S/4HANA Advanced Compliance Reporting

February 7, 2019 Posted by: Philippe Despierre
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In my nearly twenty years as a SAP Financials consultant, I have closely worked together with numerous SAP customers. For each of them, I assisted them in setting up or refining their financial processes to work as efficient as possible. And with many of those customers, I saw the same challenges returning. The main struggle, which usually brought a smile on the face of the accountants was “the closing”. Ah, that closing. Many steps to be executed, each and every month again…

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An important part of the financial closing is the obligatory declarations to the government. The VAT declaration, the EC sales list, yearly listing, declarations to the national banks, and many others. Luckily, SAP has, over the years, optimized their declaration programs resulting in that a smooth generation of these results (today usually XML or similar files).

One of the complaints that I often heard up until now, is: “Well, we are able to generate those declarations, but we struggle to keep track of them”. It means that business users need to keep track (usually in an MS Excel sheet) of which declaration was already sent to the government for which company code and a file share has to be created to store those declaration files for archiving.

With S/4HANA, SAP has provided us with a solution to this request: Advanced Compliance Reporting (ACR, also known as Statutory Reporting Framework or SRF), which is supported by a series of nice Fiori apps. Using these apps, it is possible to centrally manage statutory reporting for your international organization. Well that sounds good, not?

But is it worth the implementation? Let’s find out.

Each time when I am exploring functionality that is unknown to me, I prefer to connect to the SAP Best Practice scenarios on rapid.sap.com/bp. These scenarios are ideal to learn and understand how functionality has to be set up, and how SAP intended to use it.

Also for ACR, SAP has provided a best practice scenario, which can be activated easily in your S/4HANA system.

It is important to notice that a specific business function needs to be activated. Without this business function, the ACR is working, but not all features are available. Note that with the activation of this business function, an additional license fee applies.

The full scope of ACR is currently  only available in the on-premise version of S/4HANA. If you use the cloud edition, you only get a minimal scope and content.

How to get access to the ACR?

In what follows, I assume you have a system landscape with a frontend (the gateway where Fiori is running) and backend (where S/4HANA 1809 is installed).

In order to make the ACR work, you need to make sure that you have the necessary authorizations in your backend and frontend. Next to the transaction authorizations, your userID needs to following standard roles assigned in the frontend:

  • SAP_BR_AP_MANAGER_BE (Country-specific role for Accounts Payable Manager, in this case Belgium)
  • SAP_BR_GL_ACCOUNTANT_BE (Country-specific role for General Ledger Accountant, in this case Belgium)

When logging on to the system with these roles assigned, you get a Fiori screen with following tiles:

ACR Blog 1

Which declarations can you run from it?

For Belgium, you are (currently) able to run three declarations:

  • EC Sales list
  • Balance of Payments (the “yearly listing”)
  • Withholding tax report (the “fiches 281.50” for Belcotax)

You notice immediately that the VAT declaration is not part of the reports that can run. This is disappointing for me, as the VAT declaration is (I would say) vital for any company.

But let’s not despair: the SAP framework will, I hope, contain the VAT declaration soon.

How to run the reports?

The three reports that are now supported by ACR are not new: they are available in any SAP ECC system for decades. But, I think we can agree that they never were an example of user-friendliness. Each of those reports in SAP ECC has a large selection screen, requiring you to be an experienced or skilled user in order to understand what to fill in each of the selection parameters.

In ACR, the user interface to run these reports has drastically improved, which is, in my opinion, the biggest plus.

ACR Blog 2

The above screenshot is an example of how the app Run Advanced Compliance reporting looks like. As the example is based on a demo system, there is a lot of overdue, but with such an overview, you will – in a productive environment – be able to follow-up the declarations easily.

Details of a declaration

By clicking the right arrow for the “completed” declaration, the details of that declaration are shown. Especially the completed phases block is very helpful to understand what the status of a declaration is. In this example, it is accepted by the government. Note that this status change was done manually, since the declaration exchange was manually. However, at least there is a status follow-up, which is a big step forward compared to ECC.

ACR Blog 3

As you can see, also this activity has some more details (arrow at the right), which is shown below:

ACR Blog 4

By going into the details, it is possible to get back to the originally sent file (and XML in this case), as well as the audit trail:

ACR Blog 5

Again, SAP has made use of the power of HANA to make SAP a true strategic partner in the declaration process. By making use of sorting and colors in the powerful Fiori layout, they offer a clear view to the user: what has been declared and what is still to be done for each company code. I believe this is how an ERP system should look in 2019.

What is new compared to ECC declarations?

As stated above, the generation of the declarations is certainly not new. However, SAP has provided interesting features with ACR, that were not available in ECC:

  • Reporting dashboard to follow up the declaration status, due dates, etc.
  • An audit trail allows you to store data for audit purposes. It also detects documents that were posted after the declaration. A handy feature that facilitates the declaration for the next period.
  • The Data preview mode displays the reports in an intuitive way
  • And let’s not forget the embedded analytics, that allow quick reporting on the declared data.

What is behind it?

To enable ACR, of course, configuration to be done. By activating ACR in a best-practice scenario, the necessary configuration is done automatically and only needs a review.

The main configuration is done via transaction SM34, table view SRFVC_RPG_ENT. Here you define, per country, which declarations are relevant, and – important – as of when. This relevance date is needed to make sure that your Fiori tile is showing correct numbers. In the implementation guide, the settings are found here:

ACR Blog 6

In this same table view, the necessary parameters are set to fill in the XML Files. This is done per declaration and is similar to the necessary setup for the XML VAT declaration.

Alternatively, you can use the Fiori app “Define Compliance Reports” to work on the definition of the reports. Note that you need to assign the role SAP_BR_ADMINISTRATOR to see this app.

ACR Blog 7

Minimal versus full scope

As stated in the beginning of this article, a minimal (“light”) version and a full version exist. To get the full version, the activation of the business function FIN_LOC_SRF is required. A comparison:

 

Minimal

Full

Fiori Tiles

Yes

Yes

Reporting Dashboard

Yes

Yes

Audit Trail

No

Yes

Data preview

No

Yes

Embedded Analytics

No

Yes

 

ACR and the Financial Closing Cockpit?

The governmental declarations are an important part of the periodic closing process. To support the closing process, SAP has the Financial Closing Cockpit (FCC) available. You may ask yourself what the relation between FCC and ACR is.

According to me, one solution does not replace the other. The power of the Financial Closing Cockpit is known to all of us: it offers structure and standardization to all of the financial closing activities, not just the declaration part. And yes, the FCC can automate the declarations, so that you do not need the ACR to keep track of your declarations. However, to my experience, very little companies actually do a fully automated declaration run. Declarations are most often run in test, are checked and validated. Errors are solved and only then a final run is executed. In this case, ACR is a better tool than FCC for follow up.

Conclusion

After exploring the Advanced Compliance Reporting tool available in S/4HANA 1809, I am feeling confident that this tool will soon be part of all finance implementations, as it makes declarations so much more visible and traceable. I, however, consider the lack of support for the VAT declaration as a missing functionality for the moment. Once this has been added, ACR can surely be commonly used by all S/4HANA customers.

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Philippe Despierre

Principal consultant SAP Financial Accounting & Controlling within Expertum Belgium