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Open Item Management in SAP For GL Accounts

Open item management in SAP allows vendor and customer accounts to be managed as open items that are cleared upon settlement. It is recommended to maintain balance sheet accounts as open items so they can be readily reconciled to the trial balance. Examples of accounts that should be managed as open items include prepaid expenses, provisions, loans, accrued interest, deposits, clearing accounts, investments, bank accounts, statutory liabilities, and advances. Clearing documents are posted in SAP to track items grouped for clearing. Inventory, share capital, main local currency bank accounts, fixed assets, and cash should not be open item managed as they cannot be reconciled at the GL level.

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3K views2 pages

Open Item Management in SAP For GL Accounts

Open item management in SAP allows vendor and customer accounts to be managed as open items that are cleared upon settlement. It is recommended to maintain balance sheet accounts as open items so they can be readily reconciled to the trial balance. Examples of accounts that should be managed as open items include prepaid expenses, provisions, loans, accrued interest, deposits, clearing accounts, investments, bank accounts, statutory liabilities, and advances. Clearing documents are posted in SAP to track items grouped for clearing. Inventory, share capital, main local currency bank accounts, fixed assets, and cash should not be open item managed as they cannot be reconciled at the GL level.

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Open item management in SAP

All the vendor and customer accounts are by default managed as open items, which are
subsequently cleared on settlement.
As a good accounting practice, it is recommended to maintain Balance Sheet accounts
which will be settled on any future date (s) on an open item basis. It will benefit the
entity since they can readily reconcile the closing balance as per the Trial Balance with
the respective line items.
Some example GLs, which should be open item managed are listed below, along with
explanations.
 Prepaid expenses: On a periodic basis, the prepaid items are transferred to
expense. When the prepaid expense has been fully amortized to cost, clearing
should be performed for the relevant open items;
 Provision for outstanding expenses: At every period end, an entity estimates the
unpaid expenses and creates an accrual for the same. On receipt of the supplier
invoice, the accrual is reversed while the actual invoice is booked. For this, the
process of FBS1 & F.81 is used. Maintaining provision for outstanding expenses
as open item managed helps in easy identification of items which form the
closing balance;
 All loans: Till the loan are repaid, they continue to appear as open item & the
respective items are cleared on settlement;
 Accrued Interest: At every period end, interest is accrued. On payment, the open
items should be cleared;
 Accrued Income: At every period end, accrued income can be accounted and on
raising the customer invoices, the open items can be cleared or reversed;
 Term Deposits: This will continue to appear as an open item until matured;
 GR/IR clearing account: Entry created at GRN is settled at MIRO;
 Investments: Each entry appears as an open item. On any future date, entity
might want to liquidate it’s investments. Historical cost of investment can be
tracked easily;
 Incoming, Outgoing bank account: Line items cleared with bank reconciliation,
when they are transferred to the main account;
 Main bank account, only if it is a foreign currency bank account;
 All statutory liabilities e.g. GST, VAT, Withholding Tax, Corporate Income Tax;
 All advances e.g. Advance Income Tax, Entity’s Withholding tax that has been
deducted by another entity.
Whenever clearing is performed for open items, a “clearing document” is posted in SAP. In
order to track which items have been grouped together for the clearing performed in the
past, it can be easily seen through FBL3N, filtering out the clearing document. For obtaining
faster results, the clearing document number can also be filled in “dynamic selection”
before executing FBL3N
Other Advantages:
 When any line item (s) are cleared against each other, SAP automatically makes sure
that the clearing gets done not only at GL level, but also at profit center, business
area level. System automatically creates that many line items.
 Small rounding off differences can be directly posted to “rounding off difference”
account. There is a possibility to define upper limits for restricting misuse of
rounding off difference by users.
 F.13 and F13E can be setup for doing mass clearing, based on a given set of rules.
The clearing rules for every GL account can be defined through standard
configuration. For example, the clearing rule for GR/IR clearing account is PO
number + PO line item number.

Following Balance Sheet accounts, however under no circumstances should be created


as open item managed, since there is no possibility to reconcile them at GL level:
 Inventory accounts;
 Share capital and retained earnings;
 Main bank account maintained in local currency
 Assets Gross Block, Accumulated Depreciation
 Cash in Hand

Written by: Parag Bhargava, Chartered Accountant


Reach me: paragbhargavaca@gmail.com

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