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Overhead Accounting for Universal Parallel Accounting in SAP S/4HANA Cloud 2105

Welcome back to the blog series on Universal Parallel Accounting in SAP S/4HANA Cloud 2105. In the last blog Astr­­­id discussed Asset Accounting for Universal Parallel Accounting. This time I would like to cover Overhead Accounting for Universal Parallel Accounting.

Parallel Accounting was already available in SAP S/4HANA Cloud but reached its limits when it came to the management accounting processes. In these processes, the leading ledger value was applied to all ledgers, which might have c­aused additional efforts. Universal parallel accounting (short ‘UPA’) from now on allows the parallel representation of different accounting principles across the whole value flow using ledgers in legal and management accounting.

Figure 1: E2E Value flow example and sources for differences between GAAPs

What you see is a flow that goes across the value chain and that allows you to keep the double view, IFRS in the one view and local GAAP in the other view. Imagine a self-manufactured asset that has a project with a group of WBS elements behind. Costs, such as material and activity costs come in with the double flow depending in the accounting principle. And then all settlement processes are going to run twice for each ledger. And the same if it’s not a new asset that is newly built but an existing asset that needs repairs. The costs are collected on a plant maintenance order, performing activity allocations, technicians working and consuming spare parts etc. And there is always the double flow onto the asset. And then think about how that asset is being depreciated and how that flows into cost center accounting so you could potentially have different ways of looking at that depending on the accounting principle you are working with. Once it got into cost center accounting everything you do with it regardless of whether you allocate the costs, whether you use it to set a charge rate, or whether you use it to calculate overhead is going to vary according to the accounting principle.

A key point is that you use parallel accounting by running parallel ledgers (standard ledgers) for different accounting principles. So you are going to see the ledger not just in reporting, e. g. cost center accounting, but whenever you are going to perform an allocation, do a charge based on a cost rate,  whenever you run a percentage overhead, you are going to logically do that for two flows by ledger.

Let’s have a look into the enhancements for Overhead Accounting in SAP S/4HANA Cloud 2105.

Cost Rates

Customer using actual costing (scope item 33Q) can calculate and maintain cost rates ledger- dependently using the Manage Cost Rates – Actual app. Planned cost rates and service cost rates are still ledger independent.

Direct Activity Allocation

Activity quantities are ledger independent, therefore this app does not allow to post different quantities per ledger. However, if actual cost rates differ per ledger, for example after an actual cost rate calculation per ledger, then the amounts posted also differ per ledger. Separate journal entries are created for the different ledgers.

Figure 2: Activity quantities are ledger-independent; separate JE are posted per ledger

Settlement

Up to now, settlement values settled from projects to assets under construction were copied from the leading ledger. From now, the settlement values can be calculated per ledger for a given settlement rule.

Figure 3: Ledger enablement for settlement

Overhead Calculation

Overhead calculation is ledger-enabled in so far as a percentage-based overhead rate, which is defined in the costing sheets and assigned to projects, maintenance orders or event-based production orders, can be calculated per ledger.

Universal Allocation

Universal Allocation is ledger enabled. You can define and run allocations per ledger or for multiple ledgers. You can also apply an allocation defined for a specific ledger to another ledger(s).

Figure 4: Overhead allocations between cost centers per ledger

Consistent Charging Models

Settings defined for settlement rules, overhead calculation % and allocation segments are ledger independent. However, sender amounts to be credit might differ by ledger so that the debit amounts calculated for the receivers also differ by ledger.

Figure 5: Ledger independent settlement rule

Period-End Closing

Actual cost rate calculation, overhead calculation, settlement, and universal allocations must run per ledger. This is either done manual via single Overhead Accounting apps or automated via Overhead Accounting jobs.

Reporting

Reports in Overhead Accounting offer the possibility to select and review financial data by ledger, since in these reports’ ledger is a filter criterion.

Figure 6: Product Profitability for ledger 2L

Figure 7: Product Profitability for ledger 0L

 

What are the next steps to run parallel accounting for Overhead Accounting?

It’s as simple as this: Start period end-closing jobs per ledger and benefit in several ways:

  • Consistent parallel value flows of overhead costs, no reconciliation effort
  • Higher degree of automation and accuracy
  • Full audit trail of overhead costs
  • Easy to use and simple to configure

Additional Details

For more information on how you can post and calculate overhead with parallel accounting, see Overhead Calculation (Parallel Accounting).

For more information on how you can settle actual costs from WBS elements, projects, or orders in parallel ledgers, see Settlement (Parallel Accounting).

For more information on how you can run allocations per ledger with parallel accounting, see Allocations (Parallel Accounting).

For more information on how you can calculate actual cost rates per ledger with parallel accounting, see Actual Cost Rate Calculation (Parallel Accounting).

For more information on how you can calculate different cost rates per ledger and then use those cost rates to post activity allocations in different ledgers, see Manage Cost Rates (Parallel Accounting) and Manage Direct Activity Allocation (Parallel Accounting).

For more information on how you can reassign costs and revenues per ledger with parallel accounting, see Reassign Costs and Revenues (Parallel Accounting).

For an overview of the available reporting options per ledger, see Reporting (Parallel Accounting).

For information on restrictions regarding these functions, see SAP Note 3033604. 

To view all blog posts from the Universal Parallel Accounting series, see Finance in SAP S/4HANA Cloud 2105.

For more information on SAP S/4HANA Cloud, check out the following links:

  • SAP S/4HANA Cloud release info here
  • Latest SAP S/4HANA Cloud Release Blogs here and previous release highlights here
  • Product videos on our SAP S/4HANA Cloud and SAP S/4HANA YouTube playlist
  • SAP S/4HANA PSCC Digital Enablement Wheel here
  • Early Release Webinar Series here
  • Inside SAP S/4HANA Podcast here
  • openSAP Microlearnings for SAP S/4HANA here
  • Best practices for SAP S/4HANA Cloud here
  • SAP S/4HANA Cloud Community: here
  • Feature Scope Description here
  • What’s New here
  • Help Portal Product Page here
  • Implementation Portal here

Follow us via @SAP and #S4HANA, or myself via @HaukeUlrich and LinkedIn

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