For SAP S/4HANA 2021 FPS1 updated

Objectives
S/4HANA SAP A central transformation platform where you can centrally execute financial activities, Central Finance has grown from a purely advanced financial reporting solution.

I’ll concentrate on Asset Accounting procedures in this blog post and provide important things to keep in mind when setting up Asset Accounting in a Central Finance landscape in SAP S/4HANA. I’ll talk about the following subjects and answer some often asked questions:

Is there a replication of Central Finance into FI-AA (Asset Accounting)?
What choices does Central Finance have for Asset Accounting?
What are Central Finance’s Asset Accounting’s restrictions and difficulties?
If not stated otherwise, the blog article, which is initially based on SAP S/4HANA 1909, is also relevant for lower releases. I also included news and updates from the most recent version of SAP S/4HANA 2021. You can start with my post, Different perspectives on what is Central Finance, for an introduction to it.

Because there is a unique logic involved in how asset-related postings are replicated from the source ERP system to the Central Finance system, I will now concentrate in this blog post on my perspective and project experiences regarding the options, constraints, and challenges for Asset Accounting in Central Finance. I’ll also include a summary of significant frequently asked questions at the end. Let me begin by asking the main query:

Is there a replication of Central Finance into FI-AA (Asset Accounting)?
Question #7 of the Central Finance FAQ note 2184567 contains the solution.

No, at this time, only the reconciliation account in the General Ledger is updated when a line item posts onto a fixed asset on the source system. The reconciliation account must either be mapped appropriately or configured as a “regular” GL account.

Fixed Asset Accounting (FI-AA) in the Central Finance system does not publish replicated FI documents that are derived from asset postings in the source system. Instead, they are only ever posted using posting keys 40 and 50 in the Central Finance system’s Universal Journal to General Ledger (FI-GL). Fixed assets are the sole assets kept in the source ERP system in this situation. The following condensed graphic shows this decentralised asset accounting scenario:

What choices does Central Finance have for Asset Accounting?
We have two fundamental choices:

A) The source ERP system’s asset accounting
I only concentrate on the pertinent process steps and information in the following graphic, which provides a condensed summary of the normal procedure in the current standard scenario:

Asset accounts in the source system are referred to as fixed asset reconciliation accounts.
Asset posts are made in the source system with the asset number on the reconciliation account for assets (such as asset acquisitions).
Asset information is removed from asset-related fields (such as fields ANLN1 and ANLN2) of the FI documents in the Central Finance Accounting Interface and the financial document is copied via SLT to Central Finance [optional]: If necessary, a BAdI implementation can move asset information to customer-defined fields for reporting purposes.
The Central Finance System’s asset accounts are either configured as non-reconciliation balance sheet accounts or mapped to such accounts.

Issues and difficulties

The source system must be used for all postings relating to assets (such as asset acquisitions, depreciation, transfer, and retirement), reporting, and period end close. Only the source system has data on individual fixed assets. One exception would be some customer reports, where you might see the asset number if you copied it into a customer field and replicated it to the Central Finance system. You should also take into account some restrictions if you activate Central Payment (see FAQs below).

B) In the Central Finance system, asset accounting
Setting up Asset Accounting in the Central Finance system, as shown in the simplified image below, would be a step toward a more centralised finance system with greater advantages.

The following are some benefits of centralising asset accounting:

Advantages of New Asset Accounting (improved parallel valuations, new depreciation calculation logic, accelerated depreciation runs, integrated in Universal Journal)
With the new UX and Fioris, asset accountants may work in SAP S/4HANA.
Elimination of old asset accounting systems
decreased posts in decentralised systems
centralization and synchronisation of asset accounting procedures
in Central Finance, complete financial reporting

As a result, posts pertaining to fixed assets are only possible in Central Finance. As a result, the Central Finance system would have to be used for both the acquisition of assets and the capitalization of investments. I’ve shown such a scenario in the illustration below:

A situation like that would have an effect on logistics operations, so you would have to transfer those operations to central finance. When deploying Central Finance, many clients take a minimally intrusive strategy for their source system. This implies that the majority of the source system’s logistics procedures won’t be altered. In this instance, asset acquisition and procurement will be carried out locally in the source systems. An investment procedure where material consumptions and activity confirmations are placed on an investment order in the source system would be another significant use case. The following image serves as an illustration of this scenario:

The issue is how to transfer such asset-related postings from the source system to Central Finance (for example, for asset acquisitions or investment orders).

An option would be to move asset-related postings (from purchase orders, invoices, material consumption, activity confirmation, and so on) to Central Finance using an investment order in the source system. The investment order is settled in Central Finance using customary transactions to assets that are either fixed assets or assets that are still being built. The following graphic depicts this scenario and the actions involved:

1. Create an internal order in source without investment profile
2. Replicate the internal order as investment order in Central Finance
3. Asset under construction is automatically created for the investment order in Central Finance
4. Do FI/CO postings and CO postings in source system on internal order
5. Replicate FI/CO and CO documents from source system to Central Finance
6. Maintain settlement parameters in Central Finance (if required)
7. Settle investment order to asset under construction in Central Finance
8. Settle asset under construction to final asset in Central Finance
9. All other asset related postings and reporting are done in Central Finance only

This scenario is now available with a WBS element and the new Central Projects (WBS) – Asset Settlement Scenario as of version SAP S/4HANA 2020 FPS1. The methods are the same; simply swap out the investment order with a WBS element. See: for further details.

Central Projects (WBS) Asset Settlement Scenario SAP Support
Blog entry: SAP S/4HANA’s Central Projects in Central Finance

The Central Asset Accounting scenario has been improved as of release SAP S/4HANA 2021 FPS1, and Central Asset Accounting can be engaged for company codes. Central Asset Accounting now offers the option of asset acquisition with a clearing account: SAP Help – Asset Acquisition with a Clearing Account. See here for further details on all the newly offered functionalities:

Central Asset Accounting is a New Feature in SAP S/4HANA 2021 FPS1.
Central Asset Accounting SAP Help
Let me go into greater detail about the procedure phases of the case that was pictured above. As of release SAP S/4HANA 2020, the asset acquisition or capitalization procedure can also be improved with central budgeting for internal orders.

1. Make a source internal order without an investment profile.
If the source system is SAP S/4HANA, you can create an internal order using the traditional SAPGUI transactions KO01 or the new Manage Internal Orders Fiori app. This app now enables investment orders to directly build asset under construction (AuC) master data as of release 1709. However, in this circumstance, Central Finance should be the sole place where the Asset Under Construction is produced, not in the source.

For all postings that need to be capitalised in Central Finance, including purchases made with purchase orders, material consumption, financial postings, activity recordings, etc., the internal order can be utilised as an account assignment object in the source system.

Additionally, you can activate the budget availability control in the source ERP and keep a budget on the investment order. Budgeting is now possible in Central Finance with the release of SAP S/4HANA 2020; for further information, read What’s New in SAP S/4HANA 2020: Central Budgeting for Internal Orders. While the budget is normally spent in a process carried out in the source systems, central budgeting for internal orders enables a centralised method to controlling budget in a central finance system.

Using MDG for Financial data would be another choice to build an internal order in a Central Finance scenario (MDG-F). Since this option falls under MDG rather than Central Finance, I will concentrate on Central Finance in this blog and not go into greater detail. SAP Help Master Data Governance – Internal Orders has more details.

2. In Central Finance, replicate the internal order as an investment order.
With the help of the cost object framework in Central Finance, internal order replication is supported (see SAP Help Cost Object Mapping). Supported situations in the cost object mapping framework are covered in SAP Note 2180924.

Cost Object Mapping Scenarios
The customization task is located in the IMG menu:
Target System Settings -> Mapping -> Cost Object Mapping -> Cost Object Mapping -> Define Cost Object Mapping -> Financial Accounting -> Central Finance -> Central Finance: Create Cost Object Mapping Scenarios

The image displays the typical cost object mapping delivery possibilities. You can develop your own scenario and modify it to suit your needs, similar to standard scenario SAP003. In a cost object mapping scenario, you first define:

How the Central Finance system maps a cost object category from a source system to a different cost item category
IO Internal Order is the source object category.
Internal Order: IO Central Object Category
Cardinality: 1:1 denotes the creation of one internal order in Central Finance for each internal order in the source.

Features of the sources in cost object mapping
Depending on the source characteristics, you specify which fields should be used for mapping. There are certain commonly used fields included by default. The fields can be modified to meet your needs. Typically, the source order type can be used to define the mapping. Pay close attention to the numerical ranges when setting up the internal order in Central Finance. Keep in mind that the number ranges for orders depend on the client, and they can easily overlap with the ranges in the source systems.

The Essentials of Cost Object Mapping
The fields from the order master that Central Finance requires are known as the Central Characteristics. The system will bring data for this field from the source and apply mapping as needed if the derive from local flag is set to active. In the “Define mapping rule” action, you must maintain logic for this field if the flag is inactive.

Consider carefully whatever fields you require as source and primary characteristics since after you have replicated an order using a scenario, you cannot change it. Reassigning the replicated orders to a new scenario would be a workaround.

Investment Measurement / Order
The source internal order must be mapped to the investment order in Central Finance after it has been defined. Internal orders with a unique feature are known as investment orders (also known as investment measures; see SAP Help – Investment Measures):

Investment orders contain the information about a construction-related asset needed to display the capitalised portions of the measure in the balance sheet, as shown in the SAP Help image below.

Technically, an investment order is created by giving an internal order an investment profile. Therefore, you must include the investment measure profile (field AUFK-IVPRO) with the essential characteristics in the cost object structure.

You can see an example of my own scenario, ZINVORDER, where I made the order type and investment profile the main characteristics. In this example, the company code will be obtained from the source:

Set Up Cost Object Mapping Scenarios Mapping Rules
The cost object mapping scenario can then be defined by setting up mapping rules. A mapping between order type 0100 from source system LOCAL100 and order type 0600 and investment profile 000003 in Central Finance is shown in the image.

This modifying task is located in the IMG menu:
Accounting for Finance: Central Finance: Target System Settings: Mapping: Cost Object Mapping: Cost Object Mapping: Define Cost Object Mapping: Define Mapping Rules for Cost Object Mapping Scenarios

Any orders created in the source system with order types 0100 and 0600 will now be duplicated to Central Finance and created with investment profile 000003 and order type 0600.

The investment profile might also be linked to a model order, which could then be linked to the order type for the investment measure in Central Finance. Because it would result in an error when the internal order is changed, you must avoid adding the field IVPRO as a central characteristic in the cost object framework in this situation Replicated master data

3. Central Finance automatically creates an asset under construction for the investment order.
When the investment order is released, the investment profile governs the production of an asset that is currently under construction. Keep in mind that a repeated order in Central Finance is automatically released. The asset class to be used and other parameters can be specified in the investment profile (for more information, see SAP Help Control Functions of the Investment Profile):

4. Execute FI/CO postings and CO postings according to internal order in the source system.
All FI and CO posts on the internal order in the source system that need to be capitalised in Central Finance can be done after the order is created and released. There are no unique asset accounting-related variables needed in Central Finance for this process step and the subsequent replication to Central Finance. My is the reason why I didn’t go into greater detail in this blog post. All that is necessary for financial posting replication are the default CFIN parameters.

5. Copy the FI/CO and CO documents to Central Finance from the source system.
The internal order’s FI and CO posts are automatically copied to Central Finance via SLT. Based on the data from the cost object mapping, the order number is mapped.

6. Keep Central Finance’s settlement specifications current (if required)
You can add more settlement characteristics and regulations to the investment order in Central Finance as necessary. Additionally, the master data maintenance for orders already allows you to easily build a final asset for the subsequent full settlement. The newly generated asset serves as the recipient of a full settlement rule that the system then automatically constructs.

7. Complete the investment order for the asset that is being built in Central Finance
The periodic settlement (transactions KO88 or KO8G) settles and capitalises all costs associated with the building of the asset that is part of the investment measure if you do not retain extra settlement receivers.

8. Convert a construction asset into a finished asset in Central Finance
When the investment measure is finished, you finally complete the full settlement. The sums are typically transferred from an asset that is still being built to one or more fixed assets after complete settlement.

Another alternative would be to finalise the transfer of assets under construction to fixed assets using asset accounting transactions AIBU and AIAB rather than order settlement in CO.

These actions, which begin with the settlement, are not unique to Central Finance. In short, these are the typical procedures for investment measures and construction-related assets in FI-AA, and you can find more details in the SAP-Help:

Investment Measures Settlement
Examine the Investment Orders settings.
Settlement of a Construction Asset

9. Postings of assets
You can make additional asset-related postings in the Central Finance system, such as depreciation, retirement, and so forth, once the asset acquisition and/or production costs are capitalised to the final asset.

Issues and difficulties
You must double-check all associated dependent procedures and reporting before beginning any posting (such as central payments or settlements) for a company code that additionally gets financial documents from another source system.

Only Central Finance will be the exclusive source of truth!

The reporting of legal and tax matters may therefore need to be transferred from the source system to Central Finance. Consider the effects of controlling as a different subject. You will only have a complete view of your costs for your cost centres in the Central Finance system as you complete the depreciation postings. If you need to have all cost centre expenses in the source system, such as for actual costing in the source system, this could be difficult. An interface with Plant Maintenance may provide another problem (PM). Asset master data is only available in the Central Finance system, while PM and equipment master data may only be available in source systems.

Be aware that New Asset Accounting has taken the place of Classic Asset Accounting in SAP S/4HANA if you want to integrate Asset Accounting in the Central Finance system. Get acquainted with SAP S/4HANA’s Asset Accounting improvements and key information:

Asset Accounting SAP Help (FI-AA)
Asset Accounting: Changes to Data Structure SAP note 2270387 S4TWL
Asset Accounting SAP Note 2270388 S4TWL: Parallel Valuation and Journal Entry

I have noted the issues that I am aware of, but there may be others based on particular use cases and other requirements. Customers must, as is customary, be aware of the possibilities as well as the limitations, dependencies, and necessity for sufficient testing of the business processes before going live. You also need to think about the transfer of old data and transition. Here, I’ve included a few significant FAQs that may be of use.

FAQs \s

(1) Central Finance: Frequently Asked Questions (SAP note 2184567) (FAQ)
You can find the following questions (and many more) answered in this note:

Is it possible to configure extra FI currencies that aren’t supported by the source system in the CFIN system?
Do source system side FI transactions involving “post late” documents, such as postings from or involving New Asset Management, get support from Central Finance?
Are the settlement rules that are assigned to cost objects duplicated?
With the Central Finance Scenario, what kinds of cost objects are possible to replicate?
Are projects and WBS components replicable?
Limitations of Later Introduction of a Ledger with Decentralized Asset Accounting in CFIN

2) Does SAP S/4HANA still allow Internal Orders?
Regarding internal orders in SAP S/4HANA on-premise edition, see SAP note 2865342.

(3) Is it feasible to carry out central procedures in Central Finance, such as settlements on duplicate Work Breakdown Structure (WBS) elements?
Only the reporting scenario is enabled for projects (WBS elements) up until S/4HANA 2020. Only the master system can be used to make changes to projects duplicated via ALE/IDOC. As a result, a settlement rule for repeated projects cannot be maintained in Central Finance, and there can be no settlement. For additional limits, see the roadmap below as well as SAP Help – ALE Business Processes: Work Breakdown Structure or Internal Order Distribution.

A new scenario for Central Projects (WBS) – Asset Settlement is available with S/4HANA 2020 FPS01. You can carry out a procedure where projects are created and edited in a source system and replicated to the Central Finance system. You can pay costs that were added to a work breakdown structure (WBS) element in a source system, an asset that is still being built, and then a fixed asset in the Central Finance system. You may get more details here:

Central Projects (WBS) Asset Settlement Scenario SAP Support
Blog entry: SAP S/4HANA’s Central Projects in Central Finance

4. What limitations apply to asset accounting with central payment?
Refer to SAP Note 2346233, “Central Payment for SAP Central Finance: Pilot” for further information. 4. What limitations apply to asset accounting with central payment?
For SAP Central Finance, see SAP Note 2346233 – Central Payment. Pilot Note for Central Payment Activation: SAP Central Payment Instead of using each source system, Central Finance enables you to make consolidated payments and carry out centralised clearing operations. Prior to Central Payment going live for actual use, consumers must be aware of and accept limits, as well as successfully complete extensive customer testing on productive data and processes: […]

• Decentralized Asset Accounting: Central Payment is only made available for those company codes where there is either no need for asset reactivation following the usage of a cash discount or no use of cash discounts at all.
• No restrictions apply to the reactivation of assets under a central payment scenario according to central asset accounting.

(5) Is it possible for me to execute Asset Accounting for some business codes in the source system and for other company codes in Central Finance?
This would entail combining variants A and B in some way. Technically, Asset Accounting might be conducted locally in a source system for some business codes and centrally in Central Finance for other company codes. Even a customer who wanted to divide Asset Accounting within one company code and I discussed a business case. The creation of some asset classes in the source system and others in the central finance system is technically feasible. Naturally, this will bring up a lot of questions for you to think about and put to the test. How to perform cross-system reporting or an asset transfer, for instance

6) Does Central Finance have a migration tool for Asset Accounting?

• Asset Accounting in SAP S/4HANA offers legacy data transfer solutions that you can use:

SAP Help: Asset Accounting Legacy Data Transfer.
FAQ regarding Legacy Data Transfer FI-AA in SAP Note 2208321

• There isn’t currently a migration or transition tool available for Central Finance’s Asset Accounting. As of FPS1 release 2021, the process for transferring legacy data is outlined in SAP – Help – Central Finance Transfer the Legacy Data.
• With the introduction of FPS1 version 2021, a new reposting tool is now accessible if you have utilised Central Finance before utilising Central Asset Accounting: Repost the Asset-Related Transactions that Were Duplicated
• Prior to the activation of Central Asset Accounting, asset-related posts will have already been reproduced and posted on G/L accounts, therefore these values will be duplicated with the migrated asset balance. Therefore, it is necessary to write off the duplicate balances in G/L accounts with new posts.

(7) Does Central Finance have a migration manual for Asset Accounting?
If you convert your system to SAP S/4HANA, there is a migration manual available: Migration to New Asset Accounting (FI-AA (New)). However, this migration guide is only valid for a system conversion, not for Central Finance. Depending on the particular circumstance, a migration and cutover plan needs to be established with the customer in mind. As of FPS1 2021, SAP Help has a documentation of the process for transferring old data in Central Finance for Central Asset Accouting. This might be a nice place to start.

A paper with additional information on Central Asset Accounting, its procedures, implementation, and transition may be found attached to the following SAP note:

Central Asset Accounting for SAP Central Finance is described in SAP note 3127262. (pdf attached)

• News in Central Finance’s Asset Accounting
  What’s New for Internal Orders in SAP S/4HANA 2020 Central Budgeting: A remote budget check from a source system to a central finance system will be active with central budgeting during the posting process, where the budget is used.
  The New Features of SAP S/4HANA 2020 FPS1
• Scenario for Asset Settlement for Central Projects (WBS) With the help of this novel scenario, you can pay costs that were submitted to a work breakdown structure (WBS) element in a source system, an asset that is still being built, and then a fixed asset in the Central Finance system.

New Features of SAP S/4HANA 2021

• Project Central Budgeting: While the budget is normally spent in a process carried out in a source system, central budgeting for projects enables a centralised approach to controlling budget in a central finance system.

The New Features of SAP S/4HANA 2021 FPS1

• Check the status of cost objects for central settlement: To stop the source orders from being closed or deleted during the central settlement, a status check has been included.
• Accounting for Centralized Assets You may now turn on Central Asset Accounting for company codes in Customizing. There is a new reposting tool available if you previously utilised Central Finance before implementing Central Asset Accounting. See SAP Help – Central Finance:
  Repost the Asset-Related Transactions that Were Duplicated

In SAP Road Map Explorer, you can access the roadmap and the newest innovations:
Enhanced capabilities for central projects that are replicated:
duplicated work breakdown structure (WBS) parts, such as settlements, and carry out central processes on them

Conclusion
This blog post addressed a few frequently asked topics about asset accounting in a central finance setting. You can do asset-related posts in source with the aid of an investment order, capitalising in Central Finance, and retaining asset accounting in Central Finance alone.

Please share your experiences, difficulties, advice, and thoughts if you have any additional suggestions or solutions for asset accounting in Central Finance.