I was hoping some may have thoughts or considerations on a problem we need to solve for a new SAP S/4HANA Finance implementation. While I have many years of finance experience in other SAP products, this is my first S4 project so I am still familiarizing myself with the benefits and drawbacks of any particular option in the product. Here's the request from the client
They have an unusual allocation requirement where they need to re-state their costs and revenues at the end of each month based on various statistical information that changes each month. This re-categorization is for the benefit of a third party who provides them significant funding, but ultimately this re-statement is not to appear on their existing financial statements as it is not relevant to how they run their business. So we know we can use statistical accounts to capture the information needed for the allocation and use the allocation process to reclassify cost and revenue based on existing GL amounts divided by those statistical amounts. This is great!
But in order to ensure that this allocation does not impact their overall financial statement, which they want to leave intact. I believe we have two options:
Option 1: Create new GL Accounts / Cost Centers (or functional areas) as the destination for these allocation entries. Build custom financial statement hierarchy to EXCLUDE these new areas so they can effectively choose to report against this other excluded hierarchy and then the allocation would not appear and would leave their original financial results as stated without the allocation. For their third party reporting requirement they would report with these new areas INCLUDED in order to see the allocation.
Option 2: Design the system with an extension ledgers and book the allocation to the extension ledger exclusively. This would mean the allocation don't appear in the standard ledger leaving their original statement intact. Or report against the extension ledger in order to see the allocation entry and use that for reporting to the third party.
As I am new to Extension Ledger functionality, I am wondering if anyone has advice or recommendation on why this may be a bad idea?