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

Parallel Accounting in SAP ERP

Account Approachversus

Ledger Approach

in New General Ledger Accounting

Solution Management FinancialsAugust 2008

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Structure of the Presentation

Aims of this presentation: Provide a short introduction to how parallel accounting can be portrayed using

Classic General Ledger AccountingNew 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 theaccount approach) Ledger approach in new General Ledger Accounting

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Portrayal of Parallel Accounting in SAP ERP

Components

Asset Accounting

Controlling

Material Management

Others

Financial Accounting

Controlling

Material Management

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Components

Asset Accounting

Controlling

Material Management

Others


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Alternatives - Parallel Management of Values in SAP ERP General Ledger Accounting

Local Close SAP R/3(Classic GL)

SAP ERP(New GL)

Parallel ledgers X

Parallel accounts X X

Parallel special purpose ledgers X X

Parallel company codes X X

Significantly improved integration of financial / managerial accounting in new GL Accounting

Recommended approaches

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 customer's 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.

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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 numeric

Account Number Suffix

A 1 0 xxxxxx Common accounts

0

B 2 1 xxxxxx IFRS accounts 1C 3 2 xxxxxx Local accounts 2

-Generally already filled-Selection of "from" and "to" numbers is more difficult

Making entries here entails considerable effort!

Common accounts retain a 0, but all local valuation accounts have to be created again and can be transferred manually (with the exception of FI-AA)

A prefix is added to all account numbers. Chart of accounts is converted using the chart of accounts conversion tool.

IFRS Reporting0 common accounts and1 IFRS accounts

Local Reporting0 common accounts and2 local accounts

=> Validation of the layer is useful for postings using the same valuation approach and values

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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)

BKPFRLDNR = " " Ledger A

(IFRS)

(leading ledger)

Ledger B(US GAAP)

Ledger C(local)

BSEG

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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

2. Same approach but different valuation=> a separate posting to local and IFRS accounts or ledgers

Depreciation or reserves for pensions

Expenses: Ext. Activities

1) 1000

Payables

1160 1)

Tax

1) 160

Expenses: Pensions Local Valuation

2) 1000

Expenses: PensionsIFRS

3) 500

Accruals Local Valuation

1000 2)

Accruals IFRS

500 3)

One common posting

Two complete postings, made separately for each valuation

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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

Posting only relevant for local GAAP: Provisions for expenses

Financial LeasingDepreciation

1) 1000

Financial Leasing

1000 1)Only one posting

Expense

1) 2000

Provision for Expenses

2000 1)Only one posting

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Delta Postings or Complete Postings (Example: Complete Posting)

FI-AA uses two depreciation areas:01 contains IFRS 30 contains local valuation

Scenario: Two valuation approaches with IFRS as leading approach

For December 2003, the following depreciation is made:01 IFRS EUR 100030 Local EUR 600

With a complete posting, the postings appear as follows:Debit "IFRS Depreciation" 1000Credit "IFRS Value Adjustment" 1000

Debit "Local Valuation: Depreciation" 600Credit "Local Valuation: Value Adjustment" 600

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Delta Postings or Complete Postings(Example: Delta Posting)

With delta postings, the following postings are made:Debit "IFRS Depreciation" 1000Credit "IFRS Value Adjustment" 1000

Credit "Local Valuation: Depreciation" 400Debit "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.

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Components

Asset Accounting

Controlling

Material Management

Others


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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).

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FI-AA: Portrayal of Multiple Accounting Principles - Ledger Approach in New GL (2)

The depreciation area settings specify whetherNo postings are madeAsset balances and depreciation are postedOnly asset balances are postedOnly 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.

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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.

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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 ledgerPosting of

Ledger Group Ledger AssetB/S Value

Periodic Depreciation

X

X

X

-

Depreciation area 01(leading)

0L IFRS X

Depreciation area 20 (calculation) 0L IFRS -

Depreciation area 30 (nonleading) N1 US GAAP -

Depreciation area 60(delta area 30-01)

N1 US GAAP X (1)

(1) Corrections from asset retirement can be posted direct or periodically (RAPERB2000)

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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.

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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).

FI-AA

FI-GL

IFRS (Leading)

US GAAP

01 IFRS30 US GAAP60 30 - 01…

Postings IFRS US GAAP

Asset Acquisition 0L N1

Capitalization of Freight Costs (ledger group-specific document with separate transaction type)

-- N1

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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 areaNonleading areaDelta 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 principleSeparate 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 affectedPeriodic FI posting to asset portfolio (and to asset clearing account) using RAPERB2000 or direct postingManual transfer posting from asset clearing account to expenses (expenses adjustment account)

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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.

FI-AA

FI-GL

IFRS (Leading)

US GAAP

01 IFRS30 US GAAP60 30 - 01…


Straight-line depreciation over5 years as per IFRS

0L --

Straight-line depreciation over 10 years as per US GAAP

-- N1

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Depreciation

Assets are depreciated using different depreciation rules in accordance with different accounting principles.



For each accounting principle, the depreciation run posts documents to the respective ledger.



For each accounting principle, the depreciation run posts documents to the accounts defined.

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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)

FI-AA

FI-GL

IFRS (Leading)

US GAAP

01 IFRS30 US GAAP60 30 - 01…


Asset sale with gains 0L N1

Adjustment of gains under IFRS, adjustment of accumulated depreciation under US GAAP, and posting of losses under US GAAP (1)

-- N1

(1) Performed direct or performed periodically using RAPERB2000

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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.



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.


A new depreciation area is required for the new accounting principleSeparate 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.

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Scrapping

Scrapping is a special type of asset retirement, producing a revenue of zero.

The same applies as with asset retirement.

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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).

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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.)

FI-AA

FI-GL

IFRS (Leading)

US GAAP

01 IFRS30 US GAAP60 30 - 01…


Settlement of internal order to asset under construction with 100%

0L N1

Reset by 20% of expenses(1) -- N1

(1) Performed direct or performed periodically using RAPERB2000

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Asset Under Construction (Investment Measure)

Different APC values have to be capitalized using different accounting principles.



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.


A new depreciation area is required for the new accounting principleSeparate 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.

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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.

FI-AA

FI-GL

IFRS (Leading)

US GAAP

01 IFRS30 US GAAP60 30 - 01…


Straight-line depreciation over3 years as per IFRS

0L --

Immediate depreciation as per US GAAP -- N1

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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).



All assets with APC that are smaller or equal to the smallest LVA value of all accounting principles are capitalized in an assetclass 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.

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Low-Value Assets (2)



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.

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Portrayal of Multiple Accounting Principles Using the Ledger Approach in New GL: Integration with Controlling

Scenario 1:

Depreciation area 01 does not post to ControllingThis is the leading depreciation areaIt posts to the leading ledgerIt uses the same accounts as depreciation areas 30 and 60

Depreciation area 20 posts to ControllingIt posts to the leading ledgerIt posts to ControllingAccounts are created as cost elementsThe 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 ofLedger Group Ledger Asset

B/S ValuePeriodic Depreciation

Depreciation area 01 (leading)

0L IFRS X X

Depreciation area 20 (calculation) 0L IFRS - X (CO)

Depreciation area 30 (nonleading) N1 US GAAP - X


N1 US GAAP X -

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Scenario 2:

Depreciation area 01 posts to ControllingThis is the leading depreciation areaIt posts to the leading ledgerIt posts to ControllingAccounts are created as cost elementsIt 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.




0L IFRS X X (CO)

Depreciation area 30 (nonleading) N1 US GAAP - X


N1 US GAAP X -

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Scenario 3:

Depreciation area 01 does not post to ControllingThis is the "leading" depreciation areaIt posts to the leading ledgerSome of the (P&L) accounts it uses are different to those used by depreciation areas 30 and 60In 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 ControllingIt does not post to the leading ledgerIt posts to ControllingAccounts are created as cost elementsSome 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).




0L IFRS or HGB X X

Depreciation area 30 (nonleading) N1 US GAAP - X (CO)


N1 US GAAP X -

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Components

Asset Accounting

Controlling

Material Management

Others

-Foreign Currency Valuation-Individual Value Adjustment-Sorting Open Items-Down Payments-Provisions Created Automatically-Provisions Created Manually-Accruals/Deferrals-Balance Carryforward


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Parallel Accounting in Financial Accounting

Depiction of parallel accounting is required for the following topics:

Value adjustmentsList of terms / ReclassificationsForeign currency valuationSecurities (CFM)ProvisionsAccruals

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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.

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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 groupThe program is run for each valuation area.

Account approach:Customizing in FI-CA: Assignment of the adjustment accounts to a valuation areaThe program is run for each valuation area.

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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.

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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 groupThe 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.

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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 areasThe 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.

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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.

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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 areasThe 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.

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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.

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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.

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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.

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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_PROVISIONLedger approach

Customizing: Assignment of accounts to valuation area and provision methodThe program is run for each valuation area and provision method.

Account approachCustomizing: Assignment of account to provision methodThe program is run for each valuation area and provision method.

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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 availableWith 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 availableManual posting of provision amounts on different provision accounts

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Balance Carryforward (SAPFGVTR)

Ledger approach in new General Ledger Accounting:Separate run for each ledger

Account approach:Not relevant

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Components

Asset Accounting

Controlling

Material Management

Others


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Cost Accounting: Basic Principles (1)

Structuring Costsby Functional Area:

ProcurementProduction

SalesAdministration

…

Structuring Costsby Cost Element:Personnel CostsMaterial Costs

Costs for Services…

FI Cost Element Accounting

Cost Center Accounting

Cost Object Controlling

Structuring Costs by Origin:Primary

Secondary

Structuring Costs by Imputability:

Direct CostsOverhead Costs

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)

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Basic Principles: Cost Accounting withCost 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!

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Cost Accounting: Basic Principles (2)

Structuring Costsby Functional Area:

ProcurementProduction

SalesAdministration

…

Structuring Costsby Cost Element:Personnel CostsMaterial Costs

Costs for Services…

FI Cost Element Accounting

Cost Center Accounting

Profitability Analysis

Cost Object Controlling

Assessment of Costs to Market Segments

Change to the Functional Area* by Assessment :

When real-time integration is active -> postings are made to the leading ledger in FI. Otherwise, subsequent

postings are made via the reconciliation ledger. The clearing account is determined on the basis

of the transaction and the object class.

Assessment of Costs within CCA

* Also applies for company code, business area, segment, profit center, fund, and grant

© SAP 2008 / Page 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 54



Components


Asset Accounting

Controlling

Material Management

Others

- Valuation of Materials- GR/IR Clearing Account

© SAP 2008 / Page 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 groupsWorkaround: Make ledger-specific postings manually

Account approach: Account determination using the valuation class – no parallel accountsWorkaround: Make manual postings to parallel accounts.

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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.

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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.

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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 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).

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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 availableThe program is run for each ledger.

Account approach:Customizing: Target account determination for each GR/IR accountThe program is run for GR/IR accounts.

© SAP 2008 / Page 61



Components


Asset Accounting

Controlling

Material Management

Others

© SAP 2008 / Page 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

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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 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

http://service.sap.com/gl

© SAP 2008 / Page 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 IBMCorporation 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 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.