Understanding the Business Requirements for Restatements and Simulations

Objectives

After completing this lesson, you will be able to:

  • Understand the business requirements for restatements and simulations
  • Discuss the version stack examples for restatements and simulations

Version Stacks for Restatements and Simulations

You can restate existing consolidated financial statements and also simulate different consolidation cases using the version stack approach.

Restatement - Key Points

  • Restatement means that retroactive adjustments to previously published financial statements are executed.

  • You carry out a restatement (for example retroactive adjustment) because of a change in:

    • Accounting principles

    • Group structures

    • Management reorganizations

      or, to implement corrections to previously published financial statements.

      For example: You adopt a new accounting standard in the current year, and therefore restate the consolidated financial statements of the previous year with the new accounting standard. This way, you can report transparent changes on past closings.

  • As restated data sometimes becomes the norm for the future, restated data sometimes needs to be merged into the standard version during balance carryforward.

In the figure above:

  • In 2024, the Standard version (yellow line) consolidates without IFRS XX
  • A new Extension version (blue line) is defined to consolidate 2024 with IFRS XX
  • The restated 2024 closing balances are carried forward to the Standard version (green line), in 2025

Simulations

Simulation – Key Points

  • Simulation is the process of a business scenario to answer a "what if" question.

  • You can then compare the results of the simulation with the current consolidated financial statements.

  • Simulations are often processed like restatements.

Example:

You acquire a new subsidiary in the current year and want to know the impact of this acquisition.

So, you create a simulation for the current year without this new company so that you can compare the results with the actual data from the current year with the new company.

This way, you can evaluate the impact of this acquisition.

Business Requirements for Restatements and Simulations:

  • Need to restate data already published, typically because of a change in accounting standards, in legal group structures, in management organizations, in reported data, and to make possible the comparison between years/periods (such as prior year comparison).
  • Different types of restatements are needed, which require a change in master data, transaction data, or configuration.
  • Restated data sometimes becomes the norm for the future: restated data needs to be "merged" into the standard during balance carryforward.
  • Previously published data must be retained (data, logs, process status, master data, configuration).
  • Some simulation cases are processed like restatements (for example, consolidate current year, but without the acquisition of a subsidiary).

Extension Versions for Restatements and Simulations – Key Points

  • An extension version can be consolidated independently, e.g., using a different configuration than the reference version at a different point in time. This is done with the help of the special versions concept. For example, you’re able to use a different group structure or different tasks and methods in SAP S/4HANA Finance for group reporting data and consolidation monitors.

  • The extension version stores only delta values, which means that it only stores the data records needed to obtain the restated or simulated values, but not all data records of the consolidated financial statements.

  • Since the restatement or simulation occurs in its own separate extension version, all the data from the original version is retained and remains unchanged.

Note

If you want to copy the restated values in local currency between parallel versions, then you need to copy the data over with the Copy Transaction Dataapp.

This is because a version only inherits data of another version below it in the version stack, not parallel to it.

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