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Co-authored by Ulrich Hauke and Verena Stuetz
Last update: January 16, 2025.
Our Financials development expert Nicoleta Cernea has been hosting several In-Depth with SAP S/4HANA sessions and SAP S/4HANA Cloud Public Edition Product Expert Trainings on ledger scenarios in SAP S/4HANA Cloud, Public Edition.
For the benefit of participants, as well as those who may have missed the sessions, we've summarized the questions that were answered during the sessions by topics, and we've also collected some additional resources that you might find helpful.
These Q&As are there to help you with your decisions regarding parallel accounting and valuations when it comes to configuring ledgers and the related accounting principle assignments and other important settings.
And off we go, with your questions regarding ...
... ledgers in general:
- Question 1:
Can you confirm that as of SAP S/4HANA Cloud, Public Edition release 2302, it is possible to have three ledgers activated in parallel, that is, using a local accounting principle, IFRS, and US GAAP at the same time?
Answer:
Yes, as of CE2302 it has been possible to use up to thr ee ledgers in parallel.
- Question 2:
When we use two ledgers, are all transactions replicated in both ledgers?
Answer:
Yes, all postings recorded in the system will be posted in the leading and non-leading ledgers.
Manual adjustments are posted in the non-leading ledger.
- Question 3:
Is it possible to delete the ledgers 2L or 3L?
Answer:
As soon as you have finished and activated your ledger scoping settings, you cannot delete ledgers anymore. - Question 4:
Because it is not possible to delete ledgers, can you deactivate a non-leading ledger for certain company codes?
Answer:
The company codes that are activated in the system must be assigned to the leading ledger. From the non-leading ledger, however, this assignment can be deleted. The deactivation of ledgers in SAP S/4HANA Public Cloud is not supported. - Question 5:
Can I use parallel accounting based on an accounts approach in SAP S/4HANA Cloud, Public Edition.
Answer:
No. In SAP S/4HANA Cloud, Public Edition, parallel accounting can only be implemented by using parallel ledgers.
- Question 6:
Are the plans to increase the flexibility, that is the maximum number of currently four possible standard ledgers, also, for example, regarding a dedicated tax ledger, in SAP S/4HANA Cloud even more in the future?
Answer:
This is continuously discussed and analyzed according to market requirements. Based on the most recent requirements and votings raised at SAP Customer Influence this is currently not planned. This might change in the future. - Question 7:
In which scenario we should use an extension ledger? What features are available in extension ledgers that is not available in a standard non-leading ledger?
Answer:
An extension can be added on top of a standard ledger. It does not have additional functions compared to a standard ledger but, as it inherits all configuration settings of the underlying standard ledger and stores only the postings that are directly posted to it, has a smaller data footprint. A use case could be to create an extension ledger to be used for posting into closed periods for restatement purposes, and in parallel to create another extension ledger to be used for adjustments for consolidation purposes only. You can find more information in this SAP Help Center document: Extension Ledger
- Question 8:
The following statement was made during the session: "You may create the second extension ledger on top of the first extension ledger." My previous understanding was that the underlying ledger for an extension ledger must be a standard ledger, having this functionality you mention would be great. Can you point me to some documentation on how to set it up in the way you describe?
Answer:
Yes, as long as there's one underlying standard ledger as a basis, you can have multiple extension ledgers on top of each other. You can find more information in this SAP Help Center document:
Extension Ledger - Question 9:
When we create a new extension ledger, can we copy the postings from another, already existing extension ledger? A use case would be to "freeze" the first extension ledger to be able to post additional adjustments in the second extension ledger.
Answer:
You may create the second extension ledger on top of the first extension ledger. By doing so, the reporting for the second extension ledger includes all the postings from the underlying standard ledger, the first and the second extension ledger. - Question 10:
Can you add extension ledgers after initial activation and postings in the system?
Answer:
Yes, you can add extension ledgers at a later point in time. It inherits the configuration settings of the standard ledger it is based on and only gets postings that are made directly to it. - Question 11:
Is there a tool or any assistance to activate additional ledgers for the Cloud Public Edition available?
Answer:
Currently, the activation at a later point in time is not supported. This means that the decision on the number of ledgers must be taken during the initial scoping phase. - Question 12:
If we use a standard parallel ledger for Tax, then we want to keep this ledger open because for Tax, we can have adjustments many years later due to tax audits etc. In our understanding, this means that we don't have additional closing activities for this ledger, right? Or do we have to perform closing before carryforward to the next fiscal year?
Answer:
Period-end closing activities are required for each ledger. It depends on the type of adjustments whether some period-end activities need to be recalculated. To differentiate between open and closed periods and years you need to define and assign separate posting period variants to ledgers and company codes.
... accounting principles in general:
- Question 13:
Is it possible to create a new accounting principle, for example, an international public sector accounting principle, and assign this to ledger 2L?
Answer:
No, it’s not possible to create your own accounting principles. Instead, you can select the relevant scope items (2VA for USGP and 1GA for IFRS; J58 comes automatically with the local accounting principle) during scoping, and then change the assignments of accounting principles to ledgers according to your business needs. You do this using the Assign Accounting Principle to Ledgers and Company Codes configuration activity.
- Question 14:
What does setting up an accounting principle involve? Is it just about entering a name or does the system really know the differences between different accounting principles?
Answer:
Selecting a specific accounting principle means that you get a full set of predelivered content that is relevant for this particular country/region or in terms of a global accounting principle (such as IFRS or US-GAAP). Amongst other things, this content also controls the valuations in the advanced valuations procedure. Note that you don't create an accounting principle yourself but you select the accounting principles that are relevant for your business needs and according to your country/region scope.
... ledger and accounting principle assignments:
- Question 15:
What's the difference between accounting principle and ledger? Aren’t they one and the same?
Answer:
No, they are different things. The ledger is the place where you record all your transactions. An accounting principle is the underlying legal framework. Accounting principles can be US-GAAP or IFRS or HGB, for example.
To familiarize yourself with the concepts, you can go to the Help Portal:
Ledgers: Ledger
Accounting Principles: Accounting Principles
- Question 16:
What is the recommendation regarding the assignments of the leading and non-leading ledger to the corporate and local accounting principles?
Answer:
For parallel accounting (that is, more than one standard (full) ledger), the recommendation is:
leading ledger 0L -> corporate accounting principle (IFRS/USGAAP or country/region-specific accounting principle)
non-leading ledger 2L or 3L -> country/region-specific accounting principle(s).
The delivered system default is that the leading ledger is assigned to the local accounting principle, as a local ledger is always needed and you could have one ledger only. As soon as you have more than one ledger, SAP recommendation is to change this default. This means that you need to change the default assignments in configuration as shown above. - Question 17:
What is SAP's recommendation with regards to the assignment of accounting principles to the leading ledger 0L (local or corporate?), as you mentioned that intercompany allocations are based on ledger 0L?
Answer:
We recommend that you use the leading ledger 0L with a corporate (group) accounting principle and one of the non-leading ledgers for the local accounting principle. One of the reasons for this recommendation is that intercompany scenarios run based on the leading ledger.
- Question 18:
If you are implementing your system only in the US, US GAAP is required. So if you choose 0L only, would US GAAP come with 0L as the local accounting principle?
Answer:
Yes, if only one ledger is set up, USAP it is the local ledger. - Question 19:
When one parallel ledger (2L) is selected during scoping, can ledger 0L be assigned to accounting principle IFRS and ledger 2L to the local GAAP?
Answer:
es, the recommendation for parallel accounting is exactly this switch, that is to change the default settings as follows (and as described above):
- leading ledger 0L -> corporate accounting principle (IFRS/US-GAAP or country/region-specific accounting principle)
- non-leading ledger 2L or 3L -> country/region-specific accounting principle(s).
- Question 20:
When multiple countries are active in the system, should one accounting principle used per country that is assigned to the non-leading ledger while the leading ledger is assigned to IFRS, for example?
That is, when we have the Netherlands, Germany, and Belgium, will we have NLAP, DEAP, and BEAP?
Answer:
Yes, exactly. You can use accounting principles of all countries/regions that are in your scope. You should assign these local accounting principles on company-code level to the non-leading ledger. For the leading ledger, you would then assign IFRS for all company codes (as corporate accounting principle), for example.
- Question 21:
If the default accounting principle assignment is switched as you recommend, will this take effect also in other areas, such as asset accounting valuation, where accounting principles are assigned to different valuation views?
Answer:
Yes, switching the accounting principle assignments that are defined in general ledger will update the related areas (such as asset accounting and event-based revenue recognition (EBRR). This assignment must be done using the Assign Accounting Principles to Ledgers and Company Codes configuration activity. - Question 22:
If a company uses IFRS and a local accounting principle, is the recommendation to assign IFRS to leading ledger 0L?
Answer:
Yes, the SAP recommendation is to assign the corporate accounting principle to the leading ledger and the local accounting principle to a non-leading ledger.
- Question 23:
Can we use only leading ledger 0L and assign this to accounting principle IFRS? Or is it mandatory to use the local ledger 2L as well?
Answer:
To take accounting principle into use, you must activate scope item 1GA. By doing so, you add one parallel ledger. Technically, it would be possible to keep only ledger 0L with IFRS, but this is not recommended. You should use the local accounting principle for the non-leading ledger at company code level because by doing so, you get a tax depreciation area and you can also assign an alternative fiscal year variant. - Question 24:
You mentioned that IFRS and US GAAP are allowed as corporate accounting principles. Is it also possible to choose a different one (for example, ITAP) as the corporate accounting principle and to assign this to ledger 2L or 3L?
Answer:
Yes, this is possible. You can use any accounting principle that is activated in the system as your corporate accounting principle as long as you make sure that at least one ledger has the accounting principle assigned on company code level. - Question 25:
Can the leading ledger be changed in the SAP S/4HANA Cloud, Public Edition?
Answer:
In SAP S/4HANA Cloud, Public Edition, ledger 0L is always the leading ledger. This setting cannot be changed. You can, however, change the assignment of the accounting principle to this ledger (by default, this is the local accounting principle). - Question 26:
If SAP's recommendation is to switch the ledger and accounting principle assignments for almost every case, why doesn't SAP just deliver the desired combination of 0L + IFRS or USGAAP and 2L/3L + local accounting principles?
Answer:
Because you can choose to have one ledger only. In this case, you will only have a local accounting principle (and no global one, such as IFRS or US-GAAP). This is why the default needs to be leading ledger plus local accounting principle. As soon as you have more than one ledger, you should switch this assignment. - Question 27:
Can there be cases where accounting principle and ledger don’t have a 1:1 relationship in the system?
Answer:
When you use two parallel ledgers, you have accounting principles assigned on corporate level and on company-code level. So the relationship is 1:1 for the ledger and corporate accounting principle, and can be 1:n for the ledger and local accounting principles for your individual company codes (countries/regions you operate in). But also with only one ledger in use, you can have several accounting principles assigned on company-code level. - Question 28:
What happens if we need to do global reporting based on IFRS and also based on US-GAAP for tax purposes. Can we have the leading ledger with IFRS and one non-leading ledger with US-GAAP as well as another non-leading ledger for the local GAAP.
Answer:
Yes, this scenario is possible.
You select 3 standard ledgers during the initial scoping and switch the default in a way that ledger 0L has IFRS assigned and one of the non-leading ledgers gets the local accounting principles assigned. - Question 29:
Is it correct that the same ledger can be used for different accounting principles at country/company-code level but not at group level?
Answer:
Yes, this is true. For the ledger used for the whole group, only one common accounting principle can be assigned. - Question 30:
If a customer activates the scope items J58 + 1GA during scoping (that is, the local accounting principle and IFRS) , can they later on decide to operate in the USA and create a new company code and assign USAP to ledger 2L on company-code level? Or is a reprovisioning and activation of scope item 2VA required to operate in the USA?
Answer:
If you have activated parallel ledgers during scoping (as described), you can add further company codes later and assign USAP to the local ledger. In this case, no reprovisioning is needed.
... fiscal year and posting period variants:
- Question 31:
Can different fiscal year variants be used in leading and non-leading ledgers?
Answer:
Yes, you can have an alternative fiscal year variant (FYV) in your parallel, non-leading ledger. The assignment of an alternative FYV must be used in combination with a country/region-specific accounting principle. - Question 32:
How can I manage companies that need to use different fiscal years in different countries?
Answer:
To use different fiscal year variants, you need a parallel ledger in addition to the leading ledger, which would be 2L or 3L. You can then add an alternative fiscal year variant to this non-leading ledger.
You can find more information in this SAP Help Center document: Alternative Fiscal Year Variant
- Question 33:
Can you give an example where one or two company codes have a different fiscal year variant than the group fiscal year variant. In that case how should we set up the ledgers?
Answer:
For some countries it is required to have a fiscal year variant that does not match the calendar fiscal year. In such cases, you can set up the group ledger with FYV K4, for example, for the local ledger to select a different FYV for each company code. - Question 34:
Is it still valid that when using different fiscal year variants they all have to start with the same date if months or weeks are used as periods?
Answer:
Yes, currently the state of play is:
The start and end dates of posting periods in fiscal year variants assigned to the non-leading ledger of a company code must not differ from the start and end dates of posting periods in the fiscal year variant assigned to the leading ledger. The periods must be of equal length. This means that, for example, if the posting period is one month and the fiscal year has 12 posting periods, then the alternative fiscal year variant must also follow this pattern. Currently, industry-specific fiscal year variants, such as the 4-4-5 variant, as well as fiscal year variants containing 13 posting periods and 3 special periods, are not supported as alternative fiscal year variants.
- Question 35:
Can a fiscal year variant with a 4-4-5 pattern, which is needed in certain industries, only be used for the main fiscal year variant, that is, not for the alternative fiscal year variant?
Answer:
Yes, that’s right. The 4-4-5 cannot be defined as alternative FYV and it can only be used as the sole fiscal year variant, that is, not in parallel with other fiscal year variants. - Question 36:
Is it possible to have the same accounting principle for the leading and non-leading ledger, but to use a different fiscal year variant?
Answer:
This depends on how you set up your ledgers. For example, 0L + IFRS with K4 and 2L + IFRS with another FYV is possible (both are group ledgers). - Question 37:
Can I use the fiscal year variant to close periods differently for each ledger?
Answer:
Yes, it is recommended to define a different posting period variant if an alternative fiscal year variant (AFYV) is used.
Note that if an AFYV is assigned to the non-leading ledger, you need a different posting period. Opening and closing posting periods is defined in the posting period variants and can differ between leading and non-leading ledger.
Question 38:
Can I have different closing periods for the leading ledger and the non-leading ledger? For example, to close the non-leading ledger first and leave only the leading ledger open for additional entries such as GAAP conversion or audit adjustment.
Answer:
Adjustments are recorded for the non-leading ledger. All postings in the system are recorded for leading and non-leading ledger.
So, closing the non-leading ledger will not really have an impact for the leading ledger.
If you have an alternative fiscal year variant assigned to the non-leading ledger, you should define a corresponding posting period variant.
This will allow you to close the periods separately in the leading ledger and the non-leading ledger. - Question 39:
Can we use leading ledger 0L with local accounting principles and use the 4 special periods to process adjustments with IFRS?
Answer:
The adjustments posted on non-leading ledgers can be posted in special periods. Each fiscal year variant can have special posting periods. The usage of special periods can be defined using the posting period variant. If a posting period variant is defined with 4 special periods and assigned to the non-leading ledger, postings can be recorded accordingly. - Question 40:
If we have an alternative fiscal year variant in our ERP system (with the so called "New G/L" architecture), what is the recommended approach for a migration on SAP S/4HANA?
Answer:
As opposed to the New G/L architecture, where an alternative fiscal year variant was assigned to an additional ledger group without any integration with asset accounting, the alternative fiscal year variant in SAP S/4HANA Cloud is integrated across all areas as part of the universal parallel accounting functionalities. - Question 41:
Can scope items that depend on US-GAAP or IFRS be setup after the initial scoping? For example, revenue recognition scope for US-GAAP and IFRS?
Answer:
Please check the scope items in the SAP Signavio Process Navigator under SAP Best Practices for SAP S/4HANA Cloud Public Edition. The scope items that are marked as "Initial Activation Only" cannot be activated later. To find these scope items, filter for Initial Activation Only and for IFRS-relevant to be shown in the Additional Information column.
... group valuation:
- Question 42:
Is group valuation available for use in CLT (Configuration Localization Tool) for the implementation of new countries/regions?
Answer:
Yes, the group valuation is supported by CLT. Please note that some restrictions apply. To find out more, see SAP Note 3093830. - Question 43:
Is the group valuation available for all countries/regions? There seemed to be restrictions in the past.
Answer:
As of release SAP S/4HANA Cloud Public Edition release 2408 all countries/regions are supported. - Question 44:
Can customers activate the group valuation scope item (5W2) after the initial activation?
Answer:
No, you need to activate this scope item during the initial scoping activities. You can find more information in this SAP Help Center document: Configuring the Group Valuation Ledger - Question 45:
What happens if the customer decides to manage transfer prices after the go live or if they acquire new companies and require new ledgers to comply with local regulations?
Answer:
If you mean the group valuation solution, then customer’s need to decide whether they need this at the beginning and activate the scope item that is needed.
And it is also true that customers need to decide on the number of ledgers they activate during initial the scoping. So, if they, for example, activate two ledgers to enable parallel accounting, they can add new countries/regions anytime later – which means that every company-code can have their own accounting principles assigned.
... group reporting:
- Question 46:
What do I have to consider when I want to set up group reporting preparation ledger in SAP S/4HANA Cloud?
Answer:
You can define a standard ledger as a group reporting preparation ledger. For more information, see Configuration for Group Reporting Preparation Ledger.
... the configuration environment:
- Question 47:
Can I select three parallel standard ledgers when I am using Manage Your Solution in a 2-system landscape as my configuration environment?
Answer:
No, you can only select three parallel ledgers when you are setting up your system using SAP Central Business Configuration in a 3-system landscape. This means that you can’t select three ledgers for new company codes in Manage Your Solution (2-system landscape) either. - Question 48:
Who can use Central Business Configuration as their configuration environment?
Answer:
All new customers get Central Business Configuration for their setup and configuration activities.
... miscellaneous topics:
- Question 49:
What would be a sample business case for an additional depreciation area in asset accounting?
Answer:
An additional depreciation area is used for customer-specific cases when different depreciation methods are required. - Question 50:
Regarding CLM and the valuation of lease contracts: In a valuation rule, we need to assign an accounting principle. Does this mean that we need to create multiple valuation rules for each accounting principle so that each country has its own valuation rule for the local accounting principle in addition to the IFRS valuation rule?
Answer:
Each Accounting principle that is used in CLM needs a valuation rule. Therefore, you need to set up a valuation rule for the accounting principle of the relevant country or region (locally used ledger), and - depending on your business requirements - an additional valuation rule for the globally used ledger, for example, IFRS.
Additional Resources
For a demo on how the ledger scoping is done in the system, check out this video:
For more background information, see the following links:
SAP Community:
Blog: Which ledger scenarios are available as of SAP S/4HANA Cloud 2302?
SAP Help Portal Documentation:
More Information on SAP S/4HANA Cloud:
- Finance Collection Blog (roadmap, quarterly release highlights, microlearnings) here
- openSAP Microlearnings for SAP S/4HANA for Finance and GRC here
- SAP S/4HANA Cloud Customer Community for Finance here
- SAP S/4HANA Cloud, public edition release info here
- SAP S/4HANA PSCC Digital Enablement Wheel here
- Early Release Webinar Series here
- Inside SAP S/4HANA Podcast here
- Best practices for SAP S/4HANA Cloud here
- SAP S/4HANA Cloud Community: here
- Feature Scope Description here
- What’s New here
- Help Portal Product Page here
Thanks to all participants for all the valuable questions you posted during the sessions or asked on the line. We all learn a lot from each other in these great interactions.
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