Purpose

The Provisions for Awards component enables you to automatically calculate and post provisions for employee award schemes such as stock option programs.

The data for the stock option program required to calculate the provisions are transferred from Financial Accounting from the SAP componentHuman Resources ( HR ). The system calculates the provisions from this data and posts them automatically. You can define a number of different calculation methods. In each period, you can start a provisions run to post the provisions. You can also simulate future provisions.

The functions in Provisions for Awards component support the use of parallel valuation methods . This means that you can calculate and post provisions based on different accounting principles at the same time.

The Provisions for Awards component is based on the Accrual Engine tool. The provision amounts are managed in the Provisions for Awards component. The processes for calculating and posting the provisions, on the other hand, are managed in the Accrual Engine. For more information, see Provisions for Awards and the Accrual Engine .

Implementation Considerations

Before you can use the provisions for awards functions, you must make extensive customizing settings. For example, you must configure the transfer of data from HR, define your accounting principles, and specify the methods for calculating the provision amounts. To be able to post provisions automatically, you must also define the account determination.

A number of customizing settings also allow you to tailor the functions to your individual requirements. For example, you can add custom fields (parameters) to the functions.

These settings are located in Customizing for Financial Accounting under  General Ledger Accounting Business Transactions Provisions for Awards.

Integration

The Provisions for Awards component is connected to the SAP component Human Resources (HR). The data on the stock option program and on how stocks are granted to individual employees is located in HR. The HR component is in turn connected to the SAP component Treasury . The current market prices of the stock option program can be read from that component.

Features

The following functions are available for calculating and posting provisions:

The functions in the Provisions for Awards component can be accessed from the SAP Easy Access screen by choosing  Accounting Financial Accounting General Ledger Periodic Processing Provisions for Awards .