Month end and Year end closing process

Month-end closing process

The month-end closing process is a set of accounting tasks to be done at the end of each month (Period) to officially close out the relevant Accounting period. The following activities has to be carried out as part of the month-end closing in the system.

         I.            Month-end Pre-closing processes – Activities that has to be done before the posting period can be closed for the month.

Finance (FI)

I.              Posting or clearing parked documents.

II.             Posting all cost allocations for the posting period.

III.           Posting and reversing accrual accounting entries.

IV.           Manual and automatic clearing of selected general ledger accounts line items.

V.            Observe the Goods Receipt/Invoice Receipt (GR/IR) clearing account.

Goods Receipt/Invoice Receipt (GR/IR) clearing account shall be cleared at the month-end. Only within one-month balances shall be in GRIR account, and if there are overdue balances PMD Accountant shall present a report with explanations to the GM Finance.

VI.           Internal accounts reconciliation.

·         Reconcile the internal sales with the cost of sales and internal profit margin account.

·         Reconcile the other internal income with other internal expenses. (Ex. Internal hiring income with internal hiring expenses)

·         Reconcile the internal debtor balance with creditors and post the internal receipt and payment.

VII.          Settlement completion, capital projects in the AUC accounts to fixed assets

VIII.        Posting depreciation expenses.

IX.           Run the ETM module and post the hiring expenses before 07^th of the following month.

Materials Management (MM)

I.                     Prepare a reconciliation of physical inventory balances with system balances and posting inventory adjustments, if any, with the approval of COO.

2.       Month-end closing processes - Include activities necessary to complete monthly accounting entries to fairly present the financial position and results of operations for the period.

I.                     Open new posting period - On a scheduled 1^st day of the month by the finance department Accountant/ GM Finance, a new posting period is opened so that users are allowed to make postings for the new period.

II.                   Run the foreign exchange valuation process ( revaluation of foreign currency bank account, debtors, vendors, etc.)

III.                 Close previous posting period - Close the last posting period on 10^th of the following month by the Accountant/GM Finance so that no postings are allowed

3.       Month-end post-closing processes - Include activities necessary to validate the month-end closing steps, verify that all documents are posted appropriately, and reconcile the FI account.

I.                     Reconciling of cash journal and GL balance.

II.                   Reconciling the asset sub-module account balances to the respective fixed asset GL account balances.

III.                 Reconciling the Accounts Payable (AP) and Accounts Receivable (AR) subsidiary ledgers to the respective GL account balances.

IV.                Reconciling inventory Account balances of MM module to the GL balances.

V.                  Bank reconciliations

4.       Prepare the monthly financial statement and other reports.

Report	Need to finalize before
Project wise financial statement with notes	15th of following month
Management accounts of the company with Notes	18th of following month
VAT report (input VAT, output VAT, SVAT report)	13th of following month
NBT output report	18th of the following month

Year-end closing process

The system offers a range of reports with the balances that can be carried forward into the new financial year. During this process, the P&L Accounts balance is sent forward to the Retained Earnings Account. The balances on the Balance Sheet is simply carried forward into the new fiscal year. Any postings made in the previous financial year subsequently will automatically adjust the proper carried-forward balances.

Same as with month-end closing, all the external reports required can be created, posting data can be documented, and internal evaluations can be carried out for the year in concern.

User management

All new end-user id creations in SAP need to be approved by the GM - PMD, and SGM. After this, a request to create a new user shall be sent to the system administrator with the required information, i.e., full name, designation, authorized plants, and access rights details. Those end-users who require remote access to the system needs to justify the same and obtain approval from the GM- PMD or the relevant department head and forward such request to the system administrator for processing and granting of a separate VPN (Virtual Private Network) id for remote access.

To ensure proper user management and maintenance, the System Administrator needs to be informed of the following instances on a prompt basis by the relevant authorities.

·         HR department need to inform of all resignations/ terminations of those employees who are SAP end-users

·         Division representatives/HR department need to inform of all the transfers and change in job roles of those employees who are SAP end-users

Problem-solving and issue handling

When a user comes across a system related matter following process needs to be followed;

·         First the issue needs to be brought to the attention of PMD level representatives for corrective action

·         If it cannot be Resolved at the PMD level, it needs to be escalated to the relevant SAP core team member based on the area of specialization via email. The e-mail shall contain below information;

Ø  Description of the issue along with the relevant screenshots

Ø  Screenshot obtained using the path (System – Utilities – Display authorization check )

·         If the issue cannot be resolved at the core team level or based on the severity of the issue core team member shall forward it to the System Administrator with their findings and recommendations for further processing

·         If the issue can be resolved internally relevant core team member will be assigned to the task and follow up actions will be carried out until a solution is arrived at and communicated to the user

·         System Administrator will check the issue and decides its severity and urgency (high, medium, low) based on which a helpdesk incident will be raised and follow up actions will be carried out

·         Upon resolution, the system administrator will communicate the status/solution to the relevant core team member, end-user, and any other party as applicable.