DEFINE FISCAL YEAR

Define fiscal year

A fiscal year is a period of one year that an organization uses for financial reporting purposes. Fiscal year is nothing but the financial accounting year of an organization. SAP fiscal year contains 16 posting periods, out of these 12 are normal posting periods and 4 are special posting periods. One fiscal year variant can be assigned to many company codes. In SAP, a fiscal year variant already exists in the system. New fiscal year variant can and should be created by copying the existing variant instead of creating new entries.

For example –V3 (April to March with 4 special periods), K4(Jan to Dec with 4 special periods), V6 (July to June with 4 special periods), V9(Oct to Sept with 4 special periods) If you want to create a new variant then copy the existing variant and start your own variant with the character Z.

 Fiscal year in SAP can be classified as

1.Year dependent :Periods can be different from year to year. Year dependent fiscal year refers to the fiscal year that is only applicable to a particular year such as 2022 or 2023. If you select a year dependent checkbox in the fiscal year variant, then you need to create conversion for every year.

2.Year Independent: Same number and dates for the periods every year .Year Independent fiscal year refer as the fiscal year is applicable to all the financial account year.

3.Calendar Year: In the calendar fiscal year, the posting period starts from 1st January and ends on the last day of the year 31st December.

4.Shortened fiscal year: Shortened fiscal year contains fewer normal posting periods. Startup companies and new SAP implemented companies may follow the shortened fiscal year.

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PATH:

STEP 1

Enter SPRO in the command field

STEP 2

Select SAP Reference IMG

STEP 3

Financial accounting (new) >> financial accounting global settings(new) >> ledgers >> fiscal year and posting period >> maintain fiscal year variant ( maintain shortened fiscal year)

STEP 4

Select the position button and select the V3 fiscal year variant Press enter to continue.

Select fiscal year variant V3

STEP 5

Double click on periods folder.

Now check calendar month, calendar day, period and year shift. You can use this FYV in SAP or you can create a new variant as per your requirements.

How to create new fiscal year variant

STEP 1

Go back to main screen, on change view “Fiscal year variants”: overview screen >> click on new entries button

STEP 2

On new entries screen, add details

§  FV: Enter the 2 digits alphanumeric key that identifies the fiscal year variant.

§  Description: FYV April – March, 4 Spl periods.

§  Number of posting periods: 12 as  fiscal contains 12 normal posting periods.

§  Number of special periods: 4 as the fiscal year consists of 4 special posting periods.

Select the save button and save in TR.

Then continue with step 4 and step 5.

Questions related to:

1. What is the fiscal year in SAP?

A fiscal year is the period of one year in which an organization is required to provide its financials in the balance sheet. Whether it is from January to December, April to March, July to June , October to September.

2. What is the requirement of the fiscal year in company code?

A fiscal year is required for financial reporting at the year end of an organization.

3. How many posting periods are there in SAP?

There are 12 posting periods and 4 special periods in the fiscal year in SAP.

4. What is a posting period?

The normal posting period is basically used for daily transactions.

5. What is a special period?

 The special period of a fiscal year is the 4 extra periods used for adjustments.

Usually, special periods are optional.

6. What is the need for the special period?

Special period postings periods are used to carry on the year-end adjustments to the previous books of accounts.

7. Can users prepare their own fiscal year?

Yes, users can prepare their own fiscal year.

8. What is year dependent, year independent, shortened fiscal year?

Year dependent: Periods can be different from year to year. Year dependent fiscal year refers to the fiscal year that is only applicable to a particular year only.

Year independent: It refers to the fiscal year that is applicable to all the financial account years.

Shortened fiscal year: Shortened fiscal year contains fewer normal posting periods