Parallel accounting using parallel ledger

[venu_001]

Dear Experts,

Please provide your valuable inputs, currently our financial system has only leading ledger with assigned accounting principle P1, now we want to implement accounting principle P2 for that we are thinking to activate non-leading ledger(1L).

The planned process and system setup is as below:

Activation of 1L is in mid FY.2021

0L will be assigned with P2

1L will be assigned with P1.

GL migration from 0L to 1L will be done in mid of 2021 as we are unable to do at end of FY, both ledgers will have P1 entries.

P1 entries continue to post to both ledgers until end of FY2021 as P2 entries only starts in FY2022.

From FY2022, P2 entries will be posted to 0L and P1 will be posted to 1L

Is there any issue if 0L logs P1 entries until end FY2021 and switches to P2 from FY2022?

is it mandatory to start posting only relevant accounting principle(P2) entries to lead ledger immediately after GL migration?

Please advise.

Thanks.

[brahms86 · Accepted solution]

Hello shiva,

well on your question:

"Is there any issue if 0L logs P1 entries until end FY2021 and switches to P2 from FY2022?"

-> I think, yes, there is. Unfortunately that does not make much sense, I would strongly advise against it.
I mean theoretically speaking it is possible to go through with it and convert the years/periods in the leading ledger before you add P2 to a "P2 Ledger" by posting all the missing adjustment postings.

But you also need to convert then the accounting principle in asset accounting, etc. There is a business function in ERP which helps to change the accounting principle in depreciation area 01. But all in all I would rethink the whole plan. In the worst case, if the accounting principle of the leading ledger is still to be changed, I would migrate to a new company code, which is correctly set up from the start.

KR,

Steffen

[venu_001 · Accepted solution]

Hi Steffen,

Thank you for input,

Would like to provide more details for clarity, both accounting principles follows same fiscal variants and currency, also postings for both P1 and P2 would be same from asset. rationale behind to create new accounting principle is IASB introduced new accounting principle IFRS17 in place of IFRS4, while implementing new accounting principle we also want to keep existing accounting principle as non-leading.

Thank you.

[brahms86 · Accepted solution]

Hello Shiva,

well, in this case, it is not really a new accounting principle (looking backwards).

So I think your approach might actually work!

So to answer your question "is it mandatory to start posting only relevant accounting principle(P2) entries to lead ledger immediately after GL migration?" -I think not, as you say yourself, the idea is, that only in 2022 you will use 0L for P2 entries. So 2022 would be your actual, functional "Go-Live" year for the new solution. 2021 would be the year of the "technical migration".

KR,

Steffen