SAP FI FAQs – Closing

1.    Discuss the monthly closing process in SAP.

The only technical requirements of period-end closing are to close the current posting period and to open the new one.  Month-end reports can be run after the posting period has been closed.  There are additional business processes (e.g., valuing foreign currency open items and G/L accounts, analyzing open items and accounts that will be closed out, etc.) that should also be completed for proper control, even though they are not required for closing.

2.    Discuss the annual closing process in SAP.

1.  Execute the month-end closing process for the last period.
2.  Run the balance sheet adjustment programs and make any manual adjusting entries.
3.  Generate year-end reports.
4.  Carry G/L, customer, and vendor accounts forward.
5.  Open the new posting period.

3.    Explain the purpose of running the GR/IR clearing account program.

The GR/IR (Goods received/invoice received) clearing account program reclassifies the entries in the GR/IR account as either assets or liabilities for reporting purposes.  At the end of a period the company can be in a situation where goods have been received but an invoice has not, or vice versa.  Therefore, there may be a debit or credit balance in the GR/IR account.

4.    Explain the basic process of valuing accounts for closing before running a balance sheet.

Before running a balance sheet, you need to value both open items and G/L accounts thatuse foreign currencies.  Open items need to be valued for vendor and customer accounts, reconciliation accounts, clearing accounts, and expense and revenue accounts.  This process is completed to accurately record the value of your assets and liabilities in the reporting (local) currency.

5.    What is the exchange rate difference key used for?

The exchange rate difference key is defined in the account master records of G/L accounts managed in foreign currency.  It is the key that defines which gain/loss account is updated when the G/L account is revalued.

6.    How is an exchange rate difference accounted for when posting and clearing an invoice in foreign currency?

The exchange rate difference between the invoice and payment is accounted for in a gain/loss account defined by the exchange rate difference key.   It is posted automatically.

7.    Explain how accounts managed in a foreign currency are valued.

Each account managed in foreign currency is defined with an exchange rate difference key.  This key identifies a valuation gain/loss account that is updated when the account is valued using program RFSBEWOO.  The valuation process itself takes the difference between the original exchange rate used in the transactions and the current exchange rate and posts the difference to a gain or loss account.

8.    What is the difference between valuation of open items and valuation upon receipt of payment.

When valuing open items, the system will post any differences to an unrealized gain/loss account.  When payment is actually received, the difference becomes a realized gain/loss.