After the release of SAP S/4 HANA Simple Finance, there has been great interest in the new, next generation finance solution of SAP. If an organization wants to simplify their finance function, then it is best to get the HANA capabilities of SAP. SAP S/4 HANA Simple Finance is a faster, smarter and simplest implementation strategy. Having running simple, organizations tend to use simple finance. Here is the overview of what simple finance involves;
A fixed asset is something intended for long-term use by the company in its normal course of business, typically longer than a single accounting period. The cost, or depreciation, is spread over the useful life (or expected life) of the asset rather than charged to the profit and loss (P&L) in the year of purchase.
Most countries have their own legislation regarding what can be included in the value of the asset, how much depreciation is charged, and when it’s charged, along with requirements regarding records to be kept of acquisitions, disposals, transfers, and depreciation for each asset.
Sometimes different records have to be kept for different purposes, for example, for Generally Accepted Accounted Principles according to local legislation (local GAAP), for International Financial Reporting Standards (IFRS), or for group or tax purposes. You may also need to keep separate records for revaluations and investment support.
In SAPS/4HANA, the New Asset Accounting module holds the asset register and allows the recording, management, and depreciation of many types of fixed assets. New Asset Accounting also integrates with other sub modules, for example, SAP Investment Management (IM), SAP Project System (PS), and SAP Plant Maintenance (PM) or SAP Enterprise Asset Management (EAM).
Not all long-term assets are physically used by the business and classified as fixed assets. Assets may be purchased for resale, for example, in the motor trade, in which case, they would be treated as stock rather than a fixed asset. They may also be used in the leasing business, in which case, they come under slightly different accounting regulations and may be recorded in several different ways depending on their complexity.
New Asset Accounting
New Asset Accounting is SAP’s latest version of the Asset Accounting module and was introduced in SAP ERP 6.0 Enhancement Pack 7 (EHP 7). It has since been fully optimized for SAP S/4HANA. Although called New Asset Accounting, many of the underlying principles and structure remain the same, so existing Asset Accounting users will still see many familiar transactions, for example, the Asset Explorer screen However, other transactions have been enhanced with additional fields or functionality. So why is it called New Asset Accounting?
SAP General Ledger
With the old version of the SAP General Ledger, the easiest way to account for additional accounting principles in one system was by using additional accounts in a separate range of the same chart of accounts.
For example, your main accounts might be local GAAP, so you might have a separate range of accounts for delta postings where IFRS or group accounts differed. Typical delta postings might be where you have different accruals, taxes, or different valuations for fixed assets.
The (new) SAP General Ledger, introduced in 2004, brought in the concept of having one or more parallel ledgers, which allows you to post most transactions (invoices, payments, etc.) for two or more sets of books simultaneously to additional parallel ledgers and report on them independently.
New transaction codes allow you to post adjustments in the additional ledgers so that a single ledger represents a complete set of books according to a specific set of accounting principles.
The SAP General Ledger enables you to post acquisitions, disposals, and depreciation in Asset Accounting for one set of books in real time to the main or leading ledger in SAP ERP Financials (FI), and postings for the other accounting principles to parallel ledgers, albeit at the end of the month.
Changes Brought in by New Asset Accounting
Apart from improvements to speed and performance, most of the enhancements brought in by New Asset Accounting revolve around posting to the different accounting principles more efficiently and reporting.
All depreciation areas in New Asset Accounting are now equal and post in real time. You can also navigate and drill down to most financial documents in the Asset Explorer, not just those in the main depreciation area.
When a change is made to an asset, its planned depreciation (used to post actual depreciation) is immediately updated, and all reports show up-to-date values.
Single Source of Truth
The reconciliation between FI and Asset Accounting is assured by design; for example, reconciliation accounts, which don’t allow manual postings, are now used in all depreciation areas, which helps preserve the integrity of the postings. Cost elements are now integrated into the chart of account master records, ensuring that SAP ERP Controlling (CO) is aligned with FI.
Postings to the other ledgers no longer take place separately at the period- end, so postings can’t be accidentally omitted, and you have access to up-to-date figures all through the period, not just at the month-end.
Benefits of New Asset Accounting
Simplification of Posting Logic
New transactions and accounts have been introduced that allow you to post independently to individual depreciation areas, accounting principles, or ledger groups, if required.
A separate line item is produced for each asset posting, including the acquisition and retirement values, the depreciation P&L charge, and the accumulated depreciation, which allows full visibility in FI.
No Redundancy of Data
New Asset Accounting no longer requires the use of delta depreciation areas in addition to normal depreciation areas.
New Logic and Easier Data Structures Aids Reporting
Custom reports are rarely necessary now to merge data from different places or tables as more data from CO, Profitability Analysis (PA), Purchasing, Sales and Distribution (SD), Asset Accounting, and so on are now stored in a single table in FI and available in the general ledger line item reports.
The period-end procedure is simpler and faster, with up-to-date data avail- able all through the month. Postings are direct or in the background, so there are no more batch postings. The depreciation posting at month-end is faster because the values don’t have to be recalculated. The planned value is simply posted directly; that is, no additional batch postings are required. Posting each ledger to different periods is possible as long as the year start and end dates are the same, for example, having calendar months for local GAAP, but quarterly periods for International Accounting Standards (IAS).
Intuitive SAP Fiori Apps
Shorter training times and better user experience are provided with SAP Fiori apps.
When migrating from another SAP system to SAP S/4HANA, although many tables are obsolete, compatibility views in SAP S/4HANA have the same name as the previous tables to allow custom reports and certain pro- grams to continue to run. If your existing system has been converted to SAP S/4HANA (as opposed to uploading opening balances), data from years prior to the migration are stored and remain accessible for reporting.
You can choose which depreciation area posts to which ledger (previously only Depreciation Area 1 posted to the leading ledger).
New Asset Accounting is available even if you’re not on SAP S/4HANA (as long as you’re on SAP ERP6.0 EHP 7 or above), but you must have the new version of the SAP General Ledger implemented first and use the ledger approach. It’s activated at the client level and, therefore, applies to all company codes. Not all of the features are available until you migrate to SAP S/4HANA, and after you’re on SAP S/4HANA, classic Asset Accounting no longer exists.
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