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Finance4U™ Property and Lease Accounting

Situation

As an asset-intensive industry, utilities are required to comply with property and lease accounting rules for capitalization. Many utilities today use and maintain two separate systems, which is inefficient and costly.

Challenges

In the past, many utilities turned to non-SAP systems to enable asset capitalization and depreciation processes. These non-SAP systems attempt to provide functionality tailored to the utilities industry. However, they also bring a series of challenges: huge amounts of data is exchanged and must be reconciled between two separate systems, causing data to be out of sync. This additional maintenance dramatically decreasing the efficiency of accounting departments and introduces additional costs to the utilities.

Solution Overview

The Finance4U™ Property and Lease Accounting Solution directly leverages the Universal Journal and enhances SAP’s Fixed Asset Accounting and Asset Retirement Obligation Module to simplify and streamline utility property accounting processes.

Value Drivers

Native to SAP S/4HANA

Enables the complete capitalization process to happen directly in SAP S/4HANA.

The universal journal provides reliable and efficient bookkeeping, real-time and insightful details on costs, vendors, materials, projects, and assets.

Natively reconciled with General Ledger. Integrated to SAP EAM and Project System.

Lease Accounting integrated to SAP S/4HANA Payment and Cash Management.

 

Compliance

Capitalization of costs according to regulation and rate jurisdiction requirements.

Asset reporting compliant to FERC standard.

Lease Contract Management, Usage, Payment, and Remeasurement Processes compliant with new accounting standard ASC 842.

 

Tailored for Utilities

Provides CWIP, RWIP, CCNC, and PIS asset types. Allows depreciation starting from CCNC.

Support reserve assets, and removal and retirement process.

Utility-specific depreciation method. Reports to support depreciation study.

Supports both regulated assets, and non- regulated assets. Supports both location assets and group assets.

 

Low Total Cost of Ownership

No separate system, database, or other third-party license as prerequisite.

No data replication thus no reconciliation required.

Less maintenance and operation effort for both Accounting and IT departments.

Easy to implement. Less custom development.

Fully leverage investment in SAP S/4HANA Finance.

Process Innovation

Asset Unitization Process

  • Automatically generate accounting postings for field complete, unitization, trailing charges, and removal of assets
  • Calculate and generate AFUDC and CIAC postings

Retirement Units Driving Cost Settlement

  • Retirement  units  automatically  drive  as-planned costs  to  be  distributed  to  assets  according  to regulation
  • Enable  manual  adjustment  of  cost  distribution  in utilization process

Depreciation and Depreciation Study

  • Support utility-specific reserve asset
  • Reports to support depreciation study

Lease Contract Management

  • Lease contract management with usage term and payment schedule
  • ROU asset and liability recognition
  • Adjustment and remeasurement

Technology Innovation

  • Installable add-on package supporting all releases of SAP S/4HANA on-premise edition
  • Natively leverage Universal Journal, no separate storage of data. Tight integration with S/4HANA General Ledger (FI), Controlling (CO), Fixed Asset (AA), and Account Payable (AP)
  • Fiori-based user experience
  • Reporting and analytics through SAP S/4HANA embedded analytics framework (CDS View) and Analysis for Office

Modern User Experience

Fiori-based UX provides property accounting managers with a thorough and holistic view on fixed assets balances, lifecycle, cost components and all the details.

 

What’s next?

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