Different company codes, different fiscal years, one controlling area

What can you do if the business requires reporting and bookkeeping to have two or more different fiscal year variants under one Controlling area?
Imagine a situation when you need to do reporting on Company Codes with different fiscal year structures, while all of them assigned to one Controlling area. Using usual approach, SAP does not allow this and if you try it, you get a following warning message:

Differing fiscal year variants: A1 – B1

Message no. KT297

Diagnosis

Fiscal year variant X1, controlling area 1000, does not agree with fiscal year variant X2, company code X001.

The following entries must agree:

– Same number of posting periods (the number of special periods may vary)

– Same period limits

Procedure

Ensure that the fiscal year variants of the controlling area and the assigned company codes agree. If necessary, maintain the fiscal year variants.

Having same fiscal year variant is one of the requirements for different company codes to be under one controlling area.

When you are creating a common controlling area, it should have the following parameters:

1 All the company codes should share the same chart of account.

2 They should share the same fiscal year variant.

Controlling area split? There is another way

To resolve it, you might find yourself thinking about Controlling area split. But deciding on this SLO services leads to running a major restructuring project.

However, and fortunately, this is not the only option. The NewGL allows every Company code to maintain different set of accounting books using different accounting principle. This means that it is possible to actively use more than one fiscal year variant with different structure, you can also have 2 accounting principles under one Company code.

This can be done by creating a parallel ledger, which is defined on the level of the Company codes. Here you can also define parallel currencies and posting period variants.

The convenience of a parallel ledger can be illustrated by a simple example:

Company with headquarters in Germany has a subsidiary in Philadelphia. Each location stands for a Company code and is required to produce financial reports using different accounting principles, various currencies and fiscal year structures.

The below picture illustrates this situation:

The company must issue the following financial statements:

  1. CC 1000: Group level in Euro, IFRS accounting principle, covering 1st January until 31st December
  2. CC 2000: Group level in Euro, IFRS accounting principle, covering 1st January until 31st December
  3. CC 2000: Local level in USD, US GAAP accounting principle, covering 1st October until 31st September

Options 1. and 2. are derived based on a leading ledger 0L. Option 3. can be achieved by assigning CC 2000 to a parallel ledger, where you can maintain specific entries for the fiscal year variant, local currencies and posting period variants. This gives you a lot of freedom, as for example creating a shortened fiscal year just on some of the company codes – in our case just by modifying the fiscal year variant Z1.

Customizing path: SPRO -> Financial Accounting (New) -> Financial Accounting Global Settings -> Ledger

Things to keep in mind

There are certain obstacles and things you need to keep in mind when opting for such a configuration:

  • Different fiscal year structure unfortunately cannot be reflected in Asset Accounting. All the depreciating areas are derived from the leading ledger. It is not possible to depreciate assets according to fiscal years with different year start and end. (Different month end dates are possible.)
  • If you post a ledger specific document, you have to create and assign a specific number range for document types.
  • Secondary currencies LC2 and LC3 can only be derived from currencies assigned to the leading ledger 0L.

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