GBS-Client Innovation Center

New GL – Functionalities & Benefits

October 2016 S/4 HANA Finance Team – CIC India

IBM Confidential
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Content
New GL – Concepts Overview
New GL Functionality
Parallel Accounting using Parallel Ledgers
Scenarios and Custom fields in Ledgers
Document Balancing (Splitting)
Real-time CO Integration
Segments
Integration with Asset Accounting
Period-End Processes
Allocations
Foreign Currency Revaluation
Reporting
Miscellaneous features
ECC 6.0 Additional GL features (not part of New GL)
Accrual Engine
Inter-company reconciliation tool
Closing Cockpit
Summary of Benefits and Implementation Challenges
New GL Migration project

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Value Proposition - Why New General Ledger?

 New General Ledger is now closely linked to financial and management accounting

Financial New G/L

Management
Accounting
Accounting

 Transparent data structures, flexible data design and uniform user interface

> New general Ledger meets the requirements of a modern, future-oriented

general-ledger accounting for companies of all sizes and industries

> The classic GL is implemented as standard functionality; the use of the New
GL must be activated

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Current Stage : SAP Process Flow

Exchange Order to Cash Material Mgmt

(i.e. A/R, Billing,
Rates Goods Issue)
(i.e. Goods Rcpt, Inv Rcpt)
Period-End Finalize BS
Close Recons
Classic GL
PCA
Posting Period
Open / Close SPL
COS Ledger Prepare
Reviews
Fin Reports
BS & PL
Accounts Journal Entries
(i.e. online entries,
Payable Inter-company, payroll,
Master Data interfaces)

Maintenance
Projects / No
Asset Mgmt Consolidation
Ready to (i.e. GFS)
COPA Close?
Business Controlling CO to FI Yes
Warehouse (CCA, IO, WBS) Recon entries

Activities in real time Period-end closing activities

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General Ledger in SAP ERP 6.0 – Architecture

Consolidation

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Future Stage : Process Flow

Exchange Order to Cash Material Mgmt

(i.e. A/R, Billing,
Rates Goods Issue)
(i.e. Goods Rcpt, Inv Rcpt)
Period-End Finalize BS
Close Recons

New GL
Posting Period
Leading / Non-Leading
Open / Close ledgers
Prepare
Reviews
Fin Reports
BS & PL
Accounts Journal Entries
(i.e. online entries,
Payable Inter-company, payroll,
Master Data interfaces)

Maintenance
Projects / No
Asset Mgmt Consolidation
Ready to (i.e. GFS)
COPA Close?
Business Controlling CO to FI Yes
Warehouse (CCA, IO, WBS) Recon entries

Activities in real time Period-end closing activities

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Value Proposition - New features in New GL

Legal and
management
reporting
Account
Simple mapping
Balancing with
of Parallel
any
Valuation
Characteristics

Real-time Extensibility
New G/L in
Integration (with customer
mySAP ERP
CO=>FI fields)

Segment Reduction of
Reporting TCO

Transparency
and Uniformity

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Parallel Accounting – SAP’s Point of View

 The New General Ledger supports Parallel Accounting by using either parallel accounts
or parallel ledgers.
 In New GL, both approaches are considered equally powerful. The choice will depend
on the specific customer situation.
 The parallel accounts approach in the New GL is as powerful as in classic GL in R/3.
 The parallel ledgers approach in the New GL is much better than the SAP R/3
approach of using classic GL plus the special ledger application.

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Parallel Accounting by using Parallel Ledgers

 Any number of parallel ledgers

– For parallel valuation –local GAAP, group GAAP, tax purposes
– For different fiscal year variants
 Same user interface for all ledgers (data entry, functions, reporting)
 Almost the same functionality for all ledgers
 Standard reporting for multiple ledgers
 Postings into multiple ledgers
 Postings per specific ledger
 Closing activities are run separately in parallel ledgers.

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Ledger Update Concept – Posting to All Ledgers

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Ledger Update Concept – Posting to Selective Ledger

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Standard G/L View vs. New (Flexible) G/L View

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Ledger groups

Representation Ledger is used only for determination of

open/closed posting periods

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Currency Concept at Medtronic

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Activation of Non-Leading Ledger

Same parallel currency concept as in Classical GL (capable of capturing only two additional
parallel currencies assigned to CoCode)
A separate FY version per ledger (same as in SPL)
Ability to close periods by Ledger / CoCode

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Non-Leading Ledger features

Supported Not supported

Separate Local Currencies Integration with other SAP
(subset of Leading Ledger’s) modules
except for FI-AA and Transfer
Separate Financial Year Pricing

Separate Open/Closed Posting Tax processing (VAT)

Periods
Clearing
Separate Scenarios

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New GL Dimension Concept

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Scenarios delivered by SAP

Scenario Fields filled
automatically
FIN_CCA Cost center update Cost center
Sender cost center
FIN_CONS Preparation for consolidation Trading partner
Transaction type
FIN_GSBER Business area Business area
Trading partner business area
FIN_PCA Profit center update Profit center
Partner profit center
FIN_SEGM Segment reporting Profit center
Partner segment
Segment
FIN_UKV Cost of sales accounting Functional area
Partner functional area

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Assignment of Scenarios to Ledgers

Each Ledger can have its own set of assigned of Scenarios

Customer fields are setup for each Ledger separately
In general, scenarios should not be changed once the postings were made

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Extensibility with customer fields

 In the New GL, fields as company code, account, profit centre, segment are standard
in the table key. In addition to that, 2 customer includes are available where the
customer can include additional 15 fields
– The point of caution is a high amount of additional fields can result in a high amount
of data volume which causes performance problems in processes as reporting,
foreign currency valuation, allocation.
 Does SAP give recommendations on how many customer dimensions with how many
characteristics customers should have?
– There is no recommendation on this. It must be decided at the project level. The
important parameter is performance during data evaluation. It would also be
conceivable to work with a few different ledgers, each with one characteristic.
 When fields are extended in the New GL tables, does this extension easily allow for
things such as reporting (line item detail and balances), SAP processes like year-end
balance carry forwards including the extended field, etc?
– All customer defined fields are extended within the line item structures and are
available within the entry view for general inquiry/reporting. Fields can also be
customized for inclusion in the totals table, making them available in the ledger view.
Only fields included in the totals table have balances carried forward.

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Account Balancing by Any Dimension

 Essential for segment reporting and management reporting

– Balance sheet for segments
– KPI including B/S accounts

 Important for various industries

– Public sector, Insurance, Media, …
– Often legal requirements

 Dimensions can be defined in the configuration.

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What is Splitting?

 Responding to requests, SAP introduced document splitting to help customers achieve a

fully-balanced set of financial statements below the company code level
 Therefore, the purpose is to create fully-balanced financial statements below the company
code level
 To achieve this, document line items are assigned characteristic values that have been
predefined in configuration based on a set of rules
 SAP delivers predefined rules, but you can maintain custom rules
 Documents can be displayed using a differentiated representation

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How does Splitting work in New GL – Data Entry View

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How does Splitting work in New GL – Ledger View

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How does the splitting work – technical info

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How Splitting works - Scenarios

1. Passive Splitting
Copying at clearing (i.e. Payments)

2. Active Splitting
Splitting method and rules
Derivation
Constants
Inheritance from offset line items (i.e. AP/AR, Taxes, etc,)

3. Balancing

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Real-Time CO integration

Where is Cost Center Accounting – CO/CCA or New GL?

CO-only postings (allocations, etc) can be set up to flow to a parallel ledger via Ledger group
assignments. CO-only postings can flow to parallel ledgers through the ledger group
assignments but they have also to flow to the leading ledger as well. Its not possible to set
the CO postings up to flow only to the parallel ledger and not the leading ledger.

Reconciliation Ledger is not required any more

Posting to Leading Ledger is mandatory
Customizing of G/L account for reconciliation of secondary cost elements

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Customizing of New GL / CO Integration

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Segment Definition

“Segment” is the new master data element in ECC 6.0

“Segment” field should be set as Optional field in the Field Status Groups for G/L Accounts &
Posting Keys
By default – derived from Profit Center master record
Direct postings to Segment are also allowed

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Integration with Asset Accounting

Derivation of Profit Center
based on Cost Center / Internal Order in Asset master record
Derivation of Segment
based on Profit Center determination (based in turn on Cost Center / Internal Order in
Asset master record)
Assignment of Depreciation Areas to Leading/Non-Leading Ledgers
Alternative Depreciation Area may be set up for Depreciation Area in order to provide
for postings with “delta” logic

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Period-End Processes – Allocations

Same features as in PCA if executed on Profit Center dimension

Not posted to CO (even when receiving account is a cost element!)
No cross-company postings
Distribution is made using initial G/L accounts
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Period-End Processes – Distribution (continued)

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Customizing of Allocations in New GL

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Period-End: Foreign Currency Revaluation

Valuation
Area

Accounting Local Valuation

Rule Currencies Method

Ledger
Group

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Revaluation of OI / Account balances in foreign currency

New programs for FC revaluation (revaluation, translation)

Splitting works for revaluation postings

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BW Reporting for New GL

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Other New GL features

 Parallel Accounting
– Posting and clearing ledger-group-specific documents on open item managed G/L
accounts
 Planning
– Cumulative display for B/S accounts during plan data entry
– Real-time integration of CO plan data to G/L
– Upload of plan data from external data sources
 New Authorization Check
– for Profit Centers when posting, clearing and displaying documents
 New Standard Reports
– for Profit Centers and Segments (Drill-Down)
 Conversion Tool
– to transfer Classic Profit Center Reports to New G/L

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Other New GL features (continued)

 FI-CO Reconciliation Reporting

– Drilldown from NewGL profit center reports to CO reports can be done dynamically
depending on the origin object type (e.g. cost center, WBS element) that is selected in the
sender report; Better reporting integration from FI to CO, value reconciliation between
profit centers and cost objects (origin objects), transparency between FI and CO values
and less reconciliation effort
 Ledger group-specific display of documents
– Possibility to identify and select ledger group specific postings; Customers running parallel
accounting using the ledger approach covering different accounting principles can now
select documents according to the ledger group and increase transparency
 PC-Assignment-Monitor
– The user interface of the transaction Profit Center Accounting: Assignment Monitor (1KE4)
has been extended. Using this overview, you can find and correct missing assignments
more easily.

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Other New GL features (continued)

 Validation of combinations of new G/L characteristics

– When entering an accounting entry, all fields are checked to see if they exist. Here also
the combinations of the fields entered are checked for validity
 Ledger Specific Posting Period Check (Local Close)
– Allows to check the posting period for each single ledger
 Posting from CO to FI in closed periods (Local Close)
– Up to now, the FI posting period had to remain open when postings from CO to FI are
performed. These postings can now be handled via a separate (new) posting period
interval

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Accrual Engine (ECC 6.0)

 The accrual engine creates accrual postings: If the corresponding accrual type is customized
accordingly the accrual engine executes one, several or all of the following type of postings:
 Opening postings
– The full amount which is to be accrued is posted, usually to an accrual account.
– This posting is executed, when the accrual object is created.
 Periodic accrual postings
– These postings post a certain value which is calculated by the accrual method.
– This value is usually a part of full value (which is to be accrued). It is usually posted from
the accrual account to a P&L account. These postings are executed by the periodic
accrual run which is usually started at the end of each period.
 Final postings
– If the posting of accrual has to be terminated before the full value has been (periodically)
accrued, then the remaining value is posted to a certain account.
 Other types of postings which are less important
– Each posting creates an accrual engine document and this document is transferred
automatically to accounting.

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Accrual Object

Benefits of Accrual Engine:

Automated periodic calculation of
accruals (no recurring entries with
fixed values)
• Automated periodic posting (self
correcting!)
• Simulation tools (e.g. future accruals)
• Supports multiple GAAPs
• Comprehensive reporting tools
• Integration with BW (Business
Information Warehouse)

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Inter-Company Reconciliation Tool

 The purpose of ICR is to ensure that inter- Intercompany Reconciliation Process
company documents from accounting
transactions within the corporate group
correspond to one another. It contains tools
Data Selection Data Storage
which check that documents have been correctly
assigned to a business transaction and which
also enable you to find corresponding documents
easily and to make additional assignments. ICR
operates on the level of companies and partner
companies (trading partners).
Data Presentation
Post Corrections *
 ICR selects documents across SAP systems and & Analysis

clients. It is also possible to integrate external

data into the reconciliation process. the
documents are reconciled in the transaction
currency. Communication

* Available through programming interface (BAdI)

 SAP AG 2005, Intercompany Reconciliation, 4

The following processes are supported by the delivered programs:

Process 001 GL Open Items
Process 002 Accounts - reconciliation of profit and loss accounts
Process 003 Customer/Vendor Open Items – interc-ompany receivables and
payables
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Closing Cockpit

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Closing Cockpit – Technical Aspect

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New GL Benefits
Area Features
Unified Financial and Management Accounting One version of the truth–stored in the General Ledger
Same valuation
No inconsistency
No reconciliation
Supports different reporting purposes
Legal entity reporting
Segment reporting
Management reporting
Multi-dimensional analysis
Account analysis, Drilldown reporting
BW Remote reporting –slide and dice for all dimensions
Pre-defined reports delivered as SAP content

Extensibility for customer dimensions Option to expand standard accounting with

Industry specific fields
Customer-defined fields
Meets international expectations
Integration of management dimensions in the GL
Supports allocation on additional dimensions in the GL

Balanced Books for any dimension Essential for segment reporting and management reporting
Balance sheet for segments
KPI including B/S accounts
Parallel Accounting The parallel ledgers approach in the New GL is much better than the SAP R/3
approach of using classic GL plus the special ledger application.

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New GL Benefits

Area Features
Fast Close Many period-end activities are no longer required:
Document online split substitutes batch split at period end.
Real-time posting from CO into FI -no longer at period end.
Legal and management data are in one uniform database. Closing activities
are run just once and not multiple times.
One uniform database instead of multiple related databases saves a lot of
reconciliation time.
Corporate Governance Perfect support of transparency
Legal entity, segment and management reporting as unified whole
Same procedures and same quality for all valuations
Document principle, entry view linked to each ledger
Less manual processing -> less risk of non-compliance
Less double processing -> less risk of non-compliance
TCO Reduction Configuration
Best fit –no discussions about which component to choose
Reduction of implementation costs –just one component
Reduction of costs for end user training
Daily Business
Reduced manual reconciliation and balancing activities
Less effort for enhancing / changing the system
Technique
No data redundancy -> less data volume -> reduced data storage
Reduced ongoing maintenance and development time

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New GL: Specific Challenges

 Defining requirements for balanced set of books by multiple dimensions in real time
(i.e. Company Code, Segment, Profit Center)

 Creating document splitting scenarios

 Determining which accounts will use automatic or manual document splitting

 Limiting the number of ledgers to avoid duplicative data

 Creating sufficient ledger groups
 Defining GAAPs to be applied to ledgers
 Identifying fiscal year requirements for tax reporting purposes

 Business transformation and change impact of New GL processes

 Training users on the “unified world” approach of combined legal and managerial New
GL ledgers

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New GL Migration Principles

Phase 0 Phase 1 Phase 2
Date of migration =
Fiscal Year Change Date of activation
Old Fiscal Year New Fiscal Year

Run Classic GL Run Classic GL Run New GL

Close fiscal year

Migration principles
– Date of migration is at the beginning of a fiscal year (current or future)
– Year-end closing of old fiscal year must be completed prior to migration and activation
of New GL
– After successful data migration, New GL will be activated
– Source ledger of migration can be determined by company code and account

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New G/L Migration Project Steps

Phase 0 Phase 1 Phase 2
Date of migration =
Fiscal Year Change Date of activation
Old Fiscal Year New Fiscal Year

Run Classic GL Run Classic GL Run New GL

Close old fiscal year

Planning & Migration Testing

Configuration New GL is live
 Customizing of Migration
 De-activation of
 Testing and Validation of New GL and
 Blueprint of NewGL migrated test system classic general
 Customizing of NewGL ledger after
Go Live transitional period
 Planning and conception
 Perform migration of production system
of migration
Activation of New General Ledger after
 Customizing of document successful migration
splitting, if applicable

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Questions

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