IFRS 18 in Practice, Part 2: Checking the SAP System Before You Start

Earlier posts covered IFRS 18 itself (Part 1), the SAP FI side and the financial statement version (Part 2), and the SAP CO cost flow behind operating profit (Part 3).

The previous post set the IFRS 18 work out in five stages and ended with a table of ten items to check before starting. This post expands those items into the queries that actually answer them.

The same IFRS 18 project is not the same amount of work at every company. A company whose accounts are already split and one whose accounts are not, a company whose allocation cycles reference cost element groups and one that lists the cost elements individually, have a different scope to touch. That difference can be established by querying the system before starting.

The T-Codes and tables below are SAP standard. What follows is the selection criteria, how to read the result, and how the scope of work splits depending on what comes back. No figures from any particular system are included.

1. Order of checks

No.	What to check	Why
1	Whether CO-PA is used, and which type	Costing-based CO-PA has a value field structure, and work follows from it. Account-based CO-PA has no value field work. The scope splits here, so this is looked at first.
2	How many income statement accounts there are	The work base is the income statement accounts, not the account total. Within those, the financial items are the first target.
3	Whether the financial income and expense accounts are already split	If they are already split, the account split stage is skipped. This is the point where the amount of work differs most.
4	Cost elements and the group structure	This decides where the category is attached. If the group structure is aligned with the value fields, the unit of work is clear.
5	How the allocation cycles specify cost elements	With a group reference only the group has to be changed. With an individual list every cycle has to be touched.
6	Data volume	This gives a sense of what adding value fields costs. Whether historical data can be reprocessed is also decided here.
7	Whether the income statement report is standard or custom-built	A custom-built report means program changes follow. If there is an external transfer, the lead time for agreeing it counts as well.

2. CO-PA structure

Item	Query	How to read it
Operating concern and type	KEA0	Check the operating concern code, whether it is active, the data structure and the type of Profitability Analysis. Costing-based keeps value fields; account-based aggregates directly on cost elements. Costing-based means value field work follows.
Value field list	KEA0 → data structure → value fields	Check how many value fields there are and what the numbering scheme is. Some systems simply run them in sequence; others use blocks, for example the 100s for revenue and the 200s for cost. A block scheme makes it easy to find a slot for a new field per category.
Value field names	Same screen	Check what names the non-operating items are held under. Items such as interest income, foreign currency translation and asset disposal are sometimes carried with an SG&A prefix. Where the name and the actual nature disagree, it is taken as something to clean up, because it causes confusion during category mapping.
Characteristic list	KEA0 → data structure → characteristics	Check the analysis axes. Seeing how far the user-defined characteristics are filled shows whether there is room for a new one. This is the basis for deciding whether the category can be carried by a characteristic instead of a value field.
SD condition mapping	KE4I	This is the path by which SD billing feeds the value fields. Zero entries mean SD is not used, and that revenue arrives by some other path. That path is then located separately.
PA transfer structure	KEI1	This is the structure by which cost center assessment and order settlement pass into CO-PA. Check how many structures there are and how many assignment lines each one has. If the assignment lines hold non-operating items such as interest, foreign currency translation or asset disposal, non-operating income and expense are traveling through the allocation.

3. Accounts

Item	Query	How to read it
Chart of accounts check	SE16N / SKA1	Compare the count with no selection against the count with a chart of accounts specified. Different numbers mean there is more than one chart of accounts, and one of them may belong to an overseas entity. This is where you decide whether to narrow the first scope to the main chart of accounts.
Number of income statement accounts	SKA1 + balance sheet account indicator	Selecting with X in the balance sheet account indicator gives the number of B/S accounts. Subtracting that from the total gives the number of income statement accounts. At some companies most accounts are B/S accounts, so the total account count alone is not something to judge by.
Income statement numbering scheme	SKA1, B/S accounts excluded	Pull the income statement accounts only and look at the first and the last screen. Check which number ranges hold revenue, cost of sales, SG&A, non-operating items and income taxes, and whether there are separate statistical accounts. This becomes the basis for the later range queries.
Financial income and expense	SKA1, account number range	Query the non-operating range. These accounts are the first work base for the IFRS 18 account work.
Split status	Reading the same result	Check whether foreign exchange gain is one line or several lines by offsetting account. Where it is split by nature — deposits, financial assets, financial liabilities, receivables, payables — the category mapping is close to mechanical. If it is a single line, the account split comes first.
Keyword query	SE16N / SKAT	Search by name in the account text table. Querying for words such as investment property, lease or derivative brings the related accounts back at once, B/S and P&L alike. This is used to check whether an account that should exist is missing.
Items that are mixed in	Reading the revenue and SG&A ranges	Rental income or investment income is sometimes sitting inside the revenue account group. Depreciation on investment property is sometimes in the SG&A range in the same way. An account must not be handed to operating on the strength of its position alone.

4. Cost elements and groups

Item	Query	How to read it
Whether cost elements exist	SE16N / CSKB	Query with the controlling area and a cost element range. Compare the number of accounts with the number of cost elements and check the difference. An account that exists with no cost element means it does not flow into CO.
Cost element category	The category field in CSKB	Check the category. Some companies have created primary cost elements for revenue accounts as well. That is a setting made so cost center postings and allocations can be done freely, but it means the category alone cannot separate revenue from expense.
Group list	SE16N / SETHEADERT	Querying with the cost element group set class returns the group names and descriptions. At some companies the groups are aligned one to one with the value fields. Where that holds, the unit of work is clearly one group at a time.
Group contents	SE16N / SETLEAF	Specify a group name and see which accounts it holds. There are two ways of specifying them: groups captured as a range, and groups listed as individual values.
Work by specification method	Range versus individual	Where a range is used, the category can be split by adjusting the boundary values only. Where the values are listed individually, the accounts are rearranged between groups. Neither requires creating new accounts.
Groups that are mixed	Reading the contents	Check whether one group holds several categories. If a retirement benefit group holds interest cost and the expected return on plan assets together, financial items are flowing into an operating value field.
Group name that does not match its contents	Reading the contents	Sometimes the group name and the actual contents differ — the name says foreign currency translation gains and losses, but it also holds foreign exchange gains. Working from the name alone leaves things out.

5. Allocation cycles

Item	Query	How to read it
Number of cycles	SE16N / T811C	This is the list of assessment and distribution cycles. Check how many there are and what naming rule was used. The number of cycles does not become the amount of work as it stands; the next item has to be checked.
How cost elements are specified	SE16N / T811K	These are the selection criteria of the cycle. Query with the cost element field in the field name. A value in the from-value means the cost element was specified directly as a range; a value in the set ID means a cost element group is referenced.
When a group is referenced	Value in the set ID	Changing the contents of the group takes effect in every cycle that uses that group. The cycles do not have to be corrected one at a time.
When specified directly	Value in the from-value	Each cycle is opened and its segments corrected. The work is the number of cycles multiplied by the number of segments.
Query caution	Internal format	The cost element field is a character field of fixed length. Even where the account has eight digits, it is stored internally padded with leading zeros. If a range query comes back with zero records, suspect the format first.
Allocation steps	Cycle names and structure	Check how many steps the allocation runs in. Where costs go from cost centers through an intermediate organization up to the business unit, the category has to be preserved at every step. If it is mixed at any one step, everything below it breaks.

6. Data volume

Item	Query	How to read it
CO-PA line items	KE24	Entering the operating concern and a period and executing gives the number of line items. Taking one closed month shows the monthly scale. If the query alone is large enough to raise a memory warning, structural changes have to be approached carefully.
Cost of adding a value field	Converted into line counts	A value field is a table column. Adding one column applies to every row. On a system that accumulates hundreds of thousands of records a month or more, adding value fields in bulk is expensive.
Historical data	Whether reprocessing is possible	With a large volume it is difficult to run historical data through the new structure. The design then has to assume it applies only from the changeover date onwards. This is something to agree with accounting in advance.
Summary tables	Querying the custom summary tables	Some systems keep the income statement aggregated in a separate table. If that table holds the value fields as columns, adding a value field brings a column along here too. Check the row count at the same time.

7. Income statement reports and custom objects

Item	Query	How to read it
Reporting method	Whether the standard FSV is used	Check whether the income statement is produced from a standard financial statement version or from a custom-built program. A custom-built program means program changes follow.
Number of Z objects	SE16N / TADIR	Query with the program ID, the object type and a name pattern. The number of programs is not the amount of work as it stands: one main program carries several includes, so counting after removing the ones with a suffix comes closer to the real number.
What the Z tables are for	SE16N / DD02T	A table name on its own does not say what the table is for. Querying the table description text by language and name pattern returns the descriptions in the local language as well. Income statement aggregation, account mapping and interface structures are found here.
External transfer paths	Reading the table descriptions	If structures for a data warehouse transfer or parameter tables for RFC calls appear, the income statement structure leaves SAP. That needs agreement with the receiving side, and the lead time is long. It goes into the schedule first.
The closing program set	The closing overview screen	Some systems have a custom transaction that manages the CO closing from a single screen. Expanding the tree on that screen shows the programs used in the closing in one place. It can be taken as the starting point for classifying impact.
Hard-coded accounts	Source scan	Where account numbers are written directly into program source, they have to be changed along with the account. A source search program is used to sweep for account number patterns and pull out the targets.

8. Where the query result splits the amount of work

Item	Less work	More work
CO-PA type	Account-based — no value field work	Costing-based — value field and transfer structure work follows
Split of financial income and expense	Already split by offsetting account — category mapping only	Lumped into one account — starts with the account split
Cost element group structure	Aligned one to one with the value fields — the unit of work is clear	No alignment — the mapping is designed from scratch
Cost element specification in the cycles	Group reference — only the group is changed	Direct specification — changed cycle by cycle
Allocation steps	Single step	Multi-step allocation — the category has to be preserved at each step
Data volume	Room to add value fields	Adding columns is expensive — designed to keep new fields to a minimum
Income statement report	Standard FSV — configuration change	Custom-built plus external transfer — program changes and agreement
Who creates the documents	Created inside SAP	External interface — check whether the message carries the basis for the classification

9. Query list

T-Code / table	What it checks	Selection criteria
KEA0	Operating concern, type of Profitability Analysis, value fields, characteristics	Specify the operating concern, then open the data structure
KE4I	SD condition to value field mapping	Specify the operating concern
KEI1	PA transfer structures and their assignment lines	Specify the operating concern, check the assignment lines per structure
KE24	Number of CO-PA line items	Operating concern plus one closed period
SKA1	Number of accounts, number of income statement accounts, numbering scheme	Chart of accounts / balance sheet account indicator / account number range
SKAT	Finding accounts by name	Language plus chart of accounts plus text pattern
CSKB	Whether cost elements exist, and their category	Controlling area plus cost element range
SETHEADERT	Cost element group list and names	Set class plus name pattern
SETLEAF	Accounts held in a group	Set class plus group name
T811C	List of allocation cycles	Query with no selection
T811K	How the cycles specify cost elements	Specify the cost element field in the field name
TADIR	Number of Z objects	Program ID plus object type plus name pattern
DD02T	What the Z tables are for (description text)	Language plus table name pattern

10. Summary

Aspect	Principle	Detail
Order	Query before design	Even for the same IFRS 18 project the scope of work differs with the state of the system. Checking the current state by query is faster than fixing a design first.
Criterion	Structure over numbers	What determines the amount of work is not how many accounts there are but how they are split, and not how many cycles there are but how they specify cost elements.
Scope	Leave what is not known	Anything not confirmed by query is left as an item to confirm rather than estimated. Things such as how an external interface decides the account cannot be known from queries alone.

Korean version of this post: blog.naver.com/jeonnow/224420162641