This document provides my personal insight into SAP’s Accounting system of the future – continuous accounting and consolidation

1. © 2017 SAP SE or an SAP affiliate company. All rights reserved. 1Internal
The Accounting
System of the
Future at SAP

2. SAP - CONTINUOUS ACCOUNTING & CONSOLIDATION
SAP’S TECHNICAL BREAKTHROUGH VS OTHER ERP SYSTEM
Currently relational databases require multiple ledgers which in turn require replication and reconciliation. For example, with regards to Finance, an ERP
system might split into the following areas/ledgers/tables:
 A General Ledger used for external reporting
 A Materials Ledger to record and post materials movements
 An Asset Ledger to calculate depreciation movements and maintain balances
 A table for Management Accounting purposes i.e. profitability & cost analysis
When it comes to reporting, most users require data on various granularity levels from various tables to complete their reporting requirements. This
usually requires data to be extracted and replicated from various sources. Therefore, the data is not real time. In addition, with replication there is often
aggregation and summarisation which often leads to loss of visibility, granularity and detail. Furthermore, when it comes to reporting across various
ledgers to achieve a holistic view of the business, this may require further replication of data and extra reporting solutions to sit over the various ledgers
making the process inherently more complex.
With S/4HANA, SAP can now remove these constraints – with a single table we have eliminated the need for replications and reconciliation between
various financial ledgers and we have also removed the rigid reporting structures that companies face. For example, the need for trying to report and
reconcile internal management accounting information vs externally reported financial statements is no longer an issue. Furthermore, the complexities
around conducting such things like Cost and Profitability analysis in a stand alone manner has also now been removed due to all financial data being
stored in.one location.
THE IMPACT OF THE TECHNOLOGY ON BUSINESS PROCESSES
There are various implications for Finance when running a defragmented ERP system. However, arguably, the two biggest implications are:
 The timeliness, validity and ability to provide insight into why the business has performed the way it has
 The ability to execute your planning and month end financial close processes
However, since S4 HANA posts all financial information in real time to one table, this enables end to end Accounting processes to be
fundamentally redesigned. S4 HANA, acts as the enabler to redesign your monthly processes to become intra month activities i.e.
intercompany reconciliation run during the month, Furthermore, it allows for such topics like real time analysis of Liquidity positions and
fully integrated company wide planning. However, perhaps most importantly, it allows companies to address as mentioned arguably
the two biggest issues facing finance departments, Timeliness, validity and insight of your reporting and reducing your month end close.

3. SAP - CONTINUOUS ACCOUNTING & CONSOLIDATION
IMPACT ON THE BUSINESS
How does S4 HANA address, fundamentally change and provide a competitive edge to businesses:
 Accurate and Real Time data: When a transaction is posted, all areas of accounting that the transaction impacts are updated automatically as all data
resides in one single table as opposed to other ERP solutions that spilt data into various tables i.e. an Asset ledger vs Management Accounting views.
With all possible accounting data in one table, there is no need to replicate data or reconcile ledgers. This means all reporting is done from one table as
well – the business finally has the often promised “one source of the truth”.
 Continuous Accounting: S4 HANA will allow accounting processes to be run at any point during the month. Therefore, this allows you to run processes
that would normally be run at month end closing. By bringing processes forward and by running these processes as “intra month” (during the month)
processes rather than “inter month” (end of month), we start to shorten the time it takes to close your books.
With S4 HANA, not only do we provide the technology to produce a soft close at any point in time, we also provide a Legal Consolidation solution that is
embedded into the ERP system. Ultimately, this means at any point during a month, a company can produce a consolidated view of their business. This
provides numerous benefits for decisions makers and it will ultimately lead to Accounting and Finance departments reducing month end costs, making
better & more informed decisions, releasing results earlier to the market and in due course, allowing finance to play a role in the digital economy..
Multiple ERP systems: S4 HANA offers full end to end business processes which will allow other ERP systems to feed their transactional data
directly into S4 HANA in real time. Lastly, as each business is different and unique, SAP offers multiple industry solutions allowing those unique
processes related to you and your industry to be incorporated into your system
The final two sections of this white paper outline how our unique continuous consolidation
processes works followed by outlining how SAP’s customers are moving from a inter month to a
intra month accounting process.

4. SAP’s CONTINUOUS LEGAL CONSOLIDATION
TWO CATEGORIES USED TO ALLOW FOR CONTINUOUS CONSOLIDATION:
 Preliminary Category: always uses the latest data available from the Universal Table (ACDOCA) where all actuals are stored in one table in real
time. Here we can run the consolidation at any point during the month by continuously requesting a “data submission” from the ACDOCA table.
Note, when the consolidation is run, the consolidation output is stored in the Consolidation Table ACDOCC.
 Final: Once the month end period is closed, we run a final delta data request and then this dataset is copied to the Category “Final”.
Here we perform the final consolidation and then if final adjustments can be made in ACDOCA, another date request is raised and the delta is
loaded. Alternatively, we can post changes to the ACDOCC Table where the consolidation output data is kept along with potentially Non SAP
companies i.e. other ERP systems that are not directly positing their transactional data to S4 HANA
Updated Unlock/LockUpdatedLock
Entity Status
“to be reviewed” Check Delta ChangeConsolidation Reconsolidate
FINAL CONSOL. PROCESS
Post Close PostingRaise Date Submit Req. Data Change DisplayLocal Close

5. FROM “INTER MONTH” TO “INTRA MONTH” ACCOUNTING
 Receive Final
Data Delta &
move to Closing
Category
 Post Group
Adjustments
 Load non SAP
Companies
 Run Final
Consolidation
 Review
Consolidation
 Produce
Disclosures
ACCRUALS & DEFERRALS
Pull of Delta
Carry forward balances
Foreign exchange
Elimination of intercompany transactions
Adjustments for subsidiaries, JV’s and MI
Consolidation adjustments
GAAP Adjustments
Process Settlements – IO, WBS
Post allocations
Continuous Profitability analysis
FOREIGN CURRENCY
Post foreign currency's
Intercompany matching &
Adjustments
DAILY INTERCOMPANY
PRELIMINARY CONSOLIDATION
MANAGEMENT
ACCOUNTING
Run Accruals Engine & Post Manual Accruals
Post Deferrals
Post accruals from logistics re POs
Maintain the GR/IR Clearing Account
Stock Valuations – Raw materials, WIP, Finished Goods
Post Material ledger Revaluations & Perform Inventory
Reconciliations
Calculate Standard v Actual variances
Review of PO and release
Standard costing runs for potential changes between
Standard & Actual price
All billing documents have been released
Post Good Issues reviewed
ACCOUNTS RECEIVABLE & PAYABLE
MATERIALS MANAGEMENT
SALES & DISTRIBUTION
BANK
Reconcile Bank Accounts
continuous cash forecasting*
treasury instrument
financial risk management – commodity
and treasury
FIXED ASSETS
Valuate foreign currencies
Value Adjustments - Provisions and bad Debts
Review open items, Block Postings
Group receivable & Payables
Depreciation Run, revaluations, transfers,
Capitalise AUC PERIOD END
FINAL
CONSOLIDATION
 Month End
Activities:
 Stock Valuations
 Materials
Calculations
 Final Billing runs
 Reconcile Bank
 Final Depreciation
 AP & AR Closing
 Re-run Accruals
engine
 Post FX
 Final Interco
Reconciliation
 Calculation of
Actual Prices &
variance analysis
 Final Settlements
 Close GL & Sub
Ledgers
20th Day of the Month PERIOD END 1-3 Days30th Day of the Month
AC DOC A Table
FINAL DATA
SUBMISSION
The following processes could now be moved from a month end closing process to an intra month repetitive process. The Consolidation can run
continuously as the intra month processes are executed. This gives you a real time soft financial close and this acts as the basis for a potential
predicated month end close position.