Simple Finance - The Convergence of the GL

Account and the Cost Element

In this post we will look at the convergence of long standing pieces SAP ERP
finance master data, the GL Account and the Cost Element. As anyone that has
worked with SAP CO in the past knows the cost element is key to the controlling
side of SAP. It in an object that allows you to identify the type of activities that can
be done within controlling with that account. They are generally divided into Primary
and Secondary cost elements.

Primary cost elements have an associated GL account and are generally

expense or revenue accounts.

Secondary cost elements exist only in CO and are used for internal
settlements, assessments, and allocations.
When creating a new revenue or expense account in the GL you have to create a
corresponding cost element in CO and typically all you were doing was selecting a
Cost Element Category.
With the Simple Finance Add-on 2.0 (now called On Prem 1503) the traditional cost
element create, change and display transactions are gone. The functions have been
combined in FS00 - Manage G/L Account Centrally. This greatly simplifies the act of
creating a new account and eliminated the need to maintain separate masters.
On the Type/Description screen there is a new field called account type. If you select
either "Primary Costs or Revenue" or "Secondary Costs" a new field will appear on
the Control Data tab for you to enter the Cost element type.
Primary Cost Example:

Secondary Cost Example:

I think this is a good step forward in simplifying the SAP finance master data and
driving the convergence of FI and CO.

Version 1.0 of the Simple Finance Add-on was launched in 2014 and the version 2.0
is launched in 2015 very recently. This should again put to rest some of the
concerns about the future road-map of this new offering.
Some of the highlights of the add-on 1.0 are listed below
a. Revamped Asset Accounting: Simplifies the concept of depreciation areas,
parallel valuation in asset accounting and facilitates parallel reporting by means of
ledger approach as well as accounts approach
b. New GL mandatory: Classic GL no longer supported in Simple Finance. One has
to be on New GL. (Need not be full fledged New GL. Lite version of New GL would
suffice)
c. Concept of Data Archiving replaced with Data Aging (Hot / Cold Partitions of the
Database)
d. A brand new Cash Management Solution, powered by SAP HANA
e. New Asset Accounting is mandatory. Classic AA no longer possible in the new
offering
f. On-the fly summarization reports (from line items)
g. Good amount of overhaul in the Key SAP tables.
h. Option to split COGS in the FI-GL as per the Cost Component Split, etc
Simple Finance Add-on 2.0 will unleash some new changes. Material Ledger is
covered in the add-on 2.0 and it is expected to change the way GL / Cost Element
master is looked at.
In this document, made an attempt to summarize the features / changes introduced
by Simple Finance Add-on 1.0, for various process areas / activities.

Process Area

Sub-Area

Cost Center
Accounting Master Data

Impact

In the activity type master data, predistribution of fixed costs is not

supported for sender cost centers.

Activity Price In the planning versions, tab of price

Process Area

Sub-Area

Calculation

Plan-toProduce

Period End
Close

Impact

calculation, the actual method should be

set as Periodic price .

Splitting
Structure

In the assignments of the splitting

structure configuration, multiple
splitting assignments are not supported.
In the Selection for assignment , Group
is not supported.
In the splitting rules, only splitting
methods 12, 21, 22, 23, 24, and 25 are
supported. The Weighting indicator is
not supported.
In the selection for splitting rules
configuration, version 0 is supported.

Master Data

Origin Group of the Delivered material

must not be changed
Multiple operation sequences and
parallel sequence are not supported.
Operation split for scheduling is not
supported.

Variance
Calculation

Target cost versions other than 0 not

supported
The explanation function provides less
detailed information than before. No
explanation is provided for scrap
calculation
"Write Line Items" should be selected in
the Variance Key definition
Minor differences are not supported.
Primary price variances are not
supported.
Variance categories can be posted to

Process Area

Sub-Area

Impact

different GL Accounts
New T Codes, same as Classic Ones,
with a suffix 'H' (i.e. KKS1H)
Performance improvement of the
Variance calculation program using the
power of HANA
The Close schedules must be updated to
include the new programs
New T. Code KKAOH has been
introduced for calculation of WIP

WIP
Calculation

Using KKAOH, WIP can only be

calculated on production orders, not on
product cost collectors or process orders
New WIP report helps to see the details
of the WIP GL Account broken down
into Primary and Secondary costs of
Production orders
Performance improvement of the WIP
calculation program using the power of
HANA
The Close schedules must be updated to
include the new programs
WIP calculation in only one version
(Legal Valuation) is supported

To take full advantage of the SAP

HANA architecture, assessment cycles
and settlement rules to ensure they are
Assessments & working with account- based profitability
Settlements
analysis
Overhead
Calculation

The standard dependencies (D000

Process Area

Sub-Area

Impact

D080) are supported. The customerdefined dependencies are not supported

A quantity-based overhead rate should
not be referenced by another quantitybased overhead rate.
Object currency conversion is not
supported for quantity-based overhead
rates. In such cases, the object currency
must be the same as the controlling area
currency.
Users need to configure the amount
using the controlling area currency in
the Costing Sheet.
Order and Business Process are not
supported as the object to be credited.
From/To origin are not supported. All
units of measure of the cost elements
defined in the Base must be compatible.
Order-toCash

COGS
Postings

COGS can be split between multiple GL

accounts to mirror the Cost Components

Credit
Management

FI-AR-CR (Credit Management) will be

sunset in next release. FSCM-Credit
Management must be used

Asset
Accounting Technical

Classical AA no longer available. This

applies across the system. New AA
must be used
Enterprise Extension EA-FIN is MUST.
Using New GL is MUST
Leading Valuation can take place in any
dep. Area. No longer necessary to use
Area 01 for this

Process Area

Sub-Area

Impact

SAP EHP7 with business function

FIN_AA_PARALLEL requires us to
use Ledger Approach only. SFIN
Supports both ledger and accounts
approach
ALE transfer is not available in New
AA
The batch input method for transactions
based on AB01 is not available. New
BAPIs must be used. Any existing
interfaces may have to be reworked
New T Codes, same as Classic Ones,
with a suffix 'L'. Old T Codes no longer
available. Auto direct to New T Code if
one uses the older one

Postings

Leading and Parallel Dep. Area can now

post in real time.
- Hence, Concept of Delta Dep.
Area is Obsolete
Asset postings (i.e. separate documents)
can be made separately to each Dep.
Area / Accounting principle, using
AB01L
- The restriction of transaction types
to depreciation areas no longer applies
- User Exit
APCF_DIFFERENT_AMOUNTS_GET
no longer supported
Simplified management of goods that
are to be capitalized in accordance with
one set of accounting principles, but are
to be posted to expense in accordance

Process Area

Sub-Area

Impact

with a different set

The integrated posting of investment
support on assets using FI transactions
is not supported. Tcode ABIFL must be
used
Documents before changeover from
Classical to New AA cant be reversed.
An Inverse posting must be made
Work lists made in AA before the
changeover may not work. Hence, all
pending tasks with the WL must be
processed before the migration or New
WL must be created after the Migration
For all asset postings, all posting dep.
Areas are updated in real time. Hence,
ASKBN is now required only for Dep.
Areas that manage reserves for Spl.
Depreciation only
Joint
Venture
Accounting
(Oil &
Mining)

Not Compatible with New Asset

Accounting

Planning

New Planning Solution brings financial

accounting (FI) and management
accounting (CO) together. Flexible TopDown and Bottom-Up planning function
made available
The ability to aggregate and
disaggregate data quickly makes it
possible to perform simulations and

Process Area

Sub-Area

Impact

forecasting much faster than was

previously possible.
User friendly MS Excel front end and
Embedded BI cube makes planning
easier. Sample BI cubes are integral part
of the SAP now
SAP also delivers a program that
automatically analyzes existing
customer-specific CO-PA dimensions
and generates the corresponding BI
objects.
As this planning solution is completely
new, it has no impact on existing plan
data. SAP will not provide migration
functionality.
Project
Systems

Master Data

To take best advantage of the SAP

HANA selection capabilities, you must
create selection variants

Results
Analysis

Only the following results analysis

methods are supported:
- Revenue-based results analysis
(method 01)
- Cost-based results analysis based on
the % of completion (method 03)
Customer enhancement and the other 15
methods are not supported.
Expert Mode is partially supported.
Only RA in Legal Valuation is
supported
Planned Results Analysis is not
supported.

Process Area

Sub-Area

Impact

Data Archiving made redundant, Already

Archived documents can still be
accessed
Data
Archiving

Data Aging introduced

Cash and
Liquidity
Management

Classic Cash and Liquidity Management

solution is obsolete
New Cash Management Solution on
HANA provides the following new
features
- Bank Account Management
- Cash Position and Short-Term Cash
Forecast
- Embedded Liquidity Planning
- Cash flow and liquidity forecast
calculation powered by SAP HANA
- New user experiences with the Net
Weaver Business Client (NWBC)

Year End
Close

Balance C/f

The program for carrying forward

balances now enables you to initialize
data carried forward previously when
you want to repeat a balance
carryforward

Income
statement by
market
segments

Reporting uses a logical document that

links the financial accounting (FI) line
item, the CO line item, and the CO-PA
dimensions (where available) to provide
an income statement broken down by
market segments.

Reporting

Summarization Data Collection before hand has been

Hierarchies in made redundant

Process Area

Tables

Sub-Area

Impact

CO

On-the-Fly Summarization report has

been introduced
Dynamic Summarization, rather than
Pre-defined Summarization

Summary
Tables
removed

GLT0, FAGLFLEXT, COSS, COSP,

KNC1/3, LFC1/3. (replaced by CDS
Views)

Index Tables
removed

BSIS, BSAS, BSID, BSAD, BSIK,

BSAK, FAGLBSIS, FAGLBSAS
(replaced by CDS views)

Impact on
Custom reports based on above tables
custom reports will continue to work
FI / CO document are now linked at Line
Item level

Logical
document

This facilitates a logical view of the

FI/CO document (Using HANA Live)
via program
FCO_LOGICAL_DOCUMENT