Universal Parallel Accounting

[MurlidharKhatri]

Universal parallel accounting is a new buzz by SAP being talked about from recent past. This is a topic which cut across many processes with finance and management accounting. In this post I will try to explain some concepts for better understanding of this topic.

Universal parallel accounting; as the name suggest; addresses parallel accounting requirements for multiple accounting principles. SAP regular solution also addresses parallel accounting requirements to great extent already without using universal parallel accounting. However, there are many areas where parallel accounting requirements are not addressed by default by SAP without using UPA.

Some of the motivation which leads to UPA functionality are as under:

• Report according to different fiscal year variants e.g., local v/s group
• Report inventory based on actual cost based LOCAL Gap. China, Brazil
• Functional Currency different from group and country currency
• Group Margin without intercompany profit

Following picture explain the limitation of parallel accounting without using UPA:

This view shows that Blue flow is related to group GAAP and hence no separate valuation maintained within CO. In general, this still looks fine, but it is not the case when data flows back from CO to FI (asset manufacturing and Inventory Valuation) hence manual adjustment postings were necessary due to this.

With UPA:

Let's understand below areas to build more understanding:

Asset Accounting: 

Settlement of Asset under construction to Final Asset per ledger. AuC Settlement generally post accounting to leading and non-leading ledgers and there is no control on settlement differently per ledger. UPA addresses this requirement whereby settlement rules are possible to create differently per ledger and finally AuC to Final asset takes place based on different settlement rules maintained per ledger.

Example:

Settle per ledger: L1 settle to asset L2 settle to Cost center.

Work around functionality available with Investment Management. This was complex and not fully accurate with IM functionality:

Settlement in UPA looks as under:

Inventory Valuation 

Without UPA there is only one inventory price, adjustments, delta runs at the time of period end, with introduction of UPA; inventory price is possible per ledger.

ECC/S/4 functionality without UPA was only possible at currency level but not per ledger.

With UPA it is possible to calculate, release and update price per ledger:

Actual Costing for Local GAAP

There are legal requirements for example in Brazil and China to perform actual costing for local GAAP. Without UPA actual costing is executed based on leading ledger and therefore posting takes place to both leading and non-leading ledger. With introduction of UPA it is possible to perform actual costing run per ledger.

Workaround without UPA involves below set up:

with UPA it is possible to have actual costing per ledger

Multiple Currency Requirements

There are 10 parallel currencies allowed in G/L whereas only 3 currencies are allowed in material ledger, 2 currencies are allowed in controlling. Some customers also have multiple controlling areas which add further complexity from currency point of view. With UPA in place 10 currencies are supported consistently through the applications like Material Ledger, Controlling, G/L and AA.

Workaround to address multiple currency requirement with limitation of translation based on current date is:

With UPA; No deviation in any sub ledger.

Decision to switch to UPA:

Once switched to UPA there is no come back, and hence proper evaluation should be performed before taking this decision. Also, there are limitations on certain functionality being in progress yet and therefore it is very important to understand the same. Refer SAP Note 

3265275 - Universal Parallel Accounting: FAQ

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