1. Introduction
This blog post continues a series of Controlling related topics, which circle around showcasing new functionalities in S/4HANA Cloud, comparing functionalities between SAP S/4HANA Cloud Public Edition and SAP S/4HANA Cloud Private Edition (and SAP S/4HANA) (at the time of writing the latest SAP S/4HANA release is 2023). I cover also general topics that should be considered from Management reporting/Controlling point of view when implementing S/4HANA.
Focus of today, is how to prepare for UPA. In SAP S/4HANA Cloud Public Edition UPA is always activated, however, in SAP S/4HANA Cloud Private Edition, it needs to be separately activated. As of, 2023 version it is also possible to migrate from non-UPA to UPA. The migration is only possible in the first scenarios with legal valuation (not a subsequent added ledger). This blog focuses on a few points that are good to consider, to make the transition to UPA easier. Please note that this is a topic that is being constantly developed, so this is blog is intended to be a guideline, not a definite source of truth.
2. Universal Parallel Accounting (UPA) Introduction
UPA is the new foundation of finance in S/4HANA and provides better support for currencies, accounting principles and parallel valuation, as well as multiple new innovations. It enables multiple event-based solutions to provide real-time input into financial and managerial accounting. Note 3419623 - Restriction for Profit Center Valuation … provides restrictions around profit center valuation in version 2022. For more details on UPA, please see below links. Figure 1 below describes also some of the benefits gained with UPA.
- Project Profitability for Engineering Products and... - SAP Community – by Janet Salmon
- Profit Center Valuation with Universal Parallel Ac... - SAP Community – by Janet Salmon
- Inventory Accounting with Universal Parallel Accou... - SAP Community – by Janet Salmon
- Overhead Accounting with Universal Parallel Accoun... - SAP Community – by Janet Salmon
Figure 1: Overview of Universal Parallel Accounting
3. SAP S/4HANA Cloud Private Edition & UPA
In SAP S/4HANA Cloud, Private cloud edition there are restrictions for UPA, that you need to analyze before you can take it into use. They are e.g. related to country scope and functional restrictions. For details, please see following links:
- SAP Help
- 3191636 - Universal Parallel Accounting: Scope Information - SAP for Me
- 3327778 - Migration to Universal Parallel Accounting (SAP S/4HANA 2023): Scope Information
Due to these restrictions, you cannot always activate UPA in a 2023 version, but you can still plan to take it into use later, once there are less restrictions that apply to your system and processes.
If you aim to create a design that is more “UPA prepared”, then please consider following areas in your design.
3.1 Before UPA: Multi-valuation ledger
In case you need to activate (Group valuation (currency types 31/11) and/or Profit center valuation (currency type 32,12)), then you should create a multi-valuation ledger (see figure 2 below). This is currently the planned ledger approach to be able to migrate to UPA. For further details see note: 3443265 - Ledger Settings for Group/Profit Center Valuation and/or Parallel Cost of Goods Manufactur...
- UPA is by definition a parallel single-valuation ledger setup – but before UPA, recommendation is to have a multi-valuation ledger. See also following blog e.g.:
Figure 2: Before UPA, Multi-valuation ledger is recommended, in case you need multiple valuations.
Note also that UPA with group valuation requires that you use the, otherwise the posting logic will be based on the “old/previous” group valuation logic, not the transactional consolidation, this is depicted in Figure 3. For more information about movement types in the valuated stock in transit process see following link: Movement Types for Valuated Stock in Transit | SAP Help Portal. For SAP S/4HANA Cloud Public Edition, please see following note for restrictions 3093830 - SAP S/4HANA Cloud: Release Restriction Note for Group Valuation - SAP for Me. There are currently also restrictions regarding the advanced Intercompany sales process for MTO and ETO, which might prevent you from using these processes in version 2023. For more details, see following notes: 3366067 - SAP S/4HANA 2023: Restrictions and General Information for Advanced Intercompany Sales and 3298560 - FAQ new Advanced Intercompany Processes (IC-Sales and IC-Stock Transfer).
Figure 3: Overview of Intercompany processes, Group valuation and UPA for SAP S/4HANA Cloud Private Edition .
3.2 Before UPA: Keep FI-AA-ML aligned if possible
In case possible, activate same currencies in FI (financial Accounting, AA (Asset accounting) and ML (Material ledger). This will enable to have your data more harmonized and consistent for the migration to UPA. Figure 4, below shows a simple example with legal valuation, but two currencies (company code (10) and group (30)). The same currencies are aligned in all three places.
Figure 4: Example of currency setup with same currencies in FI (FINSC_LEDGER), AA (OABT) and ML(OMX2).
3.3. Before UPA: Country specific local accounting principles
UPA requires, by design, to have country specific local accounting principles, but before UPA you could have had a setup with a common “LGAAP” accounting principle for all local accounting principles. In case you are configuring a new system, consider creating already now, country specific local accounting principles, to be more aligned with UPA (see e.g. Figure 5 below). Adding more local accounting principles will also impact your design within foreign currency valuation, Asset Accounting, RE-FX (leases) and down payments (Down payment… see this blog by Stefan Walz and Gabi Hoffmann for more details), so remember to consider them also. In case you create a separate tax ledger, then you should have same approach (separate country specific tax accounting principles).
Figure 5: Example with country specific local accounting principles.
In case you have already live system with “LGAAP” accounting principle and you would like to activate UPA, then you can see this note for an alternative approach 3334519 - Migration to Universal Parallel Accounting in SAP S/4HANA: Replacing the Generic Local Acc...).
3.4. Before UPA: Results Analysis vs. Event-based revenue recognition if possible
Results Analysis (RA) is not available in UPA, it is replaced with Event-Based Revenue Recognition (EBRR). can be used without UPA also. Analyze in case you can replace RA with EBRR, either before or at the time when activating UPA. SAP help site ( SAP Help) includes comprehensive details on current EBRR scope. Consider also that with RA, it is possible to utilize user exits (custom code), but not in EBRR, so you might need to review your process against a standard solution.
Note, that in case you use EBRR before UPA, you cannot use it with a multivaluation ledger (e.g. group valuation activated) (as this not supported and EBRR is designed base on UPA), for more details see: 3357625 - Event-Based Revenue Recognition with SAP S/4HANA 2023: Release Information Note - SAP for ....
One option is, on a high level, that you can consider if you are able to utilize only legal valuation and EBRR, and then later in UPA add a parallel ledger. As , in the current SAP Roadmap Explorer, there is an item to “Add an additional ledger for parallel valuation” in UPA (Transition to universal parallel accounting for complex scenarios). The upside is that you do not need to consider later on migrating from RA to EBRR, but the downside is that you might need to wait for some time for UPA and parallel valuations.
A second option is, on a high level, that you decide before UPA to have multiple valuations UPA, and perhaps have more complex requirements for the Revenue and cost recognition, so you decide for Results Analysis. The upside is that you get parallel valuation (although not with the UPA logic). Downsides are e.g. that you are not among the first scenarios to move to UPA (as those are only for the legal valuations), you also need to consider how to “move” RA to EBRR at some later point, as this will also require effort. Currently there are no automatic migration tools planned to support the move from RA to EBRR. Moving from RA to EBRR will be more challenging for industries where there are projects/services that are of long-running nature (as a “clean” way to do it, will require revaluing all items from the beginning).
3.5. Before UPA: Use the standard planning categories
Before UPA you will have certain SAP Standard planning categories used in ACDOCP (like Material standard costs (PLANORD02), Sales order costing (PLANORD03) in ACDOCP… ). When activating UPA they will also be used by the Even-Based Production accounting, see e.g.: 3315659 - SAP S/4HANA 2023: Universal Parallel Accounting with Event-Based Production Accounting - S.... As such, this doesn’t require any specific actions for you, but just something to be aware of.
4. Conclusion
This blog post was highlighting some design topics that are good to keep in mind when planning to move to UPA, whether you implement them already before UPA or at later stage. I hope this shed some light on what to consider and making it easier to move to Universal Parallel Accounting in SAP S/4HANA Cloud Private Edition.
- What are your experiences on this area? Please share your thoughts!
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