Technical Guide: SAP S/4HANA Finance for Group Reporting

Technical Guide: SAP S/4HANA Finance for Group Reporting

Reading time: 14 mins

By Dr. Marco Sisfontes-Monge, Managing Partner, Arellius Enterprises Inc.

Working with the Consolidation Monitor and Performing One-Sided Elimination Entries

SAP S/4 HANA Group Reporting is the new SAP tool to manage exclusively consolidation with better Integration with the S/4HANA core database. Released Initially for S/4HANA 1809 and significantly upgrade In 1909 and up, it is a new exciting new tool available for the finance community. In this article we will explore how to configure and manage intercompany data without Trading Partner (intercompany partner) that can occur when there is missing partner information in one posting. For consolidation purposes generally intercompany eliminations have trading partners in both sides of the entry, however, for Cost of Goods Sold (COGS) transactions, the trading partner will be missing and this created a data inconsistency that will increase the Gross Margin part of P&L if these postings are not corrected, and sometimes you need to leverage customized ABAP Programs, and Journal Entries in order to correct these differences.

Now with SAP Group Reporting, the equivalent of SAP BPC Business Rules has been significantly improved, and now allows the user to have greater flexibility without the need of a customized program or journal entries. In this article we will be able to:

  • Clearly define what is SAP S/4HANA Group Reporting
  • How to configure business rules to resolve the one-sided elimination issue when trading partners are missing in one of the postings
  • When and How to use and execute this configuration with the Consolidation Monitor

By Dr. Marco Sisfontes-Monge, Managing Partner, Arellius Enterprises Inc.

Working with the Consolidation Monitor and Performing One-Sided Elimination Entries

SAP S/4 HANA Group Reporting is the new SAP tool to manage exclusively consolidation with better Integration with the S/4HANA core database. Released Initially for S/4HANA 1809 and significantly upgrade In 1909 and up, it is a new exciting new tool available for the finance community. In this article we will explore how to configure and manage intercompany data without Trading Partner (intercompany partner) that can occur when there is missing partner information in one posting. For consolidation purposes generally intercompany eliminations have trading partners in both sides of the entry, however, for Cost of Goods Sold (COGS) transactions, the trading partner will be missing and this created a data inconsistency that will increase the Gross Margin part of P&L if these postings are not corrected, and sometimes you need to leverage customized ABAP Programs, and Journal Entries in order to correct these differences.

Now with SAP Group Reporting, the equivalent of SAP BPC Business Rules has been significantly improved, and now allows the user to have greater flexibility without the need of a customized program or journal entries. In this article we will be able to:

  • Clearly define what is SAP S/4HANA Group Reporting
  • How to configure business rules to resolve the one-sided elimination issue when trading partners are missing in one of the postings
  • When and How to use and execute this configuration with the Consolidation Monitor

SAP S/4 HANA Group Reporting: Quick Overview

It is important to emphasize that SAP Group Reporting is a new product, thus it has a brand new architecture and there are no migration paths from any of the previous SAP consolidation technologies such as: SAP Business Planning and Consolidation (BPC) Netweaver or Microsoft versions, Financial Consolidation (FC), Integrated Business Planning (IBP), and any other product. SAP Group Reporting has a different Data Model and completely new set of Master Data objects however, they are in alignment with SAP BW and SAP S/4 HANA objects since SAP Group Reporting is linked closer to the core database and ACDOCA architecture. It might require a few more articles to clarify all the new terminology, but Figure 1 provides a quick reference.

Figure 1— Summary of SAP S4HANA Group Reporting

Figure 1— Summary of SAP S4HANA Group Reporting

I have reviewed the functionality of SAP S/4 HANA Group Reporting in a previous article.

In this article we will review one more time how the SAP Consolidation Monitor works, and how we can perform and execute one-sided elimination entries. As a reference, generally Intercompany Elimination entries following standard accounting procedures, require a Consolidation Unit (Company Code) and a Partner Unit (Trading Partner), along with the FS Item (Consolidation Chart of Account) and it is a two-sided entry.

There are eliminations that are required as part of the monthly close process, that we have only one-side of the posting with Trading Partner (Partner Unit or Intercompany) value, and thus the traditional process requires adjustment. On top of this, generally one-sided eliminations are linked to the sales revenue and COGS (Cost of Goods Sold) because the revenue can be Intercompany posted, but the COGS is posted without a Partner Unit. This scenario is quite common and to perform the appropriate elimination we will use an intermediate account called “Clearing Account”.

What is the Consolidation Monitor?

SAP S/4 HANA Group Reporting product is focused towards Consolidation, that area that is critical and demanding from any SAP implementation, and driven by Controllers, Finance Managers, VPs, CEOs, and CFOs. The consolidation process itself is another area in which the group reporting solution leverages previous development. SAP S/4 HANA Group Reporting has two monitors: Data Monitor used for data preparation and Consolidation Monitor that handles all processes linked to monthly and yearly consolidation processes such as carry forward, net income calculation, consolidation of investments, reclassification, intercompany elimination, and more.

As shown In Figure 2, the Consolidation Monitor is quite like the Data Monitor. You can access it from the Fiori Group called Consolidation Process, and inside it is possible to find the App called Consolidation Monitor. By clicking on this App, the Data Monitor can be accessed, and it is also dependent on Parameters or Selection criteria: Chart of Accounts (COA), Version (or Category for BPC terms), and Period (Time Period). It is required to set up the Set Parameters in a separate App, which is nothing more than a selection setting that is centrally controlled in the Consolidation Settings App Group.

Figure 2— Reviewing the Consolidation Monitor Environment

Figure 2—Reviewing the Consolidation Monitor Environment

As shown in the lower bottom of Figure 2, the Consolidation Monitor has a X and Y axis arrangement with different icons that show the status of that intersection such as error, executed, or not executed. In the Y Axis, you see the Hierarchy, that is the Consolidation Units Hierarchy that is a similar object to the Consolidation Company Group Hierarchy for the legal entities that require consolidation. Remember, the Consolidation Monitor is responsible to manage all the consolidation processes required to perform the consolidation processes for monthly and year-end.

Also shown in Figure 2, on the X Axis on the top are the list of the different task groups that will be executed for each intersection with the Group Consolidation Unit Hierarchy shown on the left. Example the CG00E is the Europe Group, that includes the Consolidation Units (company Codes) for this group, and it will require to execute each of the tasks assigned for the SAP companies available.

Figure 3— SAP S4 Group Reporting Consolidation Monitor Processes

Figure 3—SAP S4/HANA Group Reporting Consolidation Monitor Processes

As shown in Figure 3, the task groups identified in the data flow are the items in the X axis on the top of the Consolidation Monitor, and controls from start to finish the standard SAP Group Reporting Consolidation Process shown In Figure 2.

The Data Monitor and Consolidation Monitors were previously used in the SAP EC-CS and SAP BCS solutions that ran in the old SAP ECC architecture and now they have been adjusted to work within the SAP HANA environment. However, as part of the enhancement of 1909, a significant number of Apps have been made obsolete from 1809, and the amount of business content available is quite like the traditional SAP BW/HANA views and queries as shown in Figure 4. In comparison to 1809 level where Business Content was not available, from 1909 and above there are pre-delivered objects, queries, and HANA Views that improve the integration with SAP Analysis for Office, SAP BPC, and SAP Embedded Analytics.

Figure 4— Sample of the pre-delivered SAP S4 HANA Group Reporting as part of SAP Embedded Analytics

Figure 4—Sample of the pre-delivered SAP S4/HANA Group Reporting as part of SAP Embedded Analytics

In this article we will use the Consolidation Monitor to execute the one-sided elimination entries linked to revenue and cost of goods sold (COGS), and not following the standard intercompany elimination process. The main reason is only one posting has the Trading Partner (Partner Unit), and the second posting is not available  in the second posting since COGS come from the SD module, and generally it is not configured with a trading partner.  For a better understanding and quick introduction to the Data Monitor it is recommended to reference to my previous article.

Data Types available in SAP Group Reporting

Before we start, we need to be clear that SAP S/4 HANA Group Reporting breaks down the transactions using Document Types and Posting Levels, which are the object equivalent of Data Source and Sub Table type Dimensions respectively In SAP BPC. Just think they are unique identifiers for the type of transactions or numbers that help to isolate postings and/or transactions in the database. For example, all data replicated from ACDOCA into ACDOCU or uploaded during data preparation are either classified in Posting Level Blank or 00 (Sub table Dimension, BPC Equivalent).

As shown In Figure 5 elimination entries are part of the Standardized Data and posting level 20, which means you can identify the postings In ACDOCU Table where the consolidation postings happen by using this identifier as filter. We will review this later when performing the Reporting after we executed the task in the Consolidation Monitor.

Figure 5—Posting Levels available In ACDOCU Table when working with Group Reporting

Figure 5—Posting Levels available In ACDOCU Table when working with Group Reporting

Table 1 shows the standard SAP Group Reporting Document Types and includes the posting levels in parenthesis. For example, also group the different Posting Levels and transactions as shown in different types of postings. Think of Document Types like the Data Source dimension in SAP BPC for those familiar. For our One-Side elimination entries we would be using 2E Document Types and with Posting Level 20, and yes you can assign them to your Reclassification Method. We will review later.

 

Table 1 - Document Types available In ACDOCU Table when working with Group Reporting

Table 1—Document Types available In ACDOCU Table when working with Group Reporting

Configuring the One-Sided Elimination using Consolidation Monitor

In this  section we will work to quickly explain how one-sided elimination works Revenue vs COGS, we have two postings and only ONE posting has Partner Consolidation Unit (Trading Partner), and for this reason we need to set up postings accordingly for Credit/Debit Scenarios. A few key points for one-side eliminations using the standard pre-delivered content available using 1SG:

  • Intercompany sales are reported with a trading partner. Generally, in SAP, Cost of Goods Sold (COGS) do not come with a trading partner field populated. Default is #. The reason behind it that the COGS is calculated as Product Quantity Sold x Unit Cost per Product, and therefore there is no intercompany information as shown In Table 2.

Table 2- Initial Posting and Group Reporting transactions

Table 2—Initial Posting and Group Reporting transactions

  • To fix this issue for intercompany elimination, we can use one-sided elimination entry to perform the elimination with a clearing account.
  • One-sided elimination is triggered by the combination of Consolidation Unit (Company Code), FS Item for Sales Revenue (G/L Account), and Partner Unit (Trading Partner) and posted on both the sales and cost items as follows and shown in Table 2:
    • Sales Elimination Sequence: Debit (positive value posted) the Sales FS Item, Keep Consolidation Unit and Partner Unit, and Use the original Amount. For the Clearing Account, the same original amount from the original Sales Revenue Account will be Credited (Reduced or Negative value posted) and both Consolidation Unit and Partner Units are maintained from the original Sales Account.
    • COGS Elimination Sequence: since there is no Trading Partner (Qty x Cost per Unit), we will need to use the Sales Revenue Original Posting as reference. COGS elimination will leverage the relationships of the original Sales Revenue posting. It will maintain the Consolidation Unit, NO Trading Partner (#), retrieve the value of the Sales Revenue Account posting and use it to Credit (Reduced or Negative Value posted) the COGS account. The second part, the system will leverage the Sales Revenue Account Consolidation Unit and Trading Partner, it will switch it in the posting making Consolidation Unit In Sales Revenue = Partner Unit In COGS, and Partner Unit In Sales = Consolidation Unit In COGS, leverage the original Revenue Account value, and Debit (Positive Increase) this amount into the Clearing Account.
    • Clearing Account: at the end this process the Clearing Account is the link between each type of postings Sales and COGS to create the elimination entries and maintain the companies In balanced. Sales with NEGATIVE posting and COGS with POSITIVE Posting and BOTH with Trading Partners and adjusting the overall COGS original account balance to REDUCED the effect of Intercompany COGS. As shown In Table 2.

Configuring Sales Elimination Sequence

Step 1: Define the Elimination Selection

First, we need to identify the Elimination Selection Attribute linked to the Sales Account (FS Item) 411100. As shown in Figure 6, we are accessing the Define Financial Statement Items in the Consolidation Master Data Fiori Group. As shown In Figure 6, we will be using the Attribute S-IUE-PL-GP to Identify the account and the account value 411100 FS Item.

Figure 6—Identifying the Elimination Selection Attribute from the Sales Revenue FS Item

Figure 6—Identifying the Elimination Selection Attribute from the Sales Revenue FS Item

Step 2: Identify the Target Account for COGS

We need to post the adjustment to the Sales Account and then move that value to the Clearing Account, maintaining the same Consolidation and Partner Unit that we have in the original posting in Table 2.  Once more time review the Master Data App and find the Target Attribute that stores the Target FS Item or Account to be used as shown in Figure 7.

Figure 7—Identifying the Target Account using FS Items Attributes

Figure 7—Identifying the Target Account using FS Items Attributes

Step 3: Define the Classification Method

Now we need to create the business rules or eliminations methods that will control the Sales Elimination Sequence. To do this access the T-Code SPRO, and access the menu as shown in Figure 8 and access the Define Reclassification Methods screen. A new method will be created called GRP00 as shown In Figure 8, and then click on the submenu on the left called Rules. Rules are a set of processes that can be configured and executed in sequence linked to a Method.

Figure 8—Define Reclassification Methods (Elimination Rules)

Figure 8—Define Reclassification Methods (Elimination Rules)

Step 4: Define the Rules within the Method

As shown in Figure 9, we are ready to define the first Rule linked to our Method. As shown in Figure 9, it is linked to Method GRP00 and defined as Sequence Number 010. Since we need on the Sales posting to maintain the SAME Consolidation Unit (Company Code), we need to maintain the default “Post to triggering unit”.

Figure 9—Define the Sales Elimination Sequence

Figure 9—Define the Sales Elimination Sequence

Click on the next tab called Trigger as shown in Figure 10 to define the Trigger or the posting or account that will Initiate the process or main driver of the procedure. In this case as we reviewed in Step 1 the Elimination Attribute S-IUE-PL-GP Is the main flag used to search the database for the FS Item required to execute the posting.

Figure 10—Defining the Trigger

Figure 10—Defining the Trigger

Click on the next tab, Src-dest, to configure the source and target postings. Setting up the Target Clearing Account based on Elimination Attribute: 412100 and Subitem Category and Subitem Category (Optional) set to 2 = Functional Area because we are dealing with P&L Accounts. As shown in Figure 11 shows the Elimination Target Attribute identified in Figure 7 and linked to target account 412100, the Clearing Account to be used that will be credited.

Figure 11— Setting up the Target Account based on Elimination Target Attribute

Figure 11—Setting up the Target Account based on Elimination Target Attribute

Finally, to complete the Sales Elimination Sequence, we need to allocate how much of the original amount would be credited or moved to the Clearing Account. Leave it the field Blank for 100% allocation as shown in Figure 12.

Figure 12— Leave the Percentage Tab to Blank so 100% of the value in the source account Is transferred

Figure 12—Leave the Percentage Tab to Blank so 100% of the value in the source account is transferred

Configure COGS Elimination Sequence (the second leg without Partner Unit and posted to Clearing Account)

Step 1 Create a Sequence in the Same Method

We have completed the Sales posting, the only side the we have Partner Unit or Trading Partner. We need to resolve the COGS issue without trading partner, and reduce the Sales Revenue value from COGS, and transfer this value to the Clearing Account as shown in Table 2. We need a new Sequence, so 020, add a new entry to the same method GRP00, in this case we need to Post Completely to the Partner Unit as shown in Figure 13. Here we are using the source Sales Account structure to correct the missing trading partner.

Figure 13— Leave the Percentage Tab to Blank so 100% of the value in the source account is transferred

Figure 13—Leave the Percentage Tab to Blank so 100% of the value in the source account is transferred

Step 2 Define the Trigger

Now we will use the same trigger as in sequence 010 since we will use that account to perform the adjustment. For this reason, in Figure 14, the Trigger attribute S-IUE-PL-GP IC ELIM Gross Profit Trigger Is the same one.

Figure 14— Defining the Selection Trigger for COGS

Figure 14—Defining the Selection Trigger for COGS

Step 3 Configure the Sequence for COGS posting

Clicking on the next tab Src-dest is where the magic happens to correct the missing trading partner and posting. First, on the left side we need to select the Target Attribute for Source, in this case as shown in Figure 15, we are using S-ELIMINATION-TARGET that must be DEBIT the Clearing Account. The CREDIT posting must go to the COGs Account, which is 412200 as shown in Figure 15, and assigning subitem category 2 for Functional Area. We will use the Sales Revenue as the Trigger, and the value would be used for DEBIT and CREDIT into the COGS account and Clearing Account.

Figure 15— Defining the COGS postings

Figure 15—Defining the COGS postings

For the percentage Tab leave it blank to allocate 100% value of the Sale Account into the Clearing Account, and COGS as shown in Table 2.

Step 4 Add the Method to the Consolidation Monitor Consolidation Tasks

The Method GRP00 has been created in the previous section, and has two sequences 010 for Sales Elimination, and 020 for COGS elimination adjusting the missing trading partner in the Clearing Account Posting 412200. Now it is required to add these custom rules to the tasks identified in the Top X Axis of the Consolidation Monitor shown in Figure 16.  The task 2011 IC. Elim Sales, it is the task chosen to include the new custom reclassification rule for One-Sided Elimination Entries, click on the task, and assign the Method on the left-hand side. The complete procedure to assign the method GRP00, and the assignment to Document Type 2E to this process when the task is executed in the Consolidation Monitor is shown in Figure 17.

Figure 16— Assigning the Method to Task Group 2011

Figure 16—Assigning the Method to Task Group 2011

Notice in Figure 17, the Task 2011 has the Method GR00 has been assigned with validity starting December 2018, and Document Type 2E, that also includes Posting Level 20 as shown in Figure 18.

Figure 17— Assigning the Method GRP00 to your IC Elim Sales Task Group for Consolidation Monitor

Figure 17—Assigning the Method GRP00 to your IC Elim Sales Task Group for Consolidation Monitor

Figure 18— Assigning Document Type 2E and Posting Level (PL) 20 to the Task Group 2011 Consolidatio

Figure 18—Assigning Document Type 2E and Posting Level (PL) 20 to the Task Group 2011 Consolidation Monitor

Step 5 Execute the Consolidation Monitor

Go back to the Consolidation Monitor App in the Fiori environment, and execute your Task Group. Review that there is data for your selections and adjust the Set Parameters as needed to match the available data sets. As shown in Figure 19, we have opened the Consolidation Group and period, not green, and we are going to execute it on Test Mode (simulation) before we perform the Update Mode (Actual Execution).

Figure 19— Executing the Consolidation Monitor with the updated Task Group

Figure 19—Executing the Consolidation Monitor with the updated Task Group

Figure 20— Executing the Task Group in Test Mode

Figure 20—Executing the Task Group in Test Mode

Once the Test Mode run was reviewed and validated, click on the Update option to execute, and save to the database. Perform the required validations in the Test Mode accordingly to verify that both Sequences 010 and 020 have been executed as shown in Figure 21.

Figure 21— Performing Validation on Sequence 010 and 020 for the One-Sided Elimination Entry Task Group

Figure 21—Performing Validation on Sequence 010 and 020 for the One-Sided Elimination Entry Task Group

Conclusion

It has been reviewed extensively and with detail the Reclassification functionality from SAP Group Reporting, and the issue of one-sided elimination entries has been configured. It has been noted that Document Types and Posting Levels are key to work with the Consolidation Monitor and Data Monitor for both data analysis and data validation and are critical for data validation.

We have successfully reviewed how to correct the COGS using a clearing account using a step by step approach and leveraging the information from the revenue postings to correct the Gross Margin from double entries. The Reclassification functionality of SAP Group Reporting provides significant customization flexibility that is worth exploring.  It is clear for One-Sided Elimination Entries to work, the master data for the accounts or financial statement items (FS Items) is key, and without properly maintenance of this master data, the posting wont’ be accurate.

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