Group Reporting – Statement of Cash Flows – US GAAP (SAP S/4HANA Public Cloud)
Group Financial Statements are prepared to meet internal and external reporting requirements. In case of New York Stock Exchange (NYSE) listed enterprises, group financial statements are required to be presented according to US Generally Accepted Accounting Principles (US GAAP). In addition to Balance Sheet and Income Statements, Statement of Cash Flows etc needs to be provided to Security and Exchange Commission (SEC).
In SAP S/4HANA Public Cloud edition, Group Reporting structures (master data) is initially delivered with SAP Best Practice content oriented towards IFRS only. That is, Financial Statement (FS) item master data and related structures are structured according to International Accounting Standards (IAS). Now, to still meet SEC requirements, SAP master data demands adjustments. As there are quite a few steps involved, leading up to US GAAP compatible structures, I decided to share this in a blog, with focus on Cash Flow Statements.
Group Reporting – Fiori apps
In context of SAP Embedded Analytics, Cash Flow Statement utilizes Fiori apps capable of applying reporting rules (at run-time) presenting Reporting Item Hierarchies in either:
1) Group Data Analysis – With Reporting Rules or
2) Group Financial Statements – Review Booklet (Section: Cash Flow Statement)
Note: “Group Data Analysis – With Reporting Rules” allows, as opposed to simply Group Data Analysis, presentation by Reporting Item (Hierarchies) which is central for Cash Flow Statements.
IFRS Standard Content
Transition from IFRS to US GAAP
Stepwise Approach – G/L Account to FS Items to Reporting Item
Obeying to US GAAP (vs IFRS) requires identifying not only appropriate FS Item to Reporting Item (with hierarchy) mapping but also and even more importantly the identification of G/L account balances belonging to certain positions in the Cash Flow Statement. For that reason, mappings need to be revised and new master data, both FS Item and Reporting Item, in some cases even G/L Account (including reposting of balances in accounting) needs to be created.
- New FS Items
- Remapping G/L Account to new FS Items
- New Reporting Item
- New Cash Flow Selection with assignment of new FS Items to new Reporting Item
- Add new FS Items to existing BS and IS structures (BS, PL)
Note: this rework also includes ultimately updating Reporting Rules in the system
Master Data & Setup
Derivation towards Reporting Item is being enabled via Reporting Rules concept, where Subitem (BS/IS) together with FS Item attribute Cash Flow Selection defines the target.
Cash Flow Selection
Via Central Business Configuration (CBC) setting “Define FS Item Attribute Values” Cash Flow Selections are being defined.
Reporting Item (Define FS Item app)
Completion of setup is only achieved after transporting system settings from D/Q system to P system environment and thereafter assigning Cash Flow Selections to FS Items of type “Reporting Item (REPT)”.
Reporting Item Hierarchy
Finally new Reporting Items require assignment to new Cash Flow Statement structure (hierarchy).
Tips & Tricks
Refreshing Global Hierarchy
When using reporting apps with Cash Flow Statement, beware that SAP delivered reference hierarchy (X2) might not be working straight away even in status “Active” – see below steps for resolution. 😊
Reporting Rules – continuous adjustments
When wanting to update Reporting Rules (Defined Reporting Rules app), system will prevent that change after initial creation (only Display mode possible), however by following below steps (1-4) adjustments will still be possible.
Refreshing Reporting Rules
Keep in mind replicating, when working with gradually fine-tuning Reporting Rules.
Aside from “help.sap.com” more documentation on Group Reporting and Cash Flow Statements is being available via Learning on “Group Reporting – Financial Consolidation” via SAP S/4HANA SAP Fiori Launchpad, as per below.
With SAP S/4HANA Public Cloud (2208) Group Financial Cash Flow Statements can be aligned to US GAAP reporting structures and requirements.
Hope you found this blog helpful, looking forward to hearing your feedback.