Accrual Engine

Solution Management

Financials

SAP AG
 What Are Accruals?

Simple Example:

„ Given: Value + time interval

„ Task: Distribute value over time interval

12,000

1000 800 1200 700 1100 500 1400 1100 800 1100 1100 1200

Period 11

Period 12
Period 10
Period 4

Period 5

Period 6

Period 7

Period 8
Period 1

Period 2

Period 3

Period 9
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 Simple Posting Example

Accounting: Accruals = Periodic postings

D P&L C D Accrual C
12 000 (1)
1 000 (2) (2) 1 000
800 (3) (3) 800
1 200 (4) (4) 1 200

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 Accrual Engine: Where Are Accruals Needed?

„ Contract business transactions:

Insurance, Leasing etc.

„ Contract-like business transactions

Bonds with fixed interests,
Magazine Subscriptions etc.

„ Any periodic postings based on an amount

or value
Provisions for Awards

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 Accrual Engine: What it does

Input: Accrual Output:

Contract-like information
Periodic postings
Engine

„ Contract-like data is transferred to the Accrual Engine.

„ The Accrual Engine makes periodic postings to Accounting based
on this data.
„ The Accrual Engine is an engine and as such is not visible to the end user
„ The Accrual Engine is surrounded by applications that define the
business content and use the Accrual Engine. This can be compared
with the engine in a car: The driver works with the car, not with the
engine itself.
„ Accrual Engine applications are defined and delivered by SAP.
They cannot be defined by customers.
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 Accrual Engine: A Generic Tool

Provisions for Real Estate

Awards

IBS
ut In p
Manual Inp ut Media
Accruals
(future)
In
pu put
t In

SDP Accrual Output:

Input Periodic postings
Leasing
Engine

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 Accrual Engine: Some Features

„ Highly flexible tool

„ Storage of all relevant data

Input (contract-like information incl. history!)
Output (posted accruals)

„ Accrual Engine = ‘Accrual sub-ledger’

„ Mass data processing, performance optimized

Parallel processing available (via server group)

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 Accrual Engine: Processes

Calling Application

Process B:
Calculateof
Trigger Calculation Accrual
and Post
Accruals Method
Accruals

R
R

Accrual Engine
Process A:
Create/
Change
TransferBasis
DataData R Create/
Periodic:
R Build Delta to R
Post
R Create
to Accrual Change already posted Accounting Documents
Calculate Accruals Document
Engine Basis Data values

Posted Values
Basis Data (Accrual Objects)
(Accrual Engine Documents)

Calculation Posting

Reporting Reporting

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 Accrual Engine: Structure of Basis Data

Accrual Object Does not carry any information; links accrual sub-objects

Accrual Subobject

Accrual Subobject

...

Header Start-date and end-date of time interval for accrual

Assignment Cost center, business area, profit center, ...

Accrual Subobject
Parameters Customer-defined fields like ‘Product Group’, ...

Each combination of
Accrual Item
- Accrual Type (costs, revenues,...) and
Accrual Item - Accounting Principle (IAS, US GAAP, ...)
defines an Accrual Item:
Accrual Item The total value to be accrued, the total quantity to
be accrued and the Accrual Method
... (linear/periodically, linear/daily) can be entered at
this level.

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 Accrual Methods

„ SAP delivers a number of accrual methods:

„ Linear, periodically
„ Linear, daily with 365 days
„ Linear, daily with 360 days
„ ...

„ Accrual methods are ordinary function modules

„ Customers can define their own accrual

methods

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 Customer-Defined Parameters

„ Customer-defined parameters are additional fields that can be entered by

users when creating or changing accrual objects

„ Customer-defined parameters are entered at the accrual sub-object level

„ The values entered here can be used in

„ Accrual Methods
The parameters can contain additional information that can be used in
customer-defined accrual methods
„ Account Determination
The parameters can also be used in Accrual Engine account determination
„ BAdIs
Parameters can be used in BAdIs for modifying documents before they are
transferred to Accounting.

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 Accounting Docs

„ The accrual engine creates accrual postings: If the corresponding

accrual type is customized accordingly the accrual engine executes
one, several or all of the following type of postings:
„ Opening postings
The full amount which is to be accrued is posted, usually to an accrual
account. This posting is executed, when the accrual object is created.
„ Periodic accrual postings
These postings post a certain value which is calculated by the accrual
method. This value is usually a part of full value (which is to be accrued).
It is usually posted from the accrual account to a P&L account. These
postings are executed by the periodic accrual run which is usually
started at the end of each period.
„ Final postings
If the posting of accrual has to be terminated before the full value has
been (periodically) accrued, then the remaining value is posted to a
certain account.
„ Other types of postings which are less important
„ Each posting creates an accrual engine document and this
document is transferred automatically to accounting.

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 Account Determination

„ When posting Accruals, Accrual Engine documents are created in the

Accrual Engine. These documents consist of only one line item without
GL accounts and without CO assignments like cost center etc.

„ When the Accrual Engine documents are transferred to Accounting

(which is usually done automatically when they are posted), an
Accounting document with two line items is created from the Accrual
Engine document.

„ At this point in time, the Accrual Engine account determination is

executed to get the following information:
„ Start account
„ Target account
„ Document type

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 Parallel Accounting

„ The Accrual Engine supports parallel accounting in two ways

„ Parallel accounts
The account determination can be customized in a way that different
accounts are used depending on the accounting principle.

„ Parallel ledgers (Ledgers in mySAP ERP or Secial Ledgers)

Ledgers are assigned to an accounting principle. Then postings in
accounting will be performed per ledger.

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 Accrual Engine: Benefits

„ Automated periodic calculation of accruals

- No recurring entries with fixed values

„ Automated periodic posting (self correcting!)

„ Simulation tools (e.g. future accruals)

„ Supports multiple GAAPs

„ Comprehensive reporting tools

„ Integration with BW (Business Information

Warehouse)

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 Applications that use the Accrual Engine

„ Manual Accruals

„ Provisions for Awards

„ Lease Accounting

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 Manual Accruals: Overview

„ Purpose: Post accruals for contract-like data

„ Create ‘contract data’ (accrual objects)

manually in the Accrual Engine

„ SAP also delivers an interface for creating

accrual objects

„ Start periodic accrual posting runs

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 Manual Accruals: Example ‘Insurance Contract’

„ Contract data:
„Valid from 01 Jan. 2000 until 31 Dec. 2004 (5 years)
„Annual premium (to be paid by customer): 3,600 EUR

„ Revenues: Customer pays 5 x 3,600 EUR = 18,000 EUR

„ Costs: Salesman gets 6,000 EUR bonus

„ Costs and revenues must be accrued over 5 years

„ Monthly revenues: 300 EUR = 18,000 EUR / (5 x 12)
„ Monthly costs: 100 EUR = 6,000 EUR / (5 x 12)

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 Manual Accruals: Application Menu

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 Manual Accruals: Application Menu

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 Manual Accruals: Create Accrual Object

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 Manual Accruals: Create Accrual Object

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 Manual Accruals: Opening Postings

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 Manual Accruals: Navigation

Place cursor
in ‘COSTS’ line
and double-click
or

press ‘Transfer
Accrual Item’
button

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 Manual Accruals: Opening Postings

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 Manual Accruals: Documents in FI

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 Manual Accruals: Opening Postings

D Receivables C D Accrued Revenues C

(I.1) 18,000 18,000 (I.1)

D Payables C D Accrued Costs C

6,000 (I.2) (I.2) 6,000

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 Manual Accruals: Documents in FI

D Receivables C

(I.1) 18,000

D Revenues C D Accrued Revenues C

18,000 (I.1)
300 (P.1) (P.1) 300

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 Manual Accruals: Posting Deltas

„ In each period, the following accruals are calculated:

„ Revenues (Accrual Type RVNUES): 300 EUR
„ Costs (Accrual Type COSTS): 100 EUR

„ In the first period (1/2000) these values were posted correctly.

„ Now let us assume that by mistake the accrual run in 2/2000 was not carried
out.
„ The next accrual run is carried out in 3/2000.
„ The Accrual Engine then calculates that in 3/2000 the accrued values should
be:
„ Calculated Revenues: 3 x 300 EUR = 900 EUR
„ Calculated Costs: 3 x 100 EUR = 300 EUR
„ In 3/2000, the Accrual Engine then posts the difference between the calculated
values and the values already posted:
„ Posted Revenues: 3 x 300 EUR - 300 EUR = 600 EUR
„ Posted Costs: 3 x 200 EUR - 100 EUR = 200 EUR

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 Manual Accruals:
Example of Derived Accrual Types (1)

Derived accrual types can be used for calculating accruals from

other accruals types.

Example:

„ Customer gets a discount of 10 %

„ Discount: 18,000 EUR x 10% = 1,800 EUR
„ The discount must be treated differently according to IAS and
HGB (German GAAP):
„ HGB: Discount is posted once when the contract is
created
„ US GAAP: Discount has to be accrued during the life of the
contract. The monthly accrual value is
1,800 EUR / (5 x 12) = 30 EUR

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 Manual Accruals:
Example of Derived Accrual Types (2)

„ According to US GAAP, additional accrual postings have to be made

for the discount.
„ These additional postings can be made with the help of derived accrual
types using the following rule:
„ “In US GAAP, the discount is calculated by taking 10 % of the revenues
in HGB”.

„ The following activities have to be performed in Accrual Engine

Customizing:
„ Create the new accrual type “DISCNT”
„ The above rule is entered in activity “Define Calculation rules for Derived Accrual
Types”.

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 Provisions for Awards: Overview
„ A company grants a number of stock options to selected employees

„ Purpose: Post provisions (= accruals) for the outstanding options.

„ To do this: Transfer information about outstanding options from HR

system to Accounting system
(Accrual Engine)

„ Afterwards: Calculate and post provisions using the Accrual Engine

„ Different calculation (=accrual) methods are possible for calculating the

provisions: SAP delivers two examples as accrual methods:

APB 25 Provisions based on stock prices

FAS 123 Provisions based on Black & Scholes Model

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 Copyright 2003 SAP AG. All Rights Reserved

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