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How SAP S/4HANA Cloud enables you to fulfill audit trail requirements in Accounting

The Ministry for Corporate Affairs in India has recently published a rule for all the Indian corporates that they need to ensure correct and compliant audit trail in their accounting software for each and every transaction, creating a log for each change for the financial year starting April 1st 2021 or later.

Let’s use the momentum and look deeper into how SAP S/4HANA Cloud enables you to fulfill requirements like this. SAP software provides a full audit trail, logging and evaluating all changed data in the system. The universal journal in SAP S/4HANA forms the basis of an integrated financial accounting system, in which accounting documents are recorded for all business transactions. To ensure a comprehensive audit trail, SAP provides the following standard functionality:

  • No posting without a document – A posting document or journal entry must be stored in the system for every transaction. Each posting document carries the document date, a time stamp, as well as information about the user who has posted this document.
  • Changes to posting documents – You cannot change a posting document, but you can add additional information, such as a reference or a comment. Again, these additions are tracked. If you want to reverse a posting, a new document including all audit-relevant data is created. You can display all document changes for any journal entry using the app “Manage Journal Entries.”
  • Unique identification of a posting – An accounting document is identified by the company code, the document number, and the fiscal year.
  • Authorization concept – A detailed authorization concept for your company can be set up to ensure that only authorized users can make postings.
  • Consistency checks – The system verifies whether the balance of debits and credits is zero, and also determines whether all mandatory fields are filled.
  • General Ledger account master data – SAP provides a standard functionality to display changes in General Ledger Account Master Data, so that you can keep control of all changes.
  • Transport of changes – If you need to change the configuration of your S/4HANA Cloud system, you will initiate this in the quality system and transport these changes into the productive system once successfully tested. The system tracks all changes in a “change project” which documents all changes made.

To provide evidence of strong Internal Controls being implemented and operating, SAP Financial Compliance Management can be used for documenting the necessary controls environment, monitoring inconsistencies in operating procedures or policy; anything factually wrong; potential fraud; illegal activity; and demonstrating adoption of best practices across financial and operational processes.

To finally generate and submit compliance reports to governments or tax authorities on time and with the required quality, you can use SAP Advanced Compliance Reporting. This functionality allows you to manage your statutory reporting centrally. You can monitor your legal compliance reporting globally via a single, unified dashboard. SAP Advanced Compliance Reporting provides an audit trail to keep track of the documents considered for reporting, to store the screen-selection parameters of the reports, to track manual adjustments to files (when allowed based on local country regulations), and to store the communication logs in case of electronic report submission. Please find the ACR scope by country which is available here.

All these things considered, SAP S/4HANA Cloud, if properly configured and used, enables you to comply with generally accepted accounting and bookkeeping principles, especially regarding audit trail requirements.

To find more information, please check help.sap.com and learn more about the journal entries, SAP Financial Compliance as well as SAP Advanced Compliance Reporting.

 

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