Automate Accrual Calculation and Posting for Improved Flexibility

  • by Kedar Muzumdar, Principal FICO Consultant, Infosys Limited
  • October 15, 2007
See the process of percentage-based cost center-wise accrual calculation. You can then automate the subsequent financial posting using standard SAP functionality.
Key Concept

Accrual calculation is the process of evenly spreading irregularly occurring costs over the periods involved and distributing them according to the cost origin. You perform accrual calculation in the Controlling (CO) module using the percentage method and you perform the FI posting using the internal orders settlement process. You use internal orders as interim collectors of the accrued costs in CO and then settle these orders to the G/L account to generate an FI posting.

Accrual calculation and posting is normally a manual process: You use transaction KSA3 (program RKAZKSA3) to calculate and post accrual values by debiting the cost center and crediting the internal order. The internal order settlement transaction KO8G (program RKO7KO8G) then settles the order to a G/L account, which makes the FI posting. This posting debits the accrual expense and credits the liability account.

You can automate the posting by scheduling batch jobs for these two programs. This automated method is particularly useful for calculating and posting accruals for non-wage labor costs, such as a vacation bonus or annual bonus. It ensures that the system calculates and posts accruals through a single automated process in both FI and CO.

This method provides flexibility to adjust the base accounts for accrual calculation, accrual percentages, and accrual posting accounts based on company policy changes. Other methods, such as recurring entries, offer less flexibility because accruals are first posted in FI and then you have to manually transfer them to CO.

This process represents a tweak to the standard SAP accrual calculation process by automating the FI posting of the accruals. I’ll use a simple example of an accounting entry to show you how to enact this method.

Kedar Muzumdar

Kedar Muzumdar is an SAP-certified FICO consultant and a chartered accountant (CA) from the Institute of Chartered Accountants of India. He has been working as a principal consultant on SAP implementation, upgrade, and support projects involving the new GL, AP, AR, material ledger, product costing, cost object controlling, and profitability analysis for the past nine years.

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