in all related organizational structures. This approach minimizes implementation effort and risk.
Following configuration steps are for the latter approach.
Step 1
Change description of the current Fiscal Year Variant.
Illustration
Change description of Fiscal Year Variant ‘FY’ to ‘YD – (Aug-Sep) Jan-Dec 19’.
Step 2
Switch on the indicator ‘Year-dependent’.
Illustration
Check Year Dependent indicator for Fiscal Year Variant ‘FY’.
Step 3
Maintain No. of posting periods in ‘Shortened Fiscal Years’ option of Dialogue Structure.
Illustration
Maintain No. of posting periods as ‘4’ for Fiscal Year 2018.
This informs the system that fiscal year 2018 is a shortened fiscal year with 4 normal posting periods. Eight normal posting periods will be omitted in the shortened fiscal year 2018. Periods 13, 14, 15 and 16 will be available as special periods in each fiscal year irrespective of the number of normal posting periods.
Step 4
Maintain Periods for Calendar Yr. starting from one calendar year prior to the calendar year in which the oldest asset was activated in company code till the year preceding Shortened Fiscal Year.
Illustration
Maintain Periods for Calendar Yr. starting from 1882 to 2017. Assuming the oldest asset activated in the company code 5000 is on 02-Mar-1883.
Step 5
Maintain Period Text for Fiscal Yr. starting from one fiscal year prior to the fiscal year in which the oldest asset was activated in company code till the year of Shortened Fiscal Year.
Illustration
Maintain Period Text for Fiscal Year starting from 1882 to 2018.
Step 6
Maintain Periods for Calendar Yr. starting from calendar year of Shortened Fiscal Year till next 20-30 years.
For technical reasons also maintain similarly for calendar years 2099, 2398, 2399, 2400, 2401, 2999, 9998 and 9999.
Illustration
Maintain Periods for Calendar Yr. starting from 2018 to 2038.
Step 7
Maintain Period Text for Fiscal Yr. starting from fiscal year after Shorten Fiscal Year till next 20-30 years.
For technical reasons also maintain similarly for calendar years 2099, 2398, 2399, 2400, 2401, 2999, 9998 and 9999.
Illustration
Maintain Period Text for Fiscal Year starting from 2019 to 2038.
Note:
SAP ERP requires the definition of fiscal years and posting periods per calendar year even when the shortened fiscal year is closed. For this reason, it is mandatory that the indicator ‘Year-dependent’ in fiscal year variant FY remains switched on in future forever.
Asset Accounting
Depreciation Calculation for SFY
In a shortened fiscal year, there is an option to calculate Reduced Depreciation. Reduced Depreciation means that in the shortened fiscal year the system does not calculate and post depreciation for 12 calendar months but calculates and posts reduced depreciation which corresponds to the reduced duration of the shortened fiscal year.
Regulations or the law determine in each country whether annual depreciation must be reduced in a shortened fiscal year or not.
Illustration
Following are the possible approaches to calculate depreciation in Shortened Fiscal Year;
Approach 1: The ordinary depreciation in SFY 2018 is not reduced. Depreciation is calculated evenly over 4 years of useful life.
Approach 2: The ordinary depreciation in SFY 2018 is proportionally reduced and the balance depreciation of 2018 is planned in fiscal year after 4 years of useful life.
Approach 3: The ordinary depreciation in SFY 2018 is proportionally reduced and the balance depreciation of 2018 is smooth over left 2 useful years.
Following configuration steps are for the Approach 2
Step 1
Define reduction rules for Shortened Fiscal Year by creating an entry under relevant Company Codes for relevant Depreciation Areas by ticking ‘Odep’, ‘Sdep’, ‘Int.’ and ‘Rev.’.
SPRO > Financial Accounting > Asset Accounting > Valuation > Fiscal Year > Shortened Fiscal Years > Define Reduction Rules for Shortened Fiscal Years
Illustration
Define reduction rules for SFY 2018 by creating an entry under Company Code 5000 for Depreciation Area 01 and 02. Tick ‘Odep’, ‘Sdep’, ‘Int.’ and ‘Rev.’
Step 2
Uncheck Field ‘No reduct. in short year’ in Depreciation Keys.
Make sure ‘No reduct. in short year’ is not checked for Depreciation Keys under relevant Chart of Depreciation. If this is checked, depreciation is not reduced for a shortened fiscal year despite the existence of other system settings done in the above step.
SPRO > Financial Accounting > Asset Accounting > Valuation > Fiscal Year > Shortened Fiscal Years > Maintain Depreciation Key (Transaction AFAMA)
Illustration
Step 3
Make sure Depreciation Key status is set to ‘Active’ and not ‘Migrated’ as recommended in SAP Note 584443. Otherwise, parameters of the previous depreciation and calculation keys are referred.
Illustration
Step 4
Implement program ZRUMPF from SAP note 123026. Execute the program after configuration done in Transaction OB29. This sets the field T093C-XRUMPF used internally by the system. If not set the depreciation is not reduced.
Note:
Program ZRUMPF ends without displaying a message nor creating an entry in a transport request. Hence, this program needs to be executed in each system.
Step 5
Adapt Period Control Rules of fiscal year variant after the configuration of shortened fiscal years has been imported.
Illustration
For Standard Period Controls (01 to 16 and 21 to 24)
Generate Period Control Rules (Transaction OA84) for fiscal year variant FY 3 times with;
1. From calendar year = 1883 (calendar year in which the oldest asset was activated)
2. From calendar year = 2017 (calendar year with the shortened fiscal year)
3. From calendar year = 2018 (calendar year after the shortened fiscal year)
For Customer specific Period Controls (17 to 20 and greater than 24)
Transaction OA84 is unable to generate customer specific period controls. Therefore, it must be maintained manually in Transaction OAVH from calendar year 1883 onwards.
6. Project Stages
SLO Analysis
Once the decision to change the Fiscal Year is done, system analysis is to be obtained from System Landscape Optimization (SLO) team. They will provide a Guide for shortened fiscal year change based upon analysis and specific to system version.
Initially SLO analysis will be done on quality system and later production system.
Realization and Deployment of the project can be started during the Shortened Fiscal Year. There is no change required in the system prior to the start of Shortened Fiscal Year.
Immediate Safeguards
Once the realization of the project starts, immediate safeguards should be taken in the production system as mentioned in Immediate Safeguards section.
Configuration and Implementation of SAP Notes
SFY configuration to be done in the system along with implementation of required SAP notes.
Testing
At least two rounds of testing to be done;
Test 1 – Unit Testing
Test 2 – Integration Testing
Hints for Testing
Pre – Checks
Before moving Shortened Fiscal Year configurations to Production perform pre-checks as mentioned in Pre-requisites section.
Transports
Shortened Fiscal Year changes must be moved to the Production before the Shortened Fiscal Year is over and all project specific activities must be accomplished in the productive environment before the last day of Shortened Fiscal Year.
Cutover Activities and Go-live
Following activities are to be performed post SFY configurations are moved to Production before Go-live;
Illustration
Note:
The activities for fiscal year closure of a shortened fiscal year (2018) are identical to the activities for fiscal year closure of a regular fiscal year. The only difference between the closure of a normal fiscal year and the closure of a shortened fiscal year is that the shortened fiscal year has less periods.
7. Conclusion
This blog discusses only on configuration relating to finance. There are certain configurations to be done in other modules also. Even finance may require additional configuration depending upon the SAP version and existing setup.
Hope you find this blog helpful.
Okumaya devam et...
This blog will try to provide an understanding of what is Shorten Fiscal Year (SFY). It also covers finance related configurations and ends by giving an overview of stages in a SFY project.
Shortened Fiscal Year is a fiscal year that contains less than twelve months/periods.
A Shortened Fiscal Year will be required during;
- Establishment of a company, or
- Changeover from a non-calendar fiscal year to a calendar fiscal year, or vice versa.
2. Illustration
For better understanding of the concept we will consider following case (illustration) throughout.
A Ltd. (Company Code 5000) is currently following Fiscal Year form 1st September to 31st August. However, effective 1st January, 2018 it has decided to change to Calendar Fiscal Year i.e., from 1st January to 31st December. Company Code 5000 is using fiscal year variant FY.
Fiscal year is required to be changed from current non-calendar fiscal year to calendar fiscal year. Hence, Fiscal year 2018 need to be Shortened Fiscal Year which begins on 1st of September 2017 and ends at 31st of December 2017, with only 4 posting periods. Subsequent Fiscal Years will be identical to the calendar year.
3. Pre-requisites
- A shortened fiscal year can be introduced only if no actual data are stored in the periods that are omitted by the shortened fiscal year and in the fiscal years succeeding the shortened fiscal year. (Table BKPF)
Check actual data before the configuration of the shortened fiscal year are moved to the productive system. In case relevant actual data documents are found in FI it is mandatory that these documents are reversed BEFORE the configuration of the shortened fiscal year is imported into the productive system. During reversal, set the posting date of the reversal document identical to the posting date of the document to be reversed. There should be zero balance in GLs firstly in the periods which will be omitted by the shortened fiscal year and secondly in the fiscal years after the shortened fiscal year.
Illustration
No accounting document posted for Company Code 5000 in Period 05.2018 to 16.2018 and in Fiscal Year from 2019 to 9999.
No accounting document posted for Company Code 5000 in Period 05.2018 to 16.2018 and in Fiscal Year from 2019 to 9999.
- Year-End Closing of Asset Accounting has been executed for the last fiscal year in which books are closed. (Table T093B-ABGJA)
Illustration
‘Year-End Closing for Asset Accounting’ in Company Code 5000 has been executed for the last fiscal year (2017) in which books are closed.
‘Year-End Closing for Asset Accounting’ in Company Code 5000 has been executed for the last fiscal year (2017) in which books are closed.
4. Immediate Safeguards
Ensure that in the company codes for which Shortened Fiscal Year is introduced, posting periods that are omitted by the shortened fiscal year and in the fiscal years succeeding the shortened fiscal year are not open and will remain closed until the customizing for the shortened fiscal year is in the productive system. (Transaction OB52)
Illustration
Ensure that in company code 5000, posting periods 05 to 16 of fiscal year 2018, fiscal year 2019 and fiscal years succeeding fiscal year 2019 are not open and will remain closed until the customizing for the shortened fiscal year is in the productive system.
5. FI Configuration
Fiscal Year Variant
A new Fiscal Year Variant for the Shorten Fiscal Year can be created and assigned to organizational structures OR changes can be made in the current Fiscal Year Variant and continue to use the same.
It is best practice to change the current Fiscal Year Variant to perform the shortened fiscal year. This activates the shortened fiscal year automatically in all related organizational structures. This approach minimizes implementation effort and risk.
Following configuration steps are for the latter approach.
Step 1
Change description of the current Fiscal Year Variant.
Illustration
Change description of Fiscal Year Variant ‘FY’ to ‘YD – (Aug-Sep) Jan-Dec 19’.
Step 2
Switch on the indicator ‘Year-dependent’.
Illustration
Check Year Dependent indicator for Fiscal Year Variant ‘FY’.
Step 3
Maintain No. of posting periods in ‘Shortened Fiscal Years’ option of Dialogue Structure.
Illustration
Maintain No. of posting periods as ‘4’ for Fiscal Year 2018.
This informs the system that fiscal year 2018 is a shortened fiscal year with 4 normal posting periods. Eight normal posting periods will be omitted in the shortened fiscal year 2018. Periods 13, 14, 15 and 16 will be available as special periods in each fiscal year irrespective of the number of normal posting periods.
Step 4
Maintain Periods for Calendar Yr. starting from one calendar year prior to the calendar year in which the oldest asset was activated in company code till the year preceding Shortened Fiscal Year.
Illustration
Maintain Periods for Calendar Yr. starting from 1882 to 2017. Assuming the oldest asset activated in the company code 5000 is on 02-Mar-1883.
Step 5
Maintain Period Text for Fiscal Yr. starting from one fiscal year prior to the fiscal year in which the oldest asset was activated in company code till the year of Shortened Fiscal Year.
Illustration
Maintain Period Text for Fiscal Year starting from 1882 to 2018.
Step 6
Maintain Periods for Calendar Yr. starting from calendar year of Shortened Fiscal Year till next 20-30 years.
For technical reasons also maintain similarly for calendar years 2099, 2398, 2399, 2400, 2401, 2999, 9998 and 9999.
Illustration
Maintain Periods for Calendar Yr. starting from 2018 to 2038.
Step 7
Maintain Period Text for Fiscal Yr. starting from fiscal year after Shorten Fiscal Year till next 20-30 years.
For technical reasons also maintain similarly for calendar years 2099, 2398, 2399, 2400, 2401, 2999, 9998 and 9999.
Illustration
Maintain Period Text for Fiscal Year starting from 2019 to 2038.
Note:
SAP ERP requires the definition of fiscal years and posting periods per calendar year even when the shortened fiscal year is closed. For this reason, it is mandatory that the indicator ‘Year-dependent’ in fiscal year variant FY remains switched on in future forever.
Asset Accounting
Depreciation Calculation for SFY
In a shortened fiscal year, there is an option to calculate Reduced Depreciation. Reduced Depreciation means that in the shortened fiscal year the system does not calculate and post depreciation for 12 calendar months but calculates and posts reduced depreciation which corresponds to the reduced duration of the shortened fiscal year.
Regulations or the law determine in each country whether annual depreciation must be reduced in a shortened fiscal year or not.
Illustration
Following are the possible approaches to calculate depreciation in Shortened Fiscal Year;
Approach 1: The ordinary depreciation in SFY 2018 is not reduced. Depreciation is calculated evenly over 4 years of useful life.
Approach 2: The ordinary depreciation in SFY 2018 is proportionally reduced and the balance depreciation of 2018 is planned in fiscal year after 4 years of useful life.
Approach 3: The ordinary depreciation in SFY 2018 is proportionally reduced and the balance depreciation of 2018 is smooth over left 2 useful years.
Following configuration steps are for the Approach 2
Step 1
Define reduction rules for Shortened Fiscal Year by creating an entry under relevant Company Codes for relevant Depreciation Areas by ticking ‘Odep’, ‘Sdep’, ‘Int.’ and ‘Rev.’.
SPRO > Financial Accounting > Asset Accounting > Valuation > Fiscal Year > Shortened Fiscal Years > Define Reduction Rules for Shortened Fiscal Years
Illustration
Define reduction rules for SFY 2018 by creating an entry under Company Code 5000 for Depreciation Area 01 and 02. Tick ‘Odep’, ‘Sdep’, ‘Int.’ and ‘Rev.’
Step 2
Uncheck Field ‘No reduct. in short year’ in Depreciation Keys.
Make sure ‘No reduct. in short year’ is not checked for Depreciation Keys under relevant Chart of Depreciation. If this is checked, depreciation is not reduced for a shortened fiscal year despite the existence of other system settings done in the above step.
SPRO > Financial Accounting > Asset Accounting > Valuation > Fiscal Year > Shortened Fiscal Years > Maintain Depreciation Key (Transaction AFAMA)
Illustration
Step 3
Make sure Depreciation Key status is set to ‘Active’ and not ‘Migrated’ as recommended in SAP Note 584443. Otherwise, parameters of the previous depreciation and calculation keys are referred.
Illustration
Step 4
Implement program ZRUMPF from SAP note 123026. Execute the program after configuration done in Transaction OB29. This sets the field T093C-XRUMPF used internally by the system. If not set the depreciation is not reduced.
Note:
Program ZRUMPF ends without displaying a message nor creating an entry in a transport request. Hence, this program needs to be executed in each system.
Step 5
Adapt Period Control Rules of fiscal year variant after the configuration of shortened fiscal years has been imported.
Illustration
For Standard Period Controls (01 to 16 and 21 to 24)
Generate Period Control Rules (Transaction OA84) for fiscal year variant FY 3 times with;
1. From calendar year = 1883 (calendar year in which the oldest asset was activated)
2. From calendar year = 2017 (calendar year with the shortened fiscal year)
3. From calendar year = 2018 (calendar year after the shortened fiscal year)
For Customer specific Period Controls (17 to 20 and greater than 24)
Transaction OA84 is unable to generate customer specific period controls. Therefore, it must be maintained manually in Transaction OAVH from calendar year 1883 onwards.
6. Project Stages
SLO Analysis
Once the decision to change the Fiscal Year is done, system analysis is to be obtained from System Landscape Optimization (SLO) team. They will provide a Guide for shortened fiscal year change based upon analysis and specific to system version.
Initially SLO analysis will be done on quality system and later production system.
Realization and Deployment of the project can be started during the Shortened Fiscal Year. There is no change required in the system prior to the start of Shortened Fiscal Year.
Immediate Safeguards
Once the realization of the project starts, immediate safeguards should be taken in the production system as mentioned in Immediate Safeguards section.
Configuration and Implementation of SAP Notes
SFY configuration to be done in the system along with implementation of required SAP notes.
Testing
At least two rounds of testing to be done;
Test 1 – Unit Testing
Test 2 – Integration Testing
Hints for Testing
- Test business transactions in different posting periods, by posting both in the shortened fiscal year and to the subsequent fiscal year.
- Test all core processes and check the documents that the system creates in the accounting.
- Extensively test Asset Accounting.
- Test the specific functions of industry solutions or country versions which are implemented in your system.
- In the accounting modules, test an entire period-end closing in the shortened fiscal year.
- Test reports, custom developments, interfaces and data transfers to other systems like BW (Business Warehouse).
Pre – Checks
Before moving Shortened Fiscal Year configurations to Production perform pre-checks as mentioned in Pre-requisites section.
Transports
Shortened Fiscal Year changes must be moved to the Production before the Shortened Fiscal Year is over and all project specific activities must be accomplished in the productive environment before the last day of Shortened Fiscal Year.
Cutover Activities and Go-live
Following activities are to be performed post SFY configurations are moved to Production before Go-live;
- Execute Program ZRUMPF to set the field T093C-XRUMPF.
- Recalculate Depreciation for Shortened Fiscal Year. This reduces the planned depreciation for the shortened fiscal year proportionally to the length of the shortened fiscal year. (Transaction AFAR)
Illustration
Note:
The activities for fiscal year closure of a shortened fiscal year (2018) are identical to the activities for fiscal year closure of a regular fiscal year. The only difference between the closure of a normal fiscal year and the closure of a shortened fiscal year is that the shortened fiscal year has less periods.
7. Conclusion
This blog discusses only on configuration relating to finance. There are certain configurations to be done in other modules also. Even finance may require additional configuration depending upon the SAP version and existing setup.
Hope you find this blog helpful.
Okumaya devam et...