Speed Your Month-End Close with Automated Reserve Setup, Utilization Tracking, and Over/Underrun Calculation

  • by Lawrence Chung, FI/CO Consultant
  • March 25, 2010
Use results analysis to automatically calculate reserves for installation and warranty based on the costs planned for the relevant work breakdown structure elements.
Key Concept
Results analysis (RA) is a standard function in the cost object controlling module or SAP ERP Central Component. RA is used for many different objects, including internal orders, work breakdown structures, and sales orders. It calculates the value of the costs that you can capitalize for cost objects. You can also determine whether reserves should be created and reconcile the data posted in FI and in Profitability Analysis to each other. The SAP system achieves these through the use of different RA methods and FI posting rules.

Imagine this scenario: During the month-end closing, you download all the detailed line items from a balance sheet reserve account. You perform sorting and grouping to figure out the reserve balance for each project. This means that you need to manually break down some charges to the account into separate projects. Then you have to dig out all the paper from your journal voucher to find the missing project numbers for some of the lines in the reserve account. This process is very important for month-end closing because it’s critical to review the adequacy of the reserve balance. If the reserve run rate is much faster than the original plan, then you need additional reserves to avoid any last-minute surprises to the profit and loss statement.

With this implementation, you can comfortably say goodbye for good to all these kinds of month-end hassles. Further, you can have real-time integration with the upstream module (e.g., Project System [PS]) and can analyze your reserve balance at any time.

For a typical flow for the installation and warranty reserve process, see Figure 1. I’ll show you a scenario I worked on at a client that carried out how to automatically calculate and track the reserves for this process, and the configuration we implemented in the system.

Lawrence Chung

Lawrence Chung has been working in SAP FI/CO since 1999 and was a consultant with SAP Hong Kong in 2001. He’s a CPA in Hong Kong and a fellow member of the Association of Chartered Certified Accountants. He has been acting as the lead FI/CO consultant in SAP implementations for many leading multinational corporations in various industries. He specializes in Controlling (CO-PA, CO-PC, and ML) and FI/CO integration with logistics (SD/MM, Service Management, and Project System).

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