Accrual Engine

AC205 Lesson: The AccruaI Engine
Lesson: The AccruaI Engine

Lesson Overview
This lesson describes how the Accrual Engine works.
Lesson Objectives
AIter completing this lesson, you will be able to:
Describe the generic Iunctions oI the Accrual Engine
State the advantages oI using the Accrual Engine in comparison to normal
accrual procedures
Activate an application component oI the Accrual Engine Ior a company code
List the required closing activities Ior the Accrual Engine
Business ExampIe
You will learn about how the Accrual Engine works.
Figure 58: AppIication Components of the AccruaI Engine
The Accrual Engine is a generic tool Ior calculating and creating accrual postings.
As input it receives basic data that describes the subject matter to be accrued,
Ior example, data Ior a rental agreement. The Accrual Engine uses this data to
calculate the accruals and creates the related periodic postings.
2006/Q2 2006 SAP AG. All rights reserved. 165
Unit 5: Profit and Loss AC205
Just like the motor oI a machine, the Accrual Engine itselI is not visible Ior the
end user. Instead, the user works with the application components oI the Accrual
Engine. The subjects to be accrued are entered there and are Iorwarded to the
Accrual Engine.
SAP develops and delivers the application components oI the Accrual Engine.
They cannot be developed by customers. The application component always
reIers to a special accruals scenario and provides an optimized user interIace
Ior this scenario.
The Accrual Engine is used amongst other things Ior:
Manual Accruals in Financial Accounting
Provisions Ior Awards
Lease Accounting
Intellectual Property Management
Additional application components will be delivered in Iuture extensions.
Figure 59: Interaction with the AccruaI Engine
The diagram shows the interaction between the Accrual Engine and the
application component.
166 2006 SAP AG. All rights reserved. 2006/Q2
The Accrual Engine stores two types oI data:
Basic Data
The basic data consists oI a description oI the subject to be accrued (accrual
object) and all other inIormation required Ior carrying out the accruals. Basic
data is time-dependent.
Accrual Engine Documents and Totals Records
All accruals postings create documents in the Accrual Engine (Accrual
Engine documents) and update Iiscal year-speciIic totals records. The
Accrual Engine documents automatically create corresponding documents
in FI. Various levels oI summarization are possible. II errors occur during
the FI update, you can trigger this again manually.
Usually, two main processes are triggered Irom the application component:
Create/change basic data Depending on the Customizing settings, an
opening posting may be made immediately.
Periodic start of the accrual run or reversal oI an accrual run
An Info system gives you direct access to totals records and documents in the
Accrual Engine. You can also carry out accruals simulations.
Figure 60: Advantages of the AccruaI Engine
In comparison to standard methods oI carrying out accruals, the Accrual Engine
has several advantages.
The Accrual Engine calculates the accrual amounts automatically. You do
not have to calculate the amounts manually and enter them as Iixed values in
recurring entry documents.
You can make periodic accruals postings automatically as
perIormance-optimized mass data processing using an accrual run. The
delta amount oI the cumulative accruals minus the accruals already carried
out is posted. II the amount to be accrued changes, the accruals amounts
are adjusted automatically.
You can simulate planned Iuture accruals. Depending on how the application
component is conIigured you can also carry out complete simulation
scenarios.
The Accrual Engine supports parallel accounting with either diIIerent
account areas or parallel ledgers.
An extensive InIormation System provides inIormation about planned
accruals and accruals that have already been carried out.
Figure 61: Activate the appIication component
To activate an application component oI the Accrual Engine you have to carry out
the following Customizing activities:
The application component must be assigned to the company codes that
are to use it.
The required accounting principles must be deIined iI this has not already
been done.
The application component must be assigned to the required combination oI
accounting principle and company code.
The current Iiscal year must be open Ior the application component.
Figure 62: CIosing Activities of the AccruaI Engine
The Accrual Engine requires only a small number oI closing activities oI a purely
technical nature.
Reconciliation: Accrual Engine/General Ledger
Here, Accrual Engine documents and General Ledger documents are
reconciled with one another to check whether the transIer to the General
Ledger was complete and without errors.
Balance carryforward
At the end oI the Iiscal year you have to carry Iorward the balances oI the
accruals objects into the next Iiscal year. This has nothing to do with the
balance carryIorward in the General Ledger.
Lesson Summary
You should now be able to:
Describe the generic Iunctions oI the Accrual Engine
State the advantages oI using the Accrual Engine in comparison to normal
accrual procedures
Activate an application component oI the Accrual Engine Ior a company code
List the required closing activities Ior the Accrual Engine
AC205 Lesson: ManuaI AccruaIs
Lesson: ManuaI AccruaIs
Lesson Overview
This lesson describes the application component 'Manual Accruals.
Lesson Objectives
Describe how the application component 'Manual Accruals works
DeIine subjects to be accrued as accrual objects
Describe the basic settings oI the application component 'Manual Accruals
Business ExampIe
You have been asked to make the basic settings oI the application component
'Manual Accruals.
Figure 63: ManuaI AccruaIs with the AccruaI Engine
In the application component 'Manual Accruals, you create the basic data
manually via a simple user interface.
The basic data is usually subject matter to be accrued based on diIIerent contracts,
such as rental agreements, insurance contracts, and so on.
Hint: There are also two Iunction modules that you can use to import
accrual objects Irom a database table via a batch job. These are:
ACACOBJECTCREATEEXT to create an accrual object
ACACOBJECTMODIFYEXT to change an accrual object. II it does
not exist yet, it is created.
A report must be written to select the data, export it, and adjust it to the structure
oI the Iunction modules. The Iunction modules can then be called up to load the
data into the Accrual Engine. You can also transIer legacy data this way (Ior more
inIormation read the IMG documentation).
Figure 64: DeferraIs
You have to create deferrals when an expense or revenue is posted in the current
period, but is incurred or earned partly or completely in the Iuture.
The slide shows an example oI a deIerral where an expense invoice Ior t 120
is received at the start oI the year and posted in the Iirst period. However, the
invoice covers a contractual service that is used throughout the entire year (Ior
example, insurance). The expense must thereIore be distributed over all periods oI
the Iiscal year equally.
Figure 65: Posting DeferraIs
Following on Irom the example on the previous slide, the posting Ior the deIerrals
is as Iollows:
The invoice Ior t 120 arrives in Accounts Payable in the Iirst period and is posted
there. The posting record is:
Expense to Jendor
Using an opening posting, the entire amount is transIerred Irom the expense
account to an account Ior invoice deIerral items (ARAP). The posting record is:
Prepavments and Accrued Income to Expense
During period-end closing, part oI the amount is posted back to the expense
account Irom the prepayments and accrued income account, which means that the
prepayments and accrued income are reduced. Posting record:
Expense to Prepavments and Accrued Income
II the contract is terminated prematurely, the entire residual amount is posted to
an expense account. Posting record:
Expense to Prepavments and Accrued Income
Figure 66: AccruaIs
You have to create accruals when an expense or revenue is to be received in the
Iuture, but is incurred or earned partly or completely in the current period.
The slide shows an example oI an accrual where an expense invoice Ior t 120 is
received at the end oI the year and posted in the last period. However, the invoice
reIers to a service that is used during the entire year. The expense must thereIore
be distributed over all periods oI the Iiscal year equally.
Figure 67: Posting AccruaIs
The posting record Ior accruals is 'Expense to Other Payables (or provisions) in
each period. It is posted to the account
Other payables: II you are certain about the reason and amount oI the accrual
Provisions: II you are uncertain about the amount and/or reason oI the
accrual and can only estimate it
In each period in which you carry out accruals, the credit balance on the account
'Other Payables (or Provisions) increases.
When the invoice is Iinally received, it is posted as
Other pavables (or provisions) to vendor The other payables are thereby converted
into real payables.
Figure 68: Definition of the Subject Matter to be Accrued
The subject to be accrued is deIined as an accrual object. You make this deIinition
manually in the application component 'Manual Accruals. Accrual objects in
this application component are identiIied uniquely Ior each company code using
an accrual object number Irom a deIined number range.
The accrual objects are grouped in accrual object categories Ior manual accruals.
These summarize the subject matter oI similar accrual objects. For example,
insurance contracts (accrual objects) can be assigned to the accrual object category
'Insurances.
You can use accrual object categories
As a navigation level to Iind accrual objects more easily
To assign special customer-deIined parameters that describe the accrual
object in more detail
Each accrual object can have several accrual items. An accruals item describes
how a related accruals type (usually costs or revenues) is accrued using a speciIic
accounting principle.
Figure 69: AccruaI CaIcuIation
The accrual is calculated Ior each accrual item, Ior each combination oI accrual
type and accounting principle speciIied. In addition to the amount to be accrued
and possibly also a quantity to be accrued, the accrual item contains an accrual
method.
A Iunction module is deIined Ior the accrual method, and this calculates the
accruals. For the 'Manual Accruals area, several Iunction modules are delivered.
However, you can also develop your own Iunction modules Ior the accruals.
The Iunction modules delivered that you can also use Ior manual accruals begin
with ACEDS* and are listed on the slide.
You can also deIine derived accruals types. These accruals amounts are calculated
Irom the accrual amounts oI other accrual types and not directly. However, derived
accrual types are not particularly relevant Ior manual accruals and are more
important Ior other application components.
Lesson Summary
You should now be able to:
Describe how the application component 'Manual Accruals works
DeIine subjects to be accrued as accrual objects
Describe the basic settings oI the application component 'Manual Accruals
Lesson: Posting ControI and Account Determination
Lesson Overview
This lesson explains how to conIigure the posting control and account
determination Ior the Accrual Engine.
Lesson Objectives
DeIine the posting control oI an application component in the Accrual Engine
ConIigure the account determination oI an application component in the
Accrual Engine using rules
Business ExampIe
The employees in Financial Accounting want to show you the diIIerent posting
options available with an application component.
Figure 70: Posting ControI
AC205 Lesson: Posting ControI and Account Determination
The posting control is deIined Ior each
Company code
Accounting principle
Accrual type
You deIine
How frequently accruals are carried out (Ior each posting period, daily,
monthly, quarterly, every six months, annually)
The level oI summarization Ior postings beIore the update to FI You can
make the Iollowing settings
No Summarization: A separate line item is created Ior each accruals
item.
Summarization at accrual object level: A line item is created Ior each
accrual object.
Maximum Summarization: The postings are summarized to the level
oI diIIerent additional account assignments.
Figure 71: Account Determination Task
The purpose of account determination is to
Determine the document type
Determine the debit account (here: target account)
Determine the credit account (here: start account)
For each accrual type, you deIine in Customizing which postings are to be made
automatically and, thereIore, Ior which postings account determination is required.
None (the accruals are calculated in the Accrual Engine, but not posted)
Only the opening posting
Only periodic postings (useIul, Ior example, Ior accruals)
All (opening posting, periodic accruals, and - iI the accrual object is
terminated prematurely - a closing posting)
For parallel accounting, the Accrual Engine supports
Parallel accounts
Parallel ledgers
For parallel accounts, you must conIigure the account determination oI the
Accrual Engine accordingly, that is, the accounts must be Iound depending on
the accounting principle.
For the parallel ledger solution, you have to assign a special ledger Ior the
accounting principle in Customizing Ior parallel accounting.
Figure 72: Derivation RuIes
Accounts are determined using derivation rules. These rules consist oI
Conditions under which the derivation rule is executed (optional)
Determination oI fields used in the derivation rule Here you deIine
Source fields (derivation rule input) All Iields Iilled Irom the Accrual
Engine.
Target fields (derivation rule output) All Iields that must be Iilled Ior
successIul account determination, or user-deIined parameters that you
can use Ior sequential derivation rules.
The rule entries themselves that derive the input Ior the target Iields Irom
the content oI the source Iields.
In the case of manual accruals (application component ACAC):
You deIine parameters as required in the Data Dictionary structure
ACAC_PARAMETERS. In the standard system, this table contains one
parameter only with the name 'EXAMPLE. You can create additional parameters
by Iilling the corresponding Iields in this DDIC structure. Instead oI using this
structure directly, however, you make an entry in the INCLUDE structure
CI_ACAC_PARAMETERS. The new Iields must be customer-deIined Iields
and start with Y or Z. Once you have activated the changed INCLUDE structure,
you can assign the new parameter to one or more accrual object categories and
maintain it in the corresponding accrual object.
Figure 73: Account Determination RuIes
The derivation rules are summarized in a set of rules. Depending on how the
derivation rules are deIined, they are processed either in parallel or sequentially.
Parallel derivation rules are processed sequentially and determine
independent results.
Sequential derivation rules must be created in the correct order, because
their results are cumulative.
Figure 74: ParaIIeI Derivation RuIes
The order in which parallel derivation rules are created and processed is
irrelevant, since their results are independent oI one another. Examples are:
Derivation rules Ior diIIerent accrual objects that can be diIIerentiated by
means oI user-deIined parameters. In the conditions, the system queries the
content oI the user-deIined parameters (Ior example, Parameter 'Rents?)
and the derivation rule is only executed iI the condition is IulIilled.
Derivation rules Ior diIIerent elements oI the accounting document, that is,
one rule Ior the document type, other rules Ior the accounts.
Figure 75: SequentiaI Derivation RuIes
The order in which sequential derivation rules are created and processed is
important. Examples are:
Derivation rules Ior account determinations with diIIerent levels oI detail,
that is, the Iirst derivation rule provides a very basic account determination,
the second a more detailed account determination Ior certain transactions,
and the third a very detailed account determination Ior other transactions.
Use oI extended account determination. Using the extended account
determination you can summarize combinations oI source Iields with a
derivation rule Ior characteristic combinations. In a second derivation rule,
account symbols are determined Irom characteristic combinations. In a third
derivation rule, the accounts are derived Irom the account symbols.
Exercise 13: AccruaI Engine, ManuaI
AccruaIs
Exercise Objectives
AIter completing this exercise, you will be able to:
Post Accruals using the Accrual Engine
Business ExampIe
Your company code AC## (## your group number) has taken insurance which
costs 6000 units oI your house currency each year. The insurance amount Ior the
current year was paid in Iull in the Iirst month oI the year.
Task:
Post the accrual Ior the insurance amount with the Accrual Engine.
1. Create an accrual object Ior company code AC## (## your group number).
Choose the accrual object category Z_INSURANC. Enter Accrual for
Insurance Contributions Warehouse ## (## your group number) as
the explanatory text Ior your accrual. You take the responsibility Ior the
accrual object yourselI.
Use your cost center T-A20A## Ior the account assignment (## your
group number).
For a time-based accrual, it is important to know over which period an
amount is to be distributed. This period extends over the current year.
Choose accrual type INSURA Ior your insurance contributions. The legal
principle to be used Ior the Iinancial statements is the local accounting
principle LOGA. Your company has signed an insurance contract that costs
6,000 EUR per year. You want to create accruals Ior this amount.
2. Choose 'Check and Simulate'. As the parameter Ior the simulation oI the
allocation posting, choose 01/01 oI the current year. The period is to be
determined Irom this key date. Look at the results oI your simulation.
3. Save your accrual object.
Caution: Make a note oI the number oI your accrual object.
Look at the accounting document. What is the entry in the document header
text? What is the text in the line item? From the accounting document, go to
your original document ( Accrual Engine document) which was created by
the Accrual Engine.
Continued on next page
4. Display the line items oI the Accrual Engine in the inIormation system oI
the Accrual Engine. First select only actual values Ior your company code
and your accrual object. Then select the simulated values Ior reporting key
date 03.31 oI the current year.
5. Execute an accrual/deIerral run Ior the Iirst posting period.
Start your periodic accrual/deIerral run. Restrict the general selections to
your company code, accounting principles, accrual type, and accrual object
number. As the key date Ior the accrual, choose 01.31 oI the current year.
First carry out a test run, and then an update run.
In the inIormation system, display the totals and the line items oI the Accrual
Engine. Restrict the selection to your accrual object number.

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AC205 Lesson: The AccruaI Engine

Lesson: The AccruaI Engine

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