Driving Weekly Closing through Non-leading ledger

[sandeep_ranade]

Overview

In past, while working with different clients, my assumption was at the current time everyone uses Month as the basis for period-end closing. SAP has also designed a leading ledger to provide period-end closing every month.

Recently I came across a client wherein the period-end close processes like Asset Depreciation, Payroll postings, Accruals, and Open/Close periods are managed weekly. Below mentioned work is based on my professional experience with that client. Solution was demoed and got endorsement from SAP.

 

SAP Ledger Approach

In General Ledger Accounting, you can use several ledgers in parallel. This allows you to produce financial statements according to different accounting principles,

Leading Ledger – In the Leading Ledger, all the postings are taken as primarily and default. It is based on accounting principles that are used for the consolidation of financial statements. The leader Ledger in the SAP system is defined as 0L and company codes are assigned to this ledger by default.

Non-Leading Ledger – These non-leading ledgers are used for local reporting and taxation. It is parallel to the leading ledger and based on the local accounting principles. You can activate the non-leading ledger for individual company codes that you plan to use.

 

Limitation with Leading Ledger from Weekly Close perspective:

• For Weekly Close (52/53 weeks), corresponding periods would be required.


• System does not allow to use of more than 16 periods in case of leading ledger.


• Hence for weekly closing/reporting, we need to use a non-leading ledger

More than 16 periods are possible in non-leading ledgers

 

Fiscal year Variant – Weekly Period Set up

To achieve a weekly period set up with 52/53 periods, a custom year-dependent Fiscal Year variant needs to be set up.

• In the example shown week (Sun-Sat) is followed.


• Based on the posting date in the journal, the system determines the weekly period, to be posted.


• As per requirement Week p 5-4-4 can be set up in the system

Year dependent Weekly Fiscal Year Varaint

 

Posting Period Control

Standard SAP behavior:  In case of posting period related Leading ledger is open & posting period related to the leading ledger is closed, the system checks on the leading ledger & allows posting.

• Hence, if the monthly posting period linked to the leading ledger is open & weekly posting period linked to the non-leading ledger is closed, the system will allow the posting.

 

Requirement: The system should block the postings in a prior week for all users (except GL Accountant for adjustments)

• Accordingly, an enhancement (validation) would be required, by which the system will check if the weekly posting period related to the non-leading ledger is closed, it will issue an error and won’t allow posting.

Posting period validation for weekly closing

 

Accrual Posting using Accrual Engine

• Accrual Engine makes ledger group-specific postings. This is dependent on the Ledger Group assigned to the corresponding Accounting Principle.


• Weekly Accrual can be posted in the non-leading ledger linked to the Week-wise fiscal year variant


• In the example Accrual period starts on Sunday 26.06.2022 (Sunday) and ends on 27.08.2022 (Saturday) with an Accrual amount of 9000.


• Accordingly system considers it as 9 weeks and show a calculated Accrual of amount 1000 for each week

Weekwise calculation in Accrual Engine

Weekly Accrual posting

Asset Depreciation

• To facilitate Weekly Depreciation, an additional Depreciation Area would be required which will be linked to a non-leading ledger through the local Accounting principles.


• In the below example Depreciation area 11 is linked to Non-leading ledger N1 through Accounting principle.


• During Weekly Depreciation run the Accounting principle (linked to the Non-leading ledger) along with the weekly period to be specified.

Weekly Asset Depreciation

Weekly Asset Depreciation Posting

 

Action Summary

• It is possible to carry out weekly closing for Financial scenarios like Asset Depreciation, Manual Accruals, Finance postings, based on Non-leading ledger


• Material Management (MM), Controlling (CO) postings are controlled through leading ledger only and hence its not possible to control weekly postings for same.


• Impact assessment should be thoroughly done on overall Business scenarios before adopting above solution.