eriodic accrual process and configuration in accrual

ngine- S4 HANA 1909

Solutions.

Author: Upendra Ammineni

Author: Upendra Ammineni
Periodic accrual process and configuration
in accrual engine- S4 HANA 1909
Introduction
With S/4HANA 1909, accrual engine has introduced “Review and Approve accruals” transactions.

There are additional transactions introduced are as follows:

1. ACEPROPOSALRUN – Propose Periodic Amounts

2. FACRATIVL – Edit Time Intervals for Accruals Reviews and Approvals
3. FACRARVWCO – Review Periodic Accruals – Controllers
4. FACRAAPPRVGL – Approve Periodic Accruals – G/L Accountants

The process is driven by Standard accrual periodic flow wherein accrual object is created by
preparer, reviewed by reviewer, approved by approver and then it can be posted manually or by
scheduling batch jobs.

In this blog, I would explore customizing the periodic accrual – ACCRL_PER in manual accrual flow
so that reviewer and approver concept is displayed. This will involve right from creating the accrual
object, one with value lower than the threshold limit and other with value more than the threshold
limit description the process in details.

Please note:

 The configurations described below are relevant for SAP S/4HANA 1909.
 No coding is required to set up this flow, so this can be done without any development or
ABAP knowledge.

Business Requirement

For the purpose of this blog, we would explore the requirements as follows:

 Requirement that a low value transaction of less than USD 100 is not required to be
reviewed or approved.
 Reviewer and approver shall be different person with different authorization.

Accrual processing is a typical and painful period end activity for the business users. SAP has come
up with Accrual Engine in S4 HANA 1909 to make accrual processing easier. In this blog series we
will discuss on Manual Accrual – how it is configured and how it is processed on each period end. I
have divided the complete article into 2 blogs:

Part 1 – that describes the theoretical part of Accrual Engine

Part 2 – We will see a DEMO in the system

What is Accrual Engine:

Author: Upendra Ammineni

  Accrual postings belong to the typical period-end closing activities, since the amount of the
necessary accruals is not usually known until the end of the period.
 From a technical point of view, the Accruals Management functions build on the Accrual
Engine, which calculates the accruals that are posted in Financial Accounting.
 Accruals do not need any separate journal entries but are saved as line items in the
Universal Journal with REFERENCE KEY = ‘ACES4’

Accruals supported by Accrual Engine:

 Manual Accruals
For manual accruals, you enter the data of the business transaction to be accrued or load the
corresponding data to the Accrual Engine. The system calculates the amounts to be accrued.

 Purchase Order Accruals

In purchase order accruals, the required data is taken from the Materials Management component,
transferred to the Accrual Engine, and automatically converted to accrual items. The system
calculates the amounts to be accrued

In this blog series we will discuss on Manual Accrual.

Business needs & Motivation: Advantages of S4 HANA Accrual Engine

The S/4HANA Accrual Engine

1. Is optimized for S/4HANA

 It is fully integrated into the General Ledger:

 All currencies of General Ledger are supported
 The Accrual Engine postings are stored only as line items of the universal journal entry, in
table ACDOCA.

Author: Upendra Ammineni

  The fiscal year variant of the G/L ledgers are supported.
 Standard FI reversal, e.g. using transaction FB08 or F.80 is supported.
 There is no redundant storage of the postings as original document.
 No reconciliation effort any more with G/L: Transaction ACACTRANSFER ‘Transfer of ACE
Docs to Accnting’ is obsolete.
2. There are no summary records in the Accrual Engine:

 No limitation of the number of fields in reporting.

 No separate balance carry forward run required. The G/L balance carry forward is sufficient.
Transaction ACACCARRYFORWARD is obsolete.
 Enables Complex Postings – More than two line items are possible by customer-defined of
posting schemas.
 Allows optional review and/or approval of periodic accruals at period end.
3. Mass Upload of Accrual Objects is possible:

 Create or Update accrual objects with the total amount – For creating or update accrual
objects. The total accrual amount is a required field.
 Create or update accrual objects with periodic amount – For creating or updating accrual
objects. The periodic accrual amount is a required field.
 Update periodic amounts only (Quick mode) – For updating existing period periodic accrual
objects.
Key Elements:

Delta Logic for Accrual Postings:

You can configure the accrual engine to post in each period the delta amounts compared to the
former period or to reverse and post again the full amount:

 If delta posting is configured, the Accrual Engine calculates the amount for the given period
and subtracts the amount that was already posted before. Only the delta is posted.
 If full posting is configured, the Accrual Engine first reverses the amount that was already
posted. Then the Accrual Engine calculates the amount for the given period and posts this
full amount. Both, reversal and full posting are done in the given period.
Journal Entries: For Accrual Transaction Type PP-Periodic Posting

COMPLETE POSTING

 1st Periodic Posting

Dr Offsetting Account / COST Account

Cr Accrual Account / B&S Account

 2nd Periodic Posting

Reverse previous period posting

Dr Accrual Account / B&S Account

Cr Offsetting Account / COST Account

Author: Upendra Ammineni

Post the Accrual amount for current period in the same JV

Dr Offsetting Account / COST Account

Cr Accrual Account / B&S Account

DELTA POSTING:

Dr Offsetting Account / COST Account

Cr Accrual Account / B&S Account

Review and Approval:

 Review means: A reviewer can adjust the periodic accrual amounts that are proposed by the
system. If no user performs the review, the system will post the proposed amounts.
 Approval means: An approver can approve or reject the periodic accrual amounts that are
proposed by the system. If nobody approves the amount, the system will post no accruals for
this accrual object.
Accrual Transaction Types – Different types of Posting:

 IP – Opening Posting
When an accrual object is created, the total amount can be posted.
 PP – Periodic Posting
The amount that is calculated by the accrual method for the single periods can be posted.
 FP – Automatic Release Posting (also called Final Posting)
Reduce the accruals by posting them to some other account, for example a P&L account.
This type of posting occurs if the status of the accrual object is changed to Prematurely
Finished.
There are other transaction types as well which can be explored as per customer requirement.

Accrual Methods for Accrual Calculation:

 LINEAR – Amount equally distributed through all periods automatically

 UPLD_AMNT – Use amount that was uploaded into the Accrual Engine manually
There are other methods as well.

Author: Upendra Ammineni

Configuration Details
Steps to set up the periodic accrual engine flow.

Author: Upendra Ammineni

Step 1. Assign company code to the S4 HANA accrual engine.

 Assign the company code for which accrual engine must be activated.

Author: Upendra Ammineni

Step 2. Close fiscal year for changes to Accrual objects

 Mention the year for which accrual objects is not required to be change.

Author: Upendra Ammineni

Step 3. Accrual Method

 Define the different accrual method for accrual calculations along with the ABAP class so
that the system calculates the accrual value due for the period or date.
 LINEAR accrual method with ABAP class “CL_ACE_CFG_METHOD_LINEAR_P1” for period
posting. Likewise, different standard ABAP class are to be selected and defined against each
of the method.
 New accrual method can be defined here other than standard through enhancements.

Step 4. Define reasons why adjusting periodic amount in review and approval of accruals

 Reviewer has the authorization to change the accrual amount on review due date or due
period.
 Define the possible reasons for change in the accrual value which will be used by the
reviewer when any accrual due amount is changed to tag the reason for change against
each change.
 The comment may be made mandatory.

Step 5. Define threshold variants for review and approval of accruals

Author: Upendra Ammineni

  Define threshold limit against each currency under different threshold variant.
 Define lower threshold and upper threshold amount along with currency for which no
reviewer or approver is required in the system.
 If the accrual amount in a given period is below the lower threshold, the accrual amount will
not be approved automatically by the system, and the Approval Required checkbox on the
Review and Approve Accruals screens will be read-only, that is, no user will be able to
approve this amount. In this case, the Accrual Engine won’t post the accrual amount.
 If the accrual amount in a given period exceeds the lower threshold, but is below the upper
threshold, the accrual amount is automatically approved by the system on the screens for
reviewing and approving accruals. The system also automatically approves accrual amounts
equal to the lower threshold.
 If you don’t want the system to approve accrual amounts automatically, you can enter the
same amount for both the upper and lower threshold amounts. This prevents the system
from approving accruals automatically and makes it necessary to approve them manually.
 Default variant can also be selected from the defined list of thresholds.

Step 6. Define Time interval

 Define time interval variants for reviewing and approving.

 Give the description for different variant saved in the system.
 Default variant can be selected from the defined list of threshold limit against each currency
under different threshold variant.

 Select the variant and save the time intervals for review and approval.
 List the last day of period along with the following details:
o Review start date
o Review start time
o Review end date
o Review end time
o Approval start date
o Approval start time
o Approval end date
o Approval end time

Author: Upendra Ammineni

Step 7. Define accrual item type

 Define the standard periodic accrual type with the accrual method defined.
 Linear method will enable the system to calculate the accrual value each period or date as
per configuration depending on the life of the accrual object.
 It can be defined as upload allowed, if accrual objects are created through excel upload.

Author: Upendra Ammineni

Step 8. Item type settings for ledger group

 Define the frequency of standard periodic accrual type.

 Define the reversal posting type for standard accrual type.
 Specify the ledger for accrual posting.
 Define settings for review and approval
 Select the variant which was defined for review and approval.

Author: Upendra Ammineni

Author: Upendra Ammineni
Step 9. Define Posting schema

 Define which line items a posting can contain represented by a symbolic account.
 Define the posting schema and give a description to it.

Author: Upendra Ammineni

 Appropriate account is derived from the symbolic account by using the account
determination.
 Define the symbolic account for periodic accruals.
 Define the standard SLA line item type against each symbolic account.

Author: Upendra Ammineni

Author: Upendra Ammineni
Step 10. Assignment of accrual item types to posting schemas

 Define journal entry type to be used in the accrual postings.

 Define posting schema for each accrual item type.
 Define document type for each of these accrual item types.

Author: Upendra Ammineni

Author: Upendra Ammineni
Author: Upendra Ammineni
Step 11. Create basic account determination

 Account determination for accrual postings by entering at least the symbolic account and the
G/L account to be used for accruals.
 Define G/L account to be used in the accrual postings.

Step 12. Define accrual object categories

 Define object category to group together accrual objects of a similar nature.

Author: Upendra Ammineni

  Object category like salary, legal expenses, etc can be created.

Step 13. Assign parameters to Accrual object categories

 Any field which is required to be incorporated in accrual can be defined here as a parameter.

Step 14. Define number range for accrual object

Author: Upendra Ammineni

  Number range may be internal or external to be defined at company code level.
 In case of external number range, we need to give the accrual object while creating the
same.

Step 15. Assign number range to object categories

 Assign the defined number range to object categories created.

 Different defined number ranges can be assigned to different object categories.

Author: Upendra Ammineni

Step16 : BAdI: Modify Uploaded Content

BAdI: Modify Uploaded Content

Use

The business Add-In (BAdI) is used for the Manual Accruals (ACAC) component. To create or update accrual
objects, you can use this BAdI to modify the uploaded file content for specific requirements with constants
values or variables that will be returned from the specific function module or other methods.

The following methods are available:

Method CHANGE_UPLOAD_CONTENT:

The method has parameter CT_UPLOAD_CONTENT that includes the content from the source uploaded file.
Its structure type is ACAC_S4_UPLOAD_CONTENT that includes the following modifiable structures for the
Accrual Engine:

ACESOBJ

Accrual Engine Header Data. Its type is ACESOBJ_EXT.

ACESOBJ_ITEM_T

Accrual Engine Item Data. It’s the table of structure ACESOBJ_ITEM_EXT, but it always has only one entry
corresponding to one line in the uploaded file.

ACE_UPLOADED_ACCR_AMOUNTS_T

Accrual Engine Periodic Data. It is a table of structure ACE_UPLOADED_ACCR_AMOUNTS_EXT. It has only

one entry, like ACESOBJ_ITEM_T.

Author: Upendra Ammineni

Periodic Accrual Process Flow
The following flowchart describes the Periodic accrual accounting process via accrual engine
(example).

The above diagram explains step by step periodic accrual process using accrual engine. Please
note that this is the standard step by step SAP flow. This flow may be modified as per client
requirement and through various enhancements.

Author: Upendra Ammineni

Step 1: Create accrual object

Transaction: ACACTREE01

Enter

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Click on download excel template

Click on option 1 for periodic accruals and save it in your system.

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Fill in the excel template.

Step 2: Upload the excel template

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Transaction: ACACTREE01

Navigation

Attach the file form the system

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Execute the process in test run

 Since no errors were encountered, it will be uploaded in actual run by unticking the test run
option.

Execute

Two accrual objects got created with number 12 and 13 amounting to 90000 USD and 45 USD
respectively.

Step 3: Propose periodic run

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Transaction: ACEPROPOSALRUN

Navigation

Enter the parameters

 Company code: 0001

 Accrual item type: ZSALARY
 Last day of period: 30.04.2020
 Accrual object: ZSALARY 12 and 13

Tick test run to check for any error

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 Execute in test run mode to check for any errors.

 Since no errors are encountered, it will be executed in actual run.

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Execute

Within threshold limit?

 Two columns which are highlighted are review status and review type.

Review status details

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  Review status as X – reviewed for accrual object 12 is because the accrual value is more
than threshold limit.
 Review status as U – not applicable for accrual object 13 is because the accrual value is less
than the lower threshold limit of 100 USD.

Review type details

 Review type as E- Explicit review is required as accrual value is more than the upper
threshold limit of 1000 USD.
 Review type as B – No review required as accrual value is less than the lower threshold limit
if 100 USD.

Since, two accrual objects is created, accrual object number 12 will follow step 5 and 6 but, accrual
object number 13, accrual engine will not post any document as it is below threshold limit.

Step 4: Edit time interval for review and approval

Transaction: FACRATIVL

Navigation

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Enter

 Select the variant

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  Below intervals are defined in the variant.
 It can be changed on requirement or any other reason like management decision or change
in timelines, etc.
 Edit the time interval for 30.04.2020 as we want to review and approve on 02.04.2020,
though ideally it should be in month of may.

Changed value for April 20

 Time can also be set here depending on the country time zone.

Step 5: Review Periodic accruals

Transaction: FACRARVWCO

Navigation

Author: Upendra Ammineni

Enter the parameters

 Company code: 0001

 Accrual type: ACCRL_PER
 Accrual Object: ZSALARY 0000000000000000000012
 Last Day of period: 30.04.2020

Author: Upendra Ammineni

Execute

 Accrual Value of 10000 USD can be changed by the reviewer, select the adjustment reason
for the same and comment on the same.
 Changing the accrual value from 10000 USD to 11000 USD.

 Tick the amount review tab and click on set as reviewed tab

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  Save the screen to complete the review.

Step 6: Approve Periodic accruals

Transaction: FACRAAPPRGL

Navigation

Enter the parameter:

 Company code: 0001

 Accrual item type: ACCRL_PER
 Accrual Object: ZSALARY 0000000000000000000012

Author: Upendra Ammineni

  Last Day of period: 30.04.2020

Execute

 Both the accrual value is displayed, proposed and reviewed accrual value.
 Adjustment reason and comment is also displayed to the approver given by reviewer.
 Tick on amount approver and click on approve tab.

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  Save the screen changes.

Step 7: Periodic posting run

Transaction: ACEPOSTINGRUN

Navigation

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Enter the parameter:

 Company code:0001
 Accrual Type: ACCRL_PER.
 Last day of period: 30.04.2020
 Accrual Object: ZSALARY 0000000000000000000012
 Execution in test run to check for errors.

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Execute

 No error encountered.

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Execute

Step 8: Reverse Periodic posting

Transaction: ACACTREE02

Navigation

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Enter the parameter:

 Company code: 0001

 Accrual object Category: ZSALARY
 Accrual Object Number : 12

Execute

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 Click on Postings tab

 Accrual entry posted by the system – document number 100000015.

 Select the line item to be reversed and click on reverse tab.

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  Enter the date manually on which date it is to be reversed.

Enter

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  Reversal document posted by the system.

Conclusion
Periodic accrual flow in accrual engine has reviewer and approver option available in standard.
Custom workflow is thereby not required as the purpose it met by assigning standard roles of
Controllers and G/L accountant along with threshold flexibility.

Author: Upendra Ammineni