Document Splitting in New GL in SAP #11: Document Splitting and realised foreign exchange loss/ gain

Document Splitting in New GL in SAP #11: Document Splitting and realised foreign exchange loss/ gain

Overview

SAP ECC newGL Document Splitting process supports certain “subsequent processes whereby the system transfers document splitting characteristics from the original process to the subsequent process.” Users are not required to configure any extended Document Splitting rules to split documents from subsequent processes. If subsequent processes post line item to cost centres, the system ensures that these cost centre relevant lines items are split based on the split in the original process. In this blog, I will explain and demonstrate how SAP ECC document splitting works for subsequent process of realised exchange rate gain / loss.

 

Blogs on Document Splitting

In my series of blogs on document splitting, I intend to explain and elaborate the concepts behind Document Splitting and highlight using examples how document splitting can be achieved for various complex business processes. I use Profit Centre as a “scenario” to explain the functionalities; however all processes that apply to Profit Centre also apply to the other scenarios (Segment, Business Area).

To identify the series of blog, I have categorised the blogs under SAP > newGL. If you have questions/ comments/ suggestions, please send me your comments in the form below. Sharing your questions and experience using comment box below will help other readers to gain additional knowledge involved in this functionality.

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Assumption for this blog

You should read by first 5 blogs to gain an understanding of the concepts around document splitting. These 5 blogs form the backbone of this blog series. Where possible in this blog, I will link the context to the foundation blog so you can refer back to the concept, if you want to.

Overview of new GL Document Splitting Process
Architecture of SAP new GL
The Design driving the new GL Document Splitting process
SAP delivered pre-configuration for document splitting in SAP new GL
The semantics of SAP new GL document splitting process

The configuration for document splitting characteristics for General Ledger for this blog is as below.

[IMG] Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Define Document Splitting Characteristics for General Ledger

 

Configuration for CO-relevant document splitting characteristics can be performed in IMG menu path

Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Define Document Splitting Characteristics for Controlling

 

I will also assume you have configured the GL account default for realised foreign exchange loss/ gain.

[IMG] Financial Accounting (New) > Accounts Receivable and Accounts Payable > Business Transactions > Outgoing Payments > Outgoing Payments Global Settings > Define Accounts for Exchange Rate Differences

Configuration for forex gain loss account determination

Configuration for forex gain loss account determination

 

This GL Account is created as an expense cost element.

Forex GL as cost element

Forex GL as cost element

 

What I am demonstrating

In this blog I will demonstrate foreign exchange loss/ gain realised during the purchase to pay process. I will create a Purchase Order from an Australian company for an overseas vendor in US Dollars. I will raise the Purchase Order against 2 cost centres that have different profit centres assigned to them. This will allow me to demonstrate the split that occurs when the foreign exchange gain or loss is realised during payment. The Goods Receipt is performed against this Purchase Order. When the Invoice is received, the exchange rate USD:AUD has changed. And when the payment is made against this Invoice, the exchange rate has changed again.

The Invoice Payment process will trigger a realisation of foreign exchange gain or loss. Based on configuration, these will post to relevant GL Accounts. Document Splitting process will ensure that these gain / loss line items will be split by cost centre based on the original split during Goods Receipt.

 

Foreign Exchange realised during Purchase to Pay process

Goods Receipt against Purchase Order

I performed a goods receipt against Purchase Order 4500017212. The Purchase Order is raised on a US Vendor in US Dollars for services against two cost centres (that have different profit centres assigned to them). At the time of Goods Receipt, the USD:AUD exchange rate is 1.025. The Goods Receipt of USD 250 posts the following entry:

Data entry view GRIR

Data entry view: Accounting Document for Goods Receipt

 

The document is already split by Profit Centre. Hence, the General Ledger view is similar to the Entry view:

GL view GRIR

GL view: Accounting document for Goods Receipt

 

Invoice Receipt against Purchase Order

After the Goods Receipt and before the Invoice could be received from the US vendor, the USD:AUD exchange rate moved to 1:1.035. The Invoice is received for a value of USD 255. I posted the difference of USD 5 to an expense account and to a different profit centre compared to the profit centre on the two original postings.

Data entry: Accounting document Vendor Invoice receipt

 

The Vendor account is credited with the new exchange rate of 1.035. The foreign exchange difference of USD 2.50 attributed to the two GRIR line items is split in the same ratio (1:1.5) as the original expense and assigned to the same GL 621030, cost centre (1322 /1721) and profit centre (1300 / 1701) as the original expense.

 

The Invoice Receipt document will undergo a split for the Vendor line item; the split will happen in the same ratio as the original posting.

GL view Vendor Invoice

General Ledger view: Accounting document for Vendor Invoice

 

Vendor Payment and foreign exchange realised

This Vendor Invoice is due for payment. The exchange rate has now moved to 1.045. Exchange rate differences attributed to payment process are written off to Profit & Loss account; the account is defaulted in the configuration mentioned in the Assumption section of this blog. This GL Account is a cost element with no default or automatic account assignment. SAP will expect a cost object to be posted against the gain/ loss cost element. However, SAP pre-delivered Document Splitting will post the cost centre against this line item from the original posting.

The payment document in Data Entry view is as below. The exchange rate difference of USD 2.55 is split in the same ratio as the original posting. Document Splitting has carried over the cost centre information from the previous process and assigned the split to the cost centre.

Data entry view Vendor payment

Data entry view: Accounting document for Vendor payment

 

The General Ledger view splits the Vendor Account and the Bank Account in the same ratio as the previous posting:

GL view Vendor payment

General Ledger view: Accounting document for Vendor payment

 

Variation to this process/ design

Default Account Assignment to Forex Cost Element

If you have defined a default account assignment for this GL Account, the system ignores the default account assignment and will assign the cost centre from the original document.Document Splitting inherent in newGL overrides the default account assignment configured by users.

I configured the default account assignment for forex gain/ loss cost element as below:

[IMG] Controlling > Cost Center Accounting > Actual Postings > Manual Actual Postings > Edit Automatic Account Assignment

Config forex default Account Assignment

Configuration: Default Account Assignment

 

The vendor payment document posted as shown below. The above configuration was ignored by the system.

Accounting doc after default acct assgn

Accounting document despite default account assignment

 

Document Splitting “Constant” assigned to Forex GL Account

I assigned a Constant for the item category of forex gain/ loss GL account in the Document Splitting rule (configuration shown below).

Configuration: Assign constant to forex GL account

 

Strangely, the system ignored this rule as well. This could pose a problem for users who want to post forex gain/ loss to a single default cost centre. Generally, forex differences are assigned to corporate or treasury.

If any of the readers had requirement to post forex to a different GL and managed to do so (using standard SAP), could you share your experience with other readers using the Comment box below?

Forex GL Account not a Cost Element

Another variation of this design is if you have not defined the foreign exchange loss/ gain GL Account as a Cost Element. In this case, the system will perform a Document Split only at the Profit Centre (scenario) level. It will not post the gain/ loss line item to the cost centre (cost object).

Data Entry view vendor payment + no CE

Data Entry view vendor payment + forex GL is not Cost Element

 

The split on Vendor and Bank line item occurs in the same ratio as the split in the original document.

General Ledger view vendor payment + no CE

General Ledger view vendor payment + forex GL is not Cost Element

 

 

Conclusion

The process of Document Split on subsequent processes is relatively simple. Document Splitting for certain subsequent processes works automatically in SAP without any extended Document Splitting configuration. SAP picks the split on the original document and uses that as the split basis for the subsequent document.

 

 

Please Share

I hope this blog has helped you understand the design behind document splitting of subsequent processes. Please do leave your comments below whether this article was helpful; and whether you have any suggestions/ comments; or if you would like to share your experience with document splitting.

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You could subscribe to a newsletter from this blog using the rss icon on the top right of this page.

 

View my presentation on Slideshare

Index of my blogs on Document Splitting in new GL in SAP ECC

Overview of new GL Document Splitting Process

Architecture of SAP new GL

The Design driving the new GL Document Splitting process

SAP delivered pre-configuration for document splitting in SAP new GL

The semantics of SAP new GL document splitting process

Set up Zero-balancing for SAP new GL

Customise Document Splitting rules

Use Constants for Nonassigned Processes in SAP new GL

Customise cross company code postings for document splitting

Document Splitting in Cross company code vendor payment

 

___________________________________________________________

Rajesh has implemented new GL and Document Splitting for several customers. Rajesh has 12 years experience implementing SAP / IT / BPM Finance solutions for several customers globally; he also has 7 years experience working in the business in Finance and Accounting functions. His business process knowledge combined with his IT expertise enables him to provide his customers with best-of-breed advice on business process / IT implementations.

View Rajesh Shanbhag's profile on LinkedIn

 

Comments

  1. Dear Rajesh,

    Thank you very much for your clear explanation regarding document splitting for realized gain/loss on exchange rate at payment with business transactions 1000 – Payments and Item Category 40200 – Exchange Rate Different.

    I am wondering in case of foreign currency revaluation run at month-end (T-code: FAGL_FC_VAL), is it possible to set the system to post unrealized gain/loss from foreign currency revaluation to proper cost centers by document splitting feature? If so, which standard listed business transactions that we can apply in this case? Or we need to enhance with the new created business transaction? Please advise.

    Thank you and best regards,
    Jittima Udomsrilap

    • Hi Jittima
      If you make the Processing Category = 1 (Splitting based on base item categories), the system will pick the cost centre from the original posting.

      Rajesh

      • Dear Rajesh,

        Thank you very much for all your information.

        I recently read further your articles regarding auto. default cost center from original document for foreign currency revaluation. I configured in that way and it works fine.

        Regards,
        Jittima

        • Dear Rajesh,

          I am wondering if the company is set for posting with business area as well.

          In case of foreign currency revaluation for AP Invoice, there is no problem since business area is derived from business area entered in cost center master data.

          However, in case of foreign currency revaluation for AR, original document has no cost center since we Dr. Customer and Cr. Sales account. For sales account, there is only profit center assigned in the line item. Therefore, when posting foreign currency revaluation, there is no route to get business area posted in gain/loss from foreign currency revaluation g/l account. (If company code without business area, testing is ok by selecting Account Assignment Detail = ‘3’ Profit center is mandatory in T-code: OKB9. Then, set the relationship between profit center and cost center.

          Or there is other settings inside document splitting function to overcome this problem? Please advise.

          Regards,
          Jittima

  2. Dear Rajesh,

    Refer to my earlier message to you, I am not sure about the existence of support by SAP to keep using business area. As far as I heard, SAP does not recommend to apply business area for some years ago.

    Regards,
    Jittima

    • Hi Jittima

      You are right.

      Refer to OSS note 40738 “However, it should also be noted
      that at this time there is no intent to empower Business Area’s as a
      structure with the same level of functionality available with profit
      centers.”

      This note was applicable from SAP v 3.0

      Rajesh

      • Dear Rajesh,

        In case that we change to apply segment instead of business area, will it be possible to post gain/loss from exchange rate to cost center together with segment? As I guess, it should be possible since segment is assigned in profit center master data.

        Regards,
        Jittima

        • Hi Jittima

          Yes, it is possible. However, generally, most organisations I know have used Profit Centre in place of Business Area. A Profit Centre hierarchy node will “map” to a Business Area. As an example, if you have 10 Business Areas, you will have 10 Profit Center group nodes. These nodes will be profit centres for that business. You could use segment; both segment and profit centre are both derived from cost centre (or cost object).

          Rajesh

  3. Dear Rajesh,

    I got it. Thank you so much for your helpful information.

    Regards,
    Jittima

  4. Hi,

    I have checked the above scenario. I am not getting cost center from the invoice, while making the vendor payment. system is picking cost center from OKB9 settings.

    surprise : when i check the previous data, system captured cost center for ex.gain/loss accounts from the invoice only.

    Right now system is picking cost center from the invoice, where it has only one expendeture line item. If the expenses line items are more, system is checking for OKB9.

    Any idea, Please share your ideas.

    Thanks,
    REDDY

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