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Hello Expert
Currently one of my Indian client posting the transactions in US GAAP and adjusting local GAAP entries periodically in SAP. Now they are moving to D365.
In D365 what is the best practice to maintain the US GAAP and Local GAAP requirement? If we follow the same process as SAP that all US GAAP transaction will post into current layer and Local GAAP transaction to other layers then any impact on transactions and reporting side?
Please advise
Hello sand143,
There are different ways how you can account for multiple GAAPs.
One way is using the posting layers that you mentioned.
Another way is using separate accounts that are held in a separate group or class of accounts.
Before deciding for the one or the other way, can you let us know where you see the major differences in local Indian and US GAAP?
Is this in fixed assets, inventory / project valuations, etc.?
Best regards,
Ludwig
The major difference we identified as you mentioned,fixed assets, inventory and some tax related transactions
As you mentioned separate group or class means? Are separate set of accounts which needs to be create in same chart of account like 9 series or 8 series ?
Hi sand143,
You are right. I was referring to a separate class of accounts or series that is used to incorporate the differences between US and local GAAP.
About the differences:
The fixed asset part and differences can be handled with posting layers quite easily.
Here is a video that explains this: dynamicsax-fico.com/.../
Tax related transactions can be handled in GL by posting a number of adjustment postings on separate layers as well.
The major challenge is the inventory part because inventory transactions are posted on a single ledger only. You can create manual adjustment postings in GL to account for the difference. When doing that you have to somehow figure out what the difference is that you want to post. That might require some brainstorming with your inventory and finance team on how to do that best.
Ludwig Reinhard
Do you pan to use Management Reporter (Financial Reporting) to report on the two GAAP statements?
Thanks Michael Agostini
Hello Michael,
The management reporter is one possibility to create two different GAAP statements.
Alternatively, many companies like using PowerBI to extract and analyze the data.
Thanks for clarification ludwig but my qustion is not answer yet. Is any impact on accounting side and reporting side? If I follow the same process as SAP that Posting US GAAP entries in currrent layer and all the local GAAP entries in Oparation layer or diffrent class account.
I don't know how SAP is doing that in detail from a technical / database perspective.
Based on what you describe, it seems to be very similar to the posting layer approach that D365FO uses.
This posting layer approach allows you using a single account for posting local and US-GAAP.
The separation between both approaches is made by the posting layer, which can be used as filter in your financial reports so that you can easily get your local and US GAAP based reports.
sand143,
The concept of using posting lawyers is simple. The complexity here is how you get your reporting. You are not going to have two sets of all transactions for the two GAAP's. You are going to have most of your regular transactions in the posting layer. If you do some US GAAP tax / depreciation entries they will be in the other layer.
The question now is now do you report on this.
Thanks Mike
Thanks Ludwig.
Can you please suggest how we can handle inventory related GAAP requirement in D365. As per client requiremet, In Local GAAP the costing method used for transaction as weighted avarage but in US GAAP costing method is FIFO in this case how we can adjust the inventory value?
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