CONCEPT OF THE NEW GENERAL LEDGER IN SAP

FIGURE 1 (NEW GENERAL LEDGER ACCOUNTING IN IMPLEMENTATION GUIDE)

The classic general Ledger contains all the financial transactions of a business. Besides using the classic general Ledger, businesses make use of the Special Ledger and other components like Profit Center Accounting (PCA) in order to meet statutory as well as internal requirements. SAP Profit Center Accounting and the special Ledger reside in separate applications. Therefore, these modules were not automatically reconciled with the classic general Ledger. Due to this there was a need to perform additional closing activities in order to reconcile these additional modules with the classic general Ledger.

The new general Ledger uses the same familiar interface as the classic general Ledger but overcomes the difficulty encountered while carrying out the closing activities in the classic general Ledger.

ADVANTAGES OF USING THE NEW SAP GENERAL LEDGER

• The new general Ledger covers all the functions that were previously implemented by the use of separate ledgers like the Costs of Sales Ledger, Special Purpose Ledger, the Reconciliation Ledger or the Profit Centre Ledger.  Therefore, businesses need not maintain the separate ledgers in separate applications. This makes the recording at Administration of transactional data easier.
• The user interface of the New General Ledger is similar to that of the Classic General Ledger. Therefore users already familiar with the Classic General Ledger require very little training in order to migrate to using the new general Ledger.
• The New General Ledger eliminates data redundancy by storing all the transactional data in a single totals table. This improves the efficiency of the database.
• With the New General Ledger, there is no need to use separate ledgers like the Special Purpose Ledger, Profit Center Ledger, etc. It eliminates the need of Profit & Loss and Balance Sheet adjustments with online splitting functionality. Due to this there is no need to carry out additional reconciliation activities with other applications during closing. This helps in saving a lot of time and effort on the part of the end user.
• The use of the new General Ledger makes it easier to include additional fields in order to provide flexible reporting as per the requirements of a business.
• Reconciliation ledgers postings are eliminated by the use of the New General Ledger. In case of cross company code postings, the information was initially stored in controlling and then transfer to the FI module at period close. The controlling data was stored in the Reconciliation Ledger. At the period end, this data was transferred from controlling to create FI documents so that are reconciliation between controlling and FI was carried out. The New General Ledger provides real-time reconciliation between the controlling and FI modules.
• The Total Cost of Operations for a business is reduced due to the advantages provided by the New General Ledger.

CHARACTERISTICS OF THE NEW GENERAL LEDGER

The Classic General Ledger was primarily intended to provide a comprehensive mechanism for external reporting purposes by recording all the transactions of a business. However, for internal reporting purposes data needs to flow to the various controlling modules like Profit Centre Accounting, Cost Element Accounting, etc. The linkage between the Classic General Ledger and the controlling module was weak. Due to this there was automatic reconciliation between the Classic General Ledger and the various controlling applications. The New General Ledger provides the following features:

FIGURE 2 (DOCUMENT SPLITTING IN NEW GENERAL LEDGER)

• PARALLEL ACCOUNTING: The New General Ledger allows several parallel ledgers to be maintained in order to record transactions and provide reports to meet different accounting requirements. This eliminates the need to use the Special Ledger application separately in order to fulfill these requirements.
• INTEGRATED STATUTORY AND MANAGEMENT REPORTING: The New General Ledger enables a business to perform internal management reporting along with supporting the traditional purpose of legal reporting. It allows financial statements to be generated for any dimensional in a business. Therefore, the New General Ledger may be used to produce the balance sheet which is required for external reporting purposes or the Profit Centre analysis report which is required for internal reporting purposes.
• SEGMENT REPORTING:  The New General Ledger allows reports to be prepared on the basis of segments based on the International Financial Reporting standards (IFRS) and Generally Accepted Accounting Principles (GAAP)
• COST OF SALES ACCOUNTING: The New General Ledger allows the costs of sales accounting to be implemented.
• DOCUMENT SPLITTING: Document splitting helps to create balance sheets for entities that extend beyond the scope of the company code.
• NEW TABLES: the new general Ledger makes use of the tables FAGLFLEXT (totals), FAGLFLEXP (plan line items), FAGLFLEXA (actual line items) and FAGL_SPLINFO (splitting data).

LEDGER CONCEPT IN THE NEW G/L

The New General Ledger uses the Special Purpose Ledger to save total values in the tables. All company codes are assigned to a leading Ledger. For each client, additional ledgers for each company code can be added. These additional ledgers can be used for different purposes such as parallel accounting or management reporting. With the New General Ledger it is now possible to perform postings that previously required several components. This is also true with regards to the transfer postings between profit centers that were previously stored and the Special Ledger.

The new general Ledger makes use of additional tables and fields as compared to the classic general Ledger once the new Gen functionality is activated, the previous financial accounting menu is replaced by the financial accounting (new) and the general Ledger (new) menu. It is required to activate the new general Ledger accounting so that the transactional data is written to the new tables rather than the classic general Ledger tables.

FIGURE 3 (ACTIVATE NEW GENERAL LEDGER ACCOUNTING)

ACTIVATING THE NEW GENERAL LEDGER IN THE SYSTEM

For all the new installations, the New General Ledger is activated by default. SAP recommends the use of the New General Ledger functionality because of the many advantages it has to offer. However, for existing customers it is optional. Existing customers can continue to use the Classic General Ledger or they can migrate to the New General Ledger. The New General Ledger is activated automatically during an upgrade.