Exploring the Concept of Parallel Accounting for External Accounting


After completing this lesson, you will be able to:

  • Describe parallel accounting functionality using multiple ledgers.
  • Compose a ledger-specific posting.
  • Analyze and view normal postings and ledger-specific documents.
  • Create a ledger-specific financial statement.

Parallel Accounting

Franco is currently working in the Record to Report department of company and need to understand additional concepts required for period-end closing preparations, the company is required to report under multiple accounting principles and uses the Ledger Approach for parallel accounting.

Since the company is required to produce financial statements for their major Lines of Business and uses these reports to understand the financial health of those Lines of Business. The company also reviews the type of costs required to produce its products to understand which functional areas of the company are spending money. He will learn general accounting procedures and have basic experience with General Ledger master data and documents.

Select the play button to watch the video below:

Why does Parallel Accounting use multiple ledgers?

Follow Franco and Renita as they discuss the need for Parallel Accounting.

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In using Parallel Accounting, we’ve decided to utilize three general ledgers that comply with the reporting requirements in this scenario.

The three ledger groups in this scenario are as follows:

  • - 0L Leading Ledger (IFRS): The main accounting principle the company must report.
  • - 2L Non-Leading Ledger (Local GAAP): An additional accounting principle that the company is required to report locally.
  • - TX Non-Leading Ledger (Local Tax): An additional ledger that the company chooses to maintain.

Select the Play button below to learn more about ledger groups:

Explanation of Ledger Groups

All international companies have to prepare financial statements based on different accounting principles This leads to the question of why it’s required to file financial statements with different accounting principles? Watch the video below to learn more about parallel ledger direct document entry.

Parallel Ledgers – Secondary Processes

Parallel ledgers also support parallel valuation processes, which are often performed at period end.

When configuring for parallel valuation, accounting principles are defined and subsequently assigned to both the following:

  • Parallel ledgers
  • Valuation areas

Watch the video below to learn more:

Ledger-Specific Posting

What is a ledger-specific posting?

As new ledgers are created, the system will automatically create a ledger group containing a single ledger. You cannot add ledgers to this ledger group.

However, you can manually combine multiple existing ledgers into a ledger group

  • While posting a financial document, the Ledger Group field determines which ledger or ledgers will be updated by the document. If the Ledger Group field is left blank, then all ledgers will be updated. If the ledger group is specified, only the specific ledgers assigned to the ledger group will be updated.
  • Ledger specific documents cannot be posted to a customer/vendor account.
  • Customer/vendor accounts are posted in all ledgers.
  • In order to post to a customer vendor account, the ‘Ledger Grp’ field cannot specify a ledger group.

Select the play button below to learn more about ledger groups.

Ledger-Specific Posting

Ledger-Specific Financial Statements

Financial Statements can be created for each ledger. When executing the Balance Sheet/Income Statement application, you can choose which Financial Statement Version and Ledger to display.

Watch the video below to learn more:

Verify General Journal Entries

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