New G/L Functionality in ERP 6.

New G/L Functionality in ERP 6.0

BY:
Sakthy Murali
SAP FICO CONSULTANT
DEXLER INFORMATION SOLUTIONS PVT LTD

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Index

1. Abstract: .....................................................................................................................................................................3
2. Keywords: ...................................................................................................................................................................3
3. Introduction: ................................................................................................................................................................3
4. New G/L Functionality Overview:................................................................................................................................3
5. Parallel Valuation:.......................................................................................................................................................5
Parallel Accounting: ....................................................................................................................................................5
Segment Reporting:....................................................................................................................................................6
Scenario: ....................................................................................................................................................................6
Document Splitting: ....................................................................................................................................................7
Document Splitting Characteristics: ............................................................................................................................8
Zero Balance Indicator: ..............................................................................................................................................8
Mandatory Field: .........................................................................................................................................................8
Drilldown Reporting for Segments: .............................................................................................................................8
6. Real Time Integration with CO:...................................................................................................................................9
7. Fast Close: .................................................................................................................................................................9
8. Figure 7 : Success story of XYZ Ltd (India), which migrated to the New G/L functionality ....................................... 10
9. Summary: ................................................................................................................................................................. 10
10. References: .............................................................................................................................................................. 10

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1. Abstract:

In this topic, we would discuss about the New G/L Functionality and its advantages.

2. Keywords:

Parallel Accounting
Segment
Scenario
Document Splitting

3. Introduction:

The New G/L Functionality in ERP 6.0 came as a solution to the customers who were finding it difficult to operate different components to
meet the international/industry-specific standards. The increasing importance of IAS/IFRS also heightened the need for improved quality.

4. New G/L Functionality Overview:

New G/L in SAP 6.0 is a unified world compared to the multiple applications supported by the Classic G/L in SAP R/3 enterprise. It is a
combination of Classic G/L and the Special Purpose Ledger.

From the classic G/L, the enhancements done to the New G/L are given below:

Parallel Valuation
Segment Reporting
Real Time Integration with CO
Fast Close

Some of the advantages of the New G/L are:

New G/L facilitates a single unified solution. This does not require a separate cost of sales ledger, special-purpose ledger, reconciliation
ledger or a profit-center ledger;
• It enables a parallel valuation which can meet the legal requirements (IAS/GAAP);
• The New G/L has expedited the tedious reconciliation process between various ledgers;

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• It facilitates multi-dimensional reporting with very less manual effort;

• It enables Transparency.

Online Split
Overviewew

Dr. Cr.
Dr. Cr. X 600 L6 (Leading Ledger
1000 Y 400 – For IFRS)
X 600
Y 400 X 600 0L (Non-leading
Y 400 ledger for US GAAP)

Figure 1

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5. Parallel Valuation:

The New G/L supports Parallel Accounting by using either parallel accounts or parallel ledgers. This choice depends on the business
scenario. Both the selections are equally effective and competent.

Parallel Accounting:

Parallel Accounting enables you to perform valuations and closing preparations for a company code according to the accounting principles.
For example, let us assume a US Subsidiary is headquartered in India. The company has to create financial statements according to IAS
(Indian Accounting Standards) as well as US GAAP. So, Parallel Accounting is a solution for managing two parallel accounting principles.

Primary Process (Invoices, Payments, and day-today transactions): Parallel Accounting refers to a single document, which is created for all
parallel ledgers for primary process. The fiscal year variant may differ from one ledger to another.
Secondary Process (Currency Valuation, Carry Forward etc): Parallel documents are created ledger-wise. There can be different settings
for the valuation, fiscal year variant and for any other selected dimensions.

Parallel Accounting by using Parallel Ledgers:

The New G/L allows any number of ledgers. New G/L enables:
Postings in one ledger
Postings into multiple ledgers

Figure 2

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Segment Reporting:

A segment is a division of a company for which you can create financial statements for external reporting. Typically, companies use
Segments if there are too many profit centers or if the profit centers are engaged in other activities.

Segment reporting is aimed to give a detailed insight of the various business activities in a company. Segment reporting helps to
understand the performance of the company, forecast and anticipate the revenues and risks respectively.
The accounting principles US GAAP and IFRS require companies to perform segment reporting.

US GAAP requires a complete balance sheet at the segment level. The segment is defined as a subarea of a company with activities that
are regularly used by management for profit assessment and resource allocation purposes.
IFRS also has the same requirements for segment reporting as US GAAP.

The segment is derived from the Master record of the profit center. “Segment” is released only in combination with “Profit Center”. If no
segment is specified manually during posting, it is determined from the “Profit Center” master record. The business area or the profit
centers can be used as alternatives.

The Segment Reporting is made possible only through:

Scenarios and
Document Splitting

Scenario:

‘A Scenario is a combination of customizing settings from different business views. Each business view specifies the posting data, which is
transferred from different application components to the General Ledger Accounting’ - In simple words, a scenario decides which field
would be updated in the General Ledger during a posting.

A ledger can be assigned to one or more scenarios;

You cannot define your own scenarios;
Segment is also one of the scenarios.

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Figure 3

Document Splitting:

Document Splitting is the pre-requisite for creating financial statements at any time for Segments. The system splits the documents based
on the document splitting rules. The configuration of these rules would help split the document in the defined ratios.

There are two views of a document when the New G/L is active – Entry View and the General Ledger View. The Entry View is only visible
to the sub ledgers. Document splitting is relevant in the General Ledger View only.

A quick overview of the required steps in Document Splitting:

Activate Document Splitting – This activation is done at the client level. You can activate/deactivate document splitting for the company
code(s) also.
Inheritance is activated – The name itself indicates the activity of “Inheritance”. If this field is activated, the entities projected in the first
item get inherited to the other line items as well.

Figure 4

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Document Splitting Characteristics:

The Customizing for “Document Splitting Characteristics” are used as per the dimensions for the required balance sheets. These
characteristics are based on the scenarios assigned to the ledger.

Zero Balance Indicator:

When this indicator is selected, the system creates additional clearing items to ensure that the document is balanced. This is an important
field as it ensures a financial statement without inconsistencies.

Mandatory Field:

If this indicator is set, the “Document Splitting” becomes mandatory in all postings. This means that the system allows the posting only if
the required account assignments (defined in a ledger) are defined.

Figure 5

Drilldown Reporting for Segments:

You can use standard drilldown reports for Segment Reporting. The given standard reports are available:
Segment : Actual/Plan/Variance
Segment: Plan/Plan/Actual
Segment : Key Figures
Segment : Comparison : Return on Investment

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6. Real Time Integration with CO:

The SAP R/3 Financials was designed to manage both Financials (FI - Financial Accounting) and Controlling (CO - Management
Accounting). There was a clear-cut distinction between the two sub-processes. But over a period of time, they became more integrated and
it was tougher to distinguish the difference.

The New G/L enables the integration of FI and CO in real time. This has relegated the need of running the reconciliation runs (KALC)
during period-end closing. The faster period-end closings are evident in the Profit Center Accounting cross-cost-center controlling activities
that involve different profit centers.

Figure 6

7. Fast Close:

The New G/L has improved the closing process in a significant manner. The enhancements in the New G/L has automatically simplified
the closing procedure, which otherwise is a tedious task. Some of the highlights which trigerred the Fast Close are:

Document Splitting and its Zero Balance Indicator that complete the reporting requirements at the time of posting itself;
No additional runs required for the reconciliation between FI and CO;
Ledger-Specific Postings/Postings according to the required accounting principles – These postings are very much relevant for the closing
process.

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8. Figure 7 : Success story of XYZ Ltd (India), which migrated to the New G/L functionality

XYZ wanted to take advantage of the document splitting

features and the real-time integration between Financial
accounting and Controlling.

Result : XYZ can now automatically split accounting line

items per document for each company profit center.
Because of this, the period adjustments to the balance sheet
and profit and loss statement are not required. This means
that document splitting is done real time!!!

Take Home : Greater visibility of AR and AP through their

profit centers

9. Summary:

We have discussed about the New G/L Functionality and its benefits in a compact overview. The New G/L component is optional for
existing customers. The SAP system offers the New G/L Accounting which is an interesting alternative in General Ledger Accounting with
mySAP ERP Central Component.

10. References:

http://service.sap.com

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