Parallel accounting in sap erp account approachversus ledger approachin new general ledger accounting

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Parallel accounting in sap erp account approachversus ledger approachin new general ledger accounting

  1. 1. Parallel Accounting in SAP ERP Account Approach versus Ledger Approachin New General Ledger AccountingSolution Management FinancialsAugust 2008
  2. 2. Structure of the Presentation Aims of this presentation: Provide a short introduction to how parallel accounting can be portrayed using Classic General Ledger Accounting New General Ledger Accounting Cover the relevant topics in terms of other SAP ERP components. Parallel accounting is discussed in detail for the following recommended approaches: Chart of accounts approach (or parallel G/L accounts – referred to here as the account approach) Ledger approach in new General Ledger Accounting© SAP 2008 / Page 2
  3. 3. Parallel Accounting in SAP ERP Portrayal of Parallel Accounting in SAP ERP Components Asset Accounting Financial Accounting Controlling Material Management Others© SAP 2008 / Page 3
  4. 4. Parallel Accounting in SAP ERP Portrayal of Parallel Accounting in SAP ERP Components Asset Accounting Financial Accounting Controlling Material Management Others© SAP 2008 / Page 4
  5. 5. Alternatives - Parallel Management of Values in SAP ERP General Ledger Accounting Local Close SAP R/3 SAP ERP (Classic GL) (New GL) Parallel ledgers X Parallel accounts X X Parallel special purpose ledgers X X Parallel company codes X X Recommended approaches Significantly improved integration of financial / managerial accounting in new GL Accounting In new General Ledger Accounting in SAP ERP, the approaches using parallel ledgers or parallel accounts are equivalent in terms of the results produced. Which approach is applied depends on each customers situation. Parallel accounts in SAP ERP prove just as powerful as parallel accounts in classic General Ledger Accounting in SAP R/3. Parallel ledgers in SAP ERP are much better than the combination of classic General Ledger Accounting and Special Purpose Ledgers in SAP R/3.© SAP 2008 / Page 5
  6. 6. Alternatives - Creating Charts of Accounts Using Prefixes in the Account Approach (Layer Model) Options for creating charts of accounts: Prefix and account number or last digit of the account number Prefix: Alphanumeric or Account Number Suffix -Generally numeric already filled A 1 0 xxxxxx Common 0 -Selection of accounts "from" and "to" B 2 1 xxxxxx IFRS accounts 1 numbers is more difficult C 3 2 xxxxxx Local accounts 2 Common accounts retain a 0, but all local valuation accounts have Making entries to be created again and can be transferred manually (with the here entails exception of FI-AA) considerable effort! A prefix is added to all account numbers. Chart of accounts is converted using the chart of accounts conversion tool. IFRS Reporting Local Reporting => Validation of the layer is 0 common accounts and 0 common accounts and useful for postings 1 IFRS accounts 2 local accounts using the same valuation approach and values© SAP 2008 / Page 6
  7. 7. Alternatives - Parallel Ledgers (One Ledger per Valuation Approach Instead of Account Prefix) No ledger is specified during document entry: Posting made to all defined GL ledgers Transactions: incoming invoice, outgoing invoice, payment (everything relating to open items) BKPF Ledger A Ledger B Ledger C RLDNR = " " (IFRS) (US GAAP) (local) (leading BSEG ledger)© SAP 2008 / Page 7
  8. 8. Alternatives - Approach and Valuation Affect Number of Postings Decisively (I) 1. Same approach and valuation => One posting to common accounts or in all ledgers Incoming invoice for external activities Expenses: Ext. Activities Payables Tax One common 1160 1) 1) 160 1) 1000 posting 2. Same approach but different valuation => a separate posting to local and IFRS accounts or ledgers Depreciation or reserves for pensions Expenses: Pensions Accruals Local Valuation Local Valuation 1000 2) Two complete 2) 1000 postings, made Expenses: Pensions separately for Accruals IFRS IFRS each valuation 3) 500 500 3)© SAP 2008 / Page 8
  9. 9. Alternatives - Approach and Valuation Affect Number of Postings Decisively (II) 3. Different approaches => Only one posting to local or IFRS accounts or ledgers Posting only relevant for IFRS: Financial Leasing Financial Leasing Financial Leasing Depreciation Only one 1) 1000 1000 1) posting Posting only relevant for local GAAP: Provisions for expenses Expense Provision for Expenses Only one 1) 2000 2000 1) posting© SAP 2008 / Page 9
  10. 10. Delta Postings or Complete Postings (Example: Complete Posting) Scenario: Two valuation approaches with IFRS as leading approach FI-AA uses two depreciation areas: 01 contains IFRS 30 contains local valuation For December 2003, the following depreciation is made: 01 IFRS EUR 1000 30 Local EUR 600 With a complete posting, the postings appear as follows: Debit "IFRS Depreciation" 1000 Credit "IFRS Value Adjustment" 1000 Debit "Local Valuation: Depreciation" 600 Credit "Local Valuation: Value Adjustment" 600© SAP 2008 / Page 10
  11. 11. Delta Postings or Complete Postings (Example: Delta Posting) With delta postings, the following postings are made: Debit "IFRS Depreciation" 1000 Credit "IFRS Value Adjustment" 1000 Credit "Local Valuation: Depreciation" 400 Debit "Local Valuation: Value Adjustment" 400 In this case, the local posting corrects existing values. The delta posting is only meaningful in combination with the initial posting. Posting data cannot be traced without additional information. Should tax auditors also be able to see the IFRS values? The SAP system can only make delta postings in FI-AA The delta technique is not recommended.© SAP 2008 / Page 11
  12. 12. Parallel Accounting in SAP ERP Portrayal of Parallel Accounting in SAP ERP Components Asset Accounting Financial Accounting Controlling Material Management Others© SAP 2008 / Page 12
  13. 13. FI-AA: Portrayal of Multiple Accounting Principles - Ledger Approach in New GL (1) The FI-AA application component can portray parallel accounting using depreciation areas. In Customizing, ledger groups are assigned to the depreciation areas. Consequently, postings are made to separate ledgers in FI. The leading ledger has to be assigned to depreciation area 01. The following have to be defined for every other ledger (for the additional accounting principles): A depreciation area A derived depreciation area (delta area) The start date and end date of the fiscal year variant in the depreciation areas in Asset Accounting need to correspond to the fiscal year variant of the leading ledger. Nonleading ledgers can use a different fiscal year variant. (For restrictions on this, see SAP Note 844029).© SAP 2008 / Page 13
  14. 14. FI-AA: Portrayal of Multiple Accounting Principles - Ledger Approach in New GL (2) The depreciation area settings specify whether No postings are made Asset balances and depreciation are posted Only asset balances are posted Only depreciation is posted APC can be posted direct to the G/L account in all ledgers (periodic run of RAPERP2000 is no longer necessary) An identical G/L account number can be used in different ledgers. In this way, only one APC account and only one VA account, for example, are required for all accounting principles of an asset class. A reduced version of the chart of accounts can be used for easier reference. Customizing: Different depreciation parameters (such as method and useful life) are defined for each depreciation area in an asset or asset class. "Post-Capitalization of Cash Discount to Assets" (prerequisite: document splitting is active!): Cash discounts are capitalized with payments; periodic run of SAPF181 is no longer necessary.© SAP 2008 / Page 14
  15. 15. FI-AA: Portrayal of Multiple Accounting Principles Using the Account Approach The FI-AA application component can portray parallel accounting using depreciation areas. Customizing: Different accounts can be defined in the depreciation areas / asset classes. In this way, postings are made to separate G/L accounts. One APC account and one VA account, for example, are required for each accounting principle. The start date and end date of the fiscal year variant in the depreciation areas in Asset Accounting need to correspond to the fiscal year variant of the company code. Customizing: Different depreciation parameters (such as method and useful life) are defined for each depreciation area in an asset. APC can be posted direct to the accounts of the parallel valuations or started periodically using RAPERP2000.© SAP 2008 / Page 15
  16. 16. FI-AA - Depreciation Areas Required for Ledger Approach in New General Ledger Accounting The portrayal of parallel valuation requires the depreciation areas listed below. Delta postings are used. The base value of the leading area is transferred to all ledgers, and a second periodic APC posting corrects the base value in the parallel ledger. The derived area (delta area) posts the difference between the leading area and the nonleading area to the ledger assigned to the nonleading area. The following examples assume: The IFRS ledger is the leading ledger The US GAAP ledger is the nonleading ledger Posting of Ledger Group Ledger Asset Periodic B/S Value Depreciation Depreciation area 01 0L IFRS X X (leading) Depreciation area 20 (calculation) 0L IFRS - X Depreciation area 30 (nonleading) N1 US GAAP - X Depreciation area 60 N1 US GAAP X (1) - (delta area 30-01) (1) Corrections from asset retirement can be posted direct or periodically (RAPERB2000)© SAP 2008 / Page 16
  17. 17. FI-AA - Depreciation Areas Required for Ledger Approach in New General Ledger Accounting In Area 01 The leading ledger is assigned Asset balance sheet values and depreciation are posted online; profit center and segment are always included in the posting In Area 20 Only cost-accounting depreciation is posted; another type of depreciation can be specified, and the accounts specified need to be created as cost elements In Area 30 Asset balance sheet values are posted Where appropriate, depreciation is posted with a different base value. In Area 60 (derived area) Ledger group-specific documents are entered for postings with different APC values (such as the capitalization of freight costs under US GAAP); such documents need to be entered manually Corrections for asset retirement postings are created automatically when the depreciation posted in areas 01 and 30 differs (the VA account and the gain or loss from asset retirement are corrected); this can be posted direct or posted periodically using RAPERB2000.© SAP 2008 / Page 17
  18. 18. Portrayal of Multiple Accounting Principles Using the Ledger Approach in New GL: Asset Acquisition Different APC values reflecting different accounting principles have to be posted to the ledgers (for example, freight costs need to be capitalized for US GAAP). 01 IFRS 30 US GAAP 60 30 - 01 FI-AA … FI-GL IFRS (Leading) Postings IFRS US GAAP US GAAP Asset Acquisition 0L N1 Capitalization of Freight Costs (ledger -- N1 group-specific document with separate transaction type)© SAP 2008 / Page 18
  19. 19. Asset Acquisition Assets can be valuated differently for different accounting principles (for example, freight costs have to be capitalized for US GAAP). Ledger approach in new General Ledger Accounting: Customizing: As mentioned above, at least the following depreciation areas need to be set up accordingly: Leading area Nonleading area Delta area The base value of the leading area is transferred to all ledgers. One-Step Method: The derived area (delta area) posts the difference between the leading and nonleading area to the nonleading ledger: using a ledger group-specific document that needs to be entered manually. Account approach: Customizing: A new depreciation area is required for the new accounting principle Separate accounts can be defined for the combination chart of depreciation – chart of accounts – account determination – depreciation areas. Account determination is assigned to the asset class. Three-Step Method: Manual adjustment document on the asset in the area affected Periodic FI posting to asset portfolio (and to asset clearing account) using RAPERB2000 or direct posting Manual transfer posting from asset clearing account to expenses (expenses adjustment account)© SAP 2008 / Page 19
  20. 20. Portrayal of Multiple Accounting Principles Using the Ledger Approach in New GL: Depreciation The use of different depreciation parameters (such as method and useful life) for the different accounting principles produces different depreciation values, which are posted to the corresponding ledgers. 01 IFRS 30 US GAAP 60 30 - 01 FI-AA … FI-GL IFRS (Leading) US GAAP Postings IFRS US GAAP Straight-line depreciation over 0L -- 5 years as per IFRS Straight-line depreciation over 10 years as -- N1 per US GAAP© SAP 2008 / Page 20
  21. 21. Depreciation Assets are depreciated using different depreciation rules in accordance with different accounting principles. Ledger approach in new General Ledger Accounting: Customizing: As mentioned above, at least the following depreciation areas need to be set up accordingly: Leading area Nonleading area Delta area For each accounting principle, the depreciation run posts documents to the respective ledger. Account approach: Customizing: A new depreciation area is required for the new accounting principle Separate accounts can be defined for the combination chart of depreciation – chart of accounts – account determination – depreciation areas. Account determination is assigned to the asset class. For each accounting principle, the depreciation run posts documents to the accounts defined.© SAP 2008 / Page 21
  22. 22. Portrayal of Multiple Accounting Principles Using the Ledger Approach in New GL: Asset Retirement Due to the different net book values, the accounting principles can produce different losses/gains that need to be posted to the respective ledgers. (Assumption: gains are achieved when IFRS is the leading accounting principle, whereas US GAAP produces losses) 01 IFRS 30 US GAAP 60 30 - 01 FI-AA … FI-GL IFRS (Leading) Postings IFRS US GAAP US GAAP Asset sale with gains 0L N1 Adjustment of gains under IFRS, -- N1 adjustment of accumulated depreciation under US GAAP, and posting of losses under US GAAP (1) (1) Performed direct or performed periodically using RAPERB2000© SAP 2008 / Page 22
  23. 23. Asset Retirement When assets are sold, the net book value can be different in the different accounting principles, which means that different values need to be posted. Ledger approach in new General Ledger Accounting: Customizing: As mentioned above, at least the following depreciation areas need to be set up accordingly: Leading area Nonleading area Delta area The base value of the leading accounting principle is posted to both ledgers. The derived area (delta area) posts the difference between the leading and nonleading areas to the additional ledger. This posting can be made direct or periodically using RAPERB2000. Account approach: Customizing: A new depreciation area is required for the new accounting principle Separate accounts can be defined for the combination chart of depreciation – chart of accounts – account determination – depreciation areas. Account determination is assigned to the asset class. The document in the nonleading area is posted periodically using RAPERB2000 or posted direct.© SAP 2008 / Page 23
  24. 24. Scrapping Scrapping is a special type of asset retirement, producing a revenue of zero. The same applies as with asset retirement.© SAP 2008 / Page 24
  25. 25. Portrayal of Multiple Accounting Principles Using the Ledger Approach in New GL: Asset Under Construction For assets under construction, the following distinction is made: Without investment measure: Such assets are treated as regular asset acquisition. As investment measure: Costs are collected on a WBS element or an internal order (capitalization key in the master record). The costs are collected and capitalized/settled to the asset. They are assigned to the depreciation area on the basis of the combination of capitalization key and capitalization version. In this way, different percentages of capitalization can be applied. Additional external invoices that need to be handled differently depending on each accounting principle have to be entered as an adjustment document after the asset has been capitalized (as a regular asset acquisition).© SAP 2008 / Page 25
  26. 26. Multiple Acctg Principles - Ledger Approach in New GL: Asset Under Construction (Investment Measure) The expenses are collected on an internal order and settled to the asset under construction. Different APC values have to be capitalized using different accounting principles. (Assumption: 100% of expenses are capitalized under leading accounting principle IFRS, whereas only 80% of expenses are capitalized under US GAAP. The percentage applied is defined in the capitalization key of the asset under construction.) 01 IFRS 30 US GAAP 60 30 - 01 FI-AA … FI-GL IFRS (Leading) Postings IFRS US US GAAP GAAP Settlement of internal order to asset under 0L N1 construction with 100% Reset by 20% of expenses(1) -- N1 (1) Performed direct or performed periodically using RAPERB2000© SAP 2008 / Page 26
  27. 27. Asset Under Construction (Investment Measure) Different APC values have to be capitalized using different accounting principles. Ledger approach in new General Ledger Accounting: Customizing: As mentioned above, at least the following depreciation areas need to be set up accordingly: Leading area Nonleading area Delta area The base value of the leading area is transferred to all ledgers. The derived area (delta area) posts the difference between the leading and nonleading area to the nonleading ledger; this difference is posted automatically during settlement. Account approach: Customizing: A new depreciation area is required for the new accounting principle Separate accounts can be defined for the combination chart of depreciation – chart of accounts – account determination – depreciation areas. Account determination is assigned to the asset class. The total amount and the difference are posted automatically during settlement to the respective areas.© SAP 2008 / Page 27
  28. 28. Portrayal of Multiple Accounting Principles Using the Ledger Approach in New GL: Depreciation of Low-Value Assets The limits for low-value assets differ depending on the accounting principle applied. 01 IFRS 30 US GAAP 60 30 - 01 FI-AA … FI-GL IFRS (Leading) US GAAP Postings IFRS US GAAP Straight-line depreciation over 0L -- 3 years as per IFRS Immediate depreciation as per US GAAP -- N1© SAP 2008 / Page 28
  29. 29. Low-Value Assets (1) Low-value assets have different limits due to the different accounting principles applied. The maximum low-value asset amount is defined in the country data (OA08) (the country key has been assigned to the company code). Ledger approach in new General Ledger Accounting: Customizing: As mentioned above, at least the following depreciation areas need to be set up accordingly: Leading area Nonleading area Delta area All assets with APC that are smaller or equal to the smallest LVA value of all accounting principles are capitalized in an asset class and depreciated immediately. All assets that are greater than the smallest LVA value of all accounting principles are created in a second asset class. Whereas in one area immediate depreciation occurs at 100%, depreciation is performed in another area corresponding to the useful life. Changes to the respective depreciation key and the useful life need to be made manually in the asset master record for each depreciation area. From 2008: A special transaction type needs to be created for retirement because the German tax law requires assets with an APC of between 150 EUR and 1000 EUR to be depreciated over five years (see SAP Note 1082378) For each accounting principle, the depreciation run posts documents to the respective ledger.© SAP 2008 / Page 29
  30. 30. Low-Value Assets (2) Account approach: Customizing: A new depreciation area is required for the new accounting principle Separate accounts can be defined for the combination chart of depreciation – chart of accounts – account determination – depreciation areas. Account determination is assigned to the asset class. All assets with APC that are smaller or equal to the smallest LVA value of all accounting principles are capitalized in an asset class and depreciated immediately. All assets that are greater than the smallest LVA value of all accounting principles are created in a second asset class. Whereas in one area immediate depreciation occurs at 100%, depreciation is performed in another area corresponding to the useful life. Changes to the respective depreciation key and the useful life need to be made manually in the asset master record for each depreciation area. From 2008: A special transaction type needs to be created for retirement because the German tax law requires assets with an APC of between 150 EUR and 1000 EUR to be depreciated over five years (see SAP Note 1082378) For each accounting principle, the depreciation run posts documents to the accounts defined.© SAP 2008 / Page 30
  31. 31. Portrayal of Multiple Accounting Principles Using the Ledger Approach in New GL: Integration with Controlling Scenario 1: Depreciation area 01 does not post to Controlling This is the leading depreciation area It posts to the leading ledger It uses the same accounts as depreciation areas 30 and 60 Depreciation area 20 posts to Controlling It posts to the leading ledger It posts to Controlling Accounts are created as cost elements The accounts used are different to those used in depreciation areas 01, 30, and 60 In Controlling, the cost-accounting approach portrayed differs from that in the leading valuation. Posting of Ledger Group Ledger Asset Periodic B/S Value Depreciation Depreciation area 01 0L IFRS X X (leading) Depreciation area 20 (calculation) 0L IFRS - X (CO) Depreciation area 30 (nonleading) N1 US GAAP - X Depreciation area 60 N1 US GAAP X - (delta area 30-01)© SAP 2008 / Page 31
  32. 32. Portrayal of Multiple Accounting Principles Using the Ledger Approach in New GL: Integration with Controlling Scenario 2: Depreciation area 01 posts to Controlling This is the leading depreciation area It posts to the leading ledger It posts to Controlling Accounts are created as cost elements It uses the same accounts as depreciation areas 30 and 60 Depreciation area 20 is not used. In Controlling, the leading valuation is portrayed as the cost-accounting approach. Posting of Ledger Group Ledger Asset Periodic B/S Value Depreciation Depreciation area 01 0L IFRS X X (CO) (leading) Depreciation area 30 (nonleading) N1 US GAAP - X Depreciation area 60 N1 US GAAP X - (delta area 30-01)© SAP 2008 / Page 32
  33. 33. Portrayal of Multiple Accounting Principles Using the Ledger Approach in New GL: Integration with Controlling Scenario 3: Depreciation area 01 does not post to Controlling This is the "leading" depreciation area It posts to the leading ledger Some of the (P&L) accounts it uses are different to those used by depreciation areas 30 and 60 In Germany and Austria, the current trend is to portray the German Commercial Code (HGB) in area 01 Depreciation area 20 is not used. Depreciation area 30 posts to Controlling It does not post to the leading ledger It posts to Controlling Accounts are created as cost elements Some of the (P&L) accounts used are different to those used in depreciation area 01 In Controlling, group accounting is portrayed as the leading valuation without the group approach being portrayed in area 01. It may be possible to reduce the effort required for a conversion project. The BAdi FCOM_EXT_LEDGER has to be used (see SAP Note 804753). Posting of Ledger Group Ledger Asset Periodic B/S Value Depreciation Depreciation area 01 0L IFRS or HGB X X (leading) Depreciation area 30 (nonleading) N1 US GAAP - X (CO) Depreciation area 60 N1 US GAAP X - (delta area 30-01)© SAP 2008 / Page 33
  34. 34. Parallel Accounting in SAP ERP Portrayal of Parallel Accounting in SAP ERP Components Asset Accounting Financial Accounting -Foreign Currency Valuation -Individual Value Adjustment -Sorting Open Items Controlling -Down Payments -Provisions Created Automatically -Provisions Created Manually -Accruals/Deferrals Material Management -Balance Carryforward Others© SAP 2008 / Page 34
  35. 35. Parallel Accounting in Financial Accounting Depiction of parallel accounting is required for the following topics: Value adjustments List of terms / Reclassifications Foreign currency valuation Securities (CFM) Provisions Accruals© SAP 2008 / Page 35
  36. 36. Foreign Currency Valuation (FAGL_FC_VALUATION) Receivables / Payables / foreign currency balance sheet accounts may be valuated differently on the basis of different accounting principles. Ledger approach in new General Ledger Accounting: Customizing: Determination of the ledger group using the assignment of the valuation area to a valuation method and to an accounting principle. The program is run for each valuation area. Account approach: Customizing: Assignment of different accounts on the basis of the valuation area (for each chart of accounts) The program is run for each valuation area.© SAP 2008 / Page 36
  37. 37. Foreign Currency Valuation in FI-CA In the FI-CA application component, open items that are posted in a foreign currency may be valuated using different accounting views. Ledger approach in new General Ledger Accounting: Customizing in FI-CA: Assignment of the valuation area to a ledger group The program is run for each valuation area. Account approach: Customizing in FI-CA: Assignment of the adjustment accounts to a valuation area The program is run for each valuation area.© SAP 2008 / Page 37
  38. 38. Valuations in Treasury and Risk Management (TR- TM) In the Treasury application component, financial instruments (such as fixed-term deposits, securities, or foreign exchange) may be valuated from different accounting views. Ledger approach in new General Ledger Accounting: Customizing: Assignment of the valuation area to the accounting principle (to the ledger group in new General Ledger Accounting) The program is run for each accounting principle. Account approach: Customizing (TR-TM): Assignment of the valuation area to the valuation accounts. The program is run for each valuation area.© SAP 2008 / Page 38
  39. 39. Translation (FAGL_FC_TRANSLATION) Receivables/Payables FAS 52 requires that the valuation result in the functional currency be translated into the reporting currency. Ledger approach in new General Ledger Accounting: Customizing: Assignment of valuation area to accounting principle to ledger group The program is run for each valuation area. Account approach: Customizing: Definition of different accounts depending on the valuation area. The program is run for each valuation area.© SAP 2008 / Page 39
  40. 40. Flat-Rate Individual Value Adjustment (SAPF107) Receivables (and, where applicable, payables) can be valuated differently by number of days overdue and risk classes in accordance with different accounting principles. Ledger approach in new General Ledger Accounting: Customizing: Assignment of ledger group using valuation areas The program is run for each valuation area. Account approach: Customizing: Assignment of different accounts (for each chart of accounts) using valuation areas. The program is run for each valuation area.© SAP 2008 / Page 40
  41. 41. Individual Value Adjustment of Receivables (Manual Posting, Special G/L Transaction) Receivables can be transferred as doubtful receivables (special G/L transaction) Ledger approach in new General Ledger Accounting: Not available Account approach: The special G/L transaction represents a type of account approach.© SAP 2008 / Page 41
  42. 42. Sorting Open Items by Remaining Term (FAGL_CL_REGROUP) Receivables (and, where applicable, payables) can be portrayed by remaining term on different balance sheet items in accordance with different accounting principles (transfer posting). Ledger approach in new General Ledger Accounting: Customizing: Assignment of ledger group using valuation areas The program is run for each valuation area. Account approach: Customizing: Assignment of different accounts (for each chart of accounts) using valuation areas. The program is run for each valuation area.© SAP 2008 / Page 42
  43. 43. Down Payments Made In the results analysis, different results analysis versions can be used to view down payments differently. For example, down payments that have already been made can be considered revenue in results analysis and thereby reduce the revenue in excess of billings. This is achieved in transaction OKG3 by setting the "Commitments" indicator (methods G-K). With the "G" indicator, two results analysis categories are calculated and updated: category ANKB (down payments reduce revenue in excess of billings) and category ANUS (down payment surplus). When down payments reduce revenue in excess of billings, the amount of the down payment cannot exceed the amount of revenue in excess of billings. The portion of the down payment amount exceeding the revenue in excess of billings is transferred as down payment surplus. In both cases, postings can be made to FI during the settlement of the order/project. -> With account assignments, the postings can be made to different ledgers or accounts.© SAP 2008 / Page 43
  44. 44. Provisions from Controlling For internal orders, sales orders, and projects carrying revenues, provisions can be created by means of results analysis or WIP calculation. Provisions are created for probable losses when the plan costs exceed the planned revenue. In the subsequent periods, these provisions are automatically used until the complete amount has been realized as a loss. Provisions are created for uncovered costs when the calculated cost of sales exceeds the actual costs (using results analysis) or when the credit amount exceeds the actual costs due to goods receipts (WIP calculation). In the subsequent periods, these provisions are automatically used whenever subsequent costs are incurred. The provisions are cancelled upon order completion. Provisions for complaints and commission are created on the basis of planned costs for specific cost elements. In the subsequent periods, these provisions are automatically used whenever costs are incurred for these cost elements. For all of these provisions, postings are created automatically in FI during settlement (managed in transaction OKG8). A results analysis version can be created for each accounting principle. In this way, the different results analysis versions can be used to create different amounts of provisions that can then be used or cancelled when the order attains different statuses. With IFRS, results analysis is also used to make revenue postings (revenues in excess of billings) automatically on the basis of the percentage of completion. If the revenues that are actually made exceed the revenues determined, the revenue surplus is calculated and transferred to FI as a provision.© SAP 2008 / Page 44
  45. 45. Manual Accruals/Deferrals (Transaction ACACACT) Accruals and deferrals need to be allocated to the relevant periods. The use of parallel accounting may mean that different accrual/deferral postings need to be made, depending on the accounting principle. Ledger approach in new General Ledger Accounting: Customizing: Assignment of the accrual method to the accounting principle (determination of the ledger group) The program (periodic accrual run) is run for each accounting principle. Account approach: Customizing: Assignment of the accounts to a set of rules (such as accrual type) The program is run for each accrual type.© SAP 2008 / Page 45
  46. 46. Doubtful Receivables (SAPF103 and SAPF104 or FAGL_DR_PROVISION (New G/L with EhP3) Receivables sometimes need to be portrayed as doubtful receivables. SAPF103 selects the overdue receivables and posts them as doubtful receivables across multiple ledgers (special G/L transaction). SAPF104 or FAGL_DR_PROVISION (which replaces SAPF104 in New G/L Accounting with EHP3) creates postings for doubtful receivables on provision accounts. SAPF104 (account approach only) Customizing: Assignment of accounts to transaction key (KTOSL) The program is run for each provision method (period selection). FAGL_DR_PROVISION Ledger approach Customizing: Assignment of accounts to valuation area and provision method The program is run for each valuation area and provision method. Account approach Customizing: Assignment of account to provision method The program is run for each valuation area and provision method.© SAP 2008 / Page 46
  47. 47. Provisions (Manual Posting in Financial Accounting) It may be necessary for specific transactions (such as legal costs or acquisition costs) to be posted as provisions. Ledger approach in new General Ledger Accounting: Customizing: Not available With ERP 6.0 EHP3, manual processing of provisions (that is, manual posting and clearing) for each ledger (only G/L accounts) Account approach: Customizing: Not available Manual posting of provision amounts on different provision accounts© SAP 2008 / Page 47
  48. 48. Balance Carryforward (SAPFGVTR) Ledger approach in new General Ledger Accounting: Separate run for each ledger Account approach: Not relevant© SAP 2008 / Page 48
  49. 49. Parallel Accounting in SAP ERP Portrayal of Parallel Accounting in SAP ERP Components Asset Accounting Financial Accounting Controlling Material Management Others© SAP 2008 / Page 49
  50. 50. Cost Accounting: Basic Principles (1) Structuring Costs Structuring Costs by Cost Element: by Functional Area: FI Cost Element Accounting Personnel Costs Procurement Material Costs Production Costs for Services Sales Cost Center Accounting … Administration Structuring Costs … by Origin: Structuring Costs Primary by Imputability: Secondary Direct Costs Overhead Costs Cost Object Controlling Valuation of Products/Projects/Orders •Collection of primary and secondary costs by cost object •Specification of amount of FI-relevant costs (such as work in process) FI Period-End Closing: WIP, asset under construction (multiple results analysis versions/capitalization versions) Stocks (valuation using closing postings from the material ledger)© SAP 2008 / Page 50
  51. 51. Basic Principles: Cost Accounting with Cost Object Controlling The use of cost object controlling requires a two-step procedure for the inclusion of costs in FI. However, there are some gaps … In the first step, Controlling collects the relevant costs and assigns them to the cost object (order, sales order, project). Primary costs are taken from FI and secondary costs from CO. During period-end closing, it is determined whether work in process or provisions need to be created for the costs incurred. Then results analysis / WIP calculation is used to perform different valuations; in the case of the percentage of completion method, for example, a revenue (revenue in excess of billings) is calculated, whereas all costs are still considered work in process according to the German Commercial Code (HGB). However, there is only one valuation approach for the actual costs incurred. In the second step, the posting is made in FI. At this point, the option of capitalization can be considered (WIP) and an account assignment rule can be created (in the Customizing settings for the posting logic). In this way, the results of different results analysis versions, for example, can be combined with different ledgers and postings can be made to the relevant ledgers. A similar approach is applied to stocks: The material ledger calculates the values using the settings in the valuation run (LIFO, FIFO, market prices for raw materials, plan/actual price for services) and then performs a valuation run to make delta postings to revaluate the stocks. With the account assignment rule, values can be posted to different accounts. Caution: If the activity allocation changes the company code, the business area, or the functional area, postings are made to FI using real-time integration!© SAP 2008 / Page 51
  52. 52. Cost Accounting: Basic Principles (2) Structuring Costs Structuring Costs by Cost Element: by Functional Area: Procurement FI Cost Element Accounting Personnel Costs Material Costs Production Costs for Services Sales Cost Center Accounting … Administration … Assessment of Costs Change to the Functional Area* by within CCA Assessment : When real-time integration is active -> postings are made to the leading Cost Object Controlling ledger in FI. Otherwise, subsequent postings are made via the reconciliation ledger. The clearing Assessment of Costs account is determined on the basis to Market Segments of the transaction and the object class. Profitability Analysis * Also applies for company code, business area, segment, profit center, fund, and grant© SAP 2008 / Page 52
  53. 53. Basic Principles: Cost Accounting Using Assessment With assessment, costs are apportioned from a sender (such as a marketing cost center) to a receiver (such as other cost centers or a region in CO-PA). In classic General Ledger Accounting, this type of assessment only affected FI whenever more than one functional area (or similar) was involved. The reconciliation ledger was used to manage such postings and to transfer them to FI at a specified time (period-end closing). In new General Ledger Accounting, postings can be made to FI using real-time integration when the segment, profit center, functional area, and so on, is changed by an allocation in CO. However, CO only knows the actual version 0 and not the ledgers. This means that assessments from CO are always updated in the leading ledger. If the assessment is restricted to FI dimensions, assessment can be performed using transaction FAGLGA15. This type of assessment is performed in FI without the involvement of CO. When the FIN_CCA scenario is used, an assessment can be made from one cost center to another in General Ledger Accounting, without making any postings in CO. Current research is looking into whether it is possible to consider more dimensions in CO and whether an FI assessment without the involvement of CO suffices for many simple scenarios.© SAP 2008 / Page 53
  54. 54. Parallel Accounting in SAP ERP Portrayal of Parallel Accounting in SAP ERP Components Asset Accounting Financial Accounting Controlling Material Management - Valuation of Materials - GR/IR Clearing Account Others© SAP 2008 / Page 54
  55. 55. Raw Materials and Manufacturing Supplies (Without Material Ledger) Parallel accounting is not possible in the Materials Management (MM) application component. Valuation in MM makes a distinction between the standard price and the moving average price. On the balance sheet date, valuations such as FIFO valuation (first in, first out), lowest value principle, and LIFO valuation (last in, first out) are performed in MM and transferred to FI. Ledger approach in new General Ledger Accounting: Account determination using the valuation class – no means of connecting to parallel ledger groups Workaround: Make ledger-specific postings manually Account approach: Account determination using the valuation class – no parallel accounts Workaround: Make manual postings to parallel accounts.© SAP 2008 / Page 55
  56. 56. Raw Materials and Manufacturing Supplies (with Material Ledger) If parallel accounting is desired for material stocks, the material ledger has to be used. When the material ledger is activated, additional valuation fields are created for each material. A periodic unit price is calculated using the value flows for the period. With alternative valuation runs, parallel values for each material and procurement alternatives can be determined and posted in different posting runs to different ledgers or accounts in FI. Ledger approach in new General Ledger Accounting: In the alternative valuation run (transaction CKMLCPAVR), the account assignment rule applied appears on the "Settings" tab page. This is linked to the ledger group. Account grouping for alternative valuation is always different to that for operational valuation. This means that a ledger approach in the strict sense is not possible. Account approach: Account grouping for alternative valuation is always different to that for operational valuation (BSD instead of BSX). This means that adjustment postings cannot always be identified as such.© SAP 2008 / Page 56
  57. 57. Work in Process (Products and Services) In Controlling, costs are generally collected for each order or project as expenses on a cost object. During period-end closing, either work in process (such as production orders, product cost collector, or process orders) is determined or results analysis is performed (projects, sales orders, and internal orders), which uses the percentage of completion to determine the work in process or the cost of sales. In both cases, multiple valuation methods (combined in a results analysis version) can be applied in Controlling. During settlement, postings are made for the work in process or for the cost of sales, using the posting rules in FI. WIP postings can be made using multiple results analysis versions. Ledger approach in new General Ledger Accounting: Posting rules contain an account assignment rule that is coupled with a ledger group (see transaction OKG8) Account approach: Posting rules can also be used to make postings to different accounts (transaction OKG8) With IFRS, results analysis is also used to make revenue postings (revenues in excess of billings) automatically on the basis of the percentage of completion and to transfer these postings to FI.© SAP 2008 / Page 57
  58. 58. Finished Goods and Merchandise (Without Material Ledger) Parallel accounting is not possible in the Materials Management (MM) application component. SAP recommends performing valuation with standard prices that are calculation using a standard cost estimate. On the balance sheet data, inventory costing is performed and the results achieved are used to perform revaluations. Ledger approach in new General Ledger Accounting: Account determination using the valuation class – no means of connecting to parallel ledger groups Account approach: Account determination using the valuation class – no parallel accounts Workaround -> Recommend using material ledger for parallel valuation© SAP 2008 / Page 58
  59. 59. Finished Goods and Merchandise (with Material Ledger) If parallel accounting is desired for material stocks, the material ledger has to be used. Actual costing uses value flows to determine the multilevel costs of finished goods for each period and can perform stock revaluation for closed periods. With alternative valuation runs, parallel values for each product can be determined and posted to FI in separate posting runs. Ledger approach in new General Ledger Accounting: In the alternative valuation run (transaction CKMLCPAVR), the account assignment rule applied appears on the "Settings" tab page. This is linked to the ledger group. Account grouping for alternative valuation is always different to that for operational valuation. This means that a ledger approach in the strict sense is not possible. Account approach: Account grouping for alternative valuation is always different to that for operational valuation (BSD instead of BSX).© SAP 2008 / Page 59
  60. 60. Analysis of the GR/IR Account (RFWERE00) Valuation postings are made to the target accounts “Delivered / Not Invoiced” and “Invoiced / Not Delivered”. Ledger approach in new General Ledger Accounting: Customizing: Not available The program is run for each ledger. Account approach: Customizing: Target account determination for each GR/IR account The program is run for GR/IR accounts.© SAP 2008 / Page 60
  61. 61. Parallel Accounting in SAP ERP Portrayal of Parallel Accounting in SAP ERP Components Asset Accounting Financial Accounting Controlling Material Management Others© SAP 2008 / Page 61
  62. 62. Human Resource Management Allocations for pension provisions and employee benefits/shares are generally calculated outside of the SAP system. Manual postings can be made to post to the SAP system the different valuations resulting from the different accounting principles. Ledger approach in new General Ledger Accounting: Ledger-specific manual postings Account approach: Manual postings to the accounts relevant for each accounting principle© SAP 2008 / Page 62
  63. 63. Authorization Ledger approach in new General Ledger Accounting: Authorizations can be defined for the representative ledger of a ledger group. Account approach: Authorizations can be defined for G/L accounts. Consequently, both approaches provide a comparable solution.© SAP 2008 / Page 63
  64. 64. Integration with FI-CA For more information, see SAP Service Marketplace at http://service.sap.com/gl -> Media Library -> Presentations -> New GL and Industry Solutions© SAP 2008 / Page 64
  65. 65. Copyright 2004 SAP AG. All Rights Reserved No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. Microsoft, Windows, Outlook, and PowerPoint are registered trademarks of Microsoft Corporation. IBM, DB2, DB2 Universal Database, OS/2, Parallel Sysplex, MVS/ESA, AIX, S/390, AS/400, OS/390, OS/400, iSeries, pSeries, xSeries, zSeries, z/OS, AFP, Intelligent Miner, WebSphere, Netfinity, Tivoli, and Informix are trademarks or registered trademarks of IBM Corporation in the United States and/or other countries. Oracle is a registered trademark of Oracle Corporation. UNIX, X/Open, OSF/1, and Motif are registered trademarks of the Open Group. Citrix, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, and MultiWin are trademarks or registered trademarks of Citrix Systems, Inc. HTML, XML, XHTML and W3C are trademarks or registered trademarks of W3C®, World Wide Web Consortium, Massachusetts Institute of Technology. Java is a registered trademark of Sun Microsystems, Inc. JavaScript is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and implemented by Netscape. MaxDB is a trademark of MySQL AB, Sweden. SAP, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary. These materials are subject to change without notice. These materials are provided by SAP AG and its affiliated companies ("SAP Group") for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.© SAP 2008 / Page 65
  66. 66. Copyright 2004 SAP AG. Alle Rechte vorbehalten Weitergabe und Vervielfältigung dieser Publikation oder von Teilen daraus sind, zu welchem Zweck und in welcher Form auch immer, ohne die ausdrückliche schriftliche Genehmigung durch SAP AG nicht gestattet. In dieser Publikation enthaltene Informationen können ohne vorherige Ankündigung geändert werden. Die von SAP AG oder deren Vertriebsfirmen angebotenen Softwareprodukte können Softwarekomponenten auch anderer Softwarehersteller enthalten. Microsoft, Windows, Outlook, und PowerPoint sind eingetragene Marken der Microsoft Corporation. IBM, DB2, DB2 Universal Database, OS/2, Parallel Sysplex, MVS/ESA, AIX, S/390, AS/400, OS/390, OS/400, iSeries, pSeries, xSeries, zSeries, z/OS, AFP, Intelligent Miner, WebSphere, Netfinity, Tivoli, und Informix sind Marken oder eingetragene Marken der IBM Corporation in den USA und/oder anderen Ländern. Oracle ist eine eingetragene Marke der Oracle Corporation. UNIX, X/Open, OSF/1, und Motif sind eingetragene Marken der Open Group. Citrix, ICA, Program Neighborhood, MetaFrame, WinFrame, VideoFrame, und MultiWin sind Marken oder eingetragene Marken von Citrix Systems, Inc. HTML, XML, XHTML und W3C sind Marken oder eingetragene Marken des W3C®, World Wide Web Consortium, Massachusetts Institute of Technology. Java ist eine eingetragene Marke von Sun Microsystems, Inc. JavaScript ist eine eingetragene Marke der Sun Microsystems, Inc., verwendet unter der Lizenz der von Netscape entwickelten und implementierten Technologie. MaxDB ist eine Marke von MySQL AB, Schweden. SAP, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver und weitere im Text erwähnte SAP-Produkte und -Dienstleistungen sowie die entsprechenden Logos sind Marken oder eingetragene Marken der SAP AG in Deutschland und anderen Ländern weltweit. Alle anderen Namen von Produkten und Dienstleistungen sind Marken der jeweiligen Firmen. Die Angaben im Text sind unverbindlich und dienen lediglich zu Informationszwecken. Produkte können länderspezifische Unterschiede aufweisen. In dieser Publikation enthaltene Informationen können ohne vorherige Ankündigung geändert werden. Die vorliegenden Angaben werden von SAP AG und ihren Konzernunternehmen („SAP-Konzern“) bereitgestellt und dienen ausschließlich Informationszwecken. Der SAP-Konzern übernimmt keinerlei Haftung oder Garantie für Fehler oder Unvollständigkeiten in dieser Publikation. Der SAP- Konzern steht lediglich für Produkte und Dienstleistungen nach der Maßgabe ein, die in der Vereinbarung über die jeweiligen Produkte und Dienstleistungen ausdrücklich geregelt ist. Aus den in dieser Publikation enthaltenen Informationen ergibt sich keine weiterführende Haftung.© SAP 2008 / Page 66

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