First Steps in SAP S/4HANA Universal Parallel Accounting

2.1   Parallel accounts

SAP has been recommending the use of parallel ledgers since the introduction of the new general ledger back in 2005; however, many organizations have continued to use only the leading ledger (ledger 0L) and meet their parallel accounting requirements by identifying the purpose of their various G/L accounts by means of either a prefix (first digit) or a suffix (last digit). Figure 2.1 shows a simple example of this approach where the prefix I identifies IFRS-specific accounts, and the prefix L identifies local GAAP-specific accounts. Accounts without a prefix or suffix are considered common accounts (used by all accounting principles).

Figure 2.1: Parallel accounts using prefixes as separators

The challenge with this approach is to select the correct G/L accounts for the required purpose. However, all Financial Accounting reports are presented using a financial statement version, so you can use a different financial statement version to group the relevant G/L accounts for each country, including the specific accounts and the common accounts to deliver a complete picture for the required purpose.

Automatic account determination for goods movements, sales, and so on, generally updates the common accounts, but you will find that where a difference is expected, the G/L account can be set with respect to the accounting principle, so the posting rules for results analysis, for example, reference an accounting principle. If you choose this approach, then it makes sense to use different cost element groups within your allocation cycles and settlement schemes to ensure that the purpose of the allocation is clear in each case.

The preferred approach, however, is not to work with parallel accounts, but rather to use the common accounting principle for business transactions in the leading ledger, and the local accounting principle for business transactions in an additional ledger. This leads to more data records, because instead of recording business transactions to the common accounts once, the same transaction (e.g., customer invoice) is recorded in both ledgers with an identical value, while the specific valuations (e.g., currency adjustment) are updated to the appropriate ledger.

One of the most common questions in this context concerns the availability of transition tools in order to move from an account-based to a ledger approach. There is a standard service in SAP ERP to perform the migration within the new general ledger (migration scenario 8), but there is not yet a tool within SAP S/4HANA to migrate from an account-based solution to a ledger-based solution. You might have to resort to a consulting solution if you have already made the move from SAP ERP to SAP S/4HANA and also kept your legacy account-based approach, because the migration from SAP ERP to SAP S/4HANA does not change the existing ledger structure, but simply merges the Financial Accounting tables and the controlling tables into a single document which is then enriched with derived reporting dimensions, such as profit centers, functional areas, and trading partners.

Another source of confusion is the idea of a local chart of accounts in contrast to a corporate chart of accounts, because many countries have requirements concerning account numbering, and so on. It is generally more efficient for international organizations to use a common chart of accounts to ensure that all subsidiaries “speak the same language” when they record their business transactions, and to use the Alternative Account field in the G/L account master data to meet local reporting requirements. Often, in legacy implementations, there is a tendency to overload the account by constantly adding too much information to handle new requirements, when what is needed is a solid accounting backbone with a clear purpose. When you work with Universal Parallel Accounting, the purpose is captured via the ledger.