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SAP RAR Configuration Guide

This document outlines the standard configuration steps for implementing SAP Revenue Accounting and Reporting (RAR), detailing prerequisites, specific configuration for inbound processing, revenue accounting contracts, postings, and integration with other modules. It also includes practical examples for each step to ensure compliance with IFRS 15 and ASC 606 standards. Key configuration tasks involve defining organization units, maintaining revenue accounting classes, and establishing transaction prices for performance obligations.

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214 views5 pages

SAP RAR Configuration Guide

This document outlines the standard configuration steps for implementing SAP Revenue Accounting and Reporting (RAR), detailing prerequisites, specific configuration for inbound processing, revenue accounting contracts, postings, and integration with other modules. It also includes practical examples for each step to ensure compliance with IFRS 15 and ASC 606 standards. Key configuration tasks involve defining organization units, maintaining revenue accounting classes, and establishing transaction prices for performance obligations.

Uploaded by

moorthykem
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

1.

Introduction

The purpose of this document is to outline the standard configuration steps required for SAP Revenue
Accounting and Reporting (RAR) implementation. This document provides configuration details for:

 Inbound Processing of Revenue Accounting Items (RAI)


 Revenue Accounting Contracts
 Integration with Cost Object Controlling
 Revenue Accounting Postings
 SD and FI Integration with RAR

2. Prerequisites

Before beginning the configuration, ensure the following prerequisites are met:

1. Define Organization Units and Master Data


2. Install BRF+
3. Install RAR Engine (Version 1.3 or later)

3. RAR Specific Configuration

3.1 Inbound Processing – Revenue Accounting Items

3.1.1 Interface Components Definition

 Purpose: Defines interface components used in RAR.


 T-Code: FARR_IMG
 IMG Path: Revenue Accounting → Inbound Processing → Revenue Accounting Items → Define
Interface Components

3.1.2 Revenue Accounting Classes Maintenance

 Purpose: Maintain Revenue Accounting Item (RAI) classes.


 T-Code: FARR_RAI_CONF
 IMG Path: Revenue Accounting → Inbound Processing → Revenue Accounting Items →
Maintain Revenue Accounting Item Classes

3.1.3 Revenue Accounting Classes – Interface Generation

 Purpose: Generates interfaces for proper RAI transfer to RAR.


 T-Code: FARR_RAI_GEN
 IMG Path: Revenue Accounting → Inbound Processing → Revenue Accounting Items →
Generate Interfaces for Revenue Accounting Item Classes

3.2 Revenue Accounting Contracts


3.2.1 Account Specific Principles Configuration

 Purpose: Specifies contract balance presentation and posting levels.


 T-Code: FARR_IMG
 IMG Path: Revenue Accounting → Revenue Accounting Contracts → Configure Accounting
Principle Specific Settings

3.2.2 Number Ranges Definition (CUTOVER)

 Purpose: Defines number ranges for Contracts, Performance Obligations (POB), and Run IDs.
 T-Code: FARR_CONTRACT_NR
 IMG Path: Revenue Accounting → Revenue Accounting Contracts → Number Ranges → Define
Number Ranges for Contracts

3.3 Revenue Accounting Postings

3.3.1 Posting Specifications for General Ledger Transfer

 Purpose: Defines posting specifications for RAR postings.


 T-Code: FARR_IMG
 IMG Path: Revenue Accounting → Revenue Accounting Postings → Define Posting
Specifications for General Ledger Transfer

3.3.2 Account Determination for Specific Transactions

 Purpose: Configures accounts for revenue postings.


 T-Code: FARR_IMG
 IMG Path: Revenue Accounting → Revenue Accounting Postings → Configure Account
Determination for Specific Transactions

4. SD Specific Configuration

4.1 SD Integration with RAR (CUTOVER)

 Purpose: Enables RAR relevance flag on sales order items.


 T-Code: SPRO
 IMG Path: Sales and Distribution → Revenue Accounting and Reporting → Integrate with
Revenue Accounting and Reporting

4.2 Revenue Accounting Settings Maintenance

 Purpose: Defines SD item category relevance for RAR.


 T-Code: SPRO
 IMG Path: Sales and Distribution → Revenue Accounting and Reporting → Maintain Revenue
Accounting Item Settings
4.3 New Condition Types Creation

 Purpose: Creates new condition types for RAR processing.


 T-Code: SPRO
 IMG Path: Sales and Distribution → Basic Functions → Pricing → Pricing Control → Define
Condition Types → Maintain Condition Types

5. FICO Specific Configuration

5.1 New FI Document Types Creation

 Purpose: Creates new document types for RAR postings.


 T-Code: OBA7
 IMG Path: Financial Accounting → Financial Accounting Global Settings → Document →
Document Header → Define Document Types

5.2 FI Document Number Range Creation (CUTOVER)

 Purpose: Ensures number ranges for RAR-related document types.


 T-Code: FBN1
 IMG Path: Financial Accounting → Financial Accounting Global Settings → Document →
Document Number Ranges → Define Document Number Ranges

6. Result Analysis Integration with RAR

6.1 Maintain Result Analysis Key

 Purpose: Defines WIP/earned revenue calculation methods.


 T-Code: OKG1
 IMG Path: Project System → Revenue and Earning → Result Analysis → Edit Result Analysis
Keys & Versions → Maintain Result Analysis Key

6.2 Define Cost Elements for Result Analysis

 Purpose: Assigns secondary cost elements for result analysis.


 T-Code: FS00
 IMG Path: Project System → Revenue and Earning → Result Analysis → Edit Result Analysis Cost
Elements

6.3 Define Valuation Method for Result Analysis

 Purpose: Determines valuation methodology for revenue recognition.


 T-Code: OKG3
 IMG Path: Project System → Revenue and Earning → Result Analysis → Edit Result Analysis
Keys & Versions → Define Valuation Method for Result Analysis
6.4 Define Posting Rules for Settlement to Accounting

 Purpose: Assigns BS and P&L accounts for revenue postings.


 T-Code: OKG8
 IMG Path: Project System → Revenue and Earning → Result Analysis → Edit Result Analysis
Keys & Versions → Define Posting Rules for Settlement to Accounting

7. RICEFW Considerations

 RAR Integration with Project System


 Integration with SD, FI, and CO modules
 Custom Enhancements if required

8. Open Issues

 Additional master data requirements before go-live


 Pending unit testing of certain configuration steps
Outline the standard configuration steps required for SAP Revenue Accounting and Reporting (RAR)
implementation.

Step Description
1. Identify Revenue Accounting Identify and enter contracts into SAP RAR, including terms, responsibilities, and relevant
Contracts information for accounting purposes.
2. Determine Performance
Identify distinct performance obligations within the contract.
Obligations
3. Establish Transaction Price Determine the transaction price for each performance obligation.
4. Allocate Price to Performance Allocate the transaction price to each performance obligation based on their standalone
Obligations selling price (SSP).
5. Recognize Revenues Recognize revenues based on the fulfillment of performance obligations.
These steps ensure compliance with IFRS 15 and ASC 606 standards. If you need more details or have any questions, feel free
to ask!

Here are some practical examples of each step in action for SAP Revenue Accounting and Reporting (RAR) implementation:

1. Identify Revenue Accounting Contracts


o Example: A software company signs a contract with a client for a three-year software subscription and
annual maintenance. The contract is entered into the SAP RAR system, detailing all relevant terms and
responsibilities.
2. Determine Performance Obligations
o Example: In the same contract, the performance obligations include (a) providing software access, (b)
offering annual maintenance services, and (c) providing customer support. Each of these is identified as a
distinct performance obligation.
3. Establish Transaction Price
o Example: The total contract value is $300,000, with $240,000 allocated to the software subscription and
$60,000 to the annual maintenance. Variable considerations, such as discounts or penalties, are also
considered to determine the final transaction price.
4. Allocate Price to Performance Obligations
o Example: The transaction price is allocated to each performance obligation based on their standalone
selling price (SSP). For instance, $240,000 is allocated to the software subscription, and $60,000 is
allocated to the annual maintenance services.
5. Recognize Revenues
o Example: Revenue for the software subscription is recognized over the three-year period as the service is
provided. Annual maintenance revenue is recognized at the end of each year when the service is fulfilled.

These examples demonstrate how each step is applied in a practical scenario, ensuring compliance with revenue
recognition standards and providing accurate financial reporting.

Common questions

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Detailed configuration steps are vital in SAP RAR implementation to ensure that all transactions are correctly accounted for and that revenue recognition aligns with global standards like IFRS 15 and ASC 606. For instance, defining number ranges for contracts and performance obligations ensures unique identification and traceability, while setting up account-specific principles aligns with proper financial reporting requirements. Such meticulous configurations prevent errors and provide a solid framework for accurate and compliant financial operations, illustrated by examples like maintaining result analysis keys and generating interfaces for RAIs .

SAP RAR handles the allocation of transaction prices by distributing the agreed total contract price to each identified performance obligation based on their standalone selling price (SSP). This process is significant as it allows for an accurate revenue recognition that reflects the actual delivery and fulfillment of each performance obligation, complying with IFRS 15 and ASC 606 requirements .

The integration of SAP Revenue Accounting and Reporting (RAR) requires interfacing with various SAP modules such as Sales and Distribution (SD), Financial Accounting (FI), Cost Object Controlling (CO), and Project System (PS). Each integration involves specific configurations such as enabling the RAR relevance flag on sales order items in SD, configuring document types and number ranges in FI, and defining result analysis keys and valuation methods in PS .

Integration with the SD module involves maintaining relevance flags on sales order items and defining item settings relevant to RAR. This is done via transaction SPRO. For the FI module, new document types and number ranges are created using transaction OBA7 and FBN1, respectively, to support RAR-related postings and ensure data consistency across modules, essential for reliable revenue recognition processes .

SAP RAR ensures compliance by following a structured process that aligns with IFRS 15 and ASC 606 guidelines. This process includes the identification of revenue accounting contracts, determining performance obligations, establishing transaction prices, allocating these prices to performance obligations, and recognizing revenue based on the fulfillment of these obligations. This structured approach ensures that the revenue is recognized in accordance with the correct timing and value as per the standards .

Maintaining result analysis keys plays a critical role in defining the methods for calculating work in progress (WIP) and earned revenue, essential for accurate revenue recognition. It is configured using transaction OKG1, where keys are set up to align with the project system's requirements for revenue and earning calculations .

Generating interfaces for RAI classes is a process aimed at ensuring the correct and efficient transfer of RAIs into the RAR system. This involves using the transaction code FARR_RAI_GEN to create necessary interfaces. This process is significant as it supports the seamless integration and processing of RAIs, which are fundamental for accurate revenue accounting and reporting .

Number ranges are crucial for uniquely identifying contracts, performance obligations, and run IDs within SAP RAR. Configuring them involves defining these ranges during the cutover phase using transaction FARR_CONTRACT_NR. This ensures that every contract and related elements are uniquely identifiable and can be tracked and managed effectively .

The purpose of defining interface components in SAP RAR is to facilitate the inbound processing of Revenue Accounting Items (RAI). It is achieved through the configuration of interface components using transaction code FARR_IMG, where the interface components are set up to enable the efficient transfer of RAIs into the RAR system .

Configuring posting specifications and account determination is crucial as it defines how revenue postings are transferred to the General Ledger and which accounts are used for specific transactions. These tasks are performed using transaction code FARR_IMG to set up the posting specifications and ensure the correct account determination to maintain accuracy in financial reporting .

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