Fiscal year change in the SAP System

How to approach the fiscal year change from the technical side?

As a consequence, information systems need to be adjusted to the new financial reporting rules. How can this change be implemented while ensuring the truth and fairness of the company’s books of account? Sławomir Dąbek, Business Solutions Architect at Hicron, gives advice on how to deal with a fiscal year change from the technical point of view.

The SAP system

In accordance with accounting principles, the company’s books of account (general ledger and subsidiary ledgers) are divided into reporting periods that correspond to calendar months. In a standard SAP solution, a variant of the fiscal year consists of 16 posting periods: 

• 12 normal periods corresponding to subsequent months of the fiscal year,
• 4 special periods – to record adjustments that occurred in the first four months of the following fiscal year and which are made in relation to the previous fiscal year.

An accounting document is assigned to the appropriate reporting period based on the posting date.

Example

1. The company applies the 12-month variant of the fiscal year that is consistent with the calendar year. 
2. In the corporation, the fiscal year begins in October and ends in September (Oct.YY-Sept.YY+1). As part of the adaptation to the corporate requirements, it is necessary to change the financial year from 2014 onwards.

The new fiscal year will be effective from October of the following year. Until then, the company will operate on the basis of the fiscal year variant consisting of 21 months, which means that technically in the SAP system the fiscal year will consist of two variants: the full (Jan-Dec 2013) and the shortened (Jan-Sept 2014) one. The business and technical variants will be aligned from October 2014.

Effects of a fiscal year change on financial reporting

The change of the fiscal year will also modify the reporting periods. In the case of the extended financial year, companies are required to provide reporting:

Changing the fiscal year will also modify the reporting periods. In the case of an extended financial year, companies are required to provide reporting: 

•  for 21 months for tax and balance sheet purposes 
• in accordance with the calendar year, for example in the case of statistical posting* 

Therefore, when changing the fiscal year, companies must take into account the need to prepare the required reports (trial balance, profit and turnover figures, etc.) for a period of 21 months, based on 2 fiscal years (full and shortened).

New financial reporting principles and the information system

The SAP system is based on a 12 month fiscal year; any deviations mean that periodic reports no longer fulfil their functions. The change of the fiscal year variant affects the financial reporting principles and is thus connected with performing additional programming work in the system.

* Fiscal year extension does not remove the obligation to prepare reports following the calendar schema. In this case, the statistical year is in line with the calendar year.