ASSET YEAR-END CLOSE PROCESS

Introduction The Year End Change/Year End Close process is a crucial AM process that must be completed before FI closing occurs. There are 11 necessary steps in completion of this process. Skipping the Year End Change/Year End Close process for FIAA may result in reconciliation problems as well as recalculation differences. You conduct these steps in test mode periodically throughout the year to catch issues and problems early enough that they can be corrected without jeopardizing the final year-end close process. Process The following 11-step guide outlines all required actions to complete the AM Year End Change/Year End Close. 1. Recalculate values - The first step in the Year End Change/Year End Close process is the recalculate values job (program RAAFAR01, transaction AFAR or via the menu Asset Accounting -> Tools -> Recalculate values). This job will recalculate all planned depreciation amounts for all assets for all open fiscal years based on the current deprecation terms and configuration settings. Running this job will ensure that all depreciation calculations are up-to-date and all configuration changes have taken effect. If the program reports any errors such as Error in depreciation calculation or Depreciation positive in area xx, they will have to be corrected before continuing with step #2. It is important to run this step before the depreciation run is processed for the last period of the year for this company code. 2. Incomplete assets - This step will identify all incomplete assets. Incomplete assets are assets, which do not have all necessary information in the master record and therefore need to be processed manually. Also, the system may have flagged assets as incomplete even though they are not. For this step, first run program RAUNVA00 to identify all incomplete assets (program can be executed via the reporting tree). The report will list all incomplete assets and will also list the specific information (table name/field name) that is missing from these assets. If there are any assets erroneously flagged as incomplete they can be repaired by clicking the corresponding button when the program is run. 3. Unposted assets Run RAANLA01 to find all unposted assets. This report will list all assets that have been created in the system but have not been capitalized yet. In some cases this may be correct, such as newly

created Assets under Construction (AuC), which have not received a settlement posting yet. However, in other instances, assets could have been created but have never been posted to because the user might have forgotten about them. Go through the list of all unposted assets to see if these assets have been created just recently and will still be capitalized. If assets that have been created erroneously are found, delete the records in the following step. 4. Delete assets - This step allows deletion of the asset master records found in the previous step. Since these assets have never been posted to they can actually be physically deleted from the database. In order to delete assets, go to Asset Accounting -> Asset -> Delete -> Asset (transaction AS06 or AS26 for group assets). Remember though, once deleted there is no un-do function. 5. Insurance index - If the system is being used to calculate replacement values for insurance purposes, then an update to the insurance index is needed so that the system can calculate the correct replacement cost for assets. This index typically has only one insurance index value per fiscal year unless the INMA solution (Inflation Management solution for highand hyper-inflationary countries which require multiple revaluations per year/month, etc) is being used. Enter the new index value by going to Asset Accounting -> Tools -> Update settings (transaction AYLS). 6. Depreciation for last period - Proceed with the normal month-end closing process for the last period of the fiscal year. This will include (among other tasks) the depreciation run (RABUCH00, transaction AFAB) for the last period of the fiscal year. Process the BDC session (default name RABUCH) in order to post the depreciation to the G/L. Make sure that all depreciation gets posted to the G/L before continuing. 7. Reconcile FI to AA - After all documents such as depreciation, acquisitions, retirements, transfers, etc. have been posted, reconcile the Asset sub ledger with the General Ledger. Reconcile the sub ledger with the general ledger by comparing FI Account Balance Display (transaction FS10) for all APC and DD&A accounts (reconciliation accounts) with reports such as the Total Depreciation or Asset Balance reports. This step is critical to ensure that the sub ledger is in synch with the G/L. 8. Year End Change - This step will open the new fiscal year and will carry forward all balances into the new fiscal year. This is a purely technical step necessary to open the following year. Execute the program RAJAWE00 by going to Asset Accounting -> Period Processing -> Yearend Change (transaction AJRW). In order to run this program in update mode, it must be executed in the background.

9. Year End Close - This is the actual closing step. Execute program RAJABS00 by going to Asset Accounting -> Period Processing -> Yearend Close (or transaction AJAB). This program will perform several checks before actually closing the fiscal year. One of these checks will make sure that the planned depreciation for each individual asset matches the posted depreciation amounts. Only if these two numbers match can the year be closed. If errors are reported during this job, they must be fixed prior to attempting to close the year again. This step MUST NOT be skipped. In order to run this program in update mode, it must be executed in the background. 10. Re-open fiscal year - In certain instances it may be necessary to re-open the fiscal year for i.e. adjustment postings or other corrections. There are two options for this: re-open the fiscal year for the entire company code (transaction OAAQ) or re-open just certain depreciation areas (transaction OAAR). The latter option is intended for cases where an adjustment is needed i.e. tax values (audit adjustments) without impacting book values. In this case, re-open only the tax areas but leave the book areas closed. Then post documents to tax areas only (using the correct transaction types) without altering FI values. After completion of the adjustment postings, perform the year-end closing steps again. If a depreciation area which posts values into the G/L (such as depreciation area 01, or parallel currency areas) has been re-opened, then start from step #1 in order to ensure a proper year-end closing again. If , however, non-posting areas only (such as tax areas or insurance areas) have been re-opened, then perform another year-end closing starting with step #8. 11. Update production support systems It is necessary to perform all year-end closing steps in the production support systems in order to update them guaranteeing proper support of production problems. This will ensure a smooth transition into the new year.