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ARO Accounting: Leave Excel behind and become an Intelligent Enterprise with SAP S/4HANA

Asset Retirement Obligations (ARO) may not mean much to people outside the finance department; but, for asset intensive companies, the financial and environmental reporting regulations put ever increasing pressure on providing accurate, compliant, and auditable financial exhibits.

For many years, companies have managed AROs but often rely on office tools that are highly manual and time-consuming to maintain.  These non-systematic solutions are almost always prone to error, leave poor audit and reporting trails, and are disconnected from the financial system.

SAP now offers a new application to help our customers manage the ARO accounting process.

SAP S/4HANA for asset retirement obligation is an add-on application to the Intelligent Enterprise, Digital Finance Core.  This application builds on the success of the SAP Asset Retirement Obligation Management (for SAP ERP) by providing customers the ability to manage the accounting lifecycle of AROs on an SAP S/4HANA system.

The SAP S/4HANA for asset retirement obligation application provides two primary functions:

ARO Data Management

Here the application allows for the definition of key parameters for an obligation, executing the necessary calculations, and triggering the postings to SAP S/4HANA Finance.  This is also where all obligation transactions (create, change, and terminate) are entered and maintained.

Accounting Posting Engine

SAP S/4HANA for accounting integration engine orchestrates the incoming data from the ARO Data Management into the specific posting and schedules in the SAP S/4HANA Finance components of General Ledger, Asset Accounting and Accrual Engine.

SAP S/4HANA for asset retirement obligation allows customers to:

  • Eliminate time-consuming, error prone, manual processes
  • Increase audit and data transparency
  • Establish ‘one source’ of truth for AROs
  • Create a basis for better reporting and analysis
  • Reduce financial closing costs

For more information on this topic:

Go to help.sap.com; or, contact Bret Strobo.

Attend the Best Practices Oil and Gas conference, September 16 – 18, 2019, The Woodlands, Texas.

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  • SAP ARO is a, relatively, easy module to implement.  It doesn’t take much to get it up and running!  Also, it abides by the ARO calculation requirements and is far more integrated than customer’s existing Excel based approaches.