Consolidation of books without implementing SAP BPC

[Former Member]

Hello Experts

I have a question regarding the consolidation and elimination of inter company profits without implementing SAP BPC or any other consolidation tool. We are implementing SAP ECC 6.0. I have read in several forums that it is possible through creating company id for all the company codes and defining company codes(who do inter company transactions) as customer and vendors with trading partner assignment in the respective master data.

Is this possible? if yes,  Can you please explain with an example?

I will greatly appreciate your responses.

Thanks

AL

[Former Member]

Hi AL

I have done a similar set up earlier for one of the project that I implemented.

Created a elimination company code and IFRS company code apart from the main company code.

Created some custom programs to post the elimination entries in the elimination company code on daily basis. Identify IC and Wholesale/Retail company transactions and post elimination entries in another company code.

To explain with an example, suppose say your company does wholesale/brand partner and retail business. It owns both of them. When you sell from your wholesale company to retail company, from the group perspective it is not a final sale. Identify such transactions on a daily basis and post reversal entries in the elimination company code. Track your inventory at the Retail company level to see what sale entries could be retained. Similarlly for all Inter company transactions, use the trading partner in all the transactions and using a lookup table, post the elimination/reversal entries in the elimination company code.

I used the same Chart of accounts and no new GL accounts. Using financial statements, combine main company code and elimination company code to get the right results. Use business/trading partner concept to identify any further eliminations.

Also use the group chart of accounts and assing a group GL to your operational CoA GLs. Download the financial statements combined with Group GLs, users can do consolidation outside system manually. This is cost effective and applicable in some scenarios considering the volume of operations and complexity of eliminations and consolidation.

You should brainstorm a lot to check the design meets all your elimination and consoldiation functionalities.

Thanks,

Sekhar

[Former Member]

Thanks Sekhar for your elaboration. I have few questions regarding your reply.

1. It seems that your client is a public company as you referred to IFRS cocd. In my case though its a private company. In that case, how different is it ?

2. When you say you create 3 cocds(IFRS cocd/main cocd/elimination cocd.), what is the purpose of these 3 cocds? How and why will the entries be posted in each of these company codes?

Thanks

AL

[Former Member]

Hi AL

1. My cleint was a private multi national company with HO in Germany and operating world wide. They need to report as per IFRS GAAP as well, so from GAAP perspective, to post GAAP adjustments a separate IFRS company code was created. In your case if it not required in some cases to report as per IFRS, you may not need it. Your business should dictate you on this.

2. Three codes were created to post variations in transactions for reporting purpose. Main company code for regular daily operations, which is a leagal entitiy. Other two are virtual codes. One for posting eliminations between Inter company and between Wholesale n retail business as client owns both the business (It is considered as final sale only when goods are finally sold to end customer thru Retail company). So all sales and purchases between wholesale and retail business would be eliminated.( There was a separete company code even for Retail).

So entries those are subjected to elimination were identified, and logic was determined to extract them using custom programs and posted those entries as reversal entries in 'Elimination company code'. When you combine the main (wholesale and retail codes) + Elimination company code, you should get the net effect (net of eliminations).

Other company code IFRS was created, where users would decide the IFRS adjustments for Depreciation, lease agreement differences, tax law differences etc and post manual adjustments in this company code. (with net difference in values between main company code and IFRS rules).

Ex: If Depreciation is $100 posted in main company code, however $70 allowed as per IFRS. So users post minus $30 in IFRS company code to the Dep account.

In net, when you combine main company code + IFRS, it would give you net results ( like $70 for Dep above)

Above cases could have handled using special purpose ledgers or non-leading ledgers concept. In my case, the above design worked for my client without any additional investment.

Thanks,

Sekhar

[Former Member]

Thanks Sekhar for you well-explained post. Appreciate it.

thread closed.

[Former Member]

Thanks Ravi/Gregory for your effort in giving your valuable inputs. My company is undergoing new implementation and any consolidation tool is not in scope. As far as Chart of accounts is concerned, we are thinking to have one common operating chart of accounts for all domestic and foreign subsidiaries. In that case, group coa do not come into picture(correct me if I am wrong here). What would be solution to the consolidation issue and inter company eliminations in that case?

Best regards

AL

[former_member182098]

You have various options:

Option 1 : Use group chart of accounts, assign group chart of accounts in operating chart of account in OB13 and use the group chart of account GL in each of the respective GL accounts of operating chart of accounts

Option 2: Use EC-CS in ECC

Option 3: SEM BW Based Consolidation (However, this may be phased out at some point)

Option 4. Use BPC (If you have enough money)

[Former Member]

Regarding option 3 please check Note 1171344 which is now in its 15th revision, but this statement hasn't been changed for quite a while:

     Mainstream maintenance for SAP ERP 6.0 is provided until end of 2020

I can however think of additional three options:

5: HANA Live for FI and EC modules may have already interco and consolidation views as this was functionality that has been long supported by HANA.

6: sFIN may also have the required functionality, but someone from SAP should confirm this.

7: if all of the above fails, you may design/write your own calculation view on HANA once your FI and EC tables are replicated into in. it would take most effort and would not be supported by SAP, but would give you the most control over the code supporting the solution.

[former_member182098]

Thanks Greg for the update regarding SEM-BCS.

This would really help if somebody is still intending to invest on SEM-BCS.

Additional points would be really useful, thanks once for the insights 🙂

Best Regards,

Ravi

[Former Member]

neither interco nor the the rest of consolidation require BPC, but to run it in ECC you may have to turn on the switches to use the latest functionality/code/notes.