All of the hypothetical examples and screenshots provided in this blog post are just illustrative. They shouldn’t be used as guidelines when putting together financial statements or sending financial information to any government agency.
ERP Central Component: ECC
Enterprise Resource Planning (ERP)
General Ledger, or GL
Enterprise Controlling Consolidation System, or ECCS
Strategic Enterprise Management, or SEM
Business Consolidation System (BCS)
On-line Analytical Processing, or OLA
eXtensible Markup Language, or XML
eXtensible Business Reporting Language, or XBRL.
Securities and Exchange Commission, or SEC
Financial Accounting Standards Board, or FASB
In this short proof-of-concept blog, I’ll demonstrate how the SAP ECC standard software may be utilised to deliver properly structured financial statements as required by the SEC. There are many alternative configurations and solutions that might be used to address this specific business issue, but in my opinion, the configuration presented here is the simplest and most effective approach to communicate financial data to the general public.
XBRL (wikipedia reference) has been around for more than ten years and is a format that the US government has formally mandated. Both the SEC and FASB websites (http://www.sec.gov and http://www.fasb.org) feature it. It is a de facto requirement for any company organisation to become and be publicly traded or listed on US stock exchanges. XML serves as its technical foundation.
First things first or the beginning of everything is a journal entry, or at the very least, one debit and one credit that equals zero. It holds true for a single entry as well as any trial balance, which forms the basis of any financial report. Before one of these credits or debits is recorded, numerous business activities and transactions initiated by business partners must occur, but the fundamental idea hasn’t changed since Venice in the XV century.
An accounting journal entry is made starting with the conventional, and some might even say boring, ECC, as demonstrated in the FB03 Display transaction. It takes place in the final month of 2011 and is included in the 2011 annual report. Account 100000 is debited, while Account 30000 is credited. Nothing fresh has been introduced thus far. There are millions of them in your SAP system.
We extract a trial balance when accounting has through with its closure activities (behind which is the report/program RFBILA00). This is the typical F.01 transaction once more. The option value “1,” which denotes “Extract to consolidation,” is the most significant one.
A dialogue box with the options ECCS FILE and “Receiver is SEM-BCS” checked delivers the trial balance to a flat ASCII file in the operating system directory when the appropriate setting has been completed. The financial records are now prepared to depart the ECC and prepare for the SEM-BCS interface.
An interim status of the integrated financial reporting is provided by a report that includes the output file and a map of our GL account balances to the preconsolidation ledger. To maintain the integrity of the financial reporting process and to meet the requirements of internal controls and external auditing, the file must be transformed before being loaded into the SEM-BCS, which is the OLAP equivalent of ECCS. However, the underlying account and balance information cannot change.
After making the required modifications, the BCS file can be uploaded. This is a component of the flexible upload task, which is a stage of the group financial close process for consolidated entities made up of multiple legal entities with varying percentages of ownership. The most important balances or totals in these entities are investments, goodwill, equity, non-controlling interests, and intercompany relationships. Although this example is as straightforward as it can be, it actually involves hundreds of items and actions that are automated by ECC/BCS or another set of tools and interfaces.
Following the load into the BCS, the reporting cube does another intermediate check to display the balances of the two accounts, which are now referred to as Financial Statement Items. The General Ledger accounts are exactly similar to these in this case (1:1), but in reality, they would differ and be reflected along the N:1 relationship.
Obviously, end users can use any browser to access the reporting cube. The amounts are displayed here using the Firefox browser.
The XBRL taxonomy, the most intriguing mapping tool of the BCS, is now introduced. The taxonomy file will undoubtedly change each year as FASB and the SEC continue to hone the specifications for financial reporting. Mapping and testing can start as soon as the government makes the file available. Again, the most straightforward mapping is shown here, but the same procedure applies to all other relationships as well.
The final step of processing in the ECC is the generation of an instance, which produces an XML file after mapping (assignment) has been finished. The XML format is a superset of XBRL, and since 1998, it has remained mostly unchanged. The file, along with the XSD file and a few other files, creates the XBRL standard and can be read by any browser. This is the final stage of processing financial data that has come from the GL or any subledger systems feeding it that involves SAP code.
Only as an illustration, the trial version of the Altova programme displays the XML/XBRL file in a grid format with all the relevant values as specified by the SEC.
Using the fewest possible steps and utilising the current SAP production installations, we went from a GL journal entry to the published financial statements. This example illustrates a clear opportunity to streamline and make it a more efficient process, thereby producing extra value for all. Currently, this virtual financial reporting value chain requires a lot of labour and many more hours to complete.
Have a pleasant ending to the 2011 fiscal year since the 2012 one is about to start.