Overview on New G/L Accounting
A highly competitive, increasingly global economy and a rapidly changing regulatory landscape have increased the demands on varied reports in general-ledger accounting and related businesses, as a result New GL Accounting has been introduced by SAP. The New G/L overcomes the shortcomings of traditional G/L accounting by providing a single robust application with a unified interface catering both financial and management accounting.
The New G/L approach was developed to accommodate the numerous requirements for legal, managerial, country, and local accounting practices. Basically, this approach brings together much of the reporting and analysis completed separately by several different components in the ECC system.
With New G/L, SAP incorporates additional functionality that will offer information which otherwise normally obtained from the areas of the classic FI module, the Cost of Sales Ledger, the reconciliation ledger used to validate and reconcile data between FI and CO, the managerial reporting handled by the CCA and PCA modules (segment reporting) within ECC, and the reporting and analysis available by using the Special Purpose Ledger process.
In this way, the New G/L Accounting serves as a complete record of all business transactions. It is the central and up-to-date component for reporting. All posted transactions can be checked at any time in real time.
Advantages/ Benefits with the New General Ledger Accounting
New G/L provides flexibility, new and improved functionality, such as document splitting, parallel accounting, segment reporting, as well as improved integration with other applications.
Comparative Analysis between New G/L and Classic G/L
New G/L and Classic G/L are two ways to implement General Ledger functionality in SAP ECC5 and ECC6 respectively. New G/L provides lot of benefits over classic G/L. The New G/L benefits
- Provide an extension to the existing functionality in classic G/L, or
- Provide new functionality compared to classic G/L, or
- Provide a technologically superior way to perform a functionality in Classic G/L
It is imperative to understand the differences between Classic and New G/L to be able to understand which solution addresses the business requirements better. I am providing a comparative analysis of the basic differences between Classic and New G/L.
In the classical approach, users would have to retrieve information through various areas outside of the G/L, such as the special purpose ledger.
A Comparisons:
(1) Extended Data Structure provides flexibility
SAP has consolidated the multiple totals table (GLT0, GLPCT etc) in classic G/L into a single FAGLFLEXT Totals table with New G/L. One Summary Table provides flexibility and faster response time for reporting. FAGLFLEXT can also be enhanced by adding customer defined fields.
(2) Reconciliation
No automatic reconciliation existed between G/L and applications, as a result closing activities used to take several weeks or months, considerable time was lost on preparing the financial statements.
(3) Segment reporting to ensure Statutory Requirements
New G/L has document splitting functionality that enables segment reporting. Standard Segment Reporting functionality is not available in Classic G/L.
(4) Real Time Integration between FI and CO
Classic G/L has the period-close reconciliation ledger functionality to synchronize FI and CO for cost transfers across functional area, business area and company code originating in CO. New G/L has a real-time integration between FI and CO.
(5) Parallel Accounting
New G/L provides Non-leading ledgers for parallel accounting like IFRS and GAAP. Parallel accounting can also be implemented using Account based approach which is also available in classic G/L.
(6) Reduce TCO by Faster Period Close Activities
Faster Period Close is possible with New G/L as,
a. Reconciliation Ledger is not required
b. Balance sheet Adjustments are not required
c. Profit and Loss Adjustment are not required
d. Activities related to Special Purpose Ledger are not required
e. Depreciation posting is online instead of a batch session
(7) Flexible Drill-down Reporting in New G/L
New GL has advanced drill-down capabilities by segment and other characteristics.
Totals Table
A totals table is a database table in which totals records are stored. A totals table is used in General Ledger Accounting (New) as the basis for your parallel ledgers. It offers a number of dimensions. SAP delivers the totals table FAGLFLEXT for General Ledger Accounting in the standard system.
When the New General Ledger Accounting is activate, the totals records in General Ledger Accounting are updated in the standard totals table FAGLFLEXT.
The totals table of New General Ledger Accounting (FAGLFLEXT) updates more entities than was possible in the classic totals table (GLT0).
With the standard table, you can easily activate support for many scenarios, thereby supporting segment reporting, profit-center updating, cost of sales accounting, business area update and many more. Even you can define your own table - if there is very large volume of data or very different characteristic values - using FAGLFLEXT as the template.
FAGLFLEXT table—a total of 142 fields which include Cost Center, Profit Center, Functional Area, Business Area, Controlling Area, as well as Account Number, Company Code, and Segment all included in one table.
Business Scenario:
Group of companies IBM is a multinational company with companies across the world with base in US. The company has decided to implement SAP for its subsidiary IBM LLC, US. Group of companies have to use the common chart of accounts 1000. The currency for US is USD. The Parent company wants the accounts to be prepared based on Calendar year January to December.
IBM LLC has a local reporting requirement under US GAAP.
IBM LLC also has to maintain financial statements for IFRS
Based on the above requirements we need to configure the following using he New GL:
Create company code IBM LLC. - 1200
The company code currency – USD
Parallel currencies to be implemented – EURO
Common chart of accounts – 1000
Ledger 0L (leading valuation view) reporting period – Jan to December for group reporting
Ledger L1 (additional ledger) for local reporting US GAAP
Ledger L2 (additional ledger) for IFRS (April to March)
Configuration Steps:
- Creating Company Code
- Activation of New G/L
- Ledger
- Parallel Accounting
- Document Splitting
- Document Type
- Segment
Configuration Steps:
1. Create Company Code
In SAP, a company code is representative of a stand-alone legal entity that requires its own set of accounting records for reporting purposes.
Company code is the basic organizational unit in FI (Financial accounting) for which a balance sheet and profit & loss account can be drawn.
IMG Menu: Enterprise Structure --- Definition --- Financial Accounting --- Edit, Copy, Delete, Check Company Code
Click the New Entries button:
Company Code: Enter the four-character alphanumeric value of your company code. It is usually good to have the company code numeric (1200).
Company Name: Enter a descriptive name for your company code. This field is alphanumeric and can contain up to 25 characters.
City: Enter the name of the city in which your company is located or headquartered. This field is alphanumeric and can contain up to 25 characters.
Country: Enter the name of the country in which your company is located. This field must contain one of the two-character SAP country values.
Currency: Enter the currency that your company code will operate with and will report in from a tax and statutory accounting perspective.
Language: Enter the one-character language ID for the default SAP language display for the company code.
Click on Save.
A new tab will come up, fill the details as below:
Click on Save.
2. Activation of New G/L
In new installations, the new General Ledger Accounting is activated by default in SAP system. SAP does not recommend that new customers use the classic general ledger accounting.
For Existing Clients: If existing customers want to use New General Ledger Accounting, they first need to activate it using a Customizing transaction. Activating New General Ledger Accounting results in system-wide changes to application and Customizing paths. The activation indicator is set at the client level, so it will become active for all the company codes in that client.
Caution: This transaction is performed at the start of the course to only enable you to explore the new functions. However, In practice execution of this transaction (for existing customers) is one of the last activities performed during the migration project leading up to the implementation of New General Ledger Accounting.
Just to show you how to activate New G/L if it is not yet activated in your SAP system, but it is recommended do not try this in a live/ production system.
Note: This is the first activity which you need to do for configuration of new G/L accounting. In the case of existing customer this should be last transaction after completion of new G/L migration project.
With activating new G/L, it results in wide changes to customization path and table structures. The path for New General Ledger Accounting is added to the existing/classical customization path. In case you want to remove the classical paths which are reflecting int he IMG path. You need to run the program RFAGL_SWAP_IMG_OLD to hide classic G/L configuration path.
If you are already using classic General Ledger Accounting in your production system, you need to perform the migration of this data before you activate New G/L accounting.
Go to SE38 and run program “RFAGL_SWAP_IMG_OLD”
Now New G/L configuration path will be shown. Now you can start configuration for Ledger and other New G/L related configuration.
Upcoming with further configuration on New General Ledger Accounting shortly.