Parallel financial reporting means that you must create the financial statements for a company in accordance with different accounting rules. This is because a local view (by U.S. GAAP in the US) is no longer sufficient by itself in a globalized world of creditors (banks, shareholders) and business partners. An internationally respected standard, such as IAS/IFRS or U.S. GAAP, is in increasing demand.
You can still model different accounting rules using an account-based solution in the G/L. The G/L also lets you use different ledgers to save the different valuation approaches. This is called the ledger solution. However, do not confuse this ledger approach with the special ledgers (FI-SL).
Ledger Solution
You can use different ledgers (leading ledger and non-leading ledgers) to model different accounting rules. An important option to consider is which accounting rule will be modeled in the leading ledger. It is recommended that existing customers who upgrade to SAP S/4HANA do not change the leading view. A change of the leading view should always be dealt with in a separate project, as before.
Extension Ledger
An extension ledger stores delta values and points to another ledger, therefore providing a flexible mechanism for adjustments and reporting. An important use case is for management views on top of legal data (IFRS or local GAAP). Besides creating a master record, extension ledgers do not need additional configuration. Multiple extension ledgers can point to the same underlying ledger. This has the benefit of a reduced data footprint and zero reconciliation effort as only the delta values are kept.
Extension ledgers are stored in the universal journal, the same as standard ledgers. Extension ledgers can be assigned their own booking period variants. This means that the standard ledger can be closed and the assigned extension ledger can be open.
In addition, you can build up extensions ledgers that are based on another (= underlying) extension ledger.
With extension ledgers you can staple ledgers on top of each other, providing the different views you need. This minimizes the data footprint and provides new flexibility for easily creating additional views.
Defining Ledger Groups
Business scenario: You now have to run the foreign currency valuation for both U.S. GAAP and IAS/IFRS. In both cases, open items (and balances) have to be given a basic valuation. There are two options, as follows:
Option 1:
Definition of two valuation areas and two accounting principles with relevant links to ledgers.
Then, the foreign currency valuation runs twice; each time updating the appropriate ledger (for example, 0L and during the next run, only ledgerL5).
Option 2:
Definition of a valuation area (for example, International) and an accounting principle.
In addition, a ledger group is defined (in the figure, this is L7). This ledger group contains the ledgers 0L and L5 and is linked to the new valuation area International.
Effect of Option 2: The foreign currency valuation program must only be started once (for the new valuation area). The values are then written to all ledgers (0L and L5) of the ledger group L7.
To define ledger groups, in Customizing, choose Financial Accounting→Financial Accounting Global Settings→Ledgers→Ledger→Define Ledger Group.
The ledger group is an option for simplifying and/or accelerating the work in certain cases. No customer should be forced to create their own ledger groups. However, a new ledger group is created automatically for each ledger in the G/L. The new ledger group contains the relevant ledger and has the same name as it. The document is then only posted to the selected ledgers.
If the ledger group only consists of one or more non-leading ledgers, you have to define the document types for the entry view in one ledger. To do this, in Customizing, choose Financial Accounting→Financial Accounting Global Settings→Document→Document Types→Define Document Types for Entry View in a Ledger.
The general ledger view is specific to a ledger.