Chart of Accounts harmonisation in SAP is a finance initiative that aims to standardise financial language across the business and increase comparability between different entities or countries. Lack of central finance governance and lack of control over system implementations or acquisitions without full integration are possible reasons for multiple charts of accounts being set up in an enterprise. When there are multiple charts of accounts, the process of consolidating data from all the entities can be laborious. In addition, the differences in processes and customising systems result in high maintenance effort. On the other hand, having a harmonised chart of accounts would simplify period-end closing and ensure consistent reporting. As such, many enterprises aim for a global chart of accounts.
But what do we mean by the chart of accounts harmonisation in SAP?
In essence, it is the usage of one single chart of accounts (CoA) across all entities of an enterprise.
The challenge with this initiative is designing the global chart of accounts and ensuring minimal disruption to the business during the transformation. The close collaboration of the accountants and controllers is required for defining the global CoA and mapping old accounts to new account numbers. Only they know best which processes are covered within which accounts. Their input is also required to create a handbook comprising comprehensive guidelines on financial postings to each account defined in the global CoA.
System-wise, the CoA harmonisation procedure can be handled in multiple ways:
- Create new company codes
This approach involves creating a new CoA for the organisation and creating new Company Codes assigned to the new CoA. Data will then need to be migrated into the new company codes and system configuration to be set up based on the new CoA.
- Change existing CoA
This approach involves adding new G/L accounts to the existing CoA and posting from old to new accounts. System configuration will need to be updated and made effective at the due date.
- Landscape transformation
This approach involves changing all accounts to the new set-up using landscape transformation software. After the transformation, the system looks like the new accounts have always been in place. This approach results in the least effort and disruption to local business and is cbs best practice.
Regardless of the transformation approach selected, conversion of master, transaction and customising data related to G/L accounts will need to be performed. Adjustments of validations and substitutions, sets, ABAP coding, report variants, interfaces etc, are also necessary.
However, the landscape transformation approach is advantageous as:
- there are no specific preliminary activities required, e.g. reducing the number of open items
- the cutover date can be freely defined,
- there is full business continuity (no hard cut in reporting, which would have hindered comparability to previous years)
How Does cbs ONE Finance Support CoA Harmonisation?
To help organisations achieve successful finance transformation, cbs offers a product called ONE Finance which covers all services from developing the strategy to defining concepts and, finally, realising, using market-leading transformation skills.
- Strategy
This phase is typically called “Pre-study” where management input is required in defining and aligning the steering concept and business strategy. The target picture and objects to be standardised are then defined, for example, harmonised chart of accounts. In addition, a high-level roadmap to achieving the target should also be created.
- Concept
With the target in mind, taking harmonised chart of accounts as an example, concepts such as handling of country-specific requirements, account granularity, governance, reporting etc, will need to be formulated. Affected systems will need to be identified, and decisions to be made on handling the chart of accounts conversion.
- Realisation
This phase refers to the actual transformation to a global chart of accounts (CoA), starting from defining the CoA template, mapping from old to new accounts, setting up the new CoA and accounts in SAP, adopting master and application data, training users, go live and support. Given the huge number of affected objects in a CoA transformation, it is recommended to use the cbs Enterprise Transformer (ET) tool for facilitating the change.
There are some constraints to be noted for the CoA conversion using the cbs ET tool:
- All company codes assigned to a controlling area must be converted
- Complete mapping of all accounts that have been posted to is required (Chart of account transformation always takes place for the complete history)
- Basic properties must match for accounts to be merged
- Split of an account into multiple new accounts would likely need to be done manually
Apart from preparing the system and preparing the business for the new chart of accounts, it is also important to govern and maintain this global chart of accounts. The approach for governance, roles and responsibilities, and guidelines for master data creation and changes will need to be defined and clearly communicated. Otherwise, it may not be long before a master data clean-up activity is required.
Conclusion
So, that will be all for this blog.
We hope you got all the answers you sought through this one. However, if there’s still something you want to know about, make sure to contact us today.
We will try our best to help you out accordingly.
