Parallel Accounting / Parallel Ledger
Parallel accounting means recording the same business transactions according to more than one set of accounting rules – for example, US GAAP, IFRS, and local GAAP. In SAP S/4HANA, this is typically implemented with parallel ledgers.
SAP
Explanation
In the ledger approach, a company uses:
• a leading ledger, which reflects the group's primary accounting principle,
• one or more non-leading ledgers, each assigned to another accounting principle.
Transactions that are identical under all principles are posted to all ledgers. Where rules differ – for example, in lease classification, revenue timing, or depreciation – ledger-specific postings are made.
Subledgers support this approach: SAP Revenue Accounting and Reporting (RAR) can process a contract under multiple accounting principles, and asset and lease accounting can value assets and leases differently per ledger.
Why It Matters
US companies with international subsidiaries, or foreign groups with US reporting, often need both US GAAP and IFRS results. Parallel accounting avoids manual adjustments at period end – provided that accounting policies per principle are clearly defined and reflected in the system design.
Related Terms
SAP S/4HANA Finance · Universal Journal · ASC 606 · IFRS 15 · ASC 842 · SAP Asset Accounting (FI-AA) · SAP Group Reporting
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