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Understanding the many applications of “Reconciliation” – How SAP Account Reconciliation and Automation by BlackLine Complements SAP S/4HANA

Elizabeth Milne, Accounting and Financial Close Expert, SAP

Molly Boyle, SAP Solutions Expert, BlackLine

If you’ve explored the capabilities of SAP S/4HANA you’ve probably heard that one of its benefits is the elimination of reconciliations. If you’ve seen this and you’re also evaluating Solution Extensions by BlackLine for the financial close, you may be wondering whether companies running SAP S/4HANA would need SAP Account Reconciliation and Automation by BlackLine.

The answer is yes. SAP Account Reconciliation and Automation by BlackLine complement even the most sophisticated SAP solutions like SAP S/4HANA.

The Universal Journal and Reconciliations

SAP S/4HANA simplifies the ERP architecture with the Universal Journal, a table also known as ACDOCA. Specifically, data that was spread and stored across multiple tables including sub ledgers and totals tables has now converged. The Universal Journal leverages the power of SAP HANA to store all finance transaction data in this single universal journal table, making SAP S/4HANA a truly powerful Financial system.

Previously, this SAP ERP design resulted in the need to reconcile data between these tables to ensure it was not out of sync. For example, sub ledgers needed to be reconciled to the general ledger. These reconciliations were typically performed manually by Accounting & Finance and were a critical part of month-end activities.

With the single table architecture, SAP S/4HANA eliminates the need to tick and tie, or reconcile, data within the ERP.

Reconciliation vs. Substantiation

While SAP S/4HANA’s reconciliation benefits are noteworthy, the term “reconciliation” can create confusion. Because, when it comes to the financial close, the term reconciliation is typically used in reference to substantiation. When it comes to the balance sheet, companies are required to substantiate their results as of a point in time, typically at month-end or quarter-end.

Substantiation involves multiple processes including reconciliation to underlying systems, as well as validation of the completeness and accuracy of the ending balance which involves more than simply agreeing information within the ERP. Substantiation is the confirmation that an ending balance is appropriate, and more often than not, it requires corroborating information in the general ledger with supporting documentation from outside of the general ledger such as invoices, contracts, or schedules.

Auditors rely heavily on balance sheet substantiation activities to support their activities and opinion. In addition, certification and approval of substantiated account balances satisfies key control considerations under the US Sarbanes Oxley regulations, SOX 404.

SAP Account Reconciliation and Automation by BlackLine Complements SAP S/4HANA

SAP Account Reconciliation and Automation by BlackLine transforms the balance sheet substantiation process. Without such a solution, many accounting teams, including those running SAP S/4HANA, rely on a spreadsheet-heavy approach. They struggle with the manual workload at month-end and the painful audit processes that follow. Quality, consistency, and visibility to errors are other common concerns.

SAP provides reports to select the Line items; neither SAP ECC or SAP S/4HANA are designed to orchestrate, perform, document and audit the sign-off process for these line items. And this is why SAP has chosen to partner with BlackLine for this solution. SAP Account Reconciliation and Automation by BlackLine helps automate this end to end process by providing configurable rules, auto-certification and checks. It provides assurance to accountants with workflow guidance, transparent tasks and balance thresholds. Finally, it provides security with sign-offs and integrated documentation to effectively prepare for audit which is also streamlined with this solution. Rather than manually walking through items with auditors, you can create provide “read only access to auditor” to SAP Account Reconciliation and Automation by BlackLine so they can self-serve some of their audit requirements.

Your SAP ERP – whether ECC or S/4HANA – will provide details from the general ledger. BlackLine solutions complement your ERP by providing visibility, standardization, automation, and consistency to a critical component of the financial close.

A Blog Series to Answer Your Questions

There are a number of common questions about BlackLine and SAP and how our solutions work together. Please check out these blogs to answer them:

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