Over several decades SAP has established its business solutions as the global standard ERP with many companies. SAP has extensively enhanced its solutions to offer numerous options for configuration and ways to set up processes and process data. During its lifecycle, an SAP system can grow organically or become fragmented at the same time. Going through a standardization and harmonization process may address this issue, but it requires adapting the ERP system with any organizational change. A typical example is the consolidation of different charts of accounts in a company.

Definition

The chart of accounts in an SAP system is the structure containing the G/L accounts used by one or more company codes in accounting. For each G/L account, the chart of accounts shows the account number and the account name. Additionally, it holds information that determines the function of the account and in turn that controls how the account is created in the company code and in the controlling area.

It is mandatory to assign a chart of accounts to each company code. This chart of accounts is then the operating chart of accounts and is used by financial and cost accounting for daily company code postings. If cost and revenue accounting is active, the chart of accounts is also used for postings in the controlling area. When using multiple company codes, the same chart of accounts can be used for all company codes. Alternatively, a maximum of two additional charts of accounts is possible.

A chart of accounts harmonization leads to less interfaces and improved processes.

6 steps to achieving a harmonized chart of accounts

1. Aligning the target chart of accounts

The SAP chart of accounts harmonization process typically begins with aligning the target chart of accounts. Important changes to the general ledger accounts are planned and accounts receivable, accounts payable, asset and subledger accounting, and cost types are reconciled. Considering the different business processes, the posting logic is analyzed and the accounts’ detailed settings are determined. Next, an as-is and to-be analysis are conducted along internal alignment meetings.

2. Involvement of an auditor

At this stage, an auditor may be involved. The target chart of accounts is reviewed and agreed upon with the auditing firm. The auditor ensures the implementation of the correct configuration to avoid potential issues later in the process, ensuring the migration is compliant and in line with accounting standards. 

3. Setting up the new chart of accounts

This means that a new chart of accounts and general ledger accounts are created. Alternatively, a new general company code layer is being generated during migration of the original chart of accounts by mapping source accounts to the target accounts.

4. Configuring the chart of accounts

The configuration phase follows, where the chart of accounts is customized according to the organization's specific needs. This could involve unifying, restructuring, or splitting general ledger accounts to ensure that they meet the operational requirements of the business.

5. Data Migration

Once the chart of accounts is configured, the data migration process begins. A smart transformation tool can accelerate some steps during this phase through automation. The Natuvion DCS is such a tool that provides additional support with controlling and monitoring capabilities.

6. Transformation and functional testing

The project concludes with a transformation and function test phase. All steps of the harmonization process are being validated in detail. It verifies that all steps in accounting work smoothly with general ledgers, balances, and consolidation and results being accurately reflected in the new general ledger accounts.

Mitigating potential risks