The New GL concept covers all the above mentioned functions and requirements in one place, while continue providing all the existing functions.
New GL functionalities are part of ECC 6.0 version. However, we have done only technical upgrade from earlier 4.7e version to ECC 6.0 and not the functional upgrade. Hence, to reap the benefits of ECC 6.0 fully, we must go for the under-mentioned New GL functionalities offered by it.
Various additional functionalities with the introduction of New GL:
- Document Splitting
Today, in the current SAP R/3, Vendor line items and Customer line items (except special GL accounts) in a financial document do not retain profit centers. Through month-end closing activities, Vendor and Customer open line items are transferred to Profit Center accounting via F.5D and 1KEK transactions. This means that, there is no real-time transfer of profit center to PCA. Nor FI do retain any profit center for these accounts at all. Tax Line items bring profit center from either substitution or default profit center assignment (3KEH).
In the New GL scenario, for each financial account document, document splitting functionality applies account assignment information (profit center) to the non-assigned GL accounts (Vendor, Customer and Tax line items in particular and any other accounts not assigned due to any reasons, in general).
Document splitting function is based on the following model.
Accounting documents, in most of the cases, contain GL accounts with assignments. That is, accounts of expenses and revenues. Such accounts (i.e. Expenses or revenues) do provide dependent GL accounts (i.e. Accounts payables, Account receivables and tax accounts) with account assignments (profit center) based on the context (i.e. invoice or payment). Account assignments from original processes are supplied to the subsequent processes.
For example, Account assignment (profit center) is passed on from GR/IR account to Vendor line item in invoice and the profit center from invoice is passed on the vendor line item in payment.
- Balanced books (zero balance) by dimensions like Profit Center, segment, Business area etc.
Today, in the current SAP R/3, system does not ensure that every financial accounting document is balanced by profit center or segment or business area. That is, balance is not zero, profit center-wise or segment-wise or business area-wise in a financial document. As a result, any profit center report does not provide zero balance financial information (trial balance).
In the New GL, every financial document can be ensured to have a zero balance by profit center, segment or business area, depending upon the business requirements. This functionality ensures drawing out balance sheet at Profit center level, segment level or business area level.
In a company where different steams of business are being carried on, local accounting standards do require reports on segment-wise or business-wise. This requirement is ensured to be met through balanced books by different dimensions (profit center, segment, business are etc.).
- Real-time integration of Financial Accounting with FI:
Today, in the current R/3, there is no real time integration of CO with FI, though the reconciliation of CO and FI is ensured through reconciliation ledger period-end activities.
In the New GL, real-time integration of CO with FI is ensured. This ensures transfer of cross-entity controlling postings to general ledger in real time. This transfer allows continuous reconciliation of Cost Accounting books with financial books and removes the need for any subsequent reconciliation. This again ensures balanced books by different dimensions as well.
Real time integration function works on the following model. As we know, there are many activities which are only internal to CO. The examples are Cost allocation through distribution, assessment and overhead surcharge application, settlement of costs from one cost object to another cost object etc. These business transactions do create postings only in CO.
Through real-time integration, system passes a corresponding FI document for these CO documents, if and only if the posting involves any cross controlling entities like different profit centers, cross company codes etc.
- Parallel Ledgers:
Today, in the current R/3, meeting the requirements of drawing out financial statements based on other accounting principles like IFRS, US GAAP etc. are met thorough separate SAP application, i.e. Special Purpose Ledgers.
In the New GL scenario, this is clubbed in FI general ledger itself. Consequently Ledger concept has come into play.
We are now able to create different Ledgers for different accounting principles. That is, one ledger for Local GAAP, one for US GAAP, one for IFRS, one ledger with different fiscal year other than the one being used in the company code etc. In SAP terminology, these are called Leading Ledger and Non-leading Ledgers. The ledger for Local GAAP is called Leading Ledger and all others are non-leading ledgers.
Posting logics to various ledgers:
All FI postings will invariably go to the Leading ledger. All these postings will also go to the Non-leading ledgers unless otherwise restricted. We can also carry out Ledger specific postings. That is, we can post some documents only to certain ledgers, while not posting the same to others.
We have created Non-Leading ledger L3, which is meant for posting with different fiscal year than the one used for the Company code. That is, in Brazil company code, fiscal year variant for the company code is April to March (V3). While postings happen to leading ledger with V3 variant, the same will get posted with K4 fiscal year (Jan to Dec) in L3.