Understanding Parallel Accounting in SAP S/4 HANA
- Aniket sawant
- Apr 10, 2024
- 3 min read
What is Parallel Accounting?
Parallel accounting refers to the practice of preparing financial statements using multiple accounting principles concurrently. This approach enables companies with global operations to comply with the reporting requirements of different jurisdictions or standards-setting bodies, such as International Financial Reporting Standards (IFRS), Generally Accepted Accounting Principles (GAAP), or local Generally Accepted Accounting Principles (Local GAAP).
Why Companies Adopt Parallel Accounting ?
The necessity for parallel accounting arises primarily due to the following reasons:
Regulatory Compliance: Multinational corporations must stick to the accounting regulations of each country in which they operate. These regulations may vary significantly, necessitating the preparation of financial statements in accordance with different accounting standards.
Investor Expectations: Investors and stakeholders often expect companies to provide transparent and comparable financial information. By utilizing parallel accounting, organizations can enhance transparency and facilitate easier comparisons across different reporting frameworks.
Internal Management Needs: Parallel accounting can also serve internal management purposes, enabling companies to assess performance, allocate resources, and make strategic decisions based on standardized financial information tailored to specific jurisdictions or reporting requirements.
Implementing Parallel Accounting in SAP :
Implementing parallel accounting requires careful planning and integration within a company's financial reporting systems. One common method for achieving parallel accounting is through the use of parallel ledgers within SAP. Here's how it works:
Parallel Ledger Configuration: Companies configure their SAP systems to accommodate multiple parallel ledgers, each representing a different set of accounting principles or reporting requirements. For example, a company may maintain one ledger for local GAAP reporting and another for IFRS reporting.
Transactional Processing: Transactions are recorded in the appropriate ledgers based on the relevant accounting standards. For instance, a sales transaction in a foreign subsidiary may be recorded in both the local GAAP ledger and the IFRS ledger, ensuring compliance with both sets of reporting requirements.
Reconciliation and Reporting: Regular reconciliation processes are performed to ensure consistency and accuracy between the parallel ledgers. Financial statements are then generated separately for each ledger, providing stakeholders with insights into the company's financial performance under different accounting frameworks.
Configuration of Parallel Accounting
Path to Configure -
SAP IMG –> Financial Accounting (New) –> General Ledger accounting (New)–> Financial Accounting Global Settings (New) –> Ledgers –> Parallel Accounting –>
STEP 1: Define Accounting Principle
Accounting Principle - are rules that govern how companies record and report their financial data.
Click on New Entries > Enter the Accounting Principle, Name Of Accounting Principle and Save.
STEP 2 : Assign Accounting Principle to Ledger Groups.
Click on new entries > Enter Accounting Principle against Target Ledger Group (or) Update the accounting principle key for assignment of Ledger group and Save.
STEP 3 : Assign Accounting Principle to Company Code
Go to 'Define Settings for Ledger and Currency Type' to assign Accounting Principle as shown below.
In Ledger '0L'
In Ledger 'IF'
Display Document of GL Document Posting (FB50) in Leading Ledger 0L
Document Display of GL Document Posting (FB50) in Extension Ledger IA
Thank you for your time to read my blog stay tuned for more interesting SAP blogs.
UPCOMING SAP S4 HANA ONLINE BATCHES - GET UPTO 30% Discount
SAP Controlling - 20th April'24 @8:00AM, IST
Course link : https://www.gauravconsulting.com/product-page/sap-s-4-hana-controlling-co-online-training
SAP S4 HANA FICO - 07th May'24 @8:00PM, IST
Course link: https://www.gauravconsulting.com/product-page/sap-s-4-hana-finance-beginners-online-batch
SAP Sales & Distribution (SD) - 27th April'24 @8:00AM, IST
Course link: https://www.gauravconsulting.com/product-page/sap-s4-hana-sales-distribution-sd-live-training
SAP EWM - 8th April'24 @9AM, IST
#SAPFICO #SAPInterview #SAPcommunity #SAPConsultsnt #SAPledgerandcurrecnysetting #AccountingPrinicple #SAPblog #FB50 #SAPTraining #SAPjobs #0L #GAAP #IFRS
Struggling to finish your assignments on time? You can pay someone to do my homework, ensuring professional help, accurate results, and timely submissions while saving time and reducing stress for academic success.
One of the appealing aspects of Sprunki Retake is the ability for players to customize skins, note styles, and even background themes. These personalization features encourage replayability and creative expression. Such flexibility has become a hallmark of the Sprunki Retake experience.
I’ve been researching different dissertation writing services to help with academic projects, and it’s interesting how much support they can provide. From topic selection to editing and formatting, these services really help students manage time better and improve quality. It’s important, though, to choose a reliable provider that ensures originality and professional guidance.
I'm one of those people who loves cleanliness, but hates the cleaning process. Especially washing windows. They are always either streaked or have stains. As a result, I invited the guys from Supertrust. I ordered the service at https://supertrust.ae/
— they came with professional equipment. The windows became so transparent that I almost crashed into them a couple of times 😅. Even the balcony, where dust had been lying around for years, now shines.
The XNXP personality type test online offers great insights into behavior and thinking patterns. I enjoyed how it highlights strengths and growth areas. It’s definitely a valuable tool for self-awareness, relationships, and career decisions. Thanks for sharing this resource!