New General Ledger – Introduction

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The New GL concept covers all the above mentioned functions and requirements in one place,
while continue providing all the existing functions.

New GL functionalities are part of ECC 6.0 version. However, we have done only technical
upgrade from earlier 4.7e version to ECC 6.0 and not the functional upgrade. Hence, to reap the
benefits of ECC 6.0 fully, we must go for the under-mentioned New GL functionalities offered by
it.

Various additional functionalities with the introduction of New GL:

 Document Splitting

Today, in the current SAP R/3, Vendor line items and Customer line items (except special GL
accounts) in a financial document do not retain profit centers.  Through month-end closing
activities, Vendor and Customer open line items are transferred to Profit Center accounting via
F.5D and 1KEK transactions.  This means that, there is no real-time transfer of profit center to
PCA.  Nor FI do retain any profit center for these accounts at all. Tax Line items bring profit
center from either substitution or default profit center assignment (3KEH).

In the New GL scenario, for each financial account document, document splitting functionality
applies account assignment information (profit center) to the non-assigned GL accounts (Vendor,
Customer and  Tax line items in particular and any other accounts not assigned due to any
reasons, in general).

Document splitting function is based on the following model.

Accounting documents, in most of the cases, contain GL accounts with assignments.  That is,
accounts of expenses and revenues.  Such accounts (i.e. Expenses or revenues) do provide
dependent GL accounts (i.e. Accounts payables, Account receivables and tax accounts) with
account assignments (profit center) based on the context (i.e. invoice or payment).  Account
assignments from original processes are supplied to the subsequent processes.

For example, Account assignment (profit center) is passed on from GR/IR account to Vendor line
item in invoice and the profit center from invoice is passed on the vendor line item in payment.

 Balanced books (zero balance) by dimensions like Profit Center, segment,

Business area etc.
 Today, in the current SAP R/3, system does not ensure that every financial accounting
document is balanced by profit center or segment or business area.  That is, balance is
not zero, profit center-wise or segment-wise or business area-wise in a financial
document.  As a result, any profit center report does not provide zero balance financial
information (trial balance).
 In the New GL, every financial document can be ensured to have a zero balance by profit
center, segment or business area, depending upon the business requirements.  This
functionality ensures drawing out balance sheet at Profit center level, segment level or
business area level.
 In a company where different steams of business are being carried on, local accounting
standards do require reports on segment-wise or business-wise.  This requirement is
ensured to be met through balanced books by different dimensions (profit center,
segment, business are etc.).

 
  Real-time integration of Financial Accounting with FI:

Today, in the current R/3, there is no real time integration of CO with FI, though the reconciliation
of CO and FI is ensured through reconciliation ledger period-end activities.

In the New GL, real-time integration of CO with FI is ensured.  This ensures transfer of cross-
entity controlling postings to general ledger in real time.  This transfer allows continuous
reconciliation of Cost Accounting books with financial books and removes the need for any
subsequent reconciliation.  This again ensures balanced books by different dimensions as well.

Real time integration function works on the following model. As we know, there are many
activities which are only internal to CO.  The examples are Cost allocation through distribution,
assessment and overhead surcharge application, settlement of costs from one cost object to
another cost object etc.  These business transactions do create postings only in CO.

Through real-time integration, system passes a corresponding FI document for these CO

documents, if and only if the posting involves any cross controlling entities like different profit
centers, cross company codes etc.

 Parallel Ledgers:

Today, in the current R/3, meeting the requirements of drawing out financial statements based on
other accounting principles like IFRS, US GAAP etc. are met thorough separate SAP application,
i.e. Special Purpose Ledgers.

In the New GL scenario, this is clubbed in FI general ledger itself.  Consequently Ledger concept
has come into play.

We are now able to create different Ledgers for different accounting principles.  That is, one
ledger for Local GAAP, one for US GAAP, one for IFRS, one ledger with different fiscal year
other than the one being used in the company code etc.  In SAP terminology, these are called
Leading Ledger and Non-leading Ledgers.  The ledger for Local GAAP is called Leading Ledger
and all others are non-leading ledgers.

Posting logics to various ledgers:

All FI postings will invariably go to the Leading ledger.  All these postings will also go to the Non-
leading ledgers unless otherwise restricted.  We can also carry out Ledger specific postings. 
That is, we can post some documents only to certain ledgers, while not posting the same to
others.

We have created Non-Leading ledger L3, which is meant for posting with different fiscal year
than the one used for the Company code.  That is, in Brazil company code, fiscal year variant for
the company code is April to March (V3).  While postings happen to leading ledger with V3
variant, the same will get posted with K4 fiscal year (Jan to Dec) in L3.
- Extended data structure (ability to add customer fields).
- With real-time document splitting, balance sheets can be created for entities such as segment.
- Real-time integration with Controlling.
There's not much change in the user interface, apart from a few transactions.
In a green field implementation I would certainly recommend start using new GL instead of classic GL.
In an upgrade project: first finish the technical upgrade completely and then proceed with the migration
to New GL (which is a project in itself and can take 5 to 7 months in total).

New GL accounting is the new functionality which came into existence from ECC 5.0 Version in SAP which we
call as mySAP ERP. Up to SAP 4.7EE we are using Classical GL Accounting. In Classical GL accounting
General Ledger, Profit Center Acting, Reconciliation Ledger, Business Area, Special Purpose Legers and Cost of
Sales Accounting are different components but all these are incorporated in New GL accounting.

The New functionalities included in New GL Accounting are,

1. Extended Data Structure:- This allows us to activate additional fields(e.g., segment) in the New GL table.

2. Parallel Ledgers:- This provides the ability to produce different sets of financial statements.

3. Document Splitting:- This allows real-time allocation of an account assignment object to all your balance sheet
postings, this is particularly relevant when you have postings from sub ledgers.

4. Improved Management Reporting:- Profit centres are now part of GL, which allows you to produce
departmental or management accounts directly from the GL.

5. Segment Reporting:- A segment is a new account assignment object that can be used to produce segment
reports to provide an additional dimension. It helps in running analyses for objects at a level lower than company
code. This is in line with the IFRS/IAS segment reporting requirements.

6. Fast Close:- A reduction in the amount of time needed to complete the period end cycle enables a fast close to
be completed.

But for the above mentioned functionalities different configurations settings we has to go.

When coming to Special Purpose Ledgers:-

They are used in reporting. These are all basically user-defined ledgers, which can be maintained either as GL or
subsidiary ones with various account assignment objects (with SAP-dimensions like cost center, business area,
profit center etc or customer-defined dimensions like region, area etc)

Once defined, this functionality helps you to report at various levels. Ideally you collect the information, combine
them and create the totals. This is something like an additional reporting feature, and usage of this feature will
have no effect on the regular functionalities of SAP.

This also requires configurations.