Accrual Engine
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Transcript of Accrual Engine
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AC205 Lesson: The Accrual Engine
Lesson: The Accrual Engine
Lesson Overview
This lesson describes how the Accrual Engine works.
Lesson Objectives
After completing this lesson, you will be able to:
Describe the generic functions of the Accrual Engine
State the advantages of using the Accrual Engine in comparison to normal
accrual procedures
Activate an application component of the Accrual Engine for a company code
List the required closing activities for the Accrual Engine
Business Example
You will learn about how the Accrual Engine works.
Figure 58: Application Components of the Accrual Engine
The Accrual Engine is a generic tool for calculating and creating accrual postings.
As input it receives basic data that describes the subject matter to be accrued,
for example, data for a rental agreement. The Accrual Engine uses this data to
calculate the accruals and creates the related periodic postings.
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Just like the motor of a machine, the Accrual Engine itself is not visible for the
end user. Instead, the user works with the application components of the Accrual
Engine. The subjects to be accrued are entered there and are forwarded to the
Accrual Engine.
SAP develops and delivers the application components of the Accrual Engine.
They cannot be developed by customers. The application component always
refers to a special accruals scenario and provides an optimized user interface
for this scenario.
The Accrual Engine is used amongst other things for:
Manual Accruals in Financial Accounting
Provisions for Awards
Lease Accounting
Intellectual Property Management
Additional application components will be delivered in future extensions.
Figure 59: Interaction with the Accrual Engine
The diagram shows the interaction between the Accrual Engine and the
application component.
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AC205 Lesson: The Accrual Engine
The Accrual Engine stores two types of data:
Basic Data
The basic data consists of a description of the subject to be accrued (accrual
object) and all other information required for 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 fiscal year-specific totals records. The
Accrual Engine documents automatically create corresponding documents
in FI. Various levels of summarization are possible. If errors occur during
the FI update, you can trigger this again manually.
Usually, two main processes are triggered from 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 of 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 Accrual Engine
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In comparison to standard methods of 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 fixed values in
recurring entry documents.
You can make periodic accruals postings automatically as
performance-optimized mass data processing using an accrual run. The
delta amount of the cumulative accruals minus the accruals already carried
out is posted. If the amount to be accrued changes, the accruals amounts
are adjusted automatically.
You can simulate planned future accruals. Depending on how the application
component is configured you can also carry out complete simulation
scenarios.
The Accrual Engine supports parallel accounting with either different
account areas or parallel ledgers.
An extensive Information System provides information about planned
accruals and accruals that have already been carried out.
Figure 61: Activate the application component
To activate an application component of 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 defined if this has not already
been done.
The application component must be assigned to the required combination of
accounting principle and company code.
The current fiscal year must be open for the application component.
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AC205 Lesson: The Accrual Engine
Figure 62: Closing Activities of the Accrual Engine
The Accrual Engine requires only a small number of closing activities of 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 transfer to the General
Ledger was complete and without errors.
Balance carryforward
At the end of the fiscal year you have to carry forward the balances of the
accruals objects into the next fiscal year. This has nothing to do with the
balance carryforward in the General Ledger.
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Lesson Summary
You should now be able to:
Describe the generic functions of the Accrual Engine
State the advantages of using the Accrual Engine in comparison to normal
accrual procedures
Activate an application component of the Accrual Engine for a company code
List the required closing activities for the Accrual Engine
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AC205 Lesson: Manual Accruals
Lesson: Manual Accruals
Lesson Overview
This lesson describes the application component Manual Accruals.
Lesson Objectives
After completing this lesson, you will be able to:
Describe how the application component Manual Accruals works
Define subjects to be accrued as accrual objects
Describe the basic settings of the application component Manual Accruals
Business Example
You have been asked to make the basic settings of the application component
Manual Accruals.
Figure 63: Manual Accruals with the Accrual Engine
In the application component Manual Accruals, you create the basic data
manually via a simple user interface.
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The basic data is usually subject matter to be accrued based on different contracts,
such as rental agreements, insurance contracts, and so on.
Hint: There are also two function modules that you can use to import
accrual objects from a database table via a batch job. These are:
ACAC_OBJECT_CREATE_EXT to create an accrual object
ACAC_OBJECT_MODIFY_EXT to change an accrual object. If 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
of the function modules. The function modules can then be called up to load the
data into the Accrual Engine. You can also transfer legacy data this way (for more
information read the IMG documentation).
Figure 64: Deferrals
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 future.
The slide shows an example of a deferral where an expense invoice for 120
is received at the start of the year and posted in the first period. However, the
invoice covers a contractual service that is used throughout the entire year (for
example, insurance). The expense must therefore be distributed over all periods of
the fiscal year equally.
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AC205 Lesson: Manual Accruals
Figure 65: Posting Deferrals
Following on from the example on the previous slide, the posting for the deferrals
is as follows:
The invoice for 120 arrives in Accounts Payable in the first period and is posted
there. The posting record is:
Expense to Vendor
Using an opening posting, the entire amount is transferred from the expense
account to an account for invoice deferral items (ARAP). The posting record is:
Prepayments and Accrued Income to Expense
During period-end closing, part of the amount is posted back to the expense
account from the prepayments and accrued income account, which means that the
prepayments and accrued income are reduced. Posting record:
Expense to Prepayments and Accrued Income
If the contract is terminated prematurely, the entire residual amount is posted to
an expense account. Posting record:
Expense to Prepayments and Accrued Income
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Figure 66: Accruals
You have to create accruals when an expense or revenue is to be received in the
future, but is incurred or earned partly or completely in the current period.
The slide shows an example of an accrual where an expense invoice for 120 is
received at the end of the year and posted in the last period. However, the invoice
refers to a service that is used during the entire year. The expense must therefore
be distributed over all periods of the fiscal year equally.
Figure 67: Posting Accruals
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AC205 Lesson: Manual Accruals
The posting record for accruals is Expense to Other Payables (or provisions) in
each period. It is posted to the account
Other payables: If you are certain about the reason and amount of the accrual
Provisions: If you are uncertain about the amount and/or reason of 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 finally received, it is posted as
Other payables (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 defined as an accrual object. You make this definition
manually in the application component Manual Accruals. Accrual objects in
this application component are identified uniquely for each company code using
an accrual object number from a defined number range.
The accrual objects are grouped in accrual object categories for manual accruals.
These summarize the subject matter of 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 find accrual objects more easily
To assign special customer-defined parameters that describe the accrual
object in more detail
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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 specific
accounting principle.
Figure 69: Accrual Calculation
The accrual is calculated for each accrual item, for each combination of accrual
type and accounting principle specified. In addition to the amount to be accrued
and possibly also a quantity to be accrued, the accrual item contains an accrual
method.
A function module is defined for the accrual method, and this calculates the
accruals. For the Manual Accruals area, several function modules are delivered.
However, you can also develop your own function modules for the accruals.
The function modules delivered that you can also use for manual accruals begin
with ACE_DS_* and are listed on the slide.
You can also define derived accruals types. These accruals amounts are calculated
from the accrual amounts of other accrual types and not directly. However, derived
accrual types are not particularly relevant for manual accruals and are more
important for other application components.
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AC205 Lesson: Manual Accruals
Lesson Summary
You should now be able to:
Describe how the application component Manual Accruals works
Define subjects to be accrued as accrual objects
Describe the basic settings of the application component Manual Accruals
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Lesson: Posting Control and Account Determination
Lesson Overview
This lesson explains how to configure the posting control and account
determination for the Accrual Engine.
Lesson Objectives
After completing this lesson, you will be able to:
Define the posting control of an application component in the Accrual Engine
Configure the account determination of an application component in the
Accrual Engine using rules
Business Example
The employees in Financial Accounting want to show you the different posting
options available with an application component.
Figure 70: Posting Control
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AC205 Lesson: Posting Control and Account Determination
The posting control is defined for each
Company code
Accounting principle
Accrual type
You define
How frequently accruals are carried out (for each posting period, daily,
monthly, quarterly, every six months, annually)
The level of summarization for postings before the update to FI You can
make the following settings
No Summarization: A separate line item is created for each accruals
item.
Summarization at accrual object level: A line item is created for each
accrual object.
Maximum Summarization: The postings are summarized to the level
of different 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)
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For each accrual type, you define in Customizing which postings are to be made
automatically and, therefore, for 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 (useful, for example, for accruals)
All (opening posting, periodic accruals, and - if 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 configure the account determination of the
Accrual Engine accordingly, that is, the accounts must be found depending on
the accounting principle.
For the parallel ledger solution, you have to assign a special ledger for the
accounting principle in Customizing for parallel accounting.
Figure 72: Derivation Rules
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AC205 Lesson: Posting Control and Account Determination
Accounts are determined using derivation rules. These rules consist of
Conditions under which the derivation rule is executed (optional)
Determination of fields used in the derivation rule Here you define
Source fields (derivation rule input) All fields filled from the Accrual
Engine.
Target fields (derivation rule output) All fields that must be filled for
successful account determination, or user-defined parameters that you
can use for sequential derivation rules.
The rule entries themselves that derive the input for the target fields from
the content of the source fields.
In the case of manual accruals (application component ACAC):
You define 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 filling the corresponding fields in this DDIC structure. Instead of using this
structure directly, however, you make an entry in the INCLUDE structure
CI_ACAC_PARAMETERS. The new fields must be customer-defined fields
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 Rules
The derivation rules are summarized in a set of rules. Depending on how the
derivation rules are defined, 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.
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Figure 74: Parallel Derivation Rules
The order in which parallel derivation rules are created and processed is
irrelevant, since their results are independent of one another. Examples are:
Derivation rules for different accrual objects that can be differentiated by
means of user-defined parameters. In the conditions, the system queries the
content of the user-defined parameters (for example, Parameter = Rents?)
and the derivation rule is only executed if the condition is fulfilled.
Derivation rules for different elements of the accounting document, that is,
one rule for the document type, other rules for the accounts.
Figure 75: Sequential Derivation Rules
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AC205 Lesson: Posting Control and Account Determination
The order in which sequential derivation rules are created and processed is
important. Examples are:
Derivation rules for account determinations with different levels of detail,
that is, the first derivation rule provides a very basic account determination,
the second a more detailed account determination for certain transactions,
and the third a very detailed account determination for other transactions.
Use of extended account determination. Using the extended account
determination you can summarize combinations of source fields with a
derivation rule for characteristic combinations. In a second derivation rule,
account symbols are determined from characteristic combinations. In a third
derivation rule, the accounts are derived from the account symbols.
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AC205 Lesson: Posting Control and Account Determination
Exercise 13: Accrual Engine, ManualAccruals
Exercise Objectives
After completing this exercise, you will be able to:
Post Accruals using the Accrual Engine
Business Example
Your company code AC## (## = your group number) has taken insurance which
costs 6000 units of your house currency each year. The insurance amount for the
current year was paid in full in the first month of the year.
Task:
Post the accrual for the insurance amount with the Accrual Engine.
1. Create an accrual object for 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 for your accrual. You take the responsibility for the
accrual object yourself.
Use your cost center T-A20A## for 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 for your insurance contributions. The legal
principle to be used for the financial 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 for this amount.
2. Choose 'Check and Simulate'. As the parameter for the simulation of the
allocation posting, choose 01/01 of the current year. The period is to be
determined from this key date. Look at the results of your simulation.
3. Save your accrual object.
Caution: Make a note of the number of 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
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4. Display the line items of the Accrual Engine in the information system of
the Accrual Engine. First select only actual values for your company code
and your accrual object. Then select the simulated values for reporting key
date 03.31 of the current year.
5. Execute an accrual/deferral run for the first posting period.
Start your periodic accrual/deferral run. Restrict the general selections to
your company code, accounting principles, accrual type, and accrual object
number. As the key date for the accrual, choose 01.31 of the current year.
First carry out a test run, and then an update run.
In the information system, display the totals and the line items of the Accrual
Engine. Restrict the selection to your accrual object number.
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