The Accounting area includes accrual/deferral functions that you can use to assign incomings and outgoings to the period in which they arose. You use the accrual/deferral function to calculate the expenses (outgoings) and revenues (incomings) for a period on a certain key date/period-end closing (for example, at the end of a fiscal year).
Accrual/deferral amounts are calculated on the basis of flows from individual transactions that are to be accrued/deferred. The key variables for calculating the amount are the accrual/deferral period and the flow types that are indicated as being relevant for accrual/deferral. You have to make specific settings in Customizing to indicate the accrual/deferral flow types ( Accruals / Deferrals and the reversal of these). There, you also specify the accrual/deferral procedure.
The accrual/deferral method describes how the system calculates the amount that you wish to accrue/defer - pro rata temporis or pro rata temporis with linear discounting or using financial mathematics (for example, for Commercial Paper).
The accrual/deferral procedure , on the other hand, describes how the expense and revenue accounts are updated.
A distinction is made between the following accrual/deferral procedures:
Reset or Accumulation procedure Corrects income statement accounts by the accrual/deferral amount determined on the accrual/deferral key date and then resets them.
In other words, the accrual/deferral amount is calculated and posted for the period between the start of the calculation period and the key date (accruals) and between the key date and the end of the calculation period (deferrals) for the specific item (for instance, interest payment).At a later date (usually the following working day), this posting is reset by the corresponding reset posting. This adjusts the related income statement accounts accordingly. You must carry out the reset posting separately.
Difference procedure Transfers any expenses and revenues incurred in the period between the most recent and the present accrual/deferral from the accrual/deferral accounts to the related income statement accounts.
You use the Executing an Accrual/Deferral function to calculate and post the accrual/deferral amounts for a period specified by yourself. The system calculates the accrual/deferral amounts for transactions or positions and periods that you define. It generates the accrual/deferral amount for each relevant flow and the corresponding accrual/deferral flows. These can immediately be posted in FI or processed later in the posting run. You can also carry out a test run beforehand.
Using the Reversing an Accrual/Deferral function, you can reset accrual/deferral flows immediately (by reversing the related FI documents) or at a later date (by flagging the flows for reversal).