Adding Local GAAP Adjustments & Reporting Functionality Within SAP FI

[Former Member]

I am currently working at a company based in the US that has been on SAP for over 11 years.  The company is on ECC 6 and is using the Classic General Ledger.  The company has one Production-level instance of SAP and uses one Chart of Accounts that everyone uses.   We have a situation (Brazil SAP implementation) where we will have to make Adjustments to the Financials for Local GAAP purposes.  Our goal is to keep the integrity of the US GAAP statements but also provide functionality to all foreign locations to make Local GAAP/IFRS adjustments within SAP and to have that rollup within a local set of Financial Statements within SAP.

During our brainstorming on this issue we came up with an idea of using a Specific General Ledger Account Range for Local GAAP Adjustments.  In summary, the General Ledger Account Structure would be defined as follows.

GL Accounts, Account Group, Part of US GAAP Consolidation

100000 to 399999, Balance Sheet, Yes

400000 to 899999, Income Statement, Yes

910000 to 939999, Local Adjustment Balance Sheet, No

940000 to 989999, Local Adjustment Income Statement, No

With this setup, the Local GAAP values in Total would be the sum of US GAAP Value (GL Account 100000 to 899999) + any Local GAAP Financial Adjustments (GL Account 910000 to 989999). 

I am hoping I can get some advice on setting up Local reporting functionality within SAP since I do not have any first-hand experience in this area.  I would think we would need new Account Groups, new Financial Statement Versions, Validation Rules for Journal Entries, etc., but I do not know all of the SAP Configuration Transactions necessary to carry out this task.

Please advise of any resource materials I can refer to for setting this functionality up and any practical items I should consider.

Sincerely

Roman

[Former Member · Accepted solution]

Hi Roman

I have a question, if you are in ECC 6.00 why you are using classic general ledger. do you guys have any plans to go for ECC 6.00 New GL. if yes, this is the right time.

you are having migration kit for new gl with document splitting and without document splitting.

when i gone through your requirement. if you still use classic general ledger. you have to create seperate retained earning account type lets say "Z" and you need to assign specific retained earnings account to this new P&L account type. when you are posting any transactions system will not record to standard PL type "X". so, with this you will achieve your PL statements requirements.

but, you still need to create reports using these PL accout types.

for fixed assets, you need to assign depreciation accounts to revelat PL type. so, you can achieve your depreciation requirement.

all other balance sheet accounts you can post with some validations.

hope this may help you.

Regards

Srinivas

[Former Member · Accepted solution]

Thank you for your insight Srinivas.

With regards to why we are on the Classic Ledger, that is an organizational decision at a level higher than I am.  We do plan on going to the new GL, but the time table is not within the next six months at least.

I agree that the new Retained Earnings Account will have to be created in our Local GL Chart of Accounts.  It makes sense the Local Adjustments would carry forward.  As long as we can close out our Local GL Chart of Accounts to the Local Retained Earnings Account using standard functionality such as F.16 we should be good.

On the Fixed Asset side it appears to be a little less straight-forward.  For high complexity areas we were going to use a 2nd Depreciation Area post to this Local GL Chart of Accounts and make journal entry adjustments to back out the original Book Depreciation to net out to the Local Depreciation Expense.  For simpler environments we would use the Fixed Asset reporting to review Local Depreciation Expense and make journal entry adjustments in the Local GL Chart of Accounts to record the right amounts.

I am wondering if there is any documentation that outlines what SPRO Transactions I would need to work through to set this up properly within SAP.  I have not stumbled upon that as of yet.

Roman

[former_member193214 · Accepted solution]

Hello Roman,

Our situation is almost identical to you.  13 years in SAP. ERP 6.4, Classic GL. Asset module, Controlling, Profit Center Accounting. Standard SAP for local and Canadian Sales tax.  and Etc.

We are a US based company, with locations in Poland, Germany, Hungary, Brazil. Mexico and Austrailia.  We are onboarding our Poland location in the next few weeks.  It is an administrative office and will need financials and Accounts payable,  Maybe a little Sales order processing for Intercompany billing charges for Corporate services. 

We want our Polish location to be able to generate local Polish GAPP financials for their purposes.  We also need to be able to include their numbers in Local US GAAP Reporting.   

Do you have any advice on how best to do this?

Thanks,

Connie

[former_member184878]

Hello,

Request:

I summarize in my words, as I understand your request.

1. You have classical GL (no parallel accounting with ledgers)

2. You want to  post the adjustments = difference between the GAAP´s

3. You want to make financial reports for both GAAP´s easily.

Solution:

4. Add account group for adjustments in  GL master.

5. With function F.01 you select report for account group lets say US GAAP and second report for account group  IFRS.

Of course depending on the structure of you account groups.

As  you do not have 2 ledgers in  classical FI you show these 2 legers with  GL accounts.

So:

Classical GL: Different ledgers can be shown with GL accounts

New GL: You have ledgers in FI. One leading ledger and ledgers for other purposes, like tax ledger.....and so on

All postings are made for leading ledger, lets say to the end of the quater.

Then accounting makes calculation of adjustments, and these adjusments have to be posted on

the GL adjustment accounts. You can include or exclude these values for reporting.

all the best Erwin