Segment reporting in SAP

What do you mean by first segment in SAP?

Segment is usually represented by requirement for producing legal reporting statements based on different product groups or services which the company is providing.

In Some cases you will be able to use profit center groups instead of segments to get the same result, but in case you want to have profit centers pointing to one segment from different profit center groups, then Segment is the way to go.

How to create segment in SAP?

SAP path menu: IMG Path: Enterprise Structure -> Definition -> Financial Accounting -> Define Segment

When you enter in the transaction, click on “New Entries” to create new Segment.

Enter the name and Description and hit the Save button.

Now coming to the point what is segment reporting in SAP.

Segment reporting is used to portray the items in the financial statements by segment.  The detailed results are then presented by segment. Annual financial statements supplemented by the segment information from segment reporting provide deeper insights into the financial position, asset position, and profit situation of a company.

Segment reporting is required by some accounting principles, such as US GAAP and IFRS.

On the basis of the documents in new General Ledger Accounting, the system determines the segments that are relevant for the individual balance sheet items. The documents only contain segment information when document splitting is activated with the Segment characteristic.

What are the Pre-requisite for the Segment reporting.

1. Segment must have been defined in SAP.

2. Default settings for document splitting in Customizing for Financial Accounting under General Ledger Accounting -Business Transactions -Document Splitting. Must be defined.

3. For the system to produce a zero balance for each document, you need to have set the Zero Balance indicator for the segment.

4. In the activity Define Zero-Balance Clearing Account, you have specified a clearing account for the line items that the system creates during document splitting to produce a balance of zero for the Segment

For the segment to be shown in the G/L account items in the entry view, we recommend making the following settings:

• In Customizing for Financial Accounting under Financial Accounting Global Settings  Ledgers  Fields  Define Field Status Variants, define the segment as an Optional Entry for all relevant field status variants. This affects all field status variants of the field status groups that are relevant for transferring the accounts to General Ledger Accounting.

• In Customizing for Financial Accounting under Financial Accounting Global Settings  Document  Define Posting Keys, define the segment as an Optional Entry for all relevant posting keys.

Advantages of segment reporting :

 In addition to external reporting, it also enables you to analyze the operation activities in many ways e.g. cost center, project, geographical location, employee or any other aspect of business important to you. Therefore, the managers may be able to work with relevant financial reports to make internal decisions in their day-to-day activities.