Paul Ovigele, Ovigele Consulting
So you are considering using the SAP General Ledger (formerly known as the New General Ledger, or New G/L) and you want to know how some of the new characteristics such as segments can be implemented. I have been asked several times what the segment field should be used for, when there are several other fields like profit center, business area, and certain custom fields that can already satisfy the segment reporting requirement. As usual, many businesses have different requirements and hence will have different reasons for using the segment field. The requirement by the International Accounting Standards Board (IASB) and US GAAP to produce full financial statements for “segments” of their business which could be based on geographic or regional divisions has intensified the need for segment reporting.
However, this requirement (which only applies to public companies) does not specifically state that you must use the Segment field in your accounting system to produce your financial statements. If your business or geographical divisions are represented by the other characteristics mentioned above (profit center, business area, etc.) they can also serve the same purpose. If your company is in this situation then you may find the use of the segment field redundant. After all, why add more confusion to your SAP environment which is already cluttered with objects which are visible but not used (ABC “Business Processes” anyone?). It also does not help that the term “segment” is frequently confused with ano ther SAP object “profitability segment” (which represents a combination of characteristics such as customer, product and region that can be used for profitability reporting).
The decision about how to use the segment field is tied closely with the one about which characteristic(s) should be set up for document splitting and zero-balancing. You want to set up document splitting at a level which allows enough granularity to provide you with full balance sheet reporting at the appropriate divisional level. However, you do not want to set it up at too low a level that the information becomes irrelevant or unrealistic (for example, you may not be able to split certain balance sheet items such as treasury postings into product divisions).
My recommendation is that is you are a new customer and do not have many profit centers, then use your profit centers for segment reporting and let the segments be assigned to profit centers on a one-to-one or one-to-many basis. If you are an existing SAP customer that already used profit centers for other purposes (that is, not for segment reporting) then you can group your profit centers in to the segments that they relate to (for example, business or regional divisions) and use the segment object for full balance sheet reporting. If you do not use profit centers but want to perform segment reporting then you will have to use a BADI FAGL_DERIVE_SEGMENT to derive the segment using specified logic. When you have decided to use the segment characteristic for document splitting make sure that you select the “Mandatory Field Checkbox” in the menu path: Financial Accounting (New) -> General Ledger Accounting (New) -> Business Transactions -> Document Splitting -> Define Document Splitting Characteristics for General Ledger Accounting.
For more infrormation on how to optimize your SAP Financials landscape, I've put together my top tips in the book 100 Things You Should Know About Financial Accounting with SAP which is published by SAP Press.