Purchase Order Accruals – Configuration in SAP S/4 HANA
Purchase Order Accruals Introduction
The Purchase Order Accruals application enables you to calculate and post accruals in General Ledger Accounting automatically.
The functions in Purchase Order Accruals support parallel accounting. This means that you can calculate and post accruals simultaneously according to different ledger groups. You can start an accrual run, which posts all accruals for the various business transactions.
From a technical standpoint, the Purchase Order Accruals application is built on the accrual engine. The purchase order items to be accrued are managed in Purchase Order Accruals. The processes for calculating and posting accruals, on the other hand, are managed in the Accrual Engine.
To post-purchase order accruals, perform the following steps:
- In the MM component, create a purchase order
- The purchase order is then transferred to the Accrual Engine offline or online, and monthly accrual amounts are calculated and displayed in the Accrual Engine
- (Optional) Review and approve, or just approve the monthly accrual amounts
- Post the accrual amounts.
In this blog let us see about purchase order accruals basic configuration.
In Financial Accounting, the functions in Purchase Order Accruals offer you the following benefits:
- Automatic accrual calculation based on purchase order data
- Availability to review and approve the accrual amounts proposed by the system before posting them
- Depiction of complex calculation rules
Customizing Purchase Order Accruals
- Before you use the functions in Purchase Order Accruals, you must make an extensive Customizing setting.
- Additionally, some settings are available to you with which you can adjust the functions according to your needs. For example, you can add user-defined fields (or parameters) for use in the functions.
- The Customizing settings are in Customizing for Financial Accounting under General Ledger Accounting àBusiness Transactions à Accruals Management When calling the respective setting in the Application Component field, select the POAC – Purchase Order Accruals value.
The following Customizing settings for working with the functions of purchase order accruals are mandatory:
- You must have assigned the company code in which you want to calculate and post accruals. This setting is under Basic Settings –> Assigning Company Codes
- You must combine the ledgers in which you want to post accruals in ledger groups. The calculated accrual amounts are then posted in all ledgers of the specified ledger group.
- You then specify the ledger groups in Customizing when defining your accrual item types. The setting for creating ledger groups is under financial Accounting Global Settings –> Ledgers –> Ledger –> Define Ledger Group
- Specify the fiscal years for which changes to accrual objects are possible. This setting is under basic Settings à Close Fiscal Year for Changes to Accrual Objects
- Define your accrual item type. This setting is under basic Settings –> Define Accrual Item Types
- Define a default accrual method for each combination of ledger group and accrual item type. The system proposes this accrual method when creating an accrual object. You define the default accrual method in Customizing under Accrual Calculation –> Define Accrual Methods and you assign them under Basic Settings –> Accrual Item Types à Define Accrual Item Types by entering your method in the Default Accrual Method field.
- If necessary, in addition to the transaction currency (company code currency 00), you can specify additional currency types, which are displayed in certain views in accruals management. The amounts are then calculated on the basis of the currency translation settings defined in Customizing for the general ledger Settings for adding more currency types are under Basic Settings Accrual Item Types –> Assign Currency Types to Accrual Item Types.
- You must have defined the settings for transferring the purchase orders from the Materials Management component to the Accrual Engine. The setting is under accrual Management à Applications of the Accrual Engine –> Purchase Order Accruals –> Transfer of Purchase Orders from MM to the Accrual Engine.
Accrual Item Type
The accrual item type controls the calculation and posting of accruals according to different business views. It defines how the accruals are calculated and posted.
The accrual item type represents the business meaning of accrual items, that is, for example, planned costs, the actual costs, and the accruals (for purchase order accruals):
For purchase order accruals, SAP provides the following accrual item types:
- PLNCST for planned costs
- ACTCST for actual costs
- ACCRL for accruals
To calculate and post accruals, SAP recommends that you use all three accrual item types so that you can always see which values form the basis for calculation. In this approach, the accrual amounts (ACCRL) are calculated by subtracting actual costs (ACTCST) from the planned costs (PLNCST).
You use the accrual item type to control which types of posting are performed for an accrual item. You can assign all types of postings, or only individual postings, to an accrual item type, depending on your business scenario:
- Periodic Postings (PP)
The total amount to be accrued is distributed over the individual periods according to the configured accrual method. If you perform a posting run in a period, the respective partial amount to be accrued for this period is calculated and posted.
- Release Entry (FP)
A release entry (also called final posting) only occurs when you finish an accrual object prematurely. The amount that has not been accrued by the time of the premature finish is posted as the premature finish amount. For this reason, the balance for the accrual object in the accrual account is zero.
The following posting types are relevant if you use utilization and release postings:
- Utilization Postings (UP)
A utilization posting reduces existing accruals amounts by crediting the profit account and debiting the accrual account.
- Manual Release Posting (RP)
A manual release posting occurs when you release accruals. This posting reduces (that is, releases) accruals by posting them to another account, such as a profit account.
The following posting types are relevant if you distinguish between the current fiscal year and previous ones (or, more precisely, between different accrual closing periods):
- Late Utilization Posting (UL)
A late utilization posting reduces existing accruals that were posted in an earlier accrual closing period, that is, typically in a previous fiscal year. This separate posting type is necessary if utilization of accruals from previous fiscal years need to be clearly recognizable in reporting. A reason for this posting could be, for example, the actually utilized accruals prove that the accruals posted in the previous year were really needed and therefore justified.
- Late Manual Release Posting (RL)
A late release posting reduces existing accruals that were posted in an earlier accrual closing period, that is, typically in a previous fiscal year. This separate posting type is necessary if the release of accruals from previous fiscal years needs to be clearly recognizable in reporting. This is relevant for audit purposes, because, for example, a release of accruals implies that the accruals posted in the previous year were too high. This, in turn, means that the profit for the previous fiscal year should have been higher.
- Late Automatic Release Posting (FL)
This type of posting is similar to the late manual release posting, the difference being that the system makes this posting following a user action, for example, when a user changes the status of the accrual object to Prematurely Finished.
You can specify whether the accrual item type triggers full postings or only delta postings. For full postings, at the end of the period, the system makes an inverse posting of the amounts from previous periods and then posts the entire newly determined accrual amount. For delta postings, the system only posts the difference since the last posting from the previous period. In both cases, the posting date is always the last day of the current period. The recommendation is to use delta postings.
Accrual Item Type Settings for Utilization and Release of Manual Accruals
If you use the utilization and release process, you need to map the relevant accrual item types with the suitable actual cost item type. If you use the “planned minus actuals” approach, you also need to map the accrual item type to the planned cost item type.
Regarding the Post Online and Post Periodically (that is, offline) options, we strongly recommend that you use both utilization options. The advantage is that you not only benefit from the instant adjustment of your accrual amounts (online utilization) but also benefit from adjustment postings at period end, if necessary.
You can, however, also select Post Periodically alone. But please note that if you choose Post Online, you also must choose the offline option to ensure correct utilization postings.
As utilization postings are delta postings, you must select the Post Deltas indicator in the Assign Accrual Item Types to Journal Entry Types and Posting Schemas activity. This is also important for correct currency and exchange rate handling.
Accruals are always calculated in the transaction currency and have to be converted if there are other currencies involved. Utilization postings use the same exchange rates as actual cost postings. The system ensures that a periodic posting run at the period end does not change amounts even if the exchange rate is different from the exchange rate when an online utilization posting occurred.
Define accrual item Types and Methods for MM Purchase Order Items
Define for which purchase orders and purchase order items accruals will be posted and which algorithm will be used to calculate accrual amounts, In this Customizing activity, you can define the variants, accrual item types, and accrual methods you need in order to transfer purchase orders to the accrual engine.
In a posting schema, you specify how many line items can be included in an accrual posting. Furthermore, you define the symbolic account that the system uses for which line items. You can also specify the line-item type of a line item.
For the Purchase Order Accruals application, for example, you only require posting schema SAP_ACE_PP, because only periodic postings are made. You can, however, create your own posting schema.
The settings for configuring your posting schemas are in Customizing for Accruals Management under Accrual Postings à Define Posting Schema.
Assigning Posting Schema
You must assign a posting schema to each accrual item type for which accruals will be posted.
In Customizing for Accruals Management, choose Accrual Postings –> Assign Accrual Item Types to Journal Entry Types and Posting Schemas.
For each type of accrual posting that the system will make, create an entry for the corresponding transaction type.
If you want to enable automatic release postings for cases where a user terminates an accrual object prematurely, you also create an entry for transaction type FP.
For standing accruals with utilization for which the manual and automatic release of accruals is also possible, the system makes the following postings: an opening posting, a utilization posting, and if required, a manual release or automatic release. This means you need to create an entry for each of the transaction types IP, UP, RP, and FP
If you want to distinguish between postings for utilization and the release of accruals in earlier periods and the postings in the current fiscal year, you also need to create entries for the corresponding transaction types representing these “late” postings:
Only create entries for accrual item types that make postings. In the Customizing settings contained in the SAP standard delivery, The accrual item types representing planned costs and actual costs (PLANCST and ACTCST) don’t result in any postings, meaning you don’t have to create entries for them.
In the Document Type column, enter the document type to be used in accrual posting.
In the Posting Schema column, enter the appropriate posting schema for the accrual item type, for example, for the types of initial postings, SAP_ACE_IP, periodic postings, SAP_ACE_PP, and final postings, SAP_ACE_FP.
The system uses account determination to determine automatically the accounts for accrual postings. The system uses symbolic accounts to derive the actual G/L accounts for postings.
You can assign the relevant G/L accounts to the symbolic accounts in Customizing for Accruals Management under Accrual Postings –> Account Determination –> Create and Edit Account Determination. Enter the corresponding symbolic account here for your company code, the respective accrual object category, and the respective accrual item type. In the G/L Account column, select the corresponding G/L account for this symbolic account.
Accrual methods define the algorithm on how the periodic amounts are calculated by the Accrual Engine. In this activity, you define your accrual methods that specify how amounts are to be accrued, for example, straight-line or declining balance accruals. You must assign a class specifying the calculation of accruals to each accrual method.
The method with which the amounts to be periodically accrued is calculated. The accrual methods are assigned at the accrual type and accounting principal levels.
Customizing for Reviewing and Approving Accruals
SAP S/4HANA provides the default settings for the accruals review and approval processes. However, to meet your business requirements, you can use the following Customizing activities to adapt the accruals review and approval defaults:
- Define Reasons for Adjusting Amounts
- Define Threshold Variants
- Define Time Interval Variants
- Enhance Authorization Check Logics
Define Reasons for Adjusting Amounts
You can define additional reasons for adjusting an accrual amount. If you manually adjust the amount, for example, in the managing accruals view, you must provide a reason for making such changes.
To create an entry for defining reason, perform the steps as follows:
- Choose Define Reasons Why Adjusting Periodic Amounts
- Enter an application component
- In the edit mode, choose New Entries
- Specify a reason code and enter the description for the reason
- (Optional) Select Comment Mandatory if you need comments for this reason
- Save your changes
Define Threshold Variants
You can define thresholds for accrual amounts that need to be manually reviewed. To define the lower limit and the upper limit of a threshold, you must create a threshold variant that you can assign to company codes, item types, ledgers, and currency types.
When you create a threshold variant, you need to specify values for the following fields:
- Upper Threshold Amount
- Lower Threshold Amount
If the accrual amount in a given period is either equal to or above the upper threshold, the accrual amount needs manual approval. If the accrual amount in a given period is below the upper threshold, but above or equal to the lower threshold, then the system automatically approves the accrual amount.
If you don’t want the system to approve accrual amounts automatically, you can enter the same amount for both the upper and lower threshold amounts. This prevents the system from approving accruals automatically and makes it necessary to approve them manually.
Define Time Interval Variants
You can define intervals of date and time (time slots) in which the review and approval of the accrual amounts for a given period are performed. For each period, you define a separate time slot for review and one for approval. The system uses the key date field as the period end date to determine a period. The key date must be the last date of the interval of dates that are defined by the frequency.
Enhance Authorization Check Logics
You can implement specific logic for the authorization checks for reviewing and approving accruals at the end of a fiscal period. The following methods are available:
DETERMINE_USER_ROLE With this method, you can determine the user’s role. The EV_USER_ROLE parameter can be used to indicate the possible user roles.
SAP provides default roles as follows:
01 Purchase Order Owner
02 Cost Accountant
03 GL Accountant
An accrual object contains all the data that is required to accrue a business transaction. The data can be used to control the following processes for this business transaction:
For accruals for purchase orders, the accrual object is always a purchase order.
An accrual object contains all the data for an individual business transaction. Its structure resembles a contract or purchase order, that is, in the same way, that these contain contract items or order items respectively, the accrual object contains one or more accrual sub-objects. Furthermore, an accrual sub-object contains the account assignment for the respective contract- or purchase order item.
Various accruals can be calculated and posted from this data:
Total amount to be accrued, Total quantity to be accrued (as optional additional information, it is not used to calculate the accrual), Life over which the amount is to be accrued.
In the same way as a purchase order item, you cannot delete an accrual sub-object if postings have already been made. You can only preselect a purchase order item for deletion. Then the system sets the status of the accrual sub-object to obsolete and the associated amount to zero.
If you have any questions in specific then please feel free to ask. I would appreciate your feedback on the document, which will help me to enhance further. Details of the Purchase order Accruals process can be found under Scope item 2VB in SAP Best Practices Explorer. The applicable country version should be selected. If you want to learn more about Purchase Order Accruals or Accruals Management in general, check out the SAP Help Portal under purchase order accruals.
Nice blog Congrats....
This is a very nice blog, isn't there any Business Configuration set(SCPR20) available for importing standard configuration.
So I have a question related to this, but, on the Review Purchase Order Accruals Fiori Application. When executing the application, one of the required fields is Fiscal Year Period in the format PPP.YYYY
This value is already defaulted when you open the application as 000.2022 (Or whatever year you are in). Where is this configured or determined from? In the subsequent error popup, you can close the message, and then change the Fiscal Year Period value, after which the data is returned.
Review Purchase Order Accruals - F3552
we currently have huge problems withe the POA when it comes to multiple account assignment in the PO. Could you suggest some sources where I could find for solutions? SapNotes recent? Etc.