Objective

If you have a requirement to keep your group accounting principle other than IFRS & USGP (USGAAP) accounting principles in S/4HANA Public Cloud, then this blog is for you only. It will outline how to achieve the said requirement Cloud ERP.

I also found that details and documentation not available anywhere. It will be helpful document for people where this kind of scenario will occur.

Group Accounting Principle other than IFRS and USGP (USGAAP)

Local Accounting Principle as Corporate Accounting Principle

The Requirements and Solutions

We will consider two scenarios related to how to keep group accounting principle other than IFRS & USGP (USGAAP) accounting principles in S/4HANA Public Cloud.

Scenario 1:

You customer is looking for an implementation in S/4HANA Public cloud with 3 legal entities spreading 3 different countries. Legal entities are in Germany, India, and US and these are the subsidiaries of another big XYZ German Corporate, and this corporate is from Germany as name suggests. XYZ German Corporate is already on SAP S/4HANA OP, and this is of course a separate system. All in all, XYZ German Corporate will not be implemented in S/4HANA Public Cloud System. This scenario is straightforward.

They want to keep:

1. Group Accounting Principle as German Local GAAP
2. Local GAAP as per legal entity and it’s country and
3. They also want to keep 3^rd Accounting Principle as IFRS

This scenario is straightforward.

Solution to Scenario 1:

Important points about scenario 1:

1. We have free option to select the accounting principle against each ledger (0L, 2L, and 3L) in the system. The only condition is, that accounting principle must be available in the system.
2. Local accounting principles comes in the system with the country activation. However, Group Accounting Principle IFRS and USGP (USGAAP) comes with scenario activation of 2L Ledger or 3L Ledger or both.
3. Since in scenario 1, you have German legal entity/ company code so you must be activating Germany country version in S/4HANA Cloud and this country version activation will bring the local accounting principle DEAP in the system and then you would be able to select DEAP as your group ledger against a ledger.

Note: Ledger 3L is blank because you must assign local accounting principle against each company code in the system. That you can do under ‘Assignment of Accounting Principle to Ledger’

Scenario 2:

Your customer is looking for an implementation in S/4HANA Public cloud with 3 legal entities spreading 3 different countries. Legal entities are in Germany, India, and US and these are the subsidiaries of another big ABC Japan Corporate, and this corporate is from Japan. ABC Japan corporate is already on SAP S/4HANA OP, and this is of course a separate system. All in all, ABC Japan corporate will not be implemented in S/4HANA Public Cloud System.

They want to keep:

1. Group Accounting Principle as Japan Local GAAP
2. Local GAAP as per legal entity and it’s country and
3. They also want to keep 3^rd Accounting Principle as IFRS

This scenario is not so straightforward.

Solution to Scenario 2:

Important points about scenario 2:

1. We have free option to select the accounting principle against each ledger (0L, 2L, and 3L) in the system. The only condition is, that accounting principle must be available in the system.
2. Local accounting principles comes in the system with a country activation. However, Group Accounting Principle IFRS and USGP (USGAAP) comes with scenarios/scope items activation of 2L Ledger or 3L Ledger or both.
3. Since in scenario 2, you do not have legal entity/ company code of county Japan. So ideally, you would not be activating Japan country version in S/4HANA Cloud and since Japan country version activation will not happen, you will also not have the JPAP local accounting principle in the system and then you would not be able to select JPAP as your group ledger against a ledger.
4. You must have to do a workaround to achieve JPAP Local Accounting Principle in your system, so that you can select JPAP as your group accounting principle/ledger. Workaround is, you need to activate Japan country version and also need to create a company code (Dummy).

Note: Ledger 3L is blank because you must assign local accounting principle against each company code in the system. That you can do under ‘Assignment of Accounting Principle to Ledger’

5. Now you can have 3 ledgers i.e., 0L, 2L, and 3L in the S/4HANA Public Cloud system.
6. There are USAP and USGP accounting principles both covers US accounting standards in SAP. USAP is used when you have to use USGAAP as your local requirement (at company code(s) and your legal entity is operating in US and USGP is used when you have to use USGAAP accounting standard for group accounting.

Ledger and Accounting Principle Related Other Attention Worthy Points

1. Now you can have 3 ledgers i.e., 0L, 2L, and 3L in the S/4HANA Public Cloud system.
2. There are two US GAAP related accounting principles in SAP i.e., USAP and USGP. USAP is used when you have to use USGAAP as your local requirement (at company code(s) level and USGP is used when you have to use USGAAP at group level.
3. Leading Ledger tick is fixed with 0L ledger, and it can be changed. However, you can change the default assignment of accounting principles to ledgers. You should switch your accounting principle accordingly to adjust or change leading ledger.
4. SAP recommends that you shall select Leading Ledger as your Group Accounting Principle if you are using parallel accounting (using more than one ledger). However, you are free to select as per your need.
5. Group Accounting Principle IFRS and USGP (USGAAP) can only be assigned to at ledger level, means you would not be able to assign it with combination of Ledger and Company code level.
6. Be careful, you cannot add ledgers after the initial scoping is finalized. Similarly, you cannot remove activated ledgers at a later point in time.
7. You can use the following ledger or ledger combinations (parallel ledgers) starting S/4HANA Cloud 2302 Version with CBC.

8. Local accounting principles comes country version activation and Group Accounting Principle IFRS and USGP (USGAAP) comes with scenario activation. This is selected as additional scope items during initial scoping

For 2L: Scope item 1GA – IFRS: Accounting and Financial Close – Group Ledger IFRS

For 3L: Scope item 2VA – US GAAP: Accounting and Financial Close – Group Ledger US GAAP

9. You can only change the corporate accounting principle if no postings have been made in any company code in General Ledger Accounting. If postings have been made in any system in your system landscape, you can’t change this assignment anymore. You can, however, change the accounting principle for your local ledger on company code level, if no postings exist in the relevant company code.

If postings have been made in a system other than your production (P) system, however, you can delete these by using the job template Reset Transaction Data from the app Schedule Accounting Data Changes.

10. Accounting principle IFRS & USGP are group accounting principles in S4HANA Cloud system and cannot be used as local ledger
11. You cannot create your own accounting principle.
12. You will have more complexities on the project if you have deviating (more than one) fiscal year variant in the scope. Such case please follow this note 2568382 – Lean Solution for alternative fiscal year variants – SAP ONE Support Launchpad
13. Please also check below links for deeper understanding and knowledge

Accounting Principles | SAP Help Portal

Ledger | SAP Help Portal

Assign Accounting Principles to Ledgers and Company Codes | SAP Help Portal

You can also check other related blogs

Advanced Foreign Currency Valuation in S/4HANA Cloud (Cloud ERP) | SAP Blogs

3-System Landscape Provisioning and Initial Activities in CBC for S/4HANA Cloud | SAP Blogs

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