PUBLICDocument Version: 1.0 – 2021-07-30

Feature Scope Description for SAP S/4HANA for Financial Products Subledger 2107

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SAP S/4HANA for Financial Products Subledger - Feature Scope Description. . . . . . . . . . . . . . 4Subledger Accounting for Financial Instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Subledger Accounting for Insurance Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

2 PUBLICFeature Scope Description for SAP S/4HANA for Financial Products Subledger 2107

Content

Document History

NoteBefore you start the implementation, make sure you have the latest version of this document. You can find the latest version at https://help.sap.com/s4fpsl.

The following table provides an overview of the most important document changes.

Version Date Description

1.0 July 30, 2021 Initial version for SAP S/4HANA for financial products subledger 2107

Feature Scope Description for SAP S/4HANA for Financial Products Subledger 2107Document History PUBLIC 3

SAP S/4HANA for Financial Products Subledger - Feature Scope Description

SAP S/4HANA for financial products subledger (also referred to here as Financial Products Subledger) is a comprehensive subledger for financial products for banks, insurance and reinsurance companies, fintechs, and other corporations. Deployed as an add-on to SAP S/4HANA, it is based on a highly simplified core and designed for large data volumes, making use of SAP HANA capabilities. With SAP Fiori user experience and a streamlined data model it is designed to run simple.

Combining financial and cost accounting, Financial Products Subledger allows you to produce multiple, reconciled valuations for financial products.

You can also create forecasts, plans, and simulations for insurance contracts.

NoteTo use Financial Products Subledger you must have a correctly configured and operational SAP S/4HANA system. SAP S/4HANA requires a separate license.

About This Document

This feature scope description shows you which features are provided with Financial Products Subledger. It also defines the product documentation.

Depending on your licenses, you can use the features of subledger accounting for financial instruments and/or insurance contracts. Please contact your SAP Account Executive for further information.

Product Documentation

The following product documentation is available for Financial Products Subledger:

● This feature scope description● Information on security, implementation, and operation

You can find the relevant documentation at https://help.sap.com/s4fpsl.

Subledger Accounting for Financial Instruments

Subledger accounting for financial instruments allows you to produce multiple, reconciled valuations for financial instruments.

4 PUBLICFeature Scope Description for SAP S/4HANA for Financial Products Subledger 2107

SAP S/4HANA for Financial Products Subledger - Feature Scope Description

NoteThe accounting data from your Financial Products Subledger and any reporting based on this data covers a certain scope and may not meet all of the reporting requirements in your jurisdiction.

You must check with your accounting experts in order to make sure that the results generated by Financial Products Subledger are fully compliant with your jurisdictions' specific reporting requirements.

Key Features

The following table explains the key features available:

Key Feature Use

Support of Financial Instruments Financial Products Subledger supports subledger accounting for contracts and se­curities positions.

Integration with SAP S/4HANA Financial Products Subledger is integrated with General Ledger Accounting. You can also integrate it with other general ledger systems outside SAP S/4HANA.

Financial Products Subledger uses SAP Business Partner.

Data Model Financial Products Subledger is based on a structured data model comprising all entities used for financial accounting and controlling.

Virtual Data Model Financial Products Subledger is integrated with the virtual data model in SAP S/4HANA. You can use Core Data Services views (CDS views) to analyze subledger journal entry items.

Feature Scope Description for SAP S/4HANA for Financial Products Subledger 2107SAP S/4HANA for Financial Products Subledger - Feature Scope Description PUBLIC 5

Key Feature Use

Accounting Functions ● You can make valuations based on imported business events, target balances, or posting documents from product systems. You can also make manual post­ings.

● You can make valuations according to multiple accounting methodologies, such as at amortized cost or at fair value through P&L and OCI.

● You can make valuations in multiple currencies.● Financial Products Subledger determines and documents accounting changes

resulting from changes in contracts and in securities positions.● In the context of multiple GAAPs, Financial Products Subledger creates cross-

GAAP postings only once, and GAAP-specific postings once per accounting standard, following a central and delta GAAP approach.

● A comprehensive accounting process model provides process steps, each of which has a clearly defined area of responsibility in the context of day process­ing, period-end processing, year-end processing, period-opening processing, and preparatory processing.

● For suspense accounting, Financial Products Subledger creates preliminary journal entries in error situations and so ensures completeness.

● Lot accounting can be used to document securities positions and allows you to choose between different lot selection methods, such as Last In- First Out or First In- First Out.

● Financial Products Subledger provides comprehensive functions for impair­ment and allows you to document all financial risks separately and to perform hedge accounting.

● On-balance sheet netting allows you to determine an overall asset/liability sta­tus for a group of contracts. This results in a balance sheet reduction.

● The recycling function allows you to proportionally reclassify changes in value that were previously recognized in other comprehensive income to the profit and loss statement.

● You can eliminate sales revenue that arises when securities positions or parts of them are sold within the same legal entity (company code), or between dif­ferent legal entities of a group.

● Financial Products Subledger provides an integrated accounting system which brings together financial accounting and management accounting (including profit center accounting and cost center accounting), in line with the universal journal in SAP S/4HANA.

Data Volume Management ● Financial Products Subledger applies the two-level partitioning feature of the SAP HANA database to tables with large data volumes. This helps to ensure optimized performance and high scalability.

● Financial Products Subledger supports advanced SAP HANA data tiering tech­nologies.

Model Configuration Preconfigurations help you to implement different national and international ac­counting standards, such as IFRS or US GAAP.

6 PUBLICFeature Scope Description for SAP S/4HANA for Financial Products Subledger 2107

SAP S/4HANA for Financial Products Subledger - Feature Scope Description

Subledger Accounting for Insurance Contracts

Subledger accounting for insurance contracts allows you to produce multiple, reconciled valuations for insurance contracts.

NoteThe accounting data from your Financial Products Subledger and any reporting based on this data covers a certain scope and may not meet all of the reporting requirements in your jurisdiction.

You must check with your accounting experts in order to make sure that the results generated by Financial Products Subledger are fully compliant with your relevant jurisdictions' specific reporting requirements.

Key Features

The following table explains the key features available:

Key Feature Use

Support of Financial Products Financial Products Subledger supports subledger account­ing for insurance contracts and reinsurance contracts.

Estimated Cash Flow Preparation Financial Products Subledger supports the preparation of estimated cash flows. Alternatively, you can import esti­mated cash flows from other systems.

Integration with SAP S/4HANA Financial Products Subledger supports subledger account­ing for insurance contracts and is integrated with General Ledger Accounting. You can also integrate it with other gen­eral ledger systems outside SAP S/4HANA.

Financial Products Subledger uses SAP Business Partner.

Data Model Financial Products Subledger is based on a structured data model comprising all entities used for financial accounting and controlling.

Virtual Data Model Financial Products Subledger is integrated with the virtual data model in SAP S/4HANA. You can use Core Data Serv­ices views (CDS views) to analyze subledger journal entry items.

Feature Scope Description for SAP S/4HANA for Financial Products Subledger 2107SAP S/4HANA for Financial Products Subledger - Feature Scope Description PUBLIC 7

Key Feature Use

Accounting Functions ● You can apply economic and traditional measurement approaches, and combinations of the two.

● You can make valuations based on best-estimate cash flows, GAAP-specific cash flows (such as certainty equivalent cash flows), or accounting target values. You can also make manual postings.For life participating business, Financial Products Subledger allows you to distinguish between mutualized cash flows and stand-alone cash flows. This enables you to keep track of the profitability of new business.

● In the context of multiple GAAPs, Financial Products Subledger creates cross-GAAP postings only once, and GAAP-specific postings once per accounting standard, following a central and delta GAAP approach.

● Financial Products Subledger allows you to perform ac­counting at a mutualized level, which is required in the context of life participating business, for example.

● You can make valuations at the level of contract cover­age, claims coverage, or a portfolio of coverages.

● You can make valuations in multiple currencies.● A comprehensive accounting process model provides

process steps, each of which has a clearly defined area of responsibility at the times of processing Start of Year, Period Start, Daily, and Period End.

● Financial Products Subledger supports cash flow recog­nition boundaries with regard to the coverage period ("contract boundaries"), to new underlying business, and to lifecycle stages.

● For suspense accounting, Financial Products Subledger creates preliminary journal entries in error situations and so ensures completeness.

● On-balance sheet netting allows you to determine an overall asset/liability status for a group of contracts. This results in a balance sheet reduction.

● Financial Products Subledger provides an integrated ac­counting system which brings together financial ac­counting and management accounting (including profit center accounting and cost center accounting), in line with the universal journal in SAP S/4HANA.

Forecasting, Planning, and Simulation You can create forecasts, plans, and simulations for insur­ance contracts to map how different future scenarios would affect the balance sheet.

Workplace for Financial Accountants and Actuaries ● Change analysis: You can analyze balances of insurance liabilities and further investigate changes at different granularity levels.

● Assignment of change reasons: You can assign change reasons to changes to identify what led to the changes in the balances.

8 PUBLICFeature Scope Description for SAP S/4HANA for Financial Products Subledger 2107

SAP S/4HANA for Financial Products Subledger - Feature Scope Description

Key Feature Use

Data Volume Management Financial Products Subledger applies the two-level partition­ing feature of the SAP HANA database to tables with large data volumes.

Model Configuration Preconfigurations help you to implement different national and international accounting standards and guidelines, such as IFRS, US GAAP, or Solvency II. For example, Financial Products Subledger provides configurations for all three measurement approaches of IFRS 17: General Measurement Model, Variable Fee Approach, and Premium Allocation Ap­proach.

Feature Scope Description for SAP S/4HANA for Financial Products Subledger 2107SAP S/4HANA for Financial Products Subledger - Feature Scope Description PUBLIC 9

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10 PUBLICFeature Scope Description for SAP S/4HANA for Financial Products Subledger 2107

Important Disclaimers and Legal Information

Feature Scope Description for SAP S/4HANA for Financial Products Subledger 2107Important Disclaimers and Legal Information PUBLIC 11

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