Deltas im Bereich FI/CO mit Release SAP S/4HANA · PDF fileDeltas in FI/CO with Release SAP...

Janet Salmon, SAP SE

March, 2017

Deltas in FI/CO with Release SAP S/4HANA 1610 Internal

© 2017 SAP SE or an SAP affiliate company. All rights reserved. 2Internal

Agenda

Transfer Prices at Group Level

CO-PA Characteristics – A New Approach

Realignment in CO-PA

Event-based Revenue Recognition for Projects

Transfer Prices at Group LevelBasic Idea


S/4HANA Digital Core: Built for scalability and innovations

The Digital Core

FinanceMaterial Mgmt.

& Operations

Internet

of Things

Business

networks

Social

networks

People

Devices

Big Data

Globalization, a history of mergers and acquisitions, and stringent fiscal rules often mean that

companies have structured their organization into multiple legal entities. As a consequence what is

actually an internal supply chain is represented as a series of sales processes between affiliated

companies. As these organizations move to a single instance, transfer pricing becomes a major topic.


SAP S/4HANA helps horizontal and vertical system consolidation…

Due to high data volume customers split their systems in several instances.

Whole sale or spare parts Split in several instances per county or region.

On

e s

ys

tem

for

fin

al a

ss

em

bly

/ p

re a

ss

em

bly

Brazil UK Italy China

Pre assembly 1

Pre assembly 2

Final assembly

Right Wing

Left Wing

Front Fuselage

Rear Fuselage

Cabin

Seats


A Sample Supply Chain…The same worldwide supply chain with intercompany profits eliminated

Material & Value Flow (legal)

…without Intercompany & Currency Translation Profit

(Mgmt. view)

2

5

12

26

44

3

8

14

28

1

28


Group view focuses on

eliminating intercompany

profits and acting as

„one company“

Legal view focuses on

inter company pricing

agreements and legal tax

requirements

CN

DE

USAFR

IT

EQ

ID

Profit Center view

focuses on

management prices

agreed e.g. between

divisions

Americas EMEA APAC

Profit Center

Product A

Profit Center

Product B

Profit Center

Product C

SAP Solution…Multiple Views of the Same Material Flow


Real-Time ConsolidationBuilding Blocks

SAP ERP

SAP R/3

Non-SAP

BPC

Integration

Currency

Translation

ModellingEliminations

Group

Reporting

Validation

Intercompany

Flexible

Upload

BPC Consolidation

BPC Planning

BPC Modelling

SAP S/4HANA, ON PREMISE SAP BusinessObjects

Planning and Consolidation

ACDOCA Master Data ACDOCCExten. BW

Consolidation preparation RTC Enhancements

SAP S/4HANA 1610 (planned)

Existing functionalities

Consolidation Enhancements

Central Finance

ControllingAccounting

Disclosure Management

Validations

Transfer Prices at Group LevelHow it works in SAP S/4HANA


Transfer PricingLegal, Group, and Profit-Center Valuation

Multi-national groups need to report profitability for the group in total and for the individual units based on the

operational flows. Up to three parallel valuation methods for legal, group and profit center valuation provide

different perspectives on the value chain within a group.

Legal perspective looks at the transactions from the point of view of the affiliated companies including markups

Group valuation looks at the whole group eliminating markups (i.e. intercompany profits)

Profit center valuation treats profit centers as if they were independent companies using e.g. negotiated prices

SAP ERP provided those 3 perspectives, but the solution had significant short-comings

Heterogeneous approaches across applications, high complexity, difficult to understand

No clear separation of management valuations, insufficient currency flexibility

SAP S/4HANA Finance, OP 1605 and SAP S/4HANA, OP 1610 now deliver these capabilities, but with a much

more streamlined, consistent approach in the universal journal. In prior releases of SAP S/4HANA and SAP

S/4HANA Finance only legal valuation was supported.


Intercompany Billing with Multiple Prices (from Release 4.6C)

Legal valuation:

PR00 – revenues

VPRS – costs

Group valuation:

KW00 – passes cost estimate

Profit center valuation:

PC00 – revenues profit center

PCVP - costs profit center Flow works using EDI (no manual invoice entry).


Intercompany Flow in the Material Ledger (from EhP5)

The intercompany relationship is captured in the material ledger. This captures the material flows including stock in transit

(SIT), if active.

You can perform actual costing to pass purchasing and production variances through the value chain by running a cross-

company costing run. Generally this takes place in two stages: You calculate the actual costs for each entity using a periodic

costing run and then use an alternative valuation run to allocate costs across the whole supply chain,


Activating Transfer Prices

Define a currency and valuation profile and assign to controlling area

This enables group and profit center valuation alongside intercompany transfer prices (legal

valuation).


Setting Up Currency Types for Transfer Price Valuations

Each currency type is assigned to a valuation view (legal, group, profit center)

Currency types in group or prctr valuation are assigned to the appropriate legal currency type.

The last digit no longer must represent the valuation (especially not for currency types in

customer namespace)


Versions

During migration and if you continue to use classic reporting tools, settings are needed to

convert the ledgers back to „versions“.


Single-Valuation Ledgers or Multi-Valuation Ledger

New: Parallel valuations updated in

parallel single-valuation ledgers

• Use separate ledger for each valuation (a specific

valuation is assigned to the ledger)

• Transparent separation of postings and reporting

of financial results based on the various

regulations

• Only currency types of this valuation view can be

used in this ledger

ERP approach: Parallel valuations updated in

multi-valuation ledger

• Use separate amount columns in the same

ledger (no valuation view assigned to the ledger)

• Reduce memory footprint

• Reduce effort and time for closing activities

• currency types of all valuations can be used in

this type of ledger

Two Options for Storing Multiple Valuations in SAP S/4HANA


Currency Fields of ACDOCA – Transfer Prices Rules

Local Currency

Currency type 10 in multiple valuation ledgers or in ledger with legal valuation

Currency type 11 or 12 in ledgers with group or profit centre valuation

ACDOCA fieldname HSL

Global Currency

Currency type of controlling area in legal valuation in multiple valuation ledgers

Currency type of controlling area in valuation of the ledger in single valuation ledgers

ACDOCA fieldname KSL

Freely Defined Currencies 1 – 8

Any Currency type can be configured in multiple valuation ledgers

Currency type with valutation of the ledger in single valuation ledgers.

ACDOCA fieldnames OSL, VSL, BSL, CSL, DSL, ESL, FSL, GSL

Universal Journal

Entry (ACDOCA)

Local Crcy Global Crcy 1st free

Crcy

2nd free

Crcy

3rd free

Crcy

4th free

Crcy

5th free

Crcy

6th free

Crcy

7th free

Crcy

8th free

Crcy


Currency Types in a Multiple Valuation Ledger


Currency Types in a Single Valuation Ledger

Only currency types in profit center valuation can be used in this ledger

Local and global currency are also in profit center valuation

CO-PA Characteristics – A New

Approach


Profitability Characteristics in S/4HANA

General Facts

Profitability characteristics are important market or

organizational dimensions in your organization

directly linked with financial data

You can drill down from your financial reports (P&L

and partially also Balance Sheet*) on details about

product, customer, sales org and other

You can run multi-dimensional reports in real-time

with profitability characteristics

All information is integrated in the single source of

truth for financial data – the Universal Journal

Universal Journal

Ledger Company

Account/

Cost

Element

Profit

Center

Coding

Block

Amount

1

Amount

2

Fixed

AssetMaterial Customer

Market

SegmentDivision

General Ledger Management Accounting Profitability Analysis

* Currently available for Work in Progress (WIP)

…


Profitability Characteristics in S/4HANA

General Facts

Profitability characteristics are integral part of Universal Journal

Up to 60 profitability characteristics (incl. fixed characteristics) can be

defined in operating concern by selecting from pre-defined and

delivered characteristics from SAP or creating own customer fields

Profitability characteristics are generated into the Universal Journal

during the system set up or migration

The Universal Journal can be extended with customer fields through

different methods. Depending on the requirements you can extend the

Standard Coding Block or the Operating Concern.


Business Use Cases for Attributed Profitability Segments

Examples

Example 2

Drilldown on your WIP

account in your balance

sheet and find out more

about related projects

and products

Example 1

Analyze your travel

expenses by customer and

by product as they occur -

without waiting for the

closing process and

settlements to happen

Profitability characteristics are derived immediately at the point in time of each

“primary” document


Doc

No

Business

Transaction

G/L

Account

Accasty WBS El. Qty. Amt. Custome

r

Solution Region

1 CATS Senior Cons WBS

ElementWBS1 2 h

200

€

Revenue Recognition based on Billing proposal

Realized revenue 2h 260 €

Realized costs 2h 200 €

Doc

No

Business

Transaction

G/L

Account

Accasty WBS El. Qt

y.

Amt. Custom

er

Solution Region

2RevRec

settlement

Revenue

adjustment-260 €

2RevRec

settlementWIP 260 €

Doc

No

Business

Transaction

G/L

Account

Accasty WBS

El.

Qty. Amt. Custom

er

Solution Region

3RevRec

settlement

Settlement

Revenues

Profitabiliy

segment Wbs1 2h - 260 €

Custome

r1Product1 EMEA

3RevRec

settlement

Settlement

COGS

Profitabiliy

segment Wbs1 2h 200 €

Custome

r1Product1 EMEA

RA

for a better understanding settlement lines on projects are not shown

COSBUnified Journal – ACDOCA

settlement (G/L)


In the Past: Settlements Necessary to Provide Details

Revenue Recognition based on Result Analysis

Settlement required to provide Market segment Information

settlement (CO)



Now: Real-time Information & No Settlements Needed

Doc

No

Business

Transaction

G/L

Account

Accasty WBS

element

Qty. Amt. Custom

er

Solution Region

1a CATSSenior

Cons

WBS

elementWBS1 2h 200€

Custome

r1Product1 EMEA

Doc

No

Business

Transaction

G/L

Account

Accasty WBS

element

Qty. Amt. Custom

er

Solution Region

1b TBBRRevenue

adjustment

WBS

element wbs 1 -260 €

Custome

r1Product1 EMEA

1b TBBRUnbilled

revenue

WBS

element wbs1 260 €

Custome

r1Product1 EMEA

Doc

No

Business

Transaction

G/L

Account

Accasty WBS

element

Qty. Amt. Custom

er

Solution Region

3Rev rec

settlement

Settlement

Revenues

Profitabiliy

segment 2h - 260 €

Custome

r1Product1 EMEA

3Rev rec

settlement

Settlement

COGS

Profitabiliy

segment 2h 200 €

Custome

r1Product1 EMEA

Unified Journal – ACDOCA

No CO-settlement required

anymore

Market segment provided

for every posting

(assignment of sales order

item is a pre-requisite)

WIP drilldown by project

and market segment

No reconciliation between

different tables

Customer Projects


Attributed Profitability Segment

Next to Real Account Assignment to Profitability Segment

Attributed Account Assignment to

Profitability Segment

Real Account Assignment to Profitability

Segment (EO objects)

Account

Assignm.

Cost Center / Internal Order / Project / Sales

Order / Production Order

Profitability Segment

Reporting New ACDOCA-Reports New ACDOCA- and classical CO-PA Reports

Derivation

Steps

Derivation of attributed profitability

characteristics is activated in IMG

Characteristics are determined at the time

the income statement item is created

according to derivation logic:

Automated derivation logic

Manually pre-configured derivation

Profitability characteristics can be derived

for P&L and some Balance Sheet

accounts*

Profitability segment is determined in sending

application (e.g. sales) or is manually entered

in posting from FI

Profitability segment number is transferred to

G/L & profitability characteristics are moved to

the item according to certain rules

Examples Project based billing and derivation of

additional attributes

Derive additional characteristics with

expenses postings to cost center

• Goods issue item or billing document item in a

sell-from-stock scenario

• Manual FI posting to profitability segment

• Settlement of a cost object to Profitability

Analysis



Attributed Profitability Segment

Benefits

1. Receive additional characteristics for income statement items with enhanced and

automated derivation

2. Profitability characteristics are immediately derived at the point in time of each “primary”

document

3. Gain insight on profitability dimensions for P&L and even for some Balance Sheet

accounts*

4. Save time and resources, as settlement runs become partially obsolete and assessment

runs for high-level dimensions can be replaced



Activating Attributed Profitability Segments

Configuration in IMG

Activate in IMG: Controlling >> Profitability Analysis >> Master Data >> Activate Derivation

for Items without Profitability Segment

First select account assignment, for which derivation logic will be activated + this selection

can be specified by individual types

Depending on the account assignment, different derivation steps are processed in a

defined sequence - as soon as one condition matches, the program stops and derives

accordingly profitability characteristics

Field Object Type [ACCASTY] defines the real account assignment in an income statement

item, all other account assignments are attributed



Derivation steps

Sales Order

Internal Order

Production Orders

Project

Cost Center

Does a settlement rule to a profitability segment exist in the account

assignment item?

Is a sales order item referenced in income statement item or master

data?

Is a unique sales order assigned in master data?

What is maintained in CO-PA Derivation?

Derivation steps in a Nutshell (per account assignment)

Example: Project details derived with „primary“ document

BEL

NR

Item

No.

Doc.

Type

G/L Account

Project

Sales Order

Cust.Prod

.Cust. Grp

Prod.Grp

…

1 2 RV 500100 P1002167

825001 R-B1 03 006

Sales Order Item was found

for posting on WBS Element.

Based on sales order item get information

on customer and product. Use CO-PA

derivation for additional details.



Possible Usage Scenarios

Questions to be considered when activating Attributed Profitability Segments:

Is it sufficient to have profitability characteristics only for reporting purposes?

Is sufficient information available to derive Profitability characteristics?

E.g. can profitability characteristics be derived from maintained settlement rule? Is the

settlement rule simple (not multiple rules)? Can profitability characteristics be derived

based on assigned sales order item?

Is it possible to maintain a high-level assignment of CO-Objects to customer/product/sales

dimensions in CO-PA derivation tool?

Do you want to analyze profitability characteristics on Balance sheet accounts*?



Reporting for Profitability Characteristics

Real vs. Attributed Profitability Segment

Real account

assignment to project

Attributed account assignment

to Profitability Segment


Reporting for Profitability Characteristics

Real vs. Attributed Profitability Segment

1. Posting of costs to IO with automatically derived profitability characteristics. Real account

assignment is Internal Order (Object Type = OR) other account assignments are attributed.

2a. Settlement of Internal Order to Profitability Segment during month end, if required due to

complex settlement rules. Real account assignment is Internal Order (1st posting line item).

2b. Settlement of Internal Order to Profitability Segment with real account assignment to

Profitability Segment (2nd posting line item).

Realignment in CO-PA


Realignment of Profitability Characteristics

Business Requirements

Reflect organizational changes in your product, customer, or

sales structure.E.g. customer “4711” is originally assigned to sales region “North” but reassigned to

sales region “West”.

1.

Correct inconsistencies, if organizational information was

incorrectly assigned at the time of the original posting.E.g. in the customer master data, a wrong customer group was entered for customer

“0815”. During posting of a billing document the wrong customer group is derived

from the customer master and written to profitability analysis.

Enrich profitability data by information not yet available at the

time of the original posting.E.g. Activating attributed profitability segment is a pre-requisite for this use case.

When posting time confirmation to a WBS element to which no sales order item is

assigned, only a sparse attributed profitability segment is determined in the Journal

Entry. Having assigned the sales order item, the posted data shall be enriched with

customer and product information with realignment.

2.

3.


Realignment in the Universal Journal Concept

General Facts

No separation of FI and CO anymore: every Controlling document including Profitability

characteristics is also an Accounting document

Changes in the Journal Entries have to always follow the guidelines of standard

accounting principles

Therefore, realignment in Universal Journal can only be processed for non-GL-

relevant information (e.g. Profit Center, Functional Area, Account, Values etc. will

never be changed by realignment functionality)

Changeable CO-PA characteristics are pre-defined and selection cannot be changed by

users

Universal Journal

Ledger Company

Account/

Cost

Element

Profit

Center

Coding

Block

Amount

1

Amount

2

Fixed

AssetMaterial Customer

Market

SegmentDivision

General Ledger

part

Management Accounting with

definition of real account assignment

Profitability Analysis with set of characteristics

- provided by SAP and can be enhanced with

customer specific fields

…


Realignment in the Universal Journal Concept

Profitability Characteristics Applicable for Realignment

Type of Characteristics Characteristics Rule for Realignment

By SAP defined and by

customer activated CO-PA

characteristics

Customer defined

characteristics excluding fields

of coding block (DDIC-include,

CI_COBL)

Material (MATNR_COPA)Vol. Rebate Grp (BONUS_PA)

Industry (BRSCH)

Sales District (BZIRK)Sales Office (VKBUR_PA)

Sales Group (VKGRP_PA)

Country (LAND1)Customer Group (KDGRP)

Material Group (MATKL)

ABC Indicator (MAABC_PA)Form of manufacture (EFORM_PA)

*_PA

Characteristics are always

changeable without any restrictions

Fixed characteristics that are

not GL-relevant

Account assignment objects

Billing Type (FKART)Sales Org. (VKORG)

Distribution Channel (VTWEG)

Division (SPART)Plant (WERKS)

Customer (KUNNR) Sales Order (KDAUF)

Sales Order Item (KDPOS)WBS element (PS_PSP_PNR /

PS_PSPID / PS_POSID)

Cost Object (KSTRG)Internal Order (AUFNR)

Cost Center (RCNTR)

Characteristics are only

changeable if field is initial at time

of realignment.

Following fields can be changed with realignment in the Universal Journal (ACDOCA) :


Realignment Approach in a Nutshell

General Facts

Realignment Functionality

One transaction (KEND) to process realignment in Profitability Analysis in

the Universal Journal – and if activated also in costing-based CO-

PA

Realignment is processed at the same time in both solutions in order to keep

information in sync

Realigned characteristics are updated in Universal Journal (ACDOCA) and

Segment table (CE4xxxx). Therefore, there are no new line items through

realignment

Original information from line item table ACDOCA (“as posted”

view) is stored in dedicated table



Selection Conditions

Select data set for realignment

according to custom-defined

criteria



Conversion Rules

2

1

3

Choose the characteristics

that shall be changed within

realignment

Define conversion rules that

describe how characteristics

shall be changed

Event-based Revenue

Recognition for ProjectsBasic Idea


Event-Based Revenue RecognitionPurpose

Real-Time Reporting (Soft Close)

Costs and revenues are recognized as they occur.

Recognition and adjustment postings are generated simultaneously with the transactions.

The entry of a source document (e.g. time confirmation), produces two separate journal entries:

A journal entry for the initial cost or revenue posting

A journal entry for the revenue recognition posting

Reported profit and margins are always up to date. Matching principle and cost of sales reporting is provided

Additional reporting attributes, such as Customer or sold Product, are derived for every revenue recognition posting (income

statement and balance sheet items).

No Reconciliation

The revenue recognition process is fully integrated with G/L.

Revenue recognition data is stored in the same location as cost and revenue data.

Full Transparency

Ability to drill down from a revenue recognition journal entry to the cost or revenue journal entry and to the source document.


Cost/ Working Hours

Based (POC)

Fixed Price

Billing

The POC for delivery is measured in terms of expenses (planned costs from project planning) or in terms of working hours

Confirmations are posted as expenses in addition realized revenues are posted (based on planned revenues from SD

billing plan).

Invoices are posted to an income statement account and reposted to deferred revenue.

Invoice Based (POC) Fixed Price

Billing

Confirmations are posted as expenses and directly reposted to WIP.

Invoices are posted as realized revenues, COS is calculated and posted based on planned values. COS postings will post

accrued costs.

Cost Based (T&E) Time &

Expense

Billing

Confirmations are posted as expenses in addition realized revenues are posted (based on DP90/ DMR simulation).

Invoices are posted to an income statement account and directly reposted to deferred revenue.

For T&E projects a new report “Display Project WIP Details” is available to show e.g. WIP aging

Time Based Revenue

Recognition

Periodic

Billing

Confirmations are posted as COS adjustments/ WIP.

Invoices are posted as billed revenues and reposted to deferred revenues.

The periodic run recognizes costs and revenues time based on the basis of the invoice schedule/ billing plan.

No Deferral All Types of

Billings

Confirmations are posted as expenses and billings as revenues

(projects without any RA key).

Completed Contract All Types of

Billings

Confirmations are posted as expenses and reposted to WIP.

Invoices are posted to an income statement account and reposted to deferred revenue.

All costs and revenue are recognized at period end closing (revenue recognition run), if the status “finally billed” or

“technical complete” is active.

Manual Revenue

Recognition

All Types of

Billings

Confirmations are posted as expenses. Invoices are posted as billed revenues and reposted to deferred revenues.

Revenues are recognized manually by either giving a currency amount or a POC. The POC would then be applied to the

plan revenue.

Supported Revenue Recognition Proceedings


Triggers for Event-Based Recognition Postings

Postings to relevant account assignment objects will lead to revenue recognition calculations and postings

(for the first release only sales projects are supported).

The calculations for the event-based postings are based on the values of the originating document.

The event-based posting does not read the complete history of the relevant account assignment object.

Processes that do not write a prima nota will not result in any event-based revenue recognition postings.

E.g. changes of plan data will not directly result in revenue recognition postings.

If necessary, period-end-closing postings (periodic revenue recognition) will correct the event-based postings.

Basis for the periodic revenue recognition calculation are all document line items which are assigned to the account

assignment object.

We provide an always quite up-to-date but not perfect reporting (“best guess”).

Only after period-end-closing the posted values are 100% perfect.

Manual revenue recognition postings are also possible and supported by the event-based revenue recognition.


One Prima Nota Creates 2 Accounting DocumentsExample CATS time confirmation

WBS Element/ Sales Order Item

RA Key “Fixed Price”

Planned costs = 10.000€

Planned revenue = 12.000€

item G/L Account Activity type

Quantity Value CC WBS

1 Senior Cons T002 -1h -100€ CC1

2 Senior Cons T002 1h 100€ WBS1

item G/L Account B/S or P/L Value WBS

1 Revenue adjustment P/L -120€ WBS1

2 WIP/ Unbilled revenue B/S 120€ WBS1

Revenue Recognition Document

„CO“ Document

Unified Journal (ACDOCA)

CATS time

confirmation:

1h Senior Cons.

for Project WBS Element

Financials

RW

INPrima Nota


New App “Event-Based Revenue Recognition” (1)Purpose: monitoring of revenue recognition postings and manual adjustments

The object list displays all WBS/ billing elements that are relevant for the Event-Based Revenue Recognition with the values posted

on the object in separate columns for actual, accrued/ deferred, recognizes values and other information.

You can now select one single object and navigate to the “Details” page.


New App “Event-Based Revenue Recognition” (2)Purpose: monitoring of revenue recognition postings and manual adjustments


New App “Event-Based Revenue Recognition” (3) Enter Temporary Adjustment

Manual adjustments entered via “Enter Temporary Adjustments” will be cleared again with the next periodic revenue recognition run.


New App “Event-Based Revenue Recognition” (4)Enter Reserves

Manual adjustments entered via “Enter Reserves” will NOT be cleared again with the next periodic revenue recognition run, these

adjustments have to be cleared manually (if needed).


Income Statement Balance Sheet

Cost Based (POC) – Fixed Price BillingRecognize Revenue with Cost Posting

Process Steps

POC cost based

planned costs = 1,000$planned revenue = 2,000$

-> planned margin of 100%

In this example: POC = 50%

(1) time confirmation

(2) billing/ invoice

(3) period-end closing

Billed Revenue

(2) 800$

Revenue Adjustments

(1’) 1,000$

(2’) 800$

Activity Allocation

(1) 500$ (1) 500$

Accrued Revenue (WIP)

(1’) 1,000$ (3) 800$

Receivables

(2) 800$PRO – posting to Project

CCtr. – postings to CCtr.

PRO CCtr.

PRO

PRO

PRO Deferred Revenue

(3) 800$ (2’) 800$

PRO PRO

PRO PRO



Cost Based – T&E Billing Recognize Revenue with Cost Posting

Process Steps

no need to know planned costs

or planned revenue,simulation of SD pricing

In this example:sales price for Senior

Consultant: 200$/h

(1) time confirmation 5h

Senior Consulting

costs: 100$/h

(2) billing/ invoice

(3) period-end closing

Billed Revenue

(2) 1,000$

Revenue Adjustment

(1’) 1,000$

(2’) 1,000$

Activity Allocation

(1) 500$ (1) 500$

Accrued Revenue

(1’) 1,000$ (3) 1,000$

Receivables

(2) 1,000$PRO – posting to Project

CCtr. – postings to CCtr.

PRO

PRO

PRO

PRO Deferred Revenue

(3) 1,000$ (2’) 1,000$

CCtr.

PRO PRO

PRO PRO



Periodic Service – Time Based Billingcosts and revenue will be deferred, periodic RevRec will realize costs and revenues

Process Steps

(1) time confirmation 6h

Senior Consulting

costs: 600$/h

(2) billing/ invoice:

1,200$ / year

(3) Periodic Revenue

Recognition Run

(based on invoice

schedule: 100$ / month)

Billed Revenue

(2) 1,200$

Activity Allocation

(1) 600$ (1) 600$

Receivables

(2) 1,200$

WIP

(1’) 600$ (3) 50$

PRO

Revenue Adjustments

(2’) 1,200$ (3) 100$

PRO PRO PRO

COS Adjustments

(3) 50$ (1’) 600$

PRO PROCCtr.

WIP Deferred Revenue

(3) 100$ (2’) 1,200$

PRO

PROPRO

PRO


Configuration Settings for the Event-Based RevRec (1)Controlling > Product Cost Controlling > Product Cost by Sales Order > Period-End Closing > Event-Based Revenue Recognition

Source AssignmentsLine items posted to the account assignment object are classified into different Source Assignments (which will later be combined with posting rules).

Sources are defined the by specifying cost element categories, cost element groups, accounts, or SD Billing condition types.

Postings which are not assigned to Source Assignments are not relevant for Event-Based Revenue Recognition.

Source Assignments and Posting RuleSource assignments defined in the first step are now combined into posting rules.

The specified usage determines whether the assigned values are revenue or costs and provides special additional calculations like reserves for imminent loss or

currency result. Add the accounts/ cost elements to which revenue recognition posts.


Configuration Settings for the Event-Based RevRec (2)Controlling > Product Cost Controlling > Product Cost by Sales Order > Period-End Closing > Event-Based Revenue Recognition

Results Analysis KeysResults Analysis Keys define the basic method for computing the revenue recognition values, like cost-based percentage of completion or completed contract. If

applicable, the source for the plan values is also defined in this step.

The keys are defined for the combination of Company Codes and Accounting Principles.

Document Type and Financial Statement VersionSpecify a document type for revenue recognition postings.


New Report for WIP Agingavailable for Time&Expense scenarios

For Time&Expense scenarios WIP can be shown per period

Furthermore billed revenue and rejected confirmations can be shown per employee and project

Event-based Revenue

Recognition for ProjectsIntercompany


Resource Related Intercompany Process Enhancementsavailable via Business Function FINS_CO_ICO_PROC_ENH_101

This business function can be used to activate the following additional

functionality for intercompany billing and reporting which is required

especially in professional service scenarios:

Enhanced determination of activity cost rates

Service cost level attribute for employee-specific

determination of cost rates (together with EC)

Transaction-based posting of intercompany margins with time

confirmations

Flexible assignment of intercompany clearing accounts for

CO-related postings

Derivation of additional reporting attributes

for more detailed information see documentation: Intercompany Process Enhancements

http://aiokeh.wdf.sap.corp:50000/SAPIKS2/content_get.sap?IWB_INDUSTRY=S4HANA_OP&TMP_IWB_TASK=PREVIEW2&_CLASS=BCO_COMMON&_LOIO=FA453E57E9DC6659E10000000A44147B&RELEASE=1610&LANGUAGE=EN


Enhanced Determination of Activity Cost Rates

A new valuation strategy for activity allocations is provided

Instead of using transaction “Activity Type/ Price Planning (KP26)”, the cost rates for internal services can be maintained using

the App “Maintain Activity Cost Rates” (CMACA02)

Additional criteria like employee, WBS element, and service cost level can be used to maintain detailed cost rates.

The new cost rates are valid for the following receiving cost objects

cost centers, internal orders, WBS elements, sales order items, profitability segments

Intercompany rates can be maintained

You can activate the usage of the new technique in the IMG:CO > CCtr. Acc. > Planning > Price Planning Based on Condition Technique > Assign Pricing Procedure for Valuation of Activities

--> intercompany cost rate


Service Cost Levelemployee-specific determination of cost rates

A new attribute “Service Cost Level” determines the applicable cost rate for services provided by an employee.

Services provided by that employee are always charged at the same rate regardless of the service.

You define the service cost levels you require in the IMG:CO > Cost Center Accounting > Master Data > Activity Types > Define Service Cost Levels

You then assign a service cost level to each employee –With EC


Ordering CompanyDelivering Company

Enhanced Resource Related Intercompany Billing

CustomerProject

debit project with cost rate and

intercompany margin

Cost Centercredit CC with cost rate

and ICO margin

posting on project creates billing proposal

Time Confirmationon project from other company

1

Posting of intercompany margin with time confirmations

Project reporting is also available for the delivering company

Simplified intercompany reconciliation as intercompany billing values are now equal to cost postings

Staffing0

Automatic transfer per IDOC

ICO

Invoice based on

cost

postings

3 Supplier

Invoice based on market

rate, automatically

posted, no cost obj.

assigned

3

Billing4

Customer

Invoice

ICO postings creates

billing proposal


Transaction-Based Posting of Intercompany (ICO) MarginsIntercompany time confirmations

Improved resource related intercompany process

ICO margins are posted with the related time confirmations

(for ICO time confirmations, a secondary process “Manual Cost Allocation

(KB15N)” is triggered. This process posts an intercompany margin in addition

to the cost of the service)

Project reporting for the delivering/ supporting company is made available by

updating the WBS element in the cost center credit posting and in the ICO

clearing debit posting

As the margin is already posted with the time confirmation, the intercompany

billing can be based on costs. So no additional price calculation with ICO

billing and subsequent simplified intercompany reconciliation.


Configuration for Intercompany Margin Accounts

You define intercompany margin accounts in the IMG:CO > Controlling Cost Center Accounting > Actual Postings > Additional Transaction-Related Postings > Intercompany Margins for Activity

Allocations > Assign Intercompany Margin Accounts

The intercompany margin account is derived based on the activity allocation account

There are different options:

assign a different intercompany margin account to each activity allocation account

do NOT post a intercompany margin for a particular activity allocation account, in this case the intercompany margin account is <blank>

define a default intercompany margin account to be used for all activity allocation accounts

note: if no default intercompany margin account is defined, entries for all activity allocation accounts have to be created


Derivation of Additional Reporting Attributes for CO Postings

For CO-related intercompany postings, the following additional attributes are updated on the sending cost center (activity

allocation and clearing account): WBS element

Project ID

Employee

This enables margin reporting for the company providing the ICO services.

The functionality is activated at the controlling area level.IMG: CO > Cost Center Accounting > Actual Postings > Additional Transaction-Related Postings > Derivation of Add Reporting Attributes for

ICO CO Postings

To classify internal, external, and cross-company goods and services for cost analysis purposes, the attribute ”Resource” is

introduced. The attribute is updated with the following postings, provided that the posting is made to a customer project and

an employee ID was entered: Time confirmations

Subcontractor services

Manual CO-relevant postings

Resource-related billing

The following values of the resource are delivered: Activity Internal or Activity Subcontractor or Activity Intercompany or Activity ICO Provider

Expense Internal or Expense Subcontractor or Expense Intercompany or Expense ICO Provider


Intercompany Time Confirmation

Example: Employee 50000621 working in company 1710 confirms 1h to a WBS element in company 1010

Balance in each company is zero, all line items are posted to income statement accounts

ICO margin is posted with the time confirmation in both companies (debiting the WBS element in 1010, crediting the cost center in 1710)

All documents are referenced to the CATS confirmation

The receiving WBS element is shown in the sending company as reporting attribute to enable a margin reporting in the sending company

Thank youContact information:

Janet Salmon

CPO Management Accounting

SAP SE

Dietmar-Hopp-Allee 16

69190 Walldorf

+49 6227 741108

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