First you will have to close the Posting period in the Materials Management side.

To do this use the

T.Code MMPV and give the period that needs to be Opened. Once this is done you will not be able
to Post any Material Documents in the previous period.
Now at the Financial side you need to open the next period and at the same time you need to close
the Previous period. This can be done in T.Code OB52
here is the list for FI/CO year end closing check list:
now i am sending one document with T.codes
CLOSING ACTIVITIES
1 Execute Report for Inter Company Activity & Journal Entries
2 Open posting period for next yr (T.Code: OB52)
3 Run Business Area's Assignment report. (T.Code: F.50)
4 Review list of recurring journal entries (T.Code: FBD3)
5 Execute Recurring Entries for A/R, A/P, G/L (T. Code: F.14)
6 Process Parked A/R, A/P, G/L accounting documents (T.Code: FBV0)
7 Final Cutoff for the Maintenance of Fixed Asset- Add Transfer and Retire (T.Code: ABUMN)
8 Run Depreciation in Test Run and post (T.Code: AFAB)
9 Verify Display Log for Depreciation Test Run (T.Code: AFBP)
10 Capitalize AUC Assets if needed (T.Code: AIAB, AIBU)
11 Enter Payroll Data to SAP (T.Code: CAT2)
12 Verify Depreciation Balances with GL balances ( T.Code: ABST2)
13 Post Depreciation (T.Code: AFAB)
14 Execute Asset History Report, and retire assets if needed (T.Code: S_ALR_87011963, ABAVN)

15 Adjust specific depreciation areas if necessary (T.Code: ABCO)

16 Reconcile AM sub ledger with GL (T.Code: ABST2)
17 Check Bank Data (T.Code: S_P99_41000212)
18 Review AR Open Items (T.Code: FBL5N)
19 Review AP Open Items (FBL1N)
20 Execute Pending Invoices(T.Code: MRBP)
21 Clear Open Item for GRIR, freight (T.Code: F.13)
22 Reconciliation of Financial Documents and transactional figures (F.03)
23 Open new CO Posting Period: (T.Code: OKP1)
24 Compare current (cost estimates) with last current price (Moving Avg) ( T.Code: OKBH)
25 Update current cost price to material master price field (T.Code: CK11N, CK24)
26 Process Freight charges, Match SD freight to actual (T.Code: V-31)
27 Review Internal Order Postings(T.Code: OKSA)
28 Settle All Orders (T.Code: KO88)
29 Verify All Post Goods Issue have been Invoiced (Billing Due List) (T.Code: VF04)
30 Review SD Billing Doc from prior month that have not yet been released to accounting (T.Code :
F.2D)
31 Reconciliation of MM movements in Transit Intra-SAP to Non SAP
32 Reconcile PI Inventory with SAP (T.Code: MI07)
33 Perform Manual Adjustment if needed (T.Code: F-02, FB50)
34 Verify balance of the GR/IR account ( T.Code: MB5S)

35 Post Accruals and Deferrals (T.Code: FBS1)

36 Clearing of Cancelled Documents (T.Code: F-03, F-32, F-44)
37 Check Profitability Segment Adjustment (T.Code: KISR)
38 Aging Report-Reconcile GL balances with sub ledger balances AP ( T.code: FBL1N, FBL5N,
FBL3N)
39 Check the check run numbers (T.Code: FCH1, FCHI)
40 Bank reconciliation Data (T.Code: FF67 & FEBA)
41 Enter Tax Journal Entry (T.Code: FB41)
42 Reconcile GL balances with sub ledger balances AR/MM/AP ( T.Code: F.03)
43 Display Balance Sheet Adjustments (T.Code: F.5F)
44 Post Balance Sheet Adjustments (T.Code: F.5E)
45 Post Foreign Currency Valuation (foreign exchange) (T.Code: F.05)
46 Check generic cost centers for posting with wrong accounts
47 Correct wrong postings on generic cost centers
48 Check Validation dates for Cost Centers, Cost Elements, CO area (T.Code: GGB0)
49 Check COGI--for both month end and year end
50 Doubtful receivables (T.Code : F104)
51 Verify In-transit Inventory
52 Reconcile PA to G/L (T.Code: KE5U)
53 Post Cost Center Assessments and Distributions (T.Code: KSU5 & KSV5)
54 Run CO-FI Reconciliation to balance (T.Code: KALC)

55 Run BW reports P&L and Balance Sheet

56 Maintain CO yr variant (T.Code: KCRQ)
57 Fiscal Yr Balance carry forward AP/AR/AM (T.Code: F.07,
58 Fiscal Yr Balance carry forward CO (T.Code: CXS1)
59 Fiscal Yr balance carry forward FI ( T.Code: F.16)
60 Fiscal Yr balance carry forward PCA (T.Code: 2KES)
61 Set Document number ranges - FI - new year (T.Code: OBH2, OBA7)
62 Set Document number ranges AP/AR - new year (OBA7)
63 Generate Financial statement Reports ( T.Code:OB58) OR (T.Code: FSE2)
64 Change Fiscal Year For Assets (T.Code: AJRW)
65 Year end Closing-- Asset Accounting--final for year end (T.Code: AJAB)
66 Close CO Posting Period : (T.Code: OKP1)
67 Close Prior A/R Posting Period ( T.Code: OB52)
68 Close Prior A/P Posting Period (T.Code: OB52)
69 Close Prior MM Posting Period (T.Code: OMSY)
70 Reverse accruals and deferrals for the new month (T.Code: F.81)
71 Reconciliation of Financial Documents from old fiscal year and new fiscal year ( T.Code: FNSL)
72 Load Balances, Budget Data for Cost centers, sales
73 Update Retained Earning Account , balance carry fwd (T.Code: F.16)
Month end closing Activities

1. All the expenses including amortization, prepaid expenses, Preliminary expenses and accruals
have been booked.
2. Complete Bank Reconciliation (T.Code: FF67)
3. Make sure that Sum of Inter company balances is Zero
4. Suspense Accounts should be cleared regularly.
5. Ensure that all documents related to MM & SD have been entered in system. ( T.Code:F-22 & F43)
6. Ensure that all billing documents are released to accounting.
7. Calculate Overheads on all process Orders (CO43)
8. Technically complete all process orders which are fully processed (CORM).
9. Calculate Variance (KKS1) (Relevant only if Standard cost is calculated).
10. Settle all process orders which are technically complete (CO88).
11. Close All settled Process Orders
12. Close MM period (Transaction Code: MMPV).
13. Carry out GR/IR clearing (F.13) transaction
14. Depreciation Run (AFAB) has been carried out for the month
15. Close FI Posting period after the month end closing activity is over (T.Code:OB52)
Year end closing Activities:
1. Calculate production work in progress on process orders which are not technically complete.
(CO88).
2. Carry out Assessment cycle for Cost Centers.(T.Code: KSUB)
3. All month end closing Activities should be carried out.

4. Carry Forward Balances to next year

(With TC: F.16 we can carry forward the balance to next year.
With TC: OBH2 copy the number ranges to next year
Open next year periods by selecting the Posting Period Variant.
then test by posting the transaction in F-02)

The following is a process flow from the website:

http://mindmajix.com/sap-co/month-end-closing-process-flowchart-product-costing

Month End Closing Process FlowChart SAP

CO-PC
Posted by Mindmajix In SAP CO
May 10, 2016
Month-end processing is really where the bulk of the work exists for finance. Throughout a
given period, actual expenses are recorded in SAP as purchases are made, payroll is processed,
bills are paid, and production occurs. Postings are now under final review by plant controllers
and corporate finance. Incorrect postings that were not resolved throughout the month are
uncovered and the finance department finalizes fixes and adjustments before processing a
series of steps in the month-end close calendar.
At month end, work in process, variance, and settlement are calculated. COSTS are settled
after all material movements in the previous period are completed. The variance between
actual costs and standard costs can be capitalized and/or result in planning changes for costing
the next period or year.
Lets use Figure 5.4 to illustrate how variances work. This example can work for both planned
orders (repetitive manufacturing) and production orders (discrete manufacturing).
Assume we have an order to produce ten cases of perfume bottles. Components on the
perfume bottle BOM are backflushed to the production order at plan quantities, or directly
issued at actual quantities.

Figure 5.4: Component issues to order

This credits component inventory and debits the production order with consumption of raw
materials, packaging, etc. See Table 4.1 for an example.

Table 5.2: Debit & credit for material consumption

Activities are confirmed on the order for setup, labor, overhead based on either plan routing
figures, or actual figures entered during production. Remember that total activity quantities
and dollars are planned by cost center in order to calculate an activity rate. That activity rate is
multiplied by the actual activity hours in production (see Figure 5.5).

Figure 5.5: Activity confirmations to order

This credits the work centers cost center and debits the production order with the secondary
cost element assigned on the activity type (see Table 5.3).

Table 5.3: Debit & credit for activity confirmation

Now that debits are incurred on the order to reflect the consumption of materials and activities,
a credit is posted to confirm that finished good inventory is produced. Finished good
confirmations, also called production confirmations, may also be done as each case of perfume
is produced, at the end of a shift, or when all cases are produced. Depending on the scenario,
components and activities may be backflushed at the time of finished good confirmation. It is
important that you understand how your production team plans to record production so you
can understand results.

Work in process (WIP) calculation

The WIP calculation function valuates the work in process (unfinished products).
Prior to calculating variances and settling orders, orders must run through work in process
calculation to determine what portion of the order, if any, is not complete. Since WIP inventory
cannot be counted during a physical inventory count or cycle count, this process determines
the dollar value of WIP. In order to calculate variances and move the costs associated with work
in process to the balance sheet, we need to run WIP.
No financial posting is made when WIP is executed. When the order or product cost collector is
settled, WIP should post to these accounts:
Expense Account Production Credit WIP
Inventory Account Work in Process
In product cost by period (repetitive manufacturing), WIP is valued at the target cost of
quantities confirmed (based on a cost estimate) minus scrap and goods receipt quantities. In
configuration, you determine if the target cost estimate is the standard cost estimate or the
preliminary cost estimate (see Figure 5.6).

Figure 5.6: WIP calculation for product cost by period

Repetitive work in process example

A product cost collector has a plan order quantity of 100. At month end, only 10 (of the 100) are
finished. The standard cost of the finished good is $1.04.
Total debits on the order are $25 based on material consumption and activity confirmations.
Total credits on the order are based on the goods receipt of finished goods (10 times standard
cost of $1.04 = $10.40).
Target cost of quantities confirmed is ($1.04 * 10) = $10.40.
$10.40 $0- $25 = $14.60 Total WIP amount.

In product cost by order (discrete manufacturing), WIP is the difference between total debits on
an order (expenses from material backflushes and activity confirmations) and total credits on
the order (production credits at standard cost for each confirmation of finished goods) (see
Figure 5.7).

Figure 5.7: WIP calculation for product cost by order

In order for WIP to be calculated, the production or process order must be in status REL
meaning released. Regardless of whether the material has work in process or not, all
production or process orders can go through WIP calculation at the end of the month. Only
orders that have a valid results analysis key and are not in status DLFL (Deletion flag) or DLT
(Deleted) are included in WIP calculation.
Throughout order processing, orders are debited with expenses for labor, material, and
services. As finished goods are produced, a production credit is posted to the order. At this
point, all orders remain on the profit and loss statement. WIP calculation determines the
remaining cost on an order after the credit for finished goods at standard cost. Through WIP
calculation, we move WIP balances to balance sheet inventory accounts.

Discrete work in process example

An order is in REL status (Not TECO or DLV yet since it is still in progress). The plan order
quantity is 100. At the end of the month, only 10 (of the 100) are finished. The standard cost of
the finished good is $1.04.
Total debits on the order are $25 based on material consumption and activity confirmations.

Total credits on the order are based on the goods receipt of finished goods (10 times std cost of
$1.04 = $10.40).
Total plan costs are ($1.04 * 100) = $104. However, this value is not used in WIP calculation.
Total actual debits minus total actual credits equals WIP:
$25.00 $10.40 = $14.60 Total WIP amount.

The screenshot Figure 5.8 is transaction KKAO for calculating WIP for an orders in a plant. You
can also use WIP transaction KKAX for one order of transaction KKAS for each product cost
collector at a time. Note that you can run WIP in test mode at any time and review results prior
to posting.

Figure 5.8: Work in process collective processing

In the screenshot in Figure 5.9, you will see two columns with WIP values. The first is cumulated
WIP. Cumulated WIP is the amount of WIP for the period 9, in this case, and the amount that
will show up on the balance sheet as a WIP.
The second column to the right is WIP period change. This column is for analysis purposes
only and shows the change from last periods WIP to this periods WIP.
You will also notice that some orders are grouped with a description WIP data reserve for
unrealized costs. This means that the order has more credits (production credits for finished
goods) than the total debits (expenses from material consumption or activity confirmations).
SAP creates a reserve because we expect more debits on this order based on the standard cost
estimate for the material. When you settle, reserves for unrealized costs result in the system is
debiting the expense account (from reserves) in the income statement and crediting the
reserves for unrealized costs in the balance sheet.

Figure 5.9: Work in process object list

Variance calculation
Prior to settling the difference between total order debits and credits, we perform variance
calculation to classify variances for further analysis. SAP offers variance analysis on the input
(consumption, overhead allocation, actual expense) side and output (production quantity or
valuation) side. See the lists below for information on input and output variances.

Variance calculation provides you with detailed cost information on products or manufacturing
orders.
The variance calculation function:

Shows the variance between target costs and control costs (the control costs can be the
net actual costs, for example)

Determines the difference between the actual costs debited to the object and the credit
from goods receipts (total variance)

Valuates the unplanned scrap quantities with target costs to determine the scrap
variances

Determines production variances and planning variances for informational purposes

Shows the causes of the variances and assigns the variances to different variance
categories depending on the cause
The system updates the variances by object for each cost element, or for each cost element and
origin.

Input Variances
Variances on the input side are variances based on goods issues, internal activity allocations,
overhead allocation, and G/L account postings. These variances are assigned to the following
variance categories according to their cause:
Input Price Variance: Caused by differences between plan and actual material and activity
prices. Only calculated if material origin is selected on material master.
Resource-Usage Variance: Caused by using different materials and activities than were planned
in BOMs and Routings/Master Recipes.
Material Quantity Variance: Caused by different material and quantities than were planned in
BOMs.
Remaining Input Variance: This occurs when costs are entered without a quantity or when OH
rates are changed.
Scrap Variance: Caused by differences between operation scrap in routing and actual scrap
confirmed.

Output Variances
Mixed Price Variance: Caused when the system determines a different mixed cost than the
released cost estimate. Must be selected in the variance variant to see.
Output Price Variance: Caused if the standard price changed between delivery to stock and
when variances are calculated, moving average price materials are not delivered to stock at
standard price, or price used to valuate inventory is not a mixed price.
Lot Size Variance: Differences between the planned and actual costs that dont vary with lot size.

Remaining Variance: Differences between target and allocated actual costs that cannot be
assigned to any other category. Also used when no variance categories defined in variance
variant.
The screenshot in Figure 5.10 is transaction KKS1 to run variance calculation for all orders in a
plant. You can also run variance calculation for one order at a time with transaction KKS2 or
transaction KKS6 for product cost collectors. Along with WIP, you can run variance calculation in
test mode at any time.

Figure 5.10: Variance calculation

After executing the variance calculation, the list in the screenshot in Figure 5.11 will appear. This
screen shows the target and actual cost for each order, the allocated actual, work in process,

scrap variances, and total variances. Many columns can be added using the layout button that
looks like a Rubiks Cube on the toolbar to further analyze order variance details. This report
also shows you a default view of version, which represents target costs for total variances and
variances are displayed in the company code currency.

Figure 5.11: Variance calculation list

The term allocated actual costs is typically confusing to people when they view this report.
Think of allocated actual costs as costs with which the order is credited. When variances are
calculated, allocated actual costs are compared with target costs to calculate variances on the
output side. These costs are actual credits from deliveries to stock when a finished good is
produced.

Orders may show $0.00 target costs, which means the finished good material did not have a
cost estimate at the time the order was created. A strong master data management process
can help reduce the number of orders that have no target costs. If an order has no target costs,
the system will produce an error that variances cannot be calculated. If you cost the material,
then un-TECO the order, and click the calculator icon, you can recost the material on the order
to produce target costs. I suggest that you check throughout the month for orders without
target costs in order to mitigate these issues prior to month end.
Many companies prefer to perform variance calculation more often than month end in order to
stay on top of large production variances and mitigate issues. This transaction can be run in
test mode as often as needed to produce a detailed variance report for analysis.

Order settlement
When a production order is settled, the actual costs incurred for the order are settled to one or
more receiver cost-objects (for example, to the account for the material produced or to a sales
order). Offsetting entries are generated automatically to credit the production order:

If the costs for the production order are settled to a material account, the order is
credited each time material is delivered to stock. The material stock account is debited
accordingly.

If the costs for the production order are settled to another receiver (for example to a
sales order), the order is credited automatically at the time of settlement. The cost-objects are
debited accordingly.
The debit posting remains in the order and can be displayed even after the costs have been
settled. The settled costs are updated in the corresponding receiver cost-object and can be
displayed in the reporting.
Finally, we must settle orders so that the remaining balance on orders can be offset and the
variances can post to a final resting place on the financial statement. As we have discussed in
this field, orders are debited with actual costs during production material and activity
confirmations. When finished goods are produced, the order is credited at the standard cost of
the material. When you perform settlement, the difference between the debit and credit of the
order is transferred to the cost center based on the finished good materials profit center.
Each cost object in controlling has a settlement rule in the order to determine where the orders
costs should be settled. Figure 5.12 is a screenshot of a sample settlement rule from a
production order. The default settlement receiver for orders in SAP is material. The settlement
profile configuration determines what settlement rule should default in the order and you do
not need to enter a settlement rule. Further details on the settlement profile are in section 142.

Figure 5.12: Order settlement rule

The screenshot in Figure 5.13 is transaction CO88, actual order settlement for an entire plant.
Transaction KO88 can be used for settling individual production or process orders. Transaction
KK87 can be used for settling product cost collectors individually.

F
igure 5.13: Actual settlement orders
Sales orders can be settled with transaction VA88 for an entire sales order at a time, a range of
sales documents, and/or a range of document items. This settlement transaction is shown in
Figure 5.14: Actual settlement sales orders.

Figure 5.14: Actual settlement sales orders

After orders are settled, you should review the financial documents and ensure that all orders
that should be settled were settled. A great transaction to view order balances is transaction
KOC4 (see Figure 5.15). Running this transaction after settlement can clearly show you what
orders will have actual cost debits for the period and what are not settled yet. Then, you can
resolve the root cause and settle those orders again.

Figure 5.15: Order selection results list