User Experience Insights
Advance Compliance Reporting in Central Finance
The Ever-changing World of Tax reporting?
There are legal and tax Reports that need to be generated posted and reported to the Authority/Government by the customers with respect to their legal tax reporting. Different countries have different laws and multiple reporting entities. It is a cumbersome task to manage these reports in a timely fashion. Add to that managing documents posted after the posting date is very difficult. There is also a chance that these documents are missed and not reported. Earlier it was done by running separate ABAP reports manually. These complex, non-uniform existing statutory reports reduce productivity. Customers do not have a consolidated view of their legal compliance situation or a single dashboard.
After reading the blog post reader will understand how some specific legal report cannot be generated in SAP Advance Compliance Tool when it is used on Central Finance. The blog also touches SAP approach to handle this issue with a specific Accounting View of Logistics, its use cases, and some limitation.
Advanced Compliance Reporting (ACR):
Customers currently depend on in-house or partner solutions for many statutory reports resulting in high Total Cost of Ownership (TCO) and integration problems. ACR is a tool to overcome the above channel with the Generation and submission of reports if applicable.
Also, with SAP S/4HANA, a lot of traditional tax and legal reports are going out of Product Support. This is one of the primary reasons, why a customer should implement ACR Reports. The list of legal reports, which are going out of Product Support is defined in OSS Note # 2835816 and 248006
Feature of ACR
- Guided and uniform processes for report generation and submission process
- Complete Audited flow and allow data analysis as pre and post report submission
- Support multiple types of output format as per country requirement: XML, JSON, TXT, XBRL, and PDF.
- If applicable allow real-time submission of reports to Ta authorities (e.g. UK) through SAP Localization Hub
- If Premium version of ACR purchased customer can use Design Time tool to modify the existing report as per requirement and create new report also
Why ACR is different for SAP S/4 CENTRAL Finance(cFIN)?
ACR uses S/4 HANA underlying finance table to generate legal Tax reports. In some countries, ACR uses the underlying logistic table to generate legal tax reports. Now as we know CFIN does not replicate logistic data hence ACR reports which require logistic data were not feasible on CFIN. This causes the difference between ACR reports available for S/4 HANA and Central Finance. In order to overcome logistic data issue SAP comes up with a solution called Accounting View of Logistics (AVL)
For e.g. in the UAE Federal Tax authorities mandate an audit File (FAF) that requires logistic data (e.g. Purchase Order and Sales order details). Central Finance as a reporting solution alone cannot fulfill the logistic requirement for the FAF report hence this report on SAP S/4 HANA and Central Finance would be different in terms of release.
So SAP has created a solution for this by holding logistic data in a specific set of tables name as Accounting View of Logistics (AVL)
Accounting View of Logistics (AVL):
Accounting View of Logistics is used to replicate logistics data from source systems to the Central Finance system. This data is required in order to carry out few operations and reporting requirements in the Central Finance system. Please keep in mind that AVL is the only Subset of Logistic Data. AVL should not consider as an entire logistic implementation and even it uses its own tables to store the logistics-related data. Below standard table for AVL in cFIN.
AVL store below logistics information and can replicate from Source to Central Finance
- Sales orders (including pricing documents)
- Customer invoices (including pricing documents)
- Purchase orders
- Supplier invoices
With help of AVL, a few logistic-based businesses processes can be accomplished in Central Finance e.g. Central Accrual Management, Central Statutory Reporting (ACR).
Use of AVL in ACR:
ACR leverage below three key points to work in Central Finance
- AVL provides operational logistic data from source systems to the Central Finance system.
- Based on tax requirements a subset of data from purchase orders, sales orders, supplier, and customer invoices can be replicated for reporting purposes.
- Initial load, ongoing replication, error handling, key/value mapping, and data provisioning for the tax reports via CDS views are supported.
ACR team always publishes a separate list of reports for Central Finance as per the roadmap. Below is AVL views use in some of the ACR report in cFIN.
Some other use cases of AVL
- Reporting and Analysis requirement on logistic data in cFIN
- Central Purchase Order Accrual management
- Implement Predictive Account in cFIN
AVL has some limitations also :
- AVL concept only support SAP ECC EPH4 and above
- Only one client per source system is supported in one SLT configuration.
- Unless Mapping relation is maintained for the logistic documents (for example WBS data or COPA values), AVL data is not validated against master data or configuration in the cFIN system.
Implementation consideration for ACR with AVL in cFIN
- ACR is not a solution for all Tax reporting: Tax reporting includes many statutory, analytical, and transactional reports.
- ACR is a Global tool but it caters to specific country-related legal reports hence its requirement varies country by country. An individual requirement gathering for each country is very critical.
- All ACR reports do not require logistic data so for many reports there is no difference between Central Finance report and S/4 HANA reports.
- AVL is not a substitution of the Logistics process, it even doesn’t use the actual logistic table in the S/4 HANA system.
- AVL should consider using cases where certain logistic data require to perform a business process in Central Finance (e.g. ACR as part of Tax reporting)
So, in summary, the blog post explains how SAP Advance Compliance Repor is very much available on Central Finance system, and with the use of Accounting View of Logistics customers can generate logistic-specific legal/compliance reports in the Advanced Compliance Reporting tool. SAP publishes a separate list of Legal reports per country for Central Finance specifically.