Within several European Union countries it is legally required to report within the G/L the acquisition costs of materials that are put on stock. The SAP system uses functionality called Purchase Account Management to meet this requirement. Discover what this functionality is, how to set it up, and what the result looks like.
SAP has developed functionality called Purchase Account Management to handle related legal requirements. In Belgium, Luxembourg, Spain, Portugal, France, Italy, and Greece, you must use specific statutory (legal) G/L accounts to report the acquisition costs of materials that are put on stock. These accounts are then used in statutory reporting. All companies registered in those countries must follow this requirement if they use what is called periodic inventory. In these systems, changes in the stock are only recorded in the profit and loss statement, which means that the stock value is not kept up to date on the balance sheet. At the end of a period (month, quarter, but normally a year), the company takes an inventory and makes a posting to correct the stock value on the balance sheet. The posting looks like a stock account against a purchase account.
In some European countries reporting the acquisition costs of purchased materials is part of the legal financial reporting. This is only for materials that are put on stock (i.e., the goods receipt of the materials is posted against a stock G/L account). To achieve this, you need to define two special profit and loss (P&L) accounts in the chart of accounts. For countries with a statutory chart of accounts (e.g., Spain and France) these accounts are already predefined. You need to allocate these predefined accounts to operational accounts. The two accounts include the one on which you post the acquisition costs and an adjustment account you use to balance the posting. For many consultants and financial managers from outside the European Union (EU) this functionality is unknown, but even for those familiar with the legal requirements the SAP solution is not always clear.
When activated, for each goods receipt of a stockable material the system automatically makes an additional posting:
- Debit: Purchase account
- Credit: Adjustment purchase account
To fulfill this legal requirement, SAP has set up Purchase Account Management. You need to activate this functionality per company code. I’ll describe the customizing of Purchase Account Management and then go through an example to show the results of the customizing.