Accounting Principle for Consolidation Set of Books

[KCPN]

Hello,

I want to set up additional set of books for consolidation purposes to reflect data in one - group currency for two companies operating in different countries with different local currencies. Question: when you set up set of books you have mandatory field 'Accounting Principle' and there are pre-defined two local GAAP principles and one for IFRS. Do I use IFRS accounting principle assuming that there is no specific consolidation accounting principle available in solution scoping? Did anyone consider something similar or did use different approach?

[CHANDRESHJAIN · Accepted solution]

🔹 Why You Need a Separate Set of Books

You're setting up a separate set of books for:

• Reporting in group currency

• Following group-level accounting rules (e.g., IFRS)

• Performing eliminations, adjustments, and consolidated reporting

Since each company may follow its local GAAP, the group books let you reflect uniform accounting standards.

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🔹 The Role of the ‘Accounting Principle’ in Set of Books

When you define a Set of Books in ByDesign, you must assign an Accounting Principle, which drives:

• Applicable rules (e.g., depreciation, valuation)

• Relevant posting logic

• Availability of reports and views

🔹 What Are Your Options?

Typically, ByD comes with:

• Local GAAP principles for each country (e.g., DE-GAAP, US-GAAP)

• IFRS as the international standard

If your group follows IFRS, use IFRS as the Accounting Principle for the consolidation books. If you’re using IFRS elsewhere already, and you want something clean/separate for group books, you can:

✅ Option 1: Use IFRS

• If your group reporting is IFRS-based

• And you are not using IFRS elsewhere, or don’t mind dual-use

✅ Option 2: Use a local GAAP you're not using elsewhere

• For example, if DE-GAAP is available but unused

• Rename/descriptively use it for group purposes

• Not ideal, but functionally valid

✅ Option 3: Request SAP to add a new accounting principle

• Rare, and might require partner support or PDI (partner development infrastructure)

• Not always feasible in standard public cloud

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💡 Real-World Tip:

Many customers reuse IFRS as their consolidation accounting principle, especially when:

• They don't have a separate consolidation tool

• They want to use intercompany elimination features inside ByDesign

• They need to report in group currency across companies

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🧾 Additional Suggestions:

• Name your consolidation Set of Books clearly (e.g., "Group S/4 IFRS").

• Assign it only to consolidation-relevant companies (those involved in group-level reporting).

• Use manual journal entries or reclassification documents to post group-level adjustments.

[KCPN · Accepted solution]

Dear CHANDRESHJAIN, thank you for comprehensive answer.