Fiscal year – the basics
In this article I would like to offer a deeper insight into Fiscal Year changes. Fiscal Year is a term which reflects accounting and budgeting period used by governments or companies. It is used as a base for preparing financial statements. As the name suggest, it does not necessarily follow the same structure as the calendar year. The differences between fiscal and calendar year can be its beginning and end – for example Fiscal Year can last from April to March – or in length or number of calendar periods. Therefor, in accounting it is important to distinguish these two terms carefully.
Sometimes, Fiscal Year needs to be changed due to company mergers, acquisitions, or other legal requirements.
In SAP, Fiscal Year is defined through the Fiscal Year Variant (FYV). Since it is a variant, meaning there can be more of them, it allows companies to have several Fiscal Years which can be used for different purposes. Let’s say, there can be one FYV for each ledger, so one company can reflect more accounting principles, each of them having a different year beginning and end. When a project is done, we are basically adapting the Fiscal Year Variant.
How to change Fiscal Year in SAP
I will now describe what are possible changes that might need to be done with Fiscal Year Variant. Let’s use for it the following table to understand better how FYV looks:
Fiscal Year Variant F1, lasting from April till March, following 4-4-5 accounting principle:
Posting periods per a specific year
We can see that this table gives us a lot of freedom to define FYV according to any accounting needs. As in the example above, we can have Fiscal Year lasting from April to March with periods reflecting 4-4-5 week structure.
Any change in FYV, which is assigned to organizational units which are used, should be considered a project.
- Shortened Fiscal Year (in order to change the Fiscal Year beginning and end)
- Posting Periods Change (from calendar end dates to 4-4-5 or vice versa)
- Shortened Fiscal Year + Posting Period Change
- Change of Number of Posting Periods
Why changing the Fiscal Year is not as easy as it seems
Changing the accounting year affects already existing data, so simply changing the definition of the relevant Fiscal Year Variant is not the way to go. Before applying any changes, it is necessary to evaluate potential risks and plan for handling the affected data.
Fiscal year ‘GJAHR’ is a variable used (many times as a key field) in crucial FI and CO tables. The same goes for posting periods ‘PERIV’. Basically, all the FI, FI-AA and CO transactional data, majority of Planning Data, SD, MM, and many other SAP modules use this information which is closely tied to FYV. What happens, if you just decide to change it? These data can become suddenly inconsistent and many transactions will give you hard times when processing them, not mentioning the consequences for financial statements. Unprofessional changes might have grave repercussions on already existing transactional data
For this reason, projects on Fiscal Year changes include thorough system analysis. As a prerequisite for successful change, the first thing that needs close attention is overall consistency of organization structure. This is because the change of FYV will be applied to all objects directly or indirectly assigned to it. Next step is then analysis of the actual data. The result of this is a custom-made recommendation and guidance for handling transactional and planning data. For example, we need to understand how to identify objects which will be affected, how to recalculate production orders or update standard cost estimates.
On top of the analysis, crucial part of the service is a precise configuration of the fiscal calendar with special attention paid to FI-AA. It is essential to adapt (shorten) depreciation of the fixed assets accordingly to shortened year or changed periods. Likewise, the experience, knowledge of methodology and comprehension of the system combine and always lead to successful project delivery.