Define Fiscal Year Variant in S4HANA finance

A Fiscal Year Variant in SAP S/4HANA defines the structure of the fiscal year for an organization. It specifies how the year is divided into periods, whether the periods are calendar-based or non-calendar-based, and how special periods are used for closing operations.

It is a critical component for managing financial reporting and controlling processes.

Fiscal Year Variant

We can Define Following Fiscal Year as per requirement

Calendar Fiscal Year

• Calendar Year: The fiscal year corresponds to the calendar year (e.g., January to December)
• In This No need to maintain number of days in each year.

Non Calendar Year Fiscal Year:

In this we can define into two methods:

1. Year Independent:

   In this we can define period like (April to March or July to June etc.) as per our country requirement

Divides the fiscal year into periods (usually 12 monthly periods) for financial transactions.

1. Special Period Fiscal Year

   In special case when we require less then 12 month period then we can define special fiscal year variant (like January to March etc.) its created when we start a new company in mid of the year and when we close the company before complete financial year.

Configure Steps for Define Fiscal Year Variant in SAP S/4HANA

Go to Path: SPRO > SAP Reference IMG > Financial Accounting (New) > Financial Accounting Global Settings (New) > Ledgers > Fiscal Year and Posting Periods > Define Fiscal Year Variants

Create Fiscal Year Variant

1. Select New Entries:

• Enter a unique Fiscal Year Variant Key (e.g., VJ21).
• Provide a Description (e.g., “April to March with 4 Special Periods”).

1. Define Fiscal Year Type: Here we can define calendar year or non-calendar Year, but as per my requirement I am define Non-calendar year.

For Non-Calendar Year: Leave the “Calendar Year” checkbox unchecked and enter the start month (e.g., April for April to March fiscal year)

1. Specify the Number of Posting Periods:

Enter the total number of periods, including special periods (e.g., 16 if there are 12 regular periods + 4 special periods).

1. Assign Year Shift:

Define how periods are distributed if the fiscal year crosses calendar years.

Assign Periods to the Variant

• Select your Fiscal Year Variant and choose Periods
• Define the start and end dates for each period

>> For a Calendar Year, the system can automatically assign periods.

>> For a Non-Calendar Year, manually enter the start and end dates for each period.

Assign Fiscal Year Variant to Company Code

Path:

SPRO > Financial Accounting (New) > Financial Accounting Global Settings (New) > Ledgers > Fiscal Year and Posting Periods > Assign Fiscal Year Variant to Company Code

Select your Company Code (e.g., VJ21) and assign the newly created Fiscal Year Variant (e.g., VJ21).

Explanation about Shortened Fiscal Year

Suppose a company has a fiscal year from April to March but decides to transition to a calendar year starting January 1, 2024. A Shortened Fiscal Year will be introduced from April 1, 2023, to December 31, 2023, covering only 9 months. Starting January 1, 2024, the company will adopt the new fiscal year structure (January to December)

Steps to Configure a Shortened Fiscal Year in SAP S/4HANA

Define the Shortened Fiscal Year Variant

Path: SPRO > SAP Reference IMG > Financial Accounting (New) > Financial Accounting Global Settings (New) > Ledgers > Fiscal Year and Posting Periods > Define Fiscal Year Variants

Create a new Fiscal Year Variant for the shortened year:

• Key: VJ21 (e.g., Shortened Fiscal Year Variant).
• Description: “Shortened Fiscal Year – April to December 2024
• Set the number of periods (e.g., 9 periods + any special periods).

Assign Periods to the Shortened Fiscal Year

Under the newly created Fiscal Year Variant, define the start and end dates for each period:

• Period 1: April 1, 2024 – April 30, 2024
• Period 9: December 1, 2024 – December 31, 2024

Save Entries

Assign the Shortened Fiscal Year Variant to the Company Code

• Path: SPRO > Financial Accounting (New) > Financial Accounting Global Settings (New) > Ledgers > Fiscal Year and Posting Periods > Assign Fiscal Year Variant to Company Code
• Assign the newly created variant (VJ21) to the relevant Company Code

Adjust Depreciation in Asset Accounting (If Applicable)

In cases where Asset Accounting is used, depreciation calculations need to align with the shortened fiscal year.

Path: SPRO > Financial Accounting (New) > Asset Accounting > Depreciation > Define Depreciation Areas.

Set up depreciation keys to account for the shorter periods

Update Financial Reporting Settings

Ensure that financial reporting tools like Financial Statement Versions (FSVs) or Group Reporting are updated to reflect the shortened fiscal year.

Best Practices

• Perform thorough testing in a non-production environment before implementing.
• Communicate changes to stakeholders, including auditors and tax authorities.
• Ensure alignment with statutory and organizational reporting requirements.