Is there a Single Source of “Truth” with Universal Journal?

In this Blog let us try to answer the crucial question: Is there a Single Source of Truth with Universal Journal?

I have tested this concept in SAP S/4HANA Finance, On-Premise edition 1.0 on SAP system which will be released to market in Nov 2015.

Interestingly, SAP has changed the name of Simple Finance (again). The name ‘SAP S/4HANA Finance’ has been introduced in September 2015 and replaces the former name ‘SAP Simple Finance’. So you start seeing this new terminology  in my blogs.

SAP Single Source of Truth with Universal Journal

Before we answer this question, let us get a small introduction. The Universal journal entry eliminates the need for the separation made previously between Financial Accounting (FI) and Controlling (CO) (single source of truth). There is a combined FI and CO document linked with a logical document. All the information is recorded in 1 line item table (ACDOCA).

Since financial accounting and managerial accounting are reconciled constantly, there is no longer any need for reconciliation between FI and CO or between FI-GL and FI-AA. Nor is there any need for the real-time integration of these components. The reports in all components use data from the same journal and thus known as Universal journal.

For this functionality to work there is a change in master data, architecture of the tables and also in configuration. Let us see the major changes in these areas. All cost elements (primary and secondary) need to be portrayed as G/L accounts. Consequently, we no longer need to enter the master data for cost elements separately; instead, we only need to create G/L accounts from now on. You will not find any transactions related Cost elements. Below screen-prints between ECC EHP7 for SAP ERP 6.0 and S4HANA ON PREMISE 1.0

Now, let us see what does the one source truth means in SAP system.

I posted a FI document which triggered entries in BSEG, FAGLFLEXA, FAGLFLEXT, COBK, COEJ and COEP tables (and some more BSIS, etc) in ECC. Compare it with a posting in S4HANA ON PREMISE 1.0, all the information is recorded in BKPF (header) and ACDOCA (line items). Thus reducing the foot print drastically.

What will happen to old tables? Updates are no longer made to these old tables. Nevertheless, you can continue to use reports that use data from these old tables. This is because compatibility views for a data request from one of these tables read the data from ACDOCA.

Let us compare the views in these ECC tables with ACDOCA.

FI tables

CO Tables

ACDOCA (Universal Journal)

Now, let us review with one use case by posting FI document to a P&L acct with cost object as profitability analysis. Note this S4HANA ON PREMISE 1.0 system had Account Based COPA active.

There is no separate COPA document visible in the accounting document workflow (refer the screen print), a controlling document is a logical document. Real-time integration is no longer applied. Instead, CO transactions are posted directly as an universal journal entry (ACDOCA). As secondary cost elements are also contained in the chart of accounts, account assignment to a different account is no longer necessary.

Analysis on ACDOCA:

This universal journal can easily be extended with the coding block and adding CO-PA characteristics (refer the below screen print). Also, actual data posted will be stored in ACDOCA with all the Characteristics defined in the operating concern. These standard coding block extensibility and customer fields are added automatically to the universal journal.

Adding to the advantage, reporting based on the ACDOCA data is fast and flexible. Business Intelligence (BI) frontend tools can be used for operational reporting, thus the benefits of BI tools are inherited by the transactional system. Also, each journal entry contains the ledgers to which the business transactions are posted.

The profitability segment are stored in CE4XXXX tables as before.

The below table will give an snap shot of what has changed in COPA area.

Since SAP has redesigned their architecture on account based costing, the tables impacting are also on account based.

Architectural Analysis:

• COEP table will still exist and be written with entries except for Value type 04 and 11. ACDOCA will get updated with 04 and 11 value type.

• Compatibility views for tables are available on all traditional tables. E.g.: V_COEP. This is very helpful; since customers who have build programs with these traditional tables can still use them. Via this view the select is redirected to the new table ACDOCA.

• Access to old table data is still possible with V_tablename_ORI e.g. : V_COEP_ORI, V_FAGLFLEXA_ORI, etc.

• COBK still will be written as before.

• COSP and COSS will all be written directly to ACDOCA.

• New tables COPS_BAK: Primary cost: Planned cost and commitments and COSS_BAK : Secondary cost : Planned cost and commitments, will be updated with entries other than value types 04 and 11.

Conclusion:

Is there a Single Source of Truth with Universal Journal? Friends, if you have reached till here in this blog, then you would be able to answer this question easily. Yes, SAP has delivered what they promised in this area. Further to my explanation above, the universal journal entry has its own currency fields. This brings the currency concepts used in FI and CO closer together. Also, to substantiate this answer, a big advantage of this universal journal is that reconciliation efforts are enforced by design.

There are few things to improve in future from my view. As explained above, the Universal Journals can be extended with customer COPA characteristics this means if a customer has multiple operating concerns then all the characteristics will be included in the journal. This might cause an issue and will increase the fields unnecessarily. Also, the idea of keeping CE4XXXX table is unclear now since there is only one table to navigate and all the characteristics are filled directly in Universal Journal. There is no use of this table anymore. Having said this, still this concept has enormous advantage for customer.

Overall, after a long wait, SAP has successfully completed the task of brining different sources into one. Thus, with S/4HANA Finance/Simple Finance has a Single Source of Truth with Universal Journal.