Migrating to New GL Pros and Cons | Accounting | Generally Accepted Accounting Principles (United States)

Migrate Successfully to the New SAP GL

Paul Theobald

Contents
Preface ............................................................. Changes in the New G/L ................................. Migrating to the New G/L ............................... Future SAP Support of the Classic G/L and Advantages of the New G/L ............................ Intended Audience and Skill Prerequisites ...... How This Book is Organized ............................ 1 Upgrade to SAP ERP 2004/2005 ....................
4 4 5 7 7 9 9 9 3 3 3

2.3 Possible Migration Scenarios ............................ 27 Migrating From Systems That Used Parallel Accounting ................................... 28 Summary of Possible Migration Scenarios
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2.4 Potential Benefits and Risks ............................. 29 Benefits of Migrating ................................ 29 Risks of Migrating ..................................... 30 2.5 Summary ........................................................... 31

1.1 SAP ERP Key Components .............................. 1.2 Benefits of Upgrading ...................................... Benefits of SAP NetWeaver ..................... Functional Benefits .................................. Benefits of Upgrading from Legacy

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Migration Phases ............................................. 33

3.1 Phase 0: Planning ............................................. 33 3.2 Phase 1: Migration and Testing ........................ 34 3.3 Phase 2: Go Live ............................................... 34 3.4 SAP Migration Service ...................................... 35 3.5 Summary ........................................................... 36 4 Planning Phase ................................................ 37

Systems .................................................... 10 Finance Benefits ....................................... 10 1.3 Upgrade Approaches ....................................... 12 Upgrade Reasons ..................................... 12 Technical Upgrade ................................... 12 Functional Upgrade ................................. 14 Strategic Business Improvement Upgrade
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4.1 Scope of Project ............................................... 37 4.2 Initial Situations in the Classic G/L ................... 38 Use of Profit Center Accounting .............. 40 Use of Business Areas ............................... 40 Use of Cost-of-Sales Accounting .............. 40 Use of Special-Purpose Ledgers ............... 40 Use of Additional Currencies in Special Ledgers ......................................... 41 Use of Interfaces to External Systems ...... 41 How Consolidation Is Performed ............. 41 Status of Existing Transaction and Master Data .............................................. 41 Company Codes and Cross-Company Code Clearings ......................................... 42 Use of Parallel Valuation .......................... 42

1.4 Best Practices ................................................... 15 Planning ................................................... 15 Building .................................................... 16 Running .................................................... 16 1.5 Future Release Strategy ................................... 16 1.6 Summary .......................................................... 16 2 Why Migrate to the New G/L? ....................... 19

2.1 Upgrade and Migration as Separate Projects ... 20 2.2 New Functionality ........................................... 21 Segment Reporting .................................. 21 Document Splitting .................................. 23 Parallel Ledgers ........................................ 25

www.sap-press.com 1

.............................................................. 61 Scenarios Supported by the SAP Migration Service ... 83 7......... 60 5 SAP Migration Service .....................Contents 4.............2 IMG Migration Activities ......... 86 7................3 Target Migration Scenarios ...........4 Technical Facts about Migration ........................................ 54 4................................ 67 Ledgers Customizing ................. 67 Segment Reporting .........................1 Complete Customizing ....................................................... 64 5... 91 2 © Galileo Press 2008............................................................ 82 7 Go-Live Phase ..................1 Testing ...........................................5 Summary ........ 54 Staffing . 81 6.............. 78 Validation of Document Splitting Customizing ............................. 80 Validation of Migration Activities ...........5 Summary ... 44 Migration with Document Splitting .................4 Timing ......................................................................................... 70 6....................................... 49 Migration with Document Splitting and Parallel Valuation ........................... 78 Check Business Transaction Assignment for Migration Documents .........................5 Staffing and Training .6 IMG Migration Tasks ...................4 Evaluation of Migration .................. 89 Index ............................ 84 Migration Successful ........ 85 Migration Was Not Successful ............ 69 6.........7 Initial Customizing ..................... 43 Migration without Document Splitting or Parallel Valuation ......... All rights reserved... 56 Document Splitting Customization ....... 81 6.......... 55 4...................................1 Summary ....................... 57 Parallel Ledgers Customization ......................................................... 67 6.. 89 7... 53 4.................................................3 Testing ............................. 65 6 Migration and Testing Phase ............................................................................ 54 Training ....................... 45 Migration with Parallel Valuation ............. 53 4..............................................2 IMG Migration Activities ........................ 83 7............................ 87 7.............................................. 63 G/L Migration Cockpit ................. .................................................... 84 Analyze Migration Status .......................................................3 Training ............

.1 illustrates these requirements.g.2 Why Migrate to the New G/L? The classic G/L is currently being used by the majority of SAP customers worldwide and can continue to be used in SAP ERP. if the company meets any of the following criteria: The company is an international organization operating in multiple countries and on multiple continents The company is required to report multiple accounting methods. allowing more transparency and saving time as individual ledgers do not have to be reconciled.2. The new G/L reduces complexity by integrating ledgers that were maintained separately in the classic G/L. global organizations must report using many different accounting principles. such as US GAAP. Profit Center Accounting. The company is required to report by different business areas (e. are now unified within the new G/L. such as in the new G/L. which include: Management Reporting Segment Reporting Extensibility Legal Entity Reporting Balanced Books by Any Dimension Customer Requirements Parallel Accounting Compliance Transparency Fast Close TCO Reduction Figure 2. In recent years. while minimizing impact to existing system functions Balanced books by any dimension — the classic G/L could only complete partially balanced books by business areas and profit centers (see 2. Also. product lines) The company is required to report financial statement items by segment according to SEC guidelines The company is required to produce consolidated financial statements across multiple legal entities Current reconciliations between classic G/L and Controlling are complex and time consuming The company would like to reduce the complexity of it’s financial structure The new G/L was developed by SAP after gathering customer requirements over several years. Executives now have to personally attest to the accuracy of financial statements and are personally liable for any misstatements.sap-press. etc.2 on document splitting) Parallel accounting — increased requirement to pro- duce parallel sets of financial statements in accordance with different accounting principles (see section 2.1 Why Did SAP Invent the New G/L? Management reporting — requirement for better rec- onciliation between the FI and CO modules Extensibility — requirement to add new functionality.com 19 . Figure 2. Cost of Sales. accurate financial reporting has become more important than ever. and Consolidations. should a company migrate to the new G/L? will generally be yes. IFRS. The answer to the question. so why migrate to the new G/L? Let’s look at some answers.2. for example. IFRS. In the classic GL.3 on parallel ledgers) Fast close — all organizations want to close the books as soon as possible. and local GAAP. reconciliation www. including US GAAP.

. final signoff on project results Timing of the migration project will be covered in detail in the planning section.1 Upgrade and Migration as Separate Projects The new G/L represents a major change from the classic G/L. The new G/L also has new tables that may require existing interfaces and user modifications to be rewritten and tested. and accounts payable. but the date of the migration must always be the start of a new fiscal year. Note Some industry-dependent solutions require the use of the classic G/L. the new G/L has the ability to generate a set of balanced and reconcilable financial statements for any dimension of the business. There are also changes to transaction codes which will require user security roles to be revised. All rights reserved. which can still be used in SAP ERP. so their date of migration would be January 1. so the date of Upgrade Project SAP R/3 mySAP ERP New G/L Implementation Project Blueprint new G/L Customizing & implementing new G/L Migration to new G/L Timeline Figure 2. This chapter will explain the key areas of new functionality in the new G/L. accounts receivable.2 Upgrade to SAP ERP Is a Prerequisite to Migration 20 © Galileo Press 2008. and. very often the data volume in the classic G/L to be converted adds to the complexity of the project. It has many new features and the migration project will be complex. Legal entity reporting Segment reporting — requirement to report key finan- cial statement items by segments. it is very important for you to have separate projects to first upgrade to SAP ERP and then migrate to the new G/L. Migration to the new G/L — including testing certifi- reports to their originating transactions Compliance— requirement for the G/L to produce reports in compliance with other reporting standards such as IFRS. especially in a migration scenario with document splitting where existing data has to be enriched to work with the new functionality. In SAP Enterprise and previous SAP releases this was only possible with the use of business areas and profit centers and this was not a complete solution for areas such as cash.2 illustrates the upgrade project being completed and then the new G/L implementation project with three phases: 1. Also. Therefore. Customizing and implementing the new G/L — including data mapping and custom code updates 3. such as geographical region (see Section on segment reporting) Example of G/L-Related Customer Requirements Many companies have the requirement to report full financial statements by dimensions at a level lower than the company code. discuss the potential benefits and risks of migrating to the new G/L. Figure 2. provide an overview of the most common migration scenarios. scheduling of milestones 2. Migration to the new G/L is far more than a data conversion. Most companies have a fiscal year equal to the calendar year. in conjunction with document splitting. Year-end closing of the prior fiscal year must also have taken place before the migration project can go live. local GAAP.2 Why Migrate to the New G/L? between FI and CO modules was time consuming at close. finally. TCO reduction Transparency — requirement for better drilldown from 2. Blueprint new G/L — determining business requirements. cation of results. The new G/L meets this requirement by allowing customers to define their own dimensions and. The migration should be considered as a separate consulting project requiring a full project cycle.

so that decisions can be made as to whether they will be included in the migration project. etc. Segment Reporting 2. US GAAP and IFRS require a segment to be reported if the total external revenues of the segment exceed 10 % of the total revenue.com 21 . it was possible to report by segment using nodes in the profit center hierarchy. Figure 2. NewGeneral Ledger in SAP ERP Financials by Eric Bauer and Jorg Siebert. Many of the standard reports in SAP ERP contain the Segment field and therefore users can easily produce balance sheets by segment. They also require certain other balance sheet and income statement information to be reported by segment. such as revenues by geographical region. FI General Ledger Asset Management Accounts Receivable Accounts Payable Investment Management Special Purpose Ledger CO Cost Center Accounting Profit Center Accounting Profitability Analysis Product Costing Activity Based Costing Internal Orders Figure 2.4.4 Separate Segment Field on Profit Center Master The separation of the modules made cross-module reporting.2 New Functionality Segment Reporting Segment reporting is a legal requirement in many countries. Most migration projects will take approximately six months and. more flexible G/L. www. 1.3 shows the existing FI CO architecture and demonstrates how legal reporting in the FI module was completely separate to management reporting in the CO module. Note As mentioned earlier. will start around October 1. a technical upgrade. is three-and-a-half months.5. Parallel Ledgers The aim of this section is to explain these three areas in enough detail. This section will provide an overview of the three main areas of new functionality in the new G/L that will impact the possible migration scenarios.2. The next section explains the key areas of new functionality in the new G/L. In previous versions of SAP. An example of this is the standard report for producing financial statements as shown in Figure 2. It is useful to consider the existing architecture in previous releases of SAP to realize why SAP needed to introduce the new functionality in the new G/L.3 Existing FI CO Architecture Figure 2. based on a January 1 date of migration. The big change for segment reporting in SAP ERP is that there is now a separate Segment field in the profit center master record as shown in Figure 2. and thus whether to include it is an important consideration. The time required for a migration project depends on several factors but one factor is how much of the new functionality in the new G/L is implemented. such as segment reporting and balance sheets by profit centers more difficult and led to the development of the new.sap-press. for example. A migration without document splitting. Document Splitting 3. This is a great benefit for companies with many profit centers because reporting will be far less complex and time consuming. published by SAP PRESS. is far less complex than a migration with document splitting. This means that before this date there must have been a successful upgrade to SAP ERP and — as mentioned earlier in Chapter 1 — SAP estimates that the average time for the fastest upgrade approach.2 New Functionality activation will be later than the date of migration. but this new field means that there can be relatively few segments to many profit centers. 2. there is a separate book available for a more detailed explanation of the new functionality in the new G/L.

All rights reserved. Population of the segment field can be manual or automatic.5 Segment Field on Standard Reports The big advantage of segment reporting in SAP ERP is that the segments are contained at the detailed document level and. you do not need to wait until periodend close to build the segment reports. As shown in Figure 2. can be activated by segment in SAP ERP. custom derivation rules can be defined with the customer enhancement BADI FAG/L_DERIVE_SEGMENT geographical for a multinational company. Define segments. Document splitting. the segment will be derived automatically. etc.4. Commonly-used segments will be Figure 2. making it possible to produce balanced financial statements by segment. Material Management and Production: Controlling object or material master Sales: Customer order position G/L postings without profit center info: a) Manual entry of segment or b) BAdl (Coding or Substitution) or c) Default Segment Controlling: CO objects Profit Center Derivation of segment Totals per: Ledger. Segment. This step defines that segment reporting will be used for this ledger. Assign the segmentation scenario to the ledger. Company code. for example. the Segment field can be populated manually at the time of posting. .7 Define Segments 2.6 provides an overview of the various ways that segments can be derived. which will be covered later. in Figure 2. Also. Figure 2. This is less time consuming and less prone to error. the Segment field is included on the profit center master record so if a posting to a G/L account includes a profit center. therefore. The easiest and recommended approach for segment reporting is to use the Segment field on the profit center master record.8 shows how to assign the segmentaion scenario to the leading ledger. Setting Up Segment Reporting in SAP ERP The following steps are required for setting up segment reporting in SAP ERP : 1. If profit center master data is not used. document splitting required a special ledger and could only be activated on the profit center and business area fields. In previous versions of SAP. Figure 2.6 Derivation of Segment G/L 22 © Galileo Press 2008.7: Figure 2. Figure 2.2 Why Migrate to the New G/L? to derive the segment automatically.

8 Assign Segmentation Scenario to Leading Ledger Functional areas Business areas Commitment items Funds Funded programs Grants Example of Document Splitting by Segment Document splitting by segment is widely used by companies required to produce full financial statements by segment. In this example. but these were not real time and there was never a satisfactory solution for allocating cash to profit centers. producing full balance sheets by profit center was extremely difficult. as shown in Figure 2. In previous versions of SAP.9 shows where to find the customer enhancement in the IMG: Figure 2. segment.11: As you can see in Figure 2. but only in the special ledger.9 Derive Segments Automatically (BADI posting is to profit center P190004. Assign segments to the profit center master records (as shown in Figure 2.4) or use the alternative customer enhancement to derive the segments automatically. line items can be split by the following dimensions: Profit centers Segments Figure 2. Balance sheet items such as accounts receivable and accounts payable could be analyzed and posted by profit center at period-end close using standard SAP programs. using a Special Ledger with document splitting. For example.sap-press. which is linked to segment EU (Europe).10 Document Posted in the New G/L with Document Splitting This document simulation shows the classic G/L view of a document. the effects of the document splitting can be displayed before the document is posted. In SAP Enterprise. the customer posting has been split in the same way as the revenue postings so that the balance sheet accounts receivable total can also be reported by segment. it was not possible to preview/simulate www. on the other hand. Figure 2. but in the new G/L an expert view can be selected that simulates the document splitting before posting. and the other revenue posting is to profit center P190005.10 shows an example of a posted document with segments. One revenue 3.11. a customer invoice has been posted with two revenue entries. there may be a requirement to produce financial statements by profit center. Figure 2. Figure 2. a special ledger was required and document splitting could only be activated for business area and profit center. Document Splitting Document splitting is a functionality that allows fully balanced financial statements to be produced at levels lower than company code. In order to use document splitting. or other dimensions. FAGL_DERIVE_SEGMENT) Note The Business Area field can still be used for segment reporting.com 23 . In this example. Document splitting was available in SAP Enterprise.2 New Functionality In SAP ERP. but will only be retained in its present form with no new development planned for it.2. which is linked in its master record to segment NA (North America).

11 Example of Split Document by Segment in the New G/L Depending on your chart of accounts. Setting Up Document Splitting The main configuration tasks for setting up document splitting are outlined in Figure 2.13 Document Splitting Characteristics 2. option. 3. expense accounts. the cash posting will also be split between the two segments in the same proportion.14. this is a very useful feature in the new G/L. In the previous example. for example. which is Vendor invoice. SAP software does not require certain accounts to be classified. Customer-defined document types that have been added. Therefore. revenue accounts. especially when balanced financial statements are being produced by the split field. as it can recognize these as reconciliation accounts for their respective subledgers. . Z types. vendor or customer accounts. Classify Document Types for Document Splitting Document splitting also works for cash by taking the breakdown from the original invoice. Figure 2. SAP standard document type KR for a vendor invoice has been classified as Transaction 0300. etc. you need to classify accounts as balance sheet accounts. if payment is received from the customer for $5. in Figure 2. Split characteristics are the fields that you wish your ledger to split on. Zero balancing ensures that each individual document posted is balanced by the split characteristic. Define Split Characteristics The first step in setting up document splitting is to define the split characteristics. we are using the Segment field for document splitting and have also selected the Zero balance Figure 2. as shown in Figure 2.13. Segment in this case. Let’s look at each in more detail.14 Classify Document Types for Document Splitting 24 © Galileo Press 2008.2 Why Migrate to the New G/L? the split of a document before posting. must be classified in this table T8G12 or will not split correctly. In this example.000. For example. Recommendation It is strongly recommended that you select Zero balance for document splitting. Classify G/L Accounts for Document Splitting Figure 2.12.12 Document Splitting Configuration 1. for example. Figure 2. All rights reserved. Standard SAP document types have already been classified for document splitting.

IFRS and. Parallel Accounting in Previous Releases of SAP One of the challenges presented by previous releases of SAP has been how to gather and store the different sets of valuations needed to produce parallel accounting. such as FI-AR. 5. Using a special ledger.com 25 . A leading ledger must be defined. Other ledgers are known as nonleading ledgers and represent other accounting standards. the parallel accounts solution can still be used for parallel accounting and will be supported by SAP. Figure 2. and PP. and IFRS reporting and how each accounting principle also has its own separate G/L accounts. Any postings unique to the French local GAAP are made directly to the special ledger.sap-press. as shown in Figures 2. postings to other modules. there is an increased requirement to produce parallel sets of financial statements in accordance with different accounting principles such as US GAAP. Figure 2.17 and 2. Note that it is possible to deactivate document splitting by company code. which is always 0L in SAP ERP. SD. Some G/L accounts are shared where the accounting principles are the same and the different accounting principles can be reported by grouping the G/L accounts. Separate ledgers can be set up for each reporting requirement such as local GAAP. Special ledger Figure 2. postings made to the classic G/L also update a special ledger with the required local G/L account number.15. Separate G/L accounts are maintained for the different depreciation postings. but the new parallel ledgers functionality is a major improvement over the special ledger solution.15 Activate Document Splitting Parallel Ledgers With the globalization of many organizations. FI-AP.16 shows how the general ledger common accounts are shared by US GAAP. A common example is for assets that may have different useful lives depending on the accounting principle. Many companies use this approach and it is very useful for countries that have www. France — that require local accounts to be reported to the French Government using their own chart of accounts. and represents the accounting standard that is most commonly used by the organization.18. local GAAP. In previous releases of SAP. update the ledgers simultaneously (in parallel) according to different accounting standards. etc. Define Zero-Balance Clearing Account different accounting principles and require their own predefined chart of accounts. companies used one of two methods: Parallel accounts IFRS Accounts IFRS Reporting Local GAAP Reporting US-GAAP Reporting General Ledger Common Accounts US-GAAP only Accounts Local GAAP Accounts G/L accounts are created and used only for postings related to the particular accounting principle. As stated earlier.2 New Functionality 4. Activate Document Splitting The final task is to activate document splitting. as shown in Figure 2. Example A US company has a global chart of accounts but has subsidiaries in Europe — for example. MM. Controlling functionality is always A special ledger is maintained for reporting a different accounting principle.2. IFRS. zero balancing is recommended for document splitting and in this section you specify the G/L account for the balancing postings.16 Parallel Accounts Method The New Parallel Ledgers Functionality in SAP ERP In SAP ERP.

.-------.--.--.-------. All rights reserved. Local GAAP Reports are based on the corresponding ledger Figure 2.--. but dimensions such as profit center accounting can be deactivated if they are not required for non-leading ledgers. Having more than one non-leading ledger significantly increases data volume.--. However.-------. as shown in Figure 2. .2 Why Migrate to the New G/L? All ledgers updated simultaneously New General Ledger FI-AR FI-AP . with the new posting Transactions FB01L and FB50L.-------.19.A ----------. which is often confusing to users who are used to posting G/L entries with G/L transaction codes.. In SAP ERP.--. this can be made in the G/L to the specific non-leading ledger. usually one non-leading ledger is sufficient to cover parallel accounting requirements for other countries. the leading ledger 0L will usually be for IFRS. In previous releases.--.--.-------. .--.-------. but.B Debit 60 40 60 40 Credit Multi-ledger update Local GAAP US GAAP Multi-ledger update IFRS xxx xxx xxx ---. Multi-dimensional balancing Accnt / SEG ----------.-------.A ----------.19 G/L Posting to Specific Ledgers 26 © Galileo Press 2008. depending on an organization’s requirement.17 Parallel Ledgers integrated to the leading ledger. all non-leading ledgers are posted to simultaneously.--.--.B ----------.-------.18 Parallel Ledgers Are Updated Simultaneously Figure 2.--. Other Non-Leading Ledgers IFRS.--xxx xxx xxx ---.-------. postings can be made to specific non-leading ledgers only (see Figure 2. Closing activities have to be run separately by parallel ledger and SAP ERP standard reports can be run by ledger.--. the leading ledger 0L will be for US GAAP and for a European company. Only specified ledgers are updated 0L Leading Ledger Non-Leading Ledger Non-Leading Ledger • Postings via new transactions FB01L and FB50L • Foreign currency Valuation Program FAGL_FC_VALUATION • FI-AA depreciation areas . a French subsidiary of a US parent may need to make a manual posting specific to French local GAAP requirements.. the entry would have been made directly to the SPL using a different user interface. US GAAP.--. SAP ERP allows the creation of multiple non-leading ledgers. SD MM PP PM ..-------.--.--.19).-------.--- Multiple valuation Multi-dimensional Multi-dimensional Figure 2. When the leading ledger is posted to.. For example.-------. For a US company.-------.-------.--.

3 Possible Migration Scenarios Key Advantages of Parallel Ledgers Versus Parallel Accounts Key advantages of the parallel ledgers solution compared to the parallel accounts solution are: Different fiscal year variants can be used for parallel ledgers.21. Migration with document splitting In general. You can also define additional currencies for the nonleading ledgers as in Figure 2. Define Ledgers 2. In this migration scenario. a global US organization may have to report US GAAP.2.3 Possible Migration Scenarios Having learned about the main areas of new G/L functionality. There are additional account assignments that must be set up and far more testing is involved. ports a migration from a scenario that uses parallel accounts in the classic G/L. Different posting control variants can be used for parallel ledgers.20). For example. For companies that have used a special ledger approach for parallel accounting in the classic G/L. an alternative solution will have to www. which shows the currency fields available. data from the classic G/L is migrated to the new G/L without deriving any additional information for document splitting. There are many possible migration scenarios. a company that uses the classic G/L and wants to migrate to the new G/L and use segment reporting with document splitting to produce financial statements by geographical region. but the three most common scenarios are: Migration without document splitting This is the simplest form of migration.21 Settings for Nonleading Ledgers Migration with parallel accounting Migration in the standard SAP ERP system only supHaving explained the key new functionality in the new G/L. 0L is specified by default as the leading ledger and any new ledgers such as A1 are non-leading ledgers (see Figure 2. 2. They may still use cost center and profit center accounting to analyze their Income Statement but do not need to produce full balance sheets by splitting their accounts receivables and payables by. the next section will discuss how this new functionality can be incorporated into possible migration scenarios. This functionality can be helpful as the group ledger can be closed while the local GAAP ledger remains open.20 Define Parallel Ledgers This is a far more complex migration as the existing data has to be tested to ensure that documents being migrated will split correctly. Document splitting is not required for companies that do not need to produce balanced sets of financial statements by any dimension lower than company code. Settings for Nonleading Ledgers In this step. for example. local GAAP.sap-press. you should now be able to start planning possible migration scenarios. profit center. you assign company codes to the nonleading ledgers. Figure 2. All company codes are automatically assigned to the leading ledger. A migration scenario describes the existing setup in the classic G/L and the required setup in the new G/L. a separate non-leading ledger will be required for each reporting requirement that you have in your organization. In this step. for example. Setting Up Parallel Ledgers The steps required to configure parallel ledgers are as follows: 1. you define the nonleading ledgers. it is often referred to as the Quick Migration. Consider. The activities that need to be performed for each scenario will be explained in Chapter 4. Given the relative ease with which it can be performed. depending on the existing setup in the classic G/L. These segments are not in the existing data so additional account assignments are required to generate the segments in the existing line items. and IFRS and so will have 0L as the leading ledger for US GAAP and two other leading ledgers for local GAAP and IFRS.com 27 . Figure 2.

The following questions are relevant: Do you require document splitting? If yes: However. (Note: A validation is often created to ensure that cross-valuation postings do not occur) Table 2. users may mistakenly post local GAAP to US GAAP G/L accounts.2 Why Migrate to the New G/L? be found for migrating from the special ledger to the parallel ledger functionality in the new G/L. Existing G/L Solution Parallel Accounts Special Ledger New G/L Solution Parallel Accounts Parallel Ledgers Different fiscal year variants can be used for ledgers Different posting control variants can be used for ledgers Postings may cross valuations — for example. which currencies will they be maintained in? The functionality currently being used in the classic G/L will greatly influence the migration procedure. Document splitting is not required for this.1 Migration from Systems That Used Parallel Accounting Summary of Possible Migration Scenarios At this point. (Note: A validation is often created to ensure that cross-valuation postings do not occur) Ease of use and relatively simple setup High increase in the number of G/L accounts adding complexity to the chart of accounts Difficult to report on different fiscal years Retained earnings account and balance carry forward — separate retained earnings account for each accounting principle is maintained Parallel postings in the specific account areas In the new G/L you can either migrate the COS data into the leading ledger or into a nonleading ledger. However. Parallel Ledgers Pros Cons Fewer G/L accounts Data volume may increase significantly as parallel ledgers are updated simultaneously with all postings to the leading ledger Difficult to report on different fiscal years Separation of ledgers gives separate transparency (e. Consider the following questions: Table 2.. . how many ledgers will you need. Parallel Accounts Pros Cons For which company codes do you require splitting? What will be the split characteristics? Do you need parallel accounting? If yes: Will you use parallel accounts or parallel ledgers? If parallel ledgers. the parallel ledgers functionality in the new G/L is far more powerful than the classic G/L with a special ledger. The pros and cons of parallel accounts are shown in Table 2. All rights reserved. for example. users may mistakenly post local GAAP to US GAAP G/L accounts. more complex requirements. Note Please note that use of parallel accounts is still supported in the new G/L and for less complex requirements is a good solution.2 and the pros and cons of parallel ledgers are shown in Table 2. many companies that have previously used the parallel accounts solution may now require a parallel ledgers solution due to expansion globally.1. You must consider the following factors in the existing system: Previous use of profit center accounting (PCA) Previous use of cost of sales accounting (COS) Postings may cross valuations — for example. you should be thinking about the functionality that you require and the particular migration scenario that you will have.3 Pros and Cons of Parallel Ledgers Table 2. Previous use of special purpose ledger (SPL) The use of the SPL in the existing system will determine its impact on the migration scenario. for auditors) Can maintain a separate ledger for each accounting principle Migrating From Systems That Used Parallel Accounting Companies that have used parallel accounting in their existing SAP system may migrate to the new G/L as shown in Table 2.2 Pros and Cons of Parallel Accounts 28 © Galileo Press 2008.3. or to satisfy other.g.

Number of documents in the migration period All documents posted between the migration date and the activation date (i. dimensions Parallel sets of books Fast Close TCO reduction International Accounting Standards Compliance and Transparency Use of different fiscal year variants If company codes have different fiscal year variants it must be possible to derive the same fiscal year from the migration date for all company codes within a migration plan. The next section details some of the benefits and risks of migrating to the new G/L. Managing G/L accounts on an open-item basis 2. Figure 2. This section will highlight the specific benefits and risks of migration as follows: Benefits of Migrating Segment reporting. General Ledger in mySAP ERP mySAP ERP: A Unified World New General Ledgers Management reporting Legal Requirements Segment reporting Extensibility Balanced book by add. As part of the migration with document splitting. This leads to far less reconciliation than in previous SAP releases. Recommendation You should migrate all company codes that share the same fiscal year variant together as this is the most efficient method. Number of company codes and cross-company clearings The number of company codes obviously impacts the migration scenario. Use of additional currencies in special ledgers If special ledgers are used and will be replaced by the new G/L. If not... Customer-Defined Industry-Specific Ledgers B/S by. It is possible to migrate company codes separately provided there are no cross-company transactions between them. document splitting and parallel ledgers are three of the main benefits of migrating to the new G/L and have been explained earlier in this chapter.22 Unification of Ledgers www.com 29 . Fund. any risks to data being migrated incorrectly can be minimized. General Ledger in SAP R/3 Enterprise Multiple Applications Classic G/L CoGS Legal Requirements Ledger Profit Center Ledger Management and Segment reporting Special Ledger Multi-Dimensional. the currencies used in the ledgers must be in the orginal posting document.22 shows how several of the applications in SAP R/3 Enterprise have now been unified in the new G/L. such as utilizing the new functionality available.sap-press. Many ledgers such as the cost of sales ledger and profit center accounting ledger have now been combined into a single ledger. The G/L contains very sensitive data and the data in the new G/L must be exactly the same as the data in the classic G/L prior to the migration. Other benefits include: Integration of financial and management accounting This only impacts the migration scenario if document splitting will be used.. Grant. Any interfaces used to post to the classic G/L will need to be updated in order to post to the new G/L.4 Potential Benefits and Risks There are many benefits to migrating to the new G/L.e.4 Potential Benefits and Risks Which ledgers do you use and for what purpose? Are the ledgers updated in real time or built by rollups? Is document splitting already used on a ledger and what is the splitting charateristic? Use of interfaces to external systems This section has highlighted some of the areas that must be considered in the existing G/L that will determine the target migration scenario. all open items must be converted so as many as possible should be cleared before the migration starts. data cannot be migrated and the SPL must be retained.2. but the main risk is a lack of understanding of the new functionality. It is possible that some interfaces will no longer be required if the new functionality in the new G/L makes them obsolete. Figure 2. With sufficient testing and correct setup of the new functionality. phase 1) and all documents from phase 0 that are still open on the migration date must be included. Title.

with mimimal disruption to the system.23 Existing Ledgers Have Been Unified SAP ERP provides a closing cockpit. Members of the migration project team may continue to think in classic G/L terms which can lead to new functionality such as document splitting for example either being excluded from the migration when it would Cons. This service will be explained in detail later in this book. SAP NetWeaver includes Business Intelligence (BI).25 shows the link between the new G/L and the BI system and having only one sysAccounting Interface Profit Center Determination Currency Translation Derivation Zero Balance Figure 2.23 shows that ledgers such as EC-PCA. many period-end activities are no longer required. Its intuitive graphical interface uses color coding to identify the status of the closing activities. periodend programs were required to post accounts receivable and payable by profit center. which displays all closing functions on a single screen. BI provides: New Microsoft Excel integration features Better formatting for reports generated in Microsoft Excel and the Web Easy printing of reports in formats such as PDF Improved delivery of reports to users Improved transparency for users internal and external Document Split EC-PCA Reconc. as shown in Figure 2. formerly known as Business Warehouse (BW). Figure 2. FI-SL.2 Why Migrate to the New G/L? The new G/L is often referred to as one version of the truth due to the fact that financial (legal) and management reporting are unified. Legal and management data are unified in one ledger. Faster period-end closing Due to the unification of ledgers. New G/L reporting options Standard SAP reports include new fields such as Ledger and Segment. Other reasons for a faster periodend close include: Document splitting is real time. . This is a major advantage over previous SAP releases as only one system is required. Also. Ledger Figure 2. All rights reserved. consolidation preparation. Figure 2. no longer at period end.24 New Fields on Standard Reports tem leads to large improvements in performance. and reconciliation ledger are no longer needed. enhancement packs. Ledger FI-SL CO-OM auditors Better corporate governance Reduced ongoing costs Risks of Migrating Major risks such as loss of data are extremely unlikely due to the requirement to have the SAP migration service that performs technical checks throughout the migration project.24. CoGS ledger. Previously. Preparation CoGS Ledger CO-PA Reconc. report RFBILA00 can produce balance sheets for segments. for example. Easy extensibility Ability to add new functionality. but the main risks for a migration project are related to a lack of understanding of the new G/L functionality. 30 © Galileo Press 2008. Real-time posting from CO to FI. For exam- ple.

Also. www. so users with knowledge of this data can start the process of cleansing well before the migration project starts. Other potential problems that can be caused by a lack of understanding of the new G/L functionality include: Unsure what to use for segments Confusion about parallel ledgers Creating too many nonleading ledgers Not fully understanding document splitting Another significant risk is the amount of data cleansing that is required before the existing data can be migrated. General Ledger SAP NetWeaver BI Figure 2. data cleansing is a significant part of any G/L migration or conversion. PC.com 31 . Segment.. consolidating accounts. Migrating to the new G/L is complex and the data is highly sensitive. One of the main points is that upgrading to SAP ERP and migrating to the new G/L are two separate projects. without a full understanding of the new G/L functionality existing functionality such as special ledgers for example may be set up in the new G/L when they are no longer needed.. Functional Area. This cleansing activity may be performed as a separate project to precede the migration project. etc.5 Summary The aim of this chapter has been to introduce you to the new G/L and the reasons why the majority of companies should migrate to it. you will learn how to alleviate these risks by executing all activities for a migration project from planning to go live. Example Many companies have G/L open item managed accounts with thousands of un-cleared open items.5 Summary Company. which can lead to problems in meeting project deadlines. You also learned about the new G/L functionality and possible migration scenarios so that you can begin to think about the functionality you will need and.sap-press. open items on G/L accounts are time consuming to migrate and the more that can be cleared before. even before the upgrade to SAP ERP is completed. or the document splitting producing inaccurate results. and clearing open items on open item managed accounts are all good examples of tasks that can be started well in advance of a future migration. what migration scenario you will have. the better. so a full project is necessary. etc. This can lead to issues with data and decreased performance. Deleting G/L accounts that are not required. Remote Extractor Company. Preparation for a future migration to the new G/L can start at any time. Later in this guide. Other risks include the time required to test and also the time required to ensure that existing interfaces still work as expected. Segment. This is the first step in planning the migration project and the migration scenario will have a significant impact on the timing.25 SAP ERP Includes BI Reporting be beneficial. staffing. and complexity of the project. The classic G/L will remain in SAP ERP and will continue to be supported. 2. For a migration with document splitting. therefore. but this chapter has demonstrated the many benefits of upgrading to the new G/L. FI CO Periodic Extractor . Many migration projects underestimate the time required for these.2. As discussed in this chapter. Transaction Type. Profit Center. etc.

Chapter 3 provides an introduction to the three project phases and discusses why the project should be structured in this way. All rights reserved. The remaining chapters describe each phase in detail. . 32 © Galileo Press 2008.2 Why Migrate to the New G/L? Chapters 3–7 will cover the actual migration project.

84 phases 33 restrictions with document splitting 48 risks 30 target scenarios 43 with document splitting 27 with Document-Splitting and Parallel Valuation 53 with parallel accounting 27 without document splitting 27 Migration Plan activating manually 72 creation of in IMG 55 C Classic General Ledger deactivation of after migration 86 Closing 88 Company Codes scope definition 42 Consolidation scope definition 41 Controlling postings to 88 Cost-of-Sales Accounting 88 activation of for individual Company Codes 69 scope definition 40 Create Worklists 71 Cross-Company Code Clearings scope definition 42 E Existing Transaction scope definition 41 F FB01L 26 FB50L 26 Field Status Groups 76 Financial Statements Report 83 Functional Resources 54 I IMG migration activities 67 Interfaces to External Systems scope definition 41 www.com 91 .sap-press.Index A AC210 New (Flexible) General Ledger 54 AC212 Migration to New G/L Accounting 55 Accounting Principles definition of 69 Additional Currencies in Special Ledgers scope definition 41 APC Values 51 Customizing ledgers 67 Item Categories check G/L Accounts for 79 D Define Segments 69 Depreciation Areas posting to G/L 60 Depreciation Values 53 Document Splitting 23 activation of 59 assignment of method 59 classify document types for 57 classify G/L accounts for 57 customization of 57 deactivation of by Company Code 59 define characteristics 59 define information for open items 73 information for documents posted in Phase 1 74 process information for open items 73 Document Types 80 L Leading Ledger define currencies 68 Scenarios linked to 69 leading ledger 25 Ledgers assign Accounting Principles to 69 assign Customer field and Scenarios to 69 compare after activation 85 B Balance Carryforward 75 analysis of 85 creation of 47 reset of 76 Business Areas scope definition 40 Business Transaction Assignment 80 Business Transactions 80 Business Warehouse (BW) 30 M Master Data scope definition 41 Migration benefits 29 calendar fiscal year start date 53 cockpit 35 complete reset of data after failure 87 from parallel accounts to parallel accounts 49 from parallel accounts to parallel ledgers 50 IMG activities 37.

Party Consultants 54 O Open Items update in new G/L Accounting 74 U User interface 87 R Reconciliation Ledger 88 Remote service sessions 35 P Parallel accounting 19 Parallel Accounts 25 pros and cons. All rights reserved. 69 Z Zero Balance Account 58 Zero Balance Account Posting Keys 58 92 © Galileo Press 2008.Index Migration Status analysis of 81 integration with Treasury & Risk Management 53 Parallel Valuation scope decision 39 scope definition 42 Perform Assignment of Company Codes 56 Posting Period Error 70 Posting Period Table 70 Profit Center Accounting in scope determination 40 Project Manager 54 Setting Validation Date for Document Splitting 56 Special ledger 25 Special-Purpose Ledgers scope definition 40 N New G/L 19 activation after migration 85 Nonleading Ledgers 25 define and activate 68 T Technical Resources 54 Third. 21. scope definiton 42 Parallel Ledgers 25 customization of 60 defining in the new G/L 60 integration with Asset Accounting 51 W Worklists 67 creation of in document-splitting 47 S SAP Migration Service 54 Scope of project 37 Segment Maintenance 76 Segment Reporting 20. .

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