What kind of PO need to be accrued? – The business context and scenario

Business Context

  •       According to IFRS accruals may be posted if there is a potential debt to some ‘external’ legal entity (e.g. to a supplier).
  •       Accruals need to be posted for costs that already incurred but were not yet posted in Accounting.

Business Scenario

  •       As a consequence, accruals are only relevant for purchases where costs occur. Use-Cases:

o   Purchasing products that are directly used; for example, office materials.

o   Purchasing of services that are received during a period of time; for example, IT consulting.

  •       The corresponding purchase order items usually have an additional account assignment like a cost center.
  •       Accruals are usually not relevant for the purchasing of

o   Products that are put on stock, as no costs are associated to such purchase order items. For example, raw material that will later be used for producing other products.

o   Products that represent a fixed asset, for example a laptop. Their value is posted to a balance sheet account. The costs will occur later during depreciation postings.

o   Purchase orders that represent an inter-company stock transfer:
They are not related to an external supplier, so no accruals are needed.

 

How does PO selected for PO Accruals calculation and posting in S/4HANA Public Cloud with the pre-delivered configurations?

 

PO selection

By default, accruals are only posted for purchase orders that represent a purchasing into costs, not into stock or fixed assets.

  •       Default settings

       By default, accrual objects are created for standard purchase orders with standard purchase order items only, that is,

o   Order Type = Standard PO.
The technical value for this field is NB

o   Item Category = <space>

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For purchase order items that represent a purchasing of services or an enhanced limit item, the accrual method SPLN_LIN_P is used which means that the planned costs are calculated according to a straight-line approach, that is, a linearization is done between start and end date that are entered in the purchase order item.

 

For all other types of purchase order items, the accrual method SPLN_DELSL is used, that is, the planned costs are calculated using the dates and quantities that are given in the delivery schedule.

 

You can activate the accrual calculation for specific types of PO by creating additional entries in this table.

What are the calculation logic and steps?

Basic calculation logic - accrual item types and three step approach

  •    Accrual item type

SAP delivers the following three predefined accrual item types:

o   PLNCST Planned Costs.

o   ACTCST Actual Costs (the posted invoices / goods receipts).

o   ACCRL Accruals which are the result of planned costs minus actual costs.

  •    Three steps approach

o   The system calculates two amounts:

Planned costs

Actual costs

o   The system calculates accruals:

Accruals = Cumulated planned costs - Cumulated actual costs.

The accruals are calculated by subtracting the actual from planned amounts. If the result is negative, it is set to zero since accruals cannot be negative from a business point of view.

  •       Accruals Periodic posting with full posting logic 

o   PP Periodic Posting
This type of posting is performed by the periodic accrual posting run:
The amount that is calculated by the accrual method for this period is posted.

o   Full posting logic - Post full amounts

§  The accrual engine first creates a posting that inverts (reverses) the accrual amount that was posted in former periods. 

§  Afterwards it posts the full accrual amount using the last day of the current period as translation date.

§  In both postings the posting date is by default in the current period.

Posting Logic

How?

Foreign Currency PO

Posting date

FX rate

FX valuation

Full Posting

Accrual Engine first creates an inverse posting that “reverses” the accruals that have been posted in the former periods; Afterwards it posts the full accrual amount using the last day of the current period as translation date.

The last day of the current period as translation date

No need

Current period

Afterwards it posts the accrual amount that was calculated for the current period.

Posting the full accrual amount in each period (incl. the reversal of the amounts of former periods) makes sense for example if accruals are being built-up: In this case the balance of the accrual amounts shall contain the amounts in all currencies using the latest exchange rate.

  - Example: 12.000 EUR are to be accrued over 12 periods, linearly:

Posting Date

Translation Date

Calculated Accrual Amount in Accrual Item Currency

Exchange Rate

Posted Amount
in Accrual Item Currency

Posted Amount
in
Local Currency

Comment

31.01.2017

31.01.2017

1.000 EUR

1.1

   1.000 EUR

   1.100 USD

 

28.02.2017

31.01.2017

<no calculation>

1.1

 - 1.000 EUR

 - 1.100 USD

Reversal of per. 1 posting

28.02.2017

28.02.2017

2.000 EUR

1.2

   2.000 EUR

   2.400 USD

Post full amount in per. 2

31.03.2017

28.02.2017

<no calculation>

1.2

 - 2.000 EUR

 - 2.400 USD

Reversal of per. 2 posting

31.03.2017

31.03.2017

3.000 EUR

1.3

   3.000 EUR

   5.200 USD

Post full amount in per. 3

 

   

31.12.2017

30.11.2017

<no calculation>

1.3

- 11.000 EUR

-14.300 USD

Reversal of per. 11 posting

31.12.2017

31.12.2017

12.000 EUR

1.6

  12.000 EUR

 19.200 USD

Post full amount in per. 12

Cumulated

   

1.6

  12.000 EUR

 19.200 USD

 

          (In the last period, the amounts in local currency (and other additional FI currencies) were converted with the latest exchange rate 1.6.)