SAP Universal Parallel Accounting in S/4HANA 2022
As the world of technology and business continuously evolves, it becomes paramount for companies to employ the most efficient, agile, and comprehensive digital solutions to thrive. The latest innovation from SAP further validates this fact with its most recent S/4HANA 2022 release, which features an exciting new development: Universal Parallel Accounting.
This blog post will take a closer look at this new feature, its capabilities, potential advantages, and certain restrictions that you need to considering for UPA.
What is Universal Parallel Accounting?
Universal Parallel Accounting (UPA) is a new feature introduced by SAP in its latest S/4HANA 2022 release. The feature is designed to harmonize and simplify financial reporting across various accounting principles such as IFRS, GAAP, and local accounting standards.
At the heart of UPA is the concept of multiple valuations. UPA allows companies to manage multiple ledgers concurrently, each reflecting a different valuation. This multiple valuation approach is central to parallel accounting.
Previously, managing multiple accounting principles was a complex task, often leading to duplication of efforts and data. However, the UPA makes it significantly easier by providing the ledger as dimension across Fi and Co making it available in the entire value flow. In this blogpost I summarized the areas in which UPA makes the difference.
Inventory Prices and Actual Costing
For inventory valuation, UPA brings in new dimensions that allow a more flexible and detailed valuation of inventory. Inventory is no longer valued as a whole but can be segmented into various categories. This segmentation is based on ledger-specific valuation methods, allowing for a much more granular view and management of inventory.
UPA brings consistent and comprehensive support for parallel accounting standards in the value creation process. It allows parallel representation of different accounting standards for standard costs, and the valuation of work-in-process, finished goods inventories, and actual cost of goods sold.
The key benefits include consistent value flows for inventory valuation, a full audit trail for setting standard and actual costs, enhanced transparency and accuracy, and automated postings of different accounting rules.
Production Accounting
UPA extends its support to parallel accounting standards for the value creation process. It allows parallel representation of different accounting principles for input materials usage, manufacturing activities provision, overhead assignment, and the valuation of work in process and finished goods inventories.
UPA ensures immediate reflection of work-in-process and production variances, full audit trail for value created in manufacturing, with easy configuration and usability.
Asset Accounting
UPA provides robust support for managing and monitoring fixed assets across their entire lifecycle, following multiple accounting principles. It supports parallel value management with different accounting principles and parallel currencies.
The main benefits include the ability to manage asset values with detailed insights into asset values per accounting standard at the ledger level, with the inclusion of all currencies defined in General Ledger Accounting.
Before the UPA, asset accounting was performed on the book depreciation area, which often caused challenges while settling assets under construction (AUC). With UPA, a significant change is the ability to settle AUCs to final assets based on ledgers rather than the depreciation area. This ensures that every parallel ledger tracks the complete lifecycle of an asset, which is especially important for businesses that maintain parallel ledgers under various accounting principles.
This feature allows for better asset management across different accounting standards and offers a more precise valuation of assets according to each ledger’s specific rules.
Overhead Accounting
UPA offers consistent support for parallel accounting standards for end-to-end processes like make-to-stock/order and asset manufacturing. It allows parallel representation of different accounting principles across the entire value flow of overhead costs.
The key benefits include consistent parallel value flows of overhead costs, a high degree of automation and accuracy, and a full audit trail of overhead costs.
Restrictions and Considerations
While UPA brings a lot of advantages, there are certain considerations and restrictions to bear in mind. UPA is still in its initial release and not generally available yet. The business function can be activated by pilot customers only. The full list of restrictions and compatibility can be found in this OSS note: 3191636 – Universal Parallel Accounting (SAP S/4HANA 2022): Scope Information – SAP ONE Support Launchpad
Overall, Universal Parallel Accounting brings comprehensive reporting with real-time, ledger-level data, less manual adjustments or period-end closing activities, and simplified configuration processes with one central configuration for currencies and ledgers. It sets a foundation for future innovations.
In conclusion, the Universal Parallel Accounting feature in the latest SAP S/4HANA 2022 release is indeed a promising development for companies striving for enhanced and efficient financial management. Despite the potential challenges in the initial stages of implementation, the benefits it offers make it worth considering for companies reporting in multiple accounting principles.
Further scope information can be found here:
Universal Parallel Accounting | SAP Help Portal
