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IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

IFRS - Impact on India Businesses and SAP Solution_Malolan Patanki, SAP Consulting

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Published by: atuldm on Nov 16, 2010
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01/04/2014

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4. SAP BusinessObjectsand IFRS adoption overview
5. Wrap-up

Agenda

2009

2010

2010

2011

Begin IFRS Project Planning and Local
Impact to Determine SAP Landscape
Solution Required

Prepare Opening
Balance Sheet
under IFRS rules

Dual Reporting
Period Ends

IFRS Go-Live
Date

2013

Begin configuration
Landscape for IFRS

a. Transaction Layer

b.Reporting Layer

SAP General
Ledger Migration
Completed 1st
Qtr 2010

SAP General
Ledger
Validation Period
completed by
Year End

2010

Upgrade
Project to SAP
ERP 6.0
Completed

SAP General
Ledger
Migration
Project

Dual Reporting Period

Go-Live IFRS

Possible System
Landscape
Optimization (SLO)
Projects to clear
Local GAAP
Issues

SAP Field Services + Customer –SAP ERP Layer

Begin IFRS
Project

Consulting/Audit Partner, Customer + SAP Field Services

Go-Live with IFRS
as primary group
reporting standard

Perform consolidation
reporting in both the local
accounting standard and
the IFRS systems

Review
Existing
consolidations
and XBRL
capabilities

Adapt the current
or deploy a new
consolidation
application for
group reporting

Go-Live with new
or updated
consolidation
capabilities

SAP Field Services + Customer –Reporting/Analytical Layer

IFRS: Implementation Timeline –

Overview Recommendations (IN Timeline)

Options for SAP Solution Configuration

Approaches available for multi-GAAP valuation within SAP ERP Financials

Approach

Classic

SAP General
Ledger

Account Based

Easiest to implement

Can lead to a less than efficient
Chart of Accounts

Parallel Company Codes

No additional functionality
planned by SAP

Not a Recommend Solution for
most companies

Parallel Ledger

Most transparent approach

Independent set of books

Future IFRS requirements more
easily accommodated

Special Ledger

No additional functionality
planned by SAP

Not a recommend solution for
most companies

Current recommended configuration approaches for SAP General Ledger

Parallel Ledger Approach –Scenario 1

Applies to SAP General Ledger only

Why it Works

Provides IFRS and Local Accounting Standard reporting from multi-ledgers

Can be configured to meet both reporting requirements from the first go-live date

Utilizes the best features of the SAP General Ledger

Document Splitting

Segment Reporting

Etc.

Recommended option of complex installations

Large differences between IFRS reporting standards and the current legal reporting
standard

Feeds properly formatted IFRS data directly into the Reporting and Analytics

layer

Simplifies reporting and requires little manual adjustment afterconsolidations

Implementation from the beginning of fiscal year

Matches IFRS time line

Parallel Ledger Configuration is recommended where

Segment reporting is required

Increased number of Ledger accounts is not desirable

Complete set of separate legal reporting books is preferred

Different fiscal year is needed for different legal sets of books

Account Based Approach –Scenario 2

Can Be Used Across All GL Versions

Common

Accounts

Pure IFRS

Accounts

Pure
Local GAAP
Accounts

Account Solution is recommended where

Relatively few valuation differences exist between IFRS and local GAAP

No issue with an increased number of general ledger accounts

Standard reporting is used

Different fiscal years not required

How it works

Uses single ledger for all posting

Could be the Leading Ledger for SAP General Ledger

Accounts are “grouped”according to legal reporting requirements

Example

–300000 to 400000 Operational Chart

–500000 to 550000 IFRS

–600000 to 650000 Local GAAP

Each group of accounts must be in balance

Requires extra care to ensure correct account determination

And the establishment of a coding handbook.

IFRS Financial Statements report using common accounts and
“pure”IFRS accounts together

Red Oval in diagram

Single Ledger

Parallel Company Codes and Special Ledger
Approaches

Neither approach is the recommended solution for today’s environments

These approach options were recommended prior to the availability
of the SAP General Ledger and the capabilities added by SAP BusinessObjects

In some cases these options may still be workable in special cases, but only
after a through review of the other recommended options with your
consulting partner and SAP

Parallel Company Codes

Special Ledgers

Typical Questions

Do I have to upgrade to SAP ERP 6.0 and install the SAP General Ledger to meet
the IFRS requirement?

No, you can meet the IFRS requirements without an upgrade or theinstallation of the SAP
General Ledger

However, the adoption of IFRS would be much easier in most caseswith the most
current software release installed

I have just upgraded and installed the SAP General Ledger and myLeading
Ledger and Asset Valuation area are set to Local GAAP. How can I make the
switch to IFRS?

In this instance we would suggest using Parallel Ledgers within the SAP General Ledger
A combination of the Leading Ledger and Non-Leading Ledgers would be used to
report both Local GAAP and IFRS
SAP has several services that will help make the switch from Local GAAP to IFRS within
the Leading Ledger and Asset Valuation area.
For the SAP General Ledger, a new migration scenario (7) is under development
For the Asset Valuation area, an SLO service will be required

Some Frequently Asked Questions

SAP ERP Financials

Typical Questions

What is the difference between the Account Based approach and the Parallel
Ledger approach?

The Account Based approach holds all legal reporting data in a single ledger

Is suggested for smaller sized installations with minimal differences between Local
GAAP and IFRS requirements

Will add additional account numbers to the Chart of Accounts

The Parallel Ledger approach distributes legal reporting data toseparate parallel ledgers

Is suggested for larger installations with significant differences between Local GAAP
and IFRS reporting

May require a separate table groups for separate ledgers

If I plan to upgrade to SAP ERP 6.0 and migrate to the SAP General Ledger when
should I start planning the project?

In this example the time is NOW!

Overall we see an upgrade followed by a migration project to take at least a year.

Followed by the reporting validation period after the migration weekend and the IFRS
planning project would take another year.

Which will take 2 years for the upgrade/migration and first phase of the IFRS project

Some Frequently Asked Questions

SAP ERP Financials (cont.)

1. A brief overview of IFRS and its implications
2. A few comments from SAP regarding IFRS
3. SAP ERP and IFRS adoption overview

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