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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 4Internal
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 5Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 6Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 7Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 8Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 10Internal
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 11Internal
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).
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 12Internal
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,
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 13Internal
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).
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 14Internal
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)
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 15Internal
Versions
During migration and if you continue to use classic reporting tools, settings are needed to
convert the ledgers back to „versions“.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 16Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 17Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 18Internal
Currency Types in a Multiple Valuation Ledger
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 19Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 21Internal
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)
…
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 22Internal
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 23Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 24Internal
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)
Business Use Cases for Attributed Profitability Segments
In the Past: Settlements Necessary to Provide Details
Revenue Recognition based on Result Analysis
Settlement required to provide Market segment Information
settlement (CO)
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 25Internal
Business Use Cases for Attributed Profitability Segments
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 26Internal
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
* Currently available for Work in Progress (WIP)
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 27Internal
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
* Currently available for Work in Progress (WIP)
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 28Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 29Internal
Activating Attributed Profitability Segments
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 30Internal
Activating Attributed Profitability Segments
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*?
* Currently available for Work in Progress (WIP)
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 31Internal
Reporting for Profitability Characteristics
Real vs. Attributed Profitability Segment
Real account
assignment to project
Attributed account assignment
to Profitability Segment
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 32Internal
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).
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 34Internal
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 35Internal
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
…
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 36Internal
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) :
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 37Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 38Internal
Realignment Approach in a Nutshell
Selection Conditions
Select data set for realignment
according to custom-defined
criteria
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 39Internal
Realignment Approach in a Nutshell
Conversion Rules
2
1
3
Choose the characteristics
that shall be changed within
realignment
Define conversion rules that
describe how characteristics
shall be changed
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 41Internal
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 42Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 43Internal
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 44Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 45Internal
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 46Internal
New App “Event-Based Revenue Recognition” (2)Purpose: monitoring of revenue recognition postings and manual adjustments
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 47Internal
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 48Internal
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).
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 49Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 50Internal
Income Statement Balance Sheet
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 51Internal
Income Statement Balance Sheet
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 52Internal
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 53Internal
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 54Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 56Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 57Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 58Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 59Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 60Internal
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.
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 61Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 62Internal
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
© 2017 SAP SE or an SAP affiliate company. All rights reserved. 63Internal
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