Parallel Accounting

Introduction
The Central task of General Ledger Accounting is to provide a
comprehensive picture of external accounting and accounts.
Recording all business transactions (primary posting as well as
settlements from Internal Accounting) in a software system that is fully
integrated with all the other operational areas of a company ensures
that the accounting data is always complete and accurate.
Now a days many companies are required to record and report their
various accounting transactions according to different accounting
principles.
And many transactions are valued differently in different accounting
principle. For example(i)
Depreciation
(ii) Foreign Currency Valuation
For Example- Parallel accounting is necessary for an Indian Subsidiary
of an American group. The Indian subsidiary has to create Financial
Statements according to the accounting principles of the Group (such
as US GAAP or IFRS) as well as according to Indian Commercial Law
(Indian GAAP).
You can portray Parallel Accounting in your SAP System.
This enables you to perform valuations and closing preparations for a
Company Code according to the accounting principles of the group as
well as other accounting principles such as Local accounting principles.
You can use the following approaches to portray parallel accounting in
your SAP system.
(i)
Portrayal using Additional accounts.
(ii) Portrayal using Parallel Ledgers.

Portrayal using Additional Accounts

You can portray Parallel Accounting in your SAP system by creating
Additional accounts.
This means that you have different account areas(i)
One joint account area for postings that are same for both
accounting principles.

(ii)

One area with specific accounts for each accounting

principle. Each business transaction that are dependent on
the accounting principle leads to a different posting, which is
posted to the corresponding specific account area.
(iii) When you perform closing according to a specific accounting
principle, the common accounts and the specific accounts
for this accounting principles are evaluated.
The additional account approach is particularly useful if the number of
valuation differences in your accounting principles is limited and a
large number of GL accounts is acceptable.
Financial Statement Versions- You can create a separate financial
statement version for each accounting principle. This means that when
you create financial statements, you can select a separate structure for
each accounting principle.
Portrayal using Parallel Ledgers
Ledgers
A Ledger is a section of a database table.
A Ledger only contains those dimensions of the totals table that the
ledger is based on and that are required for reporting.
A totals table is a database table in which totals records are stored.
A totals table is used in General Ledger accounting as the basis for
your parallel ledgers.
SAP delivers the totals table FAGLFLEXT for General Ledger
accounting in the standard system.
A Ledger uses dimensions from the totals table it is based on.
Each dimension of the totals table represents a subset of the coding
block.
You can also include customer fields in your ledgers.
To do this you have to add the customer field to the coding block and
then include this field in the totals table that the ledger is based on.
Path to Define Ledgers
In IMG> Financial Accounting (New)>> Financial Accounting Global Settings
(New)>>>Ledgers>>>> Ledgers>>>>> Define Ledger for General Ledger
Accounting

Ledger Group
A ledger group is a combination of ledgers for the purpose of applying
the functions and processes of General Ledger accounting to the group
as a whole.
You can combine any number any number of ledgers in a ledger group.
In this way, you can simplify the tasks in the individual functions and
processes of General Ledger accounting.
For Example- You can make a posting simultaneously in several
ledgers.
In some General Ledger Accounting functions, you can only specify a
Ledger group and not individual ledgers.
Each ledger is also created automatically as a ledger group of the
same name.
You can use these automatically created ledger groups to process an
individual ledger.
You only have to create those ledger groups that you want to process
together in a function using processing for several ledgers.
If you do not enter a ledger group, processing is performed
automatically for all ledgers.
You therefore do not need to create a Ledger group for all ledgers.
Path to Define Ledger Groups
In IMG > Financial Accounting (New)>> Financial Accounting Global
Settings (New)>>> Ledgers>>>>Ledgers>>>>>Define Ledger
Group.
When you define each ledger group, you have to designate one of the
assigned ledgers as the representative ledger for that Ledger Group.
The system uses the representative ledger to determine the posting
period during posting and to check whether the posting period is open.
The posting is then made to the assigned ledgers of the ledger group
using the appropriate fiscal year variant for each individual ledger.
When the posting periods of the representative ledger are open, the
postings are made to all other assigned ledgers even if their posting
periods are closed.
The following rules apply for the specification of the representative
ledger of a ledger group-

(i)

If the Ledger group has a leading ledger, the leading ledger

must be designated as the representative ledger.
(ii) If the Ledger group does not have a leading ledger, you must
designate one of the assigned ledgers as the representative
ledger. During posting, the system uses the Fiscal year
variant of the Company Code to check whether the selection
is correct.
(iii) If one of the ledgers in the ledger group has the same Fiscal
year variant as that of the Company code, you must
designate that ledger as the representative ledger.
(iv) If all ledgers in the ledger group have a different fiscal year
variant to that of the Company Code, you can designate any
ledger as the representative ledger.
Thus, you may be unable to use the same ledger group for all
Company Codes.
In that case, you have to create separate ledger groups and in each
one designate a different ledger as the representative ledger.
Ledgers
New General Ledger (New GL) has all the functions of the classic
General Ledger but has been enhanced with special ledger functions to
create greater flexibility.
In General Ledger Accounting, you can perform parallel accounting by
running several parallel ledgers (general ledgers) for different
accounting principles.
During posting, you can post data to all ledgers, to a specified
selection of ledgers ot to a single ledger.
Leading Ledger
You must designate one ledger as the leading ledger.
In New General Ledger, there is one Leading Ledger for each client that
is valid for all Company Codes.
This Leading Ledger is integrated with all subsidiary ledgers and is
updated in all company codes.
This means that it is automatically assigned to all Company Codes.
In each company code, the leading ledger receives exactly the same
settings that apply to that company code, the currencies, the fiscal
year variant and the variant of the posting periods.
An important decision to make in which accounting standard to use in
the Leading Ledger.

 This assignment cannot be deactivated once it has been defined.

The Leading Ledger is based on the same accounting principle as that
of the consolidated financial statements or group.
If you use the account approach for parallel accounting, you post all
data to the leading ledger.
SAP provides the Leading Ledger 0L as standard.
That is in our example, the American Group will create a Ledger as
Leading Ledger with the US GAAP or IFRS as the accounting principle.
It is a base ledger which updates the cost center and consolidation.
You can define only one Ledger as the Leading Ledger- SAP provides
the Leading Ledger 0L.
The leading ledger is integrated with all subsidiary ledgers.
Only the values from the leading ledger are sent to CO.
The Leading Ledger in Asset Accounting (Depreciation Area 01) must
be posted to the Leading Ledger.
Leading Ledger uses the local currencies assigned to the Company
Codes.
Leading Ledger uses the GL total table: FAGLFLEXT.
Non Leading Ledger
Now for any other accounting principle non leading ledger can be
defined in the system which in turn can be used by the Company Code
for the parallel accounting and reporting.
The non leading ledger is parallel to the Leading Ledger.
They can be based on a local accounting principle for example Say in
our example the Indian Subsidiary creates a Non Leading Ledger in
Indian GAAP as accounting principle.
You have to activate a Non Leading Ledger for the individual Company
Code.
Non Leading Ledger can have different Fiscal Year Variant and different
Posting Period Variant per Company Code to the Leading Ledger of this
Company Code.
Path to Define and Activate Non Leading Ledger
In IMG> Financial Accounting (New)>>Financial Accounting Global
Settings (New)>>> Ledgers>>>>Ledger>>>>> Define and
Activate Non Leading Ledger.

 The second and third currency of the non leading ledger must be a
currency that is managed as second or third currency in the respective
Company Code.
However, you do not have to have a second and third currency in the
non- leading ledger, these are optional.
Parallel Currency
In Financial Accounting, in addition to the Local currency you can
define a maximum of 2 parallel currencies for your Company Code in a
Ledger.
Since the settings of the Company Code are transferred for the Leading
Ledger, your Leading Ledger is also managed in this parallel currencies
as well as the local curreny in this case.
You can only specify the parallel local currencies specified in the
Leading Ledger as parallel currencies in the Non Leading Ledgers.
You can use various currency types for the parallel currencies. You
define the currency of a currency type when you define the
organizational units.
(i) Group Currency- You define the group currency when you
define your client.
(ii) Global Company Currency- You define the Global Company
Currency, when you define the company assigned to the
Company Code.
(iii) Hard Currency- You define the hard currency when you define
the country assigned to your Company Code.
(iv) Index Based Currency- You define the Index Based Currency
when you define the country to which your Company Code is
assigned.
If you manage your ledger in parallel currencies, this has the following
effects(i)
During the posting the amounts are also saved in the parallel
currencies. The amounts are translated automatically, but you
can also enter them manually.
(ii) Transaction figures for the GL accounts are also updated in
the parallel currencies.
(iii) Exchange rate differences during clearing also appear in the
parallel currencies.
(iv) You can also perform a foreign currency valuation in the
parallel currencies.
Non Leading Ledger

 Non Leading ledgers are activated by Company Code.

You can define additional currencies that deviate from those used by
the Leading Ledger.
As a 2nd and 3rd Currency of a non- leading ledger, you may only use
currency types that you have already assigned to the relevant
Company Code for the Leading Ledger.
You can define a Fiscal Year Variant that differs from the Leading
Ledger if you dont specify a Fiscal Year Variant, the FYV of the
Company Code is automatically used.
You can also define a Posting Period Variant that differs from the
Leading Ledger.
Separate Document Types and Number Ranges can be defined for Non
Leading Ledgers by users, to ensure continuity in Ledger numbering.
Non Leading Ledgers updates the Profit Centers, segments.
The Non- Leading ledgers are used as parallel ledgers together with
the Leading Ledger. This can be used to apply different accounting
standards, such as IAS/IFRS or Indian GAAP.
Scenarios
The Scenario combines customising settings from different business
views.
For the Ledger, you define which fields are filled with posting date from
other application components.
Each business view specifies which posting data is transferred from
different application components is General Ledger Accounting such as
Cost Center Update or Profit Center Update.
You assign the desired scenarios to your ledger.
If you use Document Splitting, you define the fields of a Scenario that
you have assigned to the Ledger as Document Splitting
Characterstics
Path to Define Scenarios and Customer Fields to Ledgers
In IMG >Financial Accounting (New)>>Financial Accounting Global
Settings (New)>>> Ledgers>>>>Ledger>>>>> Assign Scenarios
and Customer Fields to Ledgers.
You cannot define your own scenarios.
A Ledger (always the Leading Ledger) can be assigned one or more
scenarios, or even all six (6) at once.

 You do not necessarily have to define non Leading Ledgers for using
multiple Scenarios.
And thus it means scenarios do not have to be assigned to nonleading ledger.
Note- You do not need a ledger for each scenario.
Parallel Ledger
SAP recommends that you implement this parallel ledger approach if
the number of General Ledger accounts would be unmanageable for
the scenarios using additional accounts.
Advantages(i)
You manage a separate ledger for each accounting
principle.
(ii) You can use standard reporting for the leading ledger and
all other parallel ledgers.
(iii) With this solution scenario, you can portray different Fiscal
Year Variants.
(iv) The number of General Ledger accounts is manageable.
Disadvantages(i)
The use of parallel ledgers increases the volume of data.