Effective Parallel Accounting Management Tools from SAP
In any business, the finance function faces two primary challenges: providing company management with real-time managerial reporting and ensuring compliance with accounting standards for fiscal authorities. These often involve different accounting principles, leading to duplicate work in maintaining parallel accounting records.
To meet all possible legislative and managerial financial reporting requirements, SAP functionality offers a range of solutions that eliminate the need for data duplication while enabling real-time performance analysis.
Maintaining multiple ledgers in SAP is a logical and straightforward tool that allows transactions to be recorded in several parallel ledgers based on a single primary document, following different accounting principles.
General Ledger
The General Ledger is the primary accounting book where all financial transactions of a company are recorded. It serves as a key element of financial reporting and typically complies with local accounting and tax standards.
Parallel Ledgers
Parallel Ledgers are additional accounting books that enable simultaneous accounting according to alternative or specific standards, such as International Financial Reporting Standards (IFRS) or managerial accounting.
Advantages of Maintaining Multiple Ledgers:
● Transparency – Access to reports under different standards and currencies in real time.
● Flexibility – Compliance with various legal and accounting standards.
● Functionality – Automation of accounting processes reduces manual operations and errors.
● Real-Time Processing – The system allows simultaneous visibility of transactions in both regulatory and managerial accounting without waiting for period closure.
Parallel Currencies in SAP:
Another essential tool is parallel currencies, which play a crucial role in financial reporting across multiple currencies simultaneously.Types of Parallel Currencies:
Transaction Currency
The currency in which a specific transaction is conducted. After execution, the data is converted into the company’s functional and parallel currencies according to system settings.
Company Code Currency
The currency used for accounting at the company level, typically matching the country’s official currency.
Controlling Currency
The currency used for managerial reporting, analyzing costs, revenues, and profitability across company divisions. This allows the use of different currencies and exchange rate sources.
Group Currency
The currency used for consolidated financial reporting across the entire corporate group.
Hard Currency
A stable foreign currency used to mitigate inflation effects in financial accounting.
Index-Based Currency
A currency linked to a specific index for accounting purposes.
Global Currency
A currency used for internal reporting and managerial accounting consolidation.
Controlling Object Currency
A currency assigned to a specific controlling object, such as a cost center, cost element, or internal order, facilitating internal accounting and analysis.
Advantages of Using Parallel Currencies:
● Transparency – Supports a database of multiple exchange rates needed for currency conversion.
● Flexibility – Enables working with multiple currencies simultaneously.
● Functionality – Automates currency calculation and conversion in financial transactions, minimizing the risk of errors from manual conversion.
Consolidated Reports
The optimization of financial processes using all available tools results in Consolidated Reports, which “speak the same language”—the language of business. These reports provide a solid foundation for decision-making, enabling effective business management through data transparency and accuracy. Consolidated reports can be generated in real time, ensuring access to up-to-date financial information.
Advantages of Using Consolidated Reports:● Transparency – Reports provide a real-time view of the company’s financial position.
● Flexibility – The ability to create reports that meet different requirements.
● Functionality – Using a single SAP system for all enterprises eliminates errors related to duplicate data entry or currency conversion. Internal group transactions are automatically eliminated.