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Classic vs. New GL Acctng


The key differences between Classic Accounting and the New GL (General Ledger) concept in SAP.

Classic Accounting (Old Approach):

  1. Separate ledgers:
    • G/L accounts were managed in the General Ledger
    • Customer accounts in Accounts Receivable (AR) subsidiary ledger
    • Vendor accounts in Accounts Payable (AP) subsidiary ledger
    • Asset accounts in Asset Accounting subsidiary ledger
  1. Each subsidiary ledger had its own reconciliation account that needed to be balanced with the General Ledger.
  2. Limited parallel accounting capabilities - difficult to maintain multiple accounting principles (like US GAAP and IFRS) simultaneously.

New GL Accounting (The Ledger Approach):

  1. Integration:
    • All subsidiary ledgers are directly integrated into one unified ledger
    • No reconciliation accounts needed between sub-ledgers and GL
    • Real-time integration and posting
  1. Parallel Accounting:
    • Supports multiple parallel ledgers (leading and non-leading)
    • Can maintain different accounting principles simultaneously
    • Each ledger can have its own:
      • Chart of accounts
      • Fiscal year variant
      • Posting periods
      • Accounting principles
  1. Enhanced Features:
    • Document splitting (automatic balancing of segments)
    • Real-time reporting capabilities
    • Better segment reporting
    • More flexible period-end closing
    • Improved cross-company/cross-business area postings

The main advantage of the New GL is its ability to handle modern business requirements like:

    • Multiple accounting standards
    • Segment reporting
    • Real-time financial consolidation
    • Faster period-end closing
    • More detailed financial analysis

The difference between Classic Accounting (in older SAP ECC versions) and New General Ledger (New GL) Accounting (introduced in ECC 6.0 and onwards) primarily lies in their architecture, functionalities, and how they handle parallel accounting and reporting.

Here’s a breakdown of key differences:

1. Ledger Structure

  • Classic Accounting: Uses a single ledger approach. In classic accounting, the General Ledger is integrated with other SAP modules, but parallel accounting is more cumbersome to handle because it often requires workarounds like using additional accounts or special ledgers.
  • New GL Accounting: Introduces a ledger-based approach (hence the term "Ledger Approach"). It allows multiple ledgers for different accounting principles (like IFRS and local GAAP) within the same system, making parallel accounting easier and more flexible.

2. Parallel Accounting

  • Classic Accounting: Parallel accounting (for handling different reporting standards such as IFRS and local GAAP) had to be managed through either separate company codes or multiple account approaches, which was complex and inefficient.
  • New GL Accounting: Supports parallel accounting more effectively by enabling multiple ledgers (leading ledger and non-leading ledgers). Each ledger can represent a different set of accounting standards, which makes it easier to comply with different regulations simultaneously.

3. Segment Reporting

  • Classic Accounting: Did not support segment reporting natively. If required, users would have to rely on custom solutions or other modules like Profit Center Accounting (PCA) or Special Purpose Ledger (SPL).
  • New GL Accounting: Segment reporting is integrated directly into New GL. Segments are now treated as a part of the organizational structure, allowing you to create balance sheets and profit and loss statements by segment, with little customization.

4. Cost of Implementation and Maintenance

  • Classic Accounting: Since workarounds (like additional accounts and special ledgers) were needed to handle multiple standards or segment reporting, the system became more complex and costly to maintain.
  • New GL Accounting: Simplifies the process and reduces the need for workarounds, thus lowering the cost of system maintenance and providing a more streamlined implementation for features like parallel accounting.

5. Document Splitting

  • Classic Accounting: Did not offer document splitting capabilities. Therefore, if splitting information (like splitting costs and revenues across segments) was needed, it had to be done manually or through customization.
  • New GL Accounting: Offers document splitting natively. This feature automatically splits documents into segments or business areas, ensuring that each posting provides a complete picture for financial reporting (e.g., splitting a single expense into multiple segments for more accurate profit and loss reporting).

6. Real-Time Integration with Controlling (CO)

  • Classic Accounting: Integration between the General Ledger and Controlling module (CO) was more limited. Sometimes, manual reconciliations between FI and CO were needed.
  • New GL Accounting: Provides real-time integration with CO, so there’s less need for manual reconciliations, and financial data is more readily available for managerial accounting.

7. Flexibility in Closing Processes

  • Classic Accounting: Closing processes (month-end, year-end) could be less flexible due to the need for manual interventions for reconciliation or adjustments.
  • New GL Accounting: Provides enhanced features for closing, such as easier reconciliation between financial accounting (FI) and controlling (CO) due to real-time integration, and better handling of parallel ledgers for different accounting standards.

Summary of Key Points:

  • Parallel Accounting: New GL allows multiple ledgers, whereas classic uses workarounds like separate accounts.
  • Segment Reporting: Directly integrated into New GL, but not supported in Classic Accounting.
  • Document Splitting: Available in New GL but absent in Classic.
  • Real-Time Integration: Better integration between FI and CO in New GL, reducing manual work.

New GL Accounting in ECC 6.0 onwards modernizes and simplifies financial processes, making it easier to handle complex requirements like parallel accounting and detailed reporting compared to Classic Accounting.


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