How subsidiaries benefit from streamlined reporting requirements

A standard that can simplify everyday corporate life

The field of international group accounting is currently gaining momentum. One reason for this is the growing realization that the full IFRS in their traditional form creates a reporting burden for certain entities within a group that is disproportionate to the actual information needs of the users.

The IFRS 19 standard, "Subsidiaries without Public Accountability: Disclosures," published by the International Accounting Standards Board (IASB) in May 2024, addresses precisely this issue. It allows qualified subsidiaries to maintain the full recognition and measurement requirements of IFRS while simultaneously preparing significantly reduced notes to the financial statements. For accounting managers in internationally operating groups, this standard offers considerable potential for simplifying reporting processes and system architectures.

What is changing specifically

IFRS 19 breaks with the previous principle that IFRS users must always fulfill the full disclosure requirements. The key change lies in the strict separation between substantive accounting rules (recognition, measurement, and presentation) and formal reporting requirements (notes to the financial statements):

• Approach, assessment and reporting: unchanged in accordance with the respective IFRS standards.
• Appendix information: IFRS 19 replaces the previous requirements with a compact, significantly reduced catalog.

The extent of the simplifications is substantial: Under IFRS 12 (Investments in other entities), disclosure requirements are reduced by up to 68%¹, and under IAS 16 (Property, Plant and Equipment) by up to 64%². Field tests show that the notes to the financial statements are on average 14% to 19% shorter³. The balance sheet, income statement, and cash flow statement remain unchanged in their basic structure.

In August 2025, the IASB also published a catch-up amendment standard that takes into account recent developments such as IFRS 18 (presentation in financial statements) and the Pillar Two rules under IAS 12 (minimum taxation).

External influencing factors: regulations, endorsements and national specificities

The implementation of IFRS 19 is influenced by several external factors:

• EU endorsement: Formal incorporation into European law is still pending. EFRAG issued an endorsement recommendation in September 2025. Application within the EU is only permitted after endorsement.
• National law (Germany): The German Commercial Code (HGB) continues to require companies to prepare separate financial statements in accordance with the HGB for tax and distribution purposes. While the exemption under Section 325 Paragraph 2a of the HGB allows for the preparation of IFRS 19 financial statements as disclosure statements, it does not exempt companies from the original HGB preparation requirement. This limits the advantage of a streamlined accounting system in Germany. The German Accounting Standards Committee (DRSC) recommends a corresponding amendment to the law.
• Mandatory initial application: The standard is mandatory for financial years beginning on or after January 1, 2027. Early adoption is permitted, provided it is disclosed in the notes to the financial statements.

Classification: IFRS 19 compared to existing alternatives

Previously, subsidiaries without a capital market orientation faced a fundamental dilemma in choosing their accounting basis. IFRS 19 improves the situation, but does not completely eliminate dual accounting for German entities.

For foreign subsidiaries IFRS 19 is reaching its full potential for German corporations: In many jurisdictions, parallel local accounting is no longer necessary, as IFRS 19 can be used as the sole basis for individual financial statements.

For German subsidiaries However, the German Commercial Code (HGB) individual financial statements remain mandatory for tax and distribution-related reasons. The IFRS 19 financial statements, which are disclosed exemptively pursuant to Section 325 Paragraph 2a of the HGB, merely serve as a supplementary disclosure and do not replace the HGB financial statements. Dual accounting thus remains structurally in place in Germany. A change in the law, as recommended by the German Accounting Standards Committee (DRSC), would be necessary to alter this situation.

In-depth technical analysis: Scope of application, transition and limitations

Scope of application

IFRS 19 is designed as a voluntary option. Its application requires three criteria to be met cumulatively:

• Subsidiaries as defined in IFRS 10 (including intermediate parent companies),
• no public accountability, i.e., no equity or debt securities on a public market and no fiduciary business model vis-à-vis a broad public.
• The ultimate parent company or an intermediate parent company prepares publicly available consolidated financial statements in accordance with full IFRS.

Banks, insurance companies, securities dealers, and investment funds are typically explicitly excluded. Furthermore, no relief is provided in three areas: segment reporting (IFRS 8), insurance contracts (IFRS 17), and earnings per share (IAS 33).

Transitional arrangements

Depending on the previous accounting basis, different transitional provisions apply:

• Previously local GAAP or IFRS SME users are considered first-time IFRS adopters and apply IFRS 1, but may limit themselves to the reduced disclosure requirements according to IFRS 19.
• Existing full IFRS users only need to adapt their notes structure to IFRS 19.
• Comparative information for the immediately preceding financial year is mandatory in both cases.

Practical limits and discretionary leeway

Despite the significant simplifications, there are areas that require careful consideration. The concept of "fiduciary capacity" is particularly open to interpretation in the insurance sector. Furthermore, management must assess on a case-by-case basis whether the reduced disclosures are sufficient to provide a fair presentation. If not, supplementary information is required.

Impact on financial statements, systems and reporting processes

IFRS 19 does not fundamentally change the structure of either the balance sheet or the income statement. The main effects are:

• Appendix (Notes): The size is significantly reduced. Field tests show an average reduction in appendix pages of 14% to 19%.
• Declaration of Conformity: The company must explicitly and unequivocally declare that it complies with IFRS by applying IFRS 19.
• Key figures and covenants: Since the approach and valuation remain identical to the full IFRS, there are no direct effects on key figures such as EBITDA or on existing credit clauses.
• Consolidation systems: Since there is no divergence between individual and consolidated financial statements in the valuation rules, data requirements and mapping logics in the consolidation systems (e.g. SAP Group Reporting) are simplified.
• ERP systems: Companies switching from local standards must implement the IFRS approach and measurement logic once in their ERP systems.

Recommendations for Accounting Managers

Analysis of the initial situation

The starting point is a structured eligibility screening of all subsidiaries of the group. The three criteria of the scope of application must be examined for each entity, and the current accounting basis must be documented. The next step involves considering the national framework of the respective jurisdiction, in particular distribution and tax accounting regulations.

Professional assessment

Based on the screening, a cost-benefit analysis must be conducted for each qualified entity. One-time implementation costs (particularly for those switching from local standards) are offset by ongoing savings in the preparation of the notes to the financial statements and in the group-wide reporting process. This analysis must also clarify the relationship to existing covenants and coordinate with the auditor regarding the materiality of the remaining disclosures.

Implementation strategy

Based on the assessment, concrete implementation steps must be defined:

• Revise the appendix templates and adapt them to the IFRS 19 disclosure requirements.
• Derive and prioritize system-related requirements for ERP and consolidation solutions.
• Early coordination with the auditor and, where necessary, with local authorities.
• For planned early adoption before 2027: Continuously monitor EU endorsement status.

Perspective: How the topic will develop further

In the coming years, IFRS 19 is expected to gain wider significance once formal EU endorsement is completed. For German corporations, the standard will initially be relevant primarily for foreign subsidiaries, as the obligation to comply with the German Commercial Code (HGB) remains in effect domestically. A potential amendment to the HGB, as recommended by the German Accounting Standards Committee (DRSC), could extend its scope to domestic entities in the future.

In parallel, increasing standardization in the consolidation environment (e.g., through SAP Group Reporting and SAP S/4HANA) enhances the technical possibilities for efficiently implementing IFRS 19. New requirements for transparency and data-driven reporting, for example in the context of ESG, will further shape this field.

And finally ...

IFRS 19 is a pragmatic and long-overdue standard that closes a real gap in the IFRS framework. It enables subsidiaries to prepare IFRS-compliant financial statements without having to bear the full disclosure burden of capital market reporting. Compliance with group accounting standards is maintained, the effort is reduced, and comparability within the group is ensured.

The positive market reaction from auditors and companies confirms the practical benefits. It is now crucial to begin structured preparations early in order to fully utilize the opportunities offered by the new standard from the 2027 financial year onwards.

Act now: INSIRE supports your IFRS 19 implementation

The introduction of IFRS 19 is not only a technical challenge, but also has a direct impact on your ERP and consolidation systems. Typical adjustments are required for the mapping logic in SAP Group Reporting, the notes templates in your financial statement cockpit, and the IFRS 1 first-time application logic for transitioning entities.

INSIRE accompanies you as a specialized consultant in the field Financial Consolidation and SAP S/4 transformation from initial eligibility checks to productive go-live in your consolidation system. Contact us if you would like to structure your IFRS 19 roadmap.

Bibliography

1 IASB, Effects Analysis: IFRS 19 Subsidiaries without Public Accountability: Disclosures, May 2024, available at: https://www.ifrs.org/content/dam/ifrs/publications/amendments/english/2024/ifrs19-effectsanalysis.pdf

² Ibid.

³ Ibid.

In many companies, SAP Analytics Cloud is the central entry point for reporting and analysis. Dashboards and ad-hoc analyses provide standardized key performance indicators (KPIs), defined data models, and a unified view of relevant business data.

At the same time, Microsoft Excel remains an integral part of daily work in many departments. Particularly in finance and controlling, users often continue to rely heavily on Excel for detailed analyses, reconciliations, and short-term evaluations.

Therefore, after a first glance at a key figure, further questions often arise immediately: 

• Which customers, regions, or cost centers are behind a deviation? 
• Which structure should be considered for the next vote? 
• Which analyses need to be expanded or individually prepared in the short term? 

This is precisely where a media break often occurs in practice. Data is exported, filters and structures are manually reconstructed, and analytical contexts are lost between systems.

The "Open in Excel Add-In" function from the SAP Analytics Cloud Data Analyzer makes this transition significantly easier.

The starting point can be a simple ad-hoc analysis in the Data Analyzer, for example an evaluation by customers, regions and key figures with a pre-defined filter context.

Figure 1: Comprehensive ad-hoc analysis by region and industry in the SAP Analytics Cloud Data Analyzer 

About the Export menu This analysis can be performed directly in SAP Analytics Cloud Add-in for Microsoft Excel can be opened. This eliminates the traditional detour via a purely static export. 

Figure 2: Direct transition via “Open in Excel Add-In” in the export menu of the Data Analyzer 

This process doesn't just create one file. Analysis and navigation context Data from SAC is transferred to an Excel workbook. After logging in to SAC Excel Add-in The evaluation can be further analyzed in Excel. 

Figure 3: Data Analyzer evaluation imported into the SAP Analytics Cloud Add-in for Microsoft Excel 

This is particularly relevant for departments that use SAP Analytics Cloud as their central reporting platform but still rely on Excel for detailed analyses, reconciliations, or individual evaluations. The added value lies not in replacing Excel, but rather in better integrating two established ways of working:

• SAP Analytics Cloud as a central entry point for reporting and analysis 
• Microsoft Excel as a flexible interface for detailed work and individual analyses 
• less manual reconstruction of analysis contexts 
• Fewer media breaks between dashboard, ad-hoc analysis and Excel 
• Better acceptance among finance and controlling teams that work extensively with Excel. 

The SAC Excel add-in is relevant beyond reporting. In suitable planning scenarios, Excel can be used as a familiar interface for planning processes, for example, for data entry, adjustments, and working with SAC planning models.

This highlights an important point: modern analytics solutions don't necessarily have to completely replace existing ways of working. Often, the greatest benefits arise when centralized control, governance, and standardized reporting are combined with familiar tools within the business unit.

SAP Analytics Cloud remains the central platform for reporting, analysis, and planning. Excel is integrated where flexible, detailed work within the specialist department is still required.

Because reporting doesn't always end at the dashboard. Often, that's where the next analysis question begins.

Why incorrect structuring approaches lead to governance chaos and how to do it right

SAP Datasphere has established itself as a central component of modern SAP data architectures. Datasphere combines data integration, modeling, and business use in hybrid landscapes, thus creating the foundation for enterprise-wide analytics and reporting scenarios. A key structural element is the concept of Spaces. 

However, Spaces are often misused in many projects. What initially appears to be a clean structuring solution can, over time, develop into a difficult-to-manage governance and operational problem. The reason for this lies less in technical limitations than in a fundamental misunderstanding of the role of Spaces in SAP Datasphere.

The common misconception: Spaces as organizational or project units

In practice, spaces are frequently used to separate projects, teams, or individual use cases. A separate space is created for each project to avoid conflicts and seemingly clearly divide responsibilities. As soon as data is needed across these boundaries, objects are shared between spaces. 

This approach follows a logic familiar from classic data warehouse architectures. InfoAreas, folder structures, and client-like concepts are transferred to SAP Datasphere. The underlying assumption is understandable, but incorrect. 

Spaces in SAP Datasphere are not merely logical structuring elements. They are not folders or project containers. Rather, a space defines a governance boundary with concrete technical, organizational, and operational implications. 

What a space actually means

Creating a space establishes an independent unit with its own security, operational, and resource logic. Each space has separate role structures, its own responsibilities, and defined resource and capacity limits. Furthermore, sharing relationships between spaces are explicitly controlled and managed. 

These characteristics are not a side effect of the platform, but rather a deliberate architectural design. They enable clear allocation of responsibility, clean demarcation of data products, and targeted enforcement of governance. However, this requires that Spaces are used with appropriate care and restraint. 

When structure becomes a governance trap

Those who primarily use Spaces for organizational structuring create the exact opposite of order in the long run. With each additional Space instance, the administrative effort increases. Roles and permissions have to be maintained multiple times, the need for coordination grows, and changes require ever more coordination across Space boundaries. 

This development becomes particularly critical when many objects are permanently shared between spaces. Data models are then technically distributed, but closely intertwined from a business perspective. The original separation loses its meaning, while governance complexity continues to grow. Responsibilities become blurred, as it is no longer clear which space is the business owner of a particular data product. 

From an operational perspective, challenges also arise. Resource consumption and costs are more difficult to allocate because persisted data, replications, and transformations are distributed across multiple spaces. Performance problems become increasingly opaque, as dependencies are no longer clearly traceable. The causes then rarely lie in individual modeling errors, but rather in the overall structure of the setup. 

These effects are not random. They are a direct consequence of a fundamental misconception in dealing with spaces. 

The real core error: structural thinking instead of governance logic

The most common error lies not in the technical setup, but in the mental model. Spaces are used as a means of structuring, even though they define governance boundaries in SAP Datasphere. This leads to decisions about security, operations, and responsibility being made implicitly, without being consciously recognized as such. 

Each additional space increases governance complexity not linearly, but disproportionately. Roles multiply, sharing relationships increase, and the effort required for operation and control grows with each additional unit. Those who use spaces excessively don't create a flexible setup, but rather a permanently complex operational and control problem. 

What a viable space concept looks like

A sustainable space concept does not begin with projects or use cases, but with the question of stable responsibility. Spaces should be defined where professional or organizational responsibilities are permanently differentiated and can be clearly defined. 

The use of a few, clearly defined space types with a distinct task has proven effective. Modeling spaces are responsible for integration, harmonization, quality, and business logic. Consumption spaces provide tested and approved data products for reporting and analysis. This separation reduces dependencies, increases transparency, and protects business users from unstable intermediate states. 

Sharing should be targeted and restrictive. It is suitable for stable, shared data products, but not as a permanent replacement for a clean architecture. The fewer objects that need to be shared between spaces, the clearer and more manageable the overall structure remains. 

Crucially, a clear allocation of ownership is essential. For each space, it must be unambiguously defined who is technically responsible, who manages technical changes, and who is responsible for operations. Projects end, but data products remain. This reality should also be reflected in the space structure. 

Conclusion

Spaces are one of the most important design elements in SAP Datasphere. Precisely for this reason, they should be used with care. Those who understand Spaces as an organizational or project structure risk long-term governance chaos, increased operating costs, and a lack of transparency. 

Those who understand Spaces for what they are – stable governance units with clear responsibilities – create the basis for a scalable, maintainable and operationally manageable Datasphere architecture. 

It is not the number of spaces that determines order, but the clarity of the architectural concept behind them. 

SAP Datasphere Introduce – structured, secure, with real added value.

Background and objectives:

Previously, the functions "Copy", "Cancel", "Create", and "Delete" were available for manual group-level bookings. With this new release, the "Replace" function has been added. This is intended to make it even easier for users to modify manual group-level bookings.

The "Replace" function automatically generates a cancellation document for the booking being changed and saves the amended booking record in the system under a new document number. If a booking or its cancellation is subject to a workflow, a workflow item is automatically created. The booking then requires prior approval.

When dealing with bundled documents, replacing one bundle element replaces the entire bundle.

Function description:

The booking document to be changed is selected in the "Book Group Booking Documents" app. Clicking the "Replace" button then takes you to the "New Booking Document" view.

In the "New Booking Document" view, the desired changes can be made to the existing document:

In this example, the amounts in the company currency were changed from 100 to 200 USD. The adjusted booking document was created under the new number 1000000375.

Please note that the cancellation of the selected booking is triggered immediately upon clicking the "Replace" button, even if the change process to adjust the original document via the replace function is not completed but rather aborted during processing!

If the "Replace" button has been clicked for a booking document, but the process is then canceled, the "Replace" function is no longer available for that booking document. The only remaining options are to create the desired change from scratch using the "Create" function, or to use the "Copy" function.

It is recommended that a user-friendly display layout be pre-configured in the "New Booking Document" view, especially for inexperienced users. The SAP standard layout also includes information (e.g., transactional currency) that is sometimes unused and can make the display appear confusing to the user.

The most important innovations for reporting, planning & administration

With the Q2 2026 release, SAP Analytics Cloud (SAC) expands its functionalities in the areas of reporting, story development, administration, and user-friendliness. The focus is on new options for more flexible reporting, improved development support, and optimizations to the user interface and monitoring.

INSIRE provides a concise summary of the most important innovations and their added value for companies.

Asymmetric Reporting: More flexibility for rolling forecasts and management reports

With the Q2 2026 release, SAP Analytics Cloud significantly simplifies the implementation of asymmetric reporting scenarios. Different time periods, granularities, and comparison values ​​can now be combined more flexibly within a single table.

This allows, for example, actual values, forecast data, budget figures, and variance analyses to be displayed in a single view. This opens up new possibilities for creating clear and informative reports, especially for rolling forecasts, management reports, and plan-actual comparisons.

The advantages at a glance:

• Greater flexibility in report design
• Simplified implementation of rolling forecast scenarios
• Fewer separate tables and analyses are needed.
• Improved transparency for specialist users and management

Composite Versioning: More control over development stages

With the new Composite versioning framework, SAP expands the possibilities for managing composite objects.

Developers can save, manage, and restore multiple versions of a composite object as needed. Changes to layouts, filters, or visualizations are thus traceably documented and can be further developed in a controlled manner.

Especially in projects with multiple developers or frequent adjustments, this significantly improves traceability and reduces the effort required for changes.

The advantages at a glance:

• More control over development stages
• Traceable documentation of changes
• Simplified restoration of previous versions
• Higher quality and transparency in the development process

Enhanced Job Monitor: Greater transparency in data processes

The Job Monitor will be expanded with additional monitoring functions in the Q2 release. In the future, data export API jobs and delta calculation jobs can also be monitored centrally.

Administrators gain a better overview of ongoing and completed data processes, as well as additional information on runtimes, processing status, and data volume. The new delta calculation jobs also increase transparency regarding data changes and support the analysis of data movements within the system landscape.

The advantages at a glance:

• Central monitoring of important data processes
• Improved transparency in data extraction
• Faster error analysis and root cause investigation
• Improved traceability and governance

New data panel for more efficient story development

With the new data panel, SAP modernizes the way data sources are used within stories.

For the first time, the data area is more clearly separated from the layout and styling functions. This gives developers and business users more direct access to models, key figures, dimensions, and calculations. At the same time, navigation between data sources is simplified, and working with multiple models becomes more transparent.

The revised user interface supports both experienced developers and casual users in creating and maintaining stories.

The advantages at a glance:

• More intuitive story development
• Faster navigation between models and data sources
• Improved clarity in complex stories
• Working more efficiently with multiple data models

Recent & Favorites: Quick access to frequently used content

Starting in Q2 2026, SAP will integrate the "Recent" and "Favorites" sections directly into the open and save dialogs of SAP Analytics Cloud.

This allows users to access recently used or favorited stories, models, and folders more quickly without having to search the entire repository structure. Especially in large SAC environments, this reduces search effort and clicks in daily work.

The advantages at a glance:

• Faster navigation within the SAP Analytics Cloud
• Reduced search effort
• Improved usability
• More efficient access to frequently used content

Conclusion

With the Q2 2026 release, SAP continues to expand SAP Analytics Cloud. Improvements in reporting, enhanced development capabilities, and optimized user interfaces, in particular, help companies to make their analysis, reporting, and planning processes more efficient.

For business users, this means greater flexibility in creating and using reports. Developers and administrators simultaneously benefit from improved traceability, simplified management functions, and greater transparency in daily operations.

The presented innovations demonstrate once again that SAP Analytics Cloud is further expanding its position as a central platform for planning, reporting and analytics.

INSIRE will gladly support you in specifically evaluating the new functions, identifying their potential for your organization and optimally integrating them into your existing SAC landscape.

Learn more about our SAP Analytics Cloud services now!

Financial closing is one of the most critical recurring processes in finance. Monthly, quarterly, and annual financial statements must be prepared on time, transparently, and in an audit-proof manner – often across multiple accounting units, companies, countries, and ERP systems. At the same time, expectations for transparency, automation, and speed are increasing.

SAP Advanced Financial Closing (AFC) addresses precisely this need for action. The solution supports companies in planning, processing, monitoring, and analyzing closing tasks for the units within a group. This shifts the focus away from manual checklists, Excel trackers, and decentralized coordination towards structured, system-supported closing management.

AFC is particularly relevant for companies whose closing process recurs periodically, involves multiple responsible parties, follows a clear chronological or dependent sequence, and whose status needs to be transparently documented. SAP describes precisely these requirements as typical use cases for financial closing in SAP Advanced. Financial Closing.

Current developments in Financial Closing

In many organizations, the closing process has evolved organically over time. Tasks are planned in local teams, progress is reported via email, and status information is consolidated in spreadsheets. This approach often works operationally, but reaches its limits as complexity increases.

Three developments are currently shaping the closing environment:

• Standardization: Global companies need uniform closing structures without completely abandoning local peculiarities.
• Automation: Recurring technical activities – such as program runs, jobs or checks – should be started and monitored with as little manual intervention as possible.
• Transparency: CFOs, accounting managers, and shared service organizations need real-time information about progress, bottlenecks, delays, and responsibilities.

SAP AFC supports this development through task plan templates, task plans, dependencies, role and user assignments, and central monitoring and reporting functions. Task plan templates can be used for various closing types, such as month-end or quarterly closing. Furthermore, multiple communication systems can be integrated into a single template, allowing the closing process to be managed across selected systems with a single task plan.

External influencing factors

The modernization of financial statements is not solely driven internally. External factors are also increasing the pressure on finance organizations:

• Regulatory requirements: Closing processes must be documented, controllable and auditable.
• Group-wide governance: Global guidelines on controls, responsibilities and deadlines must be implemented locally.
• System landscapes in transition: Many companies are moving into hybrid scenarios with SAP S/4HANA, SAP S/4HANA Cloud, SAP ERP and complementary cloud services.
• Expectations regarding speed: Management and the capital market expect timely, reliable financial information.

SAP AFC is designed as an SAP BTP application and can be connected to SAP S/4HANA Cloud Public Edition, SAP S/4HANA Cloud Private Edition, SAP S/4HANA, and SAP ERP as financial communication systems. OData services are used for SAP S/4HANA scenarios, and a REST service for SAP ERP. This makes AFC particularly suitable for heterogeneous transformation landscapes.

Classification within the professional context

SAP AFC is not a replacement for the actual FI and CO posting logic in the ERP system. The solution orchestrates the closing process through tasks, responsibilities, dependencies, job executions, status information, and reporting.

The added value thus arises less from a single function, but from the combination of process modeling, automation and controllability.

Specialized and technological expertise

Graduation structure and task plan templates

A key component of SAP AFC is task plan templates. These templates represent a company's closing structure and contain header information such as description and time zone. Specific task plans for a closing date are generated and released from these templates.

In practice, this is the crucial step from "lived process knowledge" to a manageable process model. Tasks can be structured according to areas such as general ledger accounting, accounts receivable, accounts payable, fixed asset accounting, or controlling. SAP also provides predefined content based on task plan models that include mandatory and optional closing activities for multiple roles and subledgers.

A clean, technical model is essential for implementation:

• Which tasks are globally standardized?
• Which tasks differ locally?
• Which activities are interdependent?
• Which tasks are suitable for automation?
• Where are permits or four-eyes principles required?

Dependencies, responsibilities and governance

SAP AFC allows the definition of predecessor and successor tasks. This enables the mapping not only of a chronological sequence but also of a business-oriented process logic. This is particularly important in the closing phase: Certain reconciliations, valuation programs, or intercompany processes can only be meaningfully carried out once upstream postings or audits have been completed.

Additionally, roles for responsible and executing users can be assigned to either individuals or user groups. This supports shared service models and reduces dependence on individual users.

The following aspects are particularly relevant for governance and compliance:

• clear responsibility for each task,
• documented task status,
• comprehensible changes,
• central view of open, delayed or faulty activities,
• A unified process model across closing cycles.

Automation and integration

The greatest efficiency gains are achieved when AFC is not only used as a checklist tool, but also actively orchestrates technical execution. SAP AFC can integrate multiple communication systems into task plan templates and manage completion processes across these systems.

Furthermore, integration options exist with SAP Build Process Automation, BlackLine, and external systems. According to SAP, AFC can be integrated with external systems provided they implement a simple scheduling provider interface. This allows activities outside the central SAP S/4HANA system to be included in the closing process.

Typical automation candidates are:

• technical job execution,
• recurring votes,
• standardized control steps,
• Notifications and escalations,
• Workflows for approvals or follow-up activities.

Realistic prioritization is crucial: not every task needs to be automated. The first step is to identify high-volume, recurring, and rule-based activities.

Impact on companies

The full implementation of SAP CLM has far-reaching implications:

• Processes: Standardized, automated workflows replace manual tasks in bank account and payment management.
• Systems: Activation of the business function FIN_FSCM_CLM via SFW5, customizing via SPRO, migration of existing house bank accounts
• Organization: New roles for payment approvers, bank account reviewers, and compliance officers
• Control: Real-time liquidity transparency enables informed, data-driven financing decisions.

Monitoring, reporting and new control logic

SAP AFC makes the closing process measurable. Reporting apps support the analysis of task status, progress, and bottlenecks. This allows managers to see which units are on schedule, where delays are occurring, and which tasks are critical.

This transparency fundamentally changes how the closing process is managed. Instead of subsequent status queries, continuous process monitoring is established. This is particularly valuable for organizations with many company codes, international shared service centers, or multiple ERP instances.

Current discussions surrounding company code groups further demonstrate that the flexible grouping of accounting units is a crucial component for large organizations. Accounting units can be grouped according to criteria such as region, business unit, or organizational responsibility. This allows for a more targeted structuring of closing progress, responsibilities, and reporting – particularly in multinational corporations.

Professional assessment

• Risk assessment of current processes (missing workflows, manual approvals)
• Classifying requirements for compliance, transparency and reporting
• Cost-benefit analysis for activating the full scope

Impact on companies and organizations

The implementation of SAP AFC is not a purely technical project. It affects processes, roles, governance, and operating models in the finance area.

Key impacts include:

• Process harmonization: Closing activities must be described and structured consistently.
• Role clarification: Those responsible, those carrying out the work, and those authorizing it must be clearly defined.
• System integration: Relevant SAP and, if applicable, non-SAP systems must be technically connected.
• Automation strategy: Companies must decide which tasks should be performed manually, semi-automatically, or fully automatically.
• Change Management: Departments must switch from local working methods to a centrally controlled model.

This often makes AFC a catalyst for a broader finance transformation. Anyone wanting to digitize the financial closing process must first understand how it actually works today – including workarounds, local peculiarities, and informal coordination channels.

Practical recommendations

Analyze the initial situation

Before implementing the system, the existing closing process should be systematically recorded:

• Collect existing checklists and completion calendars,
• Tasks per company, department and type of qualification are recorded,
• Document responsibilities and escalation paths,
• Distinguish between manual and automatable tasks,
• Identify dependencies and critical paths.

Define the professional target image

Subsequently, a technical target image should be developed. This should describe not only the technical use of AFC, but also the future control logic:

• What global structure applies to all societies?
• Which local variants are permitted?
• Which tasks should be standardized in the template?
• How are accounting units, organizational units, and responsibilities grouped?
• Which KPIs should guide future financial statements?

Choose a phased implementation

A pragmatic approach is usually more successful than trying to fully automate the entire closing process immediately. A phased approach has proven effective:

1. Create transparency: establish central task plans and responsibilities.
2. Standardize: Harmonize templates and reduce variants.
3. Automate: connect suitable jobs, workflows, and integrations.
4. Optimize: Use reporting, analyze bottlenecks and reduce process times.

Clarify technical requirements early

Since SAP AFC runs on the SAP Business Technology Platform, technical and organizational prerequisites should be checked early on:

• SAP BTP subaccount and entitlement,
• Identity Provider and User Management,
• Communication systems and connectivity,
• Role and authorization concept,
• Integration with SAP S/4HANA, SAP S/4HANA Cloud or SAP ERP,
• Possible integration with SAP Build Process Automation or external scheduling systems.

Perspective and outlook

In the coming years, financial closing processes will continue to face increasing pressure: shorter deadlines, rising regulatory requirements, greater automation, and higher expectations for transparency. SAP AFC positions itself as a platform for the central orchestration of financial closing – particularly in complex, international, and hybrid system landscapes.

The strategic added value lies not only in digitizing a checklist. Crucially, it is the ability to standardize closing processes across the entire group, integrate them technically, monitor them transparently, and continuously improve them.

INSIRE can help companies to Financial To analyze the subject matter from a technical perspective, develop a viable target vision, and implement SAP Advanced Financial Closing is structured to be integrated into the existing SAP Finance architecture – from process mapping to template design and authorization concept to the automation roadmap.

Conclusion

SAP Advanced Financial Closing processes are gaining increasing strategic importance for finance organizations. The solution creates transparency regarding closing activities, supports the standardization of recurring tasks, and unlocks potential for automation and group-wide management.

However, successful implementation depends significantly on thorough preparatory work. Companies should not view AFC as an isolated tool, but rather as part of a comprehensive finance transformation. Structuring closing processes early on, clarifying responsibilities, and strategically prioritizing automation lays the foundation for faster, more stable, and better-managed operations. Financial Close.

You want to know if SAP Advanced Financial Is closing suitable for your closing organization? INSIRE supports you in evaluating your current closing processes, developing an AFC target image, and deriving a realistic implementation roadmap.

Contact us – together we'll make your Financial Close more transparent, efficient and future-proof.

Comprehensive liquidity management and real-time cash transparency

Central Cash Management with SAP S/4HANA CLM

Managing corporate liquidity is one of the core tasks in finance – and simultaneously one of the areas with the greatest potential for optimization. Heterogeneous system landscapes, manual processes, and a lack of real-time transparency lead to risks in liquidity planning and management in many companies.

SAP Cash and Liquidity Management (CLM) in S/4HANA offers an integrated solution for the centralized management of bank accounts, operational cash management, and strategic liquidity planning. The focus is on real-time capability, process automation, and a modern user experience via SAP Fiori.

Current developments

In recent years, several fundamental developments have emerged in the area of ​​cash and liquidity management:

• Replacement of classic cash management (FF7A/FF7B) by SAP CLM in S/4HANA
• Availability as basic functionality (without additional license) and as full functionality (with license for SAP S/4HANA Finance for Cash Management)
• Integration of bank relationship management, cash operations and liquidity management into a unified platform
• Introduction of SAP Fiori apps as the central user interface for all CLM processes

External influencing factors

The development is further intensified by external influencing factors:

• Increasing regulatory requirements for transparency and compliance in payment transactions
• Increasing digitalization and automation in the treasury environment
• Growing need for real-time liquidity information for informed financing decisions

Overview of features: Basic functionality vs. full CLM expansion

SAP CLM distinguishes between two expansion levels, whose range of functions differs significantly:

Overview of the CLM modules: BRM, Cash Operations & Liquidity Management

Bank Relationship Management (BRM)

The BRM forms the basis for a central, workflow-based bank account management system:

• Central bank account management with full field scope and hierarchies
• Workflow, four-eyes and two-person verification processes for account opening, modification and closure
• Import and monitoring of bank fee data
• Manage bank powers of attorney and initiate bank account reviews

Cash Operations

The operational cash functions include:

• Extended daily financial overview with drill-down capabilities
• Cash pooling via bank account groups and account clearing
• Make transfers and approve bank payments in multiple stages
• Optional two-factor authentication via SAP Authentication 365
• Mass approval of payment folders as a background job

Liquidity management

Liquidity management enables:

• Actual cash flow analysis by company code, liquidity position, calendar day and planning group
• Liquidity position derivation for differentiated cash flow analyses
• Develop and analyze liquidity plans
• Snapshot function for filtering cash flows by point in time
• Integration with SAP Analytics Cloud for rolling planning cycles and variance analysis

Impact on companies

The full implementation of SAP CLM has far-reaching implications:

• Processes: Standardized, automated workflows replace manual tasks in bank account and payment management.
• Systems: Activation of the business function FIN_FSCM_CLM via SFW5, customizing via SPRO, migration of existing house bank accounts
• Organization: New roles for payment approvers, bank account reviewers, and compliance officers
• Control: Real-time liquidity transparency enables informed, data-driven financing decisions.

Approach to CLM implementation: Analysis, evaluation and implementation strategy

Analysis of the initial situation

• Inventory of current cash management processes and systems
• Checking the license status (basic functionality vs. full scope)
• Identification of areas for action in bank account, payment and liquidity processes

Professional assessment

• Risk assessment of current processes (missing workflows, manual approvals)
• Classifying requirements for compliance, transparency and reporting
• Cost-benefit analysis for activating the full scope

Implementation strategy

• Define the target vision for cash and liquidity management
• Create a customizing roadmap (BRM, Cash Operations, Liquidity Management)
• Define migration strategy for house bank accounts (automatically via CM1 or manually via FCLM_BAM_MIGRATION)
• Develop a training concept for Fiori apps and new processes

Perspective and outlook

In the coming years, the developments described are expected to intensify. New requirements from compliance and reporting, increasing standardization, and rising expectations for real-time transparency will further shape the field of cash and liquidity management.

SAP CLM is continuously being developed – for example, through deeper SAP Analytics Cloud integration and expanded automation options. INSIRE supports you in strategically leveraging its full range of functions and future-proofing your liquidity management.

Conclusion

SAP Cash and Liquidity Management in S/4HANA is far more than just operational liquidity management. It creates transparency, reduces risks, and makes liquidity management an actively controllable business factor.

For companies that want to professionalize their liquidity management, automate processes and build a future-proof SAP architecture, the step from basic functionality to the full scope is a central building block within SAP S/4HANA – and a clear added value for finance, treasury and management alike.

Additional information

Further insights and downloadable material can be found in our knowledge base.

Transparent, integrated and future-proof contract management in SAP S/4HANA

Contracts are among a company's key economic management tools – and simultaneously among its least transparent. Different contract types, decentralized storage, manual maintenance, and a lack of integration into financial processes often lead to risks, inefficiencies, and unnecessary costs.

SAP Contract and Lease Management (CLM) offers an integrated solution for the centralized management, evaluation, and control of contracts and leases in SAP S / 4 HANAThe focus is not only on compliance with regulatory requirements, but above all on the Sustainable optimization of contract management across the entire lifecycle.

Contract management as a strategic success factor

In many companies, contract management has evolved organically over time and is highly fragmented. Typical challenges include:

• Lack of transparency regarding contract durations, notice periods and renewal options
• Media breaks between contract management, purchasing and financial accounting
• Manual calculations and Excel-based auxiliary calculations
• Increased compliance and audit risks

SAP CLM addresses these challenges through a holistic, systems-based approach, which does not view contracts in isolation, but as an integral part of business processes.

Central contract management with SAP CLM

Unified database

SAP CLM enables the centralized recording and management of a wide variety of contract types – from leasing agreements and service contracts to rental agreements and usage-based agreements. All relevant contract information is maintained in a structured manner within a single system.

• Contracting parties and objects of the contract
• Contract durations, options and notice periods
• Payment plans and terms
• Contract changes and history

The Single Source of Truth This forms the basis for transparency, traceability and audit-proof processes.

Comprehensive mapping of the contract lifecycle

SAP CLM supports the entire lifecycle of a contract:

• Contract structure and classification
• Ongoing evaluation and monitoring
• Contract changes and modifications
• Contract termination or extension

Deadline monitoring and status logic reduce operational risks and prevent unwanted contract extensions or missed deadlines.

Integration instead of isolated solutions

A key advantage of SAP CLM is the deep integration in SAP S/4HANA:

• Direct connection to SAP Finance (FI) and Universal Journal
• Automatic transfer of payment flows and valuations
• Integration with purchasing, controlling and fixed asset accounting
• Use of modern SAP Fiori interfaces

This transforms contract management from an administrative side task into a integrated control instrument for Finance and Management.

Advantages of professional contract management with SAP CLM

1. Greater transparency and control

All contracts are centrally available, up-to-date, and analyzable. Management and specialist departments have a clear overview of obligations, terms, and cost structures at all times.

2. Risk reduction

Automated deadline monitoring, clear contract classifications and complete documentation minimize legal, financial and regulatory risks.

3. Efficiency improvement and automation

Standardized processes replace manual tasks. Recurring calculations, evaluations, and bookings are automated – resulting in measurable efficiency gains.

4. Improved decision-making basis

Structured contract data enables meaningful reports and analyses, e.g.:

• Contract volumes by category
• Cost developments over lifespans
• Termination and optimization potential

5. Future-proofing and scalability

SAP CLM is fully aligned with SAP S/4HANA and is continuously being developed further. New requirements – for example from accounting, compliance or reporting – can be integrated without system breaks.

SAP CLM as a basis for compliance and accounting

In addition to operational contract management, SAP CLM forms an important basis for regulatory requirements such as IFRS 16. The clear structuring of contract data and payment flows enables compliant valuation and seamless integration into financial reporting.

This makes contract management not only more efficient, but also audit-proof and compliant.

SAP Contract and Lease Management is far more than just a contract management tool. It creates transparency, reduces risks, and transforms contracts into an actively manageable business factor.

For companies that want to professionalize their contract landscape, automate processes and build a future-proof SAP architecture, SAP CLM is a central building block within SAP S/4HANA – and a clear added value for finance, purchasing and management alike.

Our preview of Disclosure Management provides Lucanet a modern solution for the creation and control of Financial and ESG reports Ready. The platform combines powerful reporting functions with a modern, cloud-based architecture. 

What distinguishes Lucanet Disclosure Management: 

• Browser-based technology for easy and flexible access
• Modern, user-friendly interface for efficient reporting processes 
• SaaS operating model for high scalability and continuous development 
• Integration with Microsoft Office for familiar work in Word and Excel 
• Office for Web for collaborative teamwork 
• Office Desktop for extensive layout and formatting functions 
• New Office add-ins with a significantly more intuitive user interface. 
• AI co-pilot with connection to the Knowledge Hub to support reporting and disclosure issues.

What we can do for you as your implementation partner:

As implementation partner We support companies in the Introduction of Disclosure Management Solutions and provide support for, among other things:

• the analysis and structuring of reporting processes
• the introduction and configuration of the solution
• the integration into existing system landscapes 
• the optimization of financial and ESG reporting processes

Our Goal

Our Goal The goal is not only to implement reporting processes technically, but also to make them more efficient and transparent in a sustainable way. 

Disclosure Management provides a powerful platform for the next generation of corporate reporting.

1. Classification: Why SAP DRC is becoming strategically relevant

The regulatory landscape for tax reporting and documentation requirements is undergoing profound structural change worldwide. Electronic invoicing, real-time reporting, and standardized data formats are evolving from optional procedures to mandatory compliance standards in many countries. In parallel, SAP is consolidating and modernizing its solutions for tax reporting and documentation requirements under the umbrella of SAP Document and Reporting Compliance (DRC). While DRC was initially perceived primarily as a reporting and localization solution, a strategic realignment is now evident: DRC is developing into a central compliance layer within modern SAP architectures – particularly in conjunction with SAP S/4HANA and the SAP Business Technology Platform (BTP).
The years 2025 and 2026 mark a phase of fundamental changes:

• Regulatory: mandatory e-invoicing and real-time reporting systems
• Technologically: Cloud consolidation and stronger ERP integration
• Organizational: increasing demands on governance and compliance architecture

Source: Federal Ministry of the Interior (2025)

2. Transformation of the DRC architecture

One of the most significant developments is the migration of existing compliance services to the DRC Cloud Edition. SAP aims to consolidate electronic invoicing, tax reporting, and communication with authorities on a single platform.
Key aspects of this transformation:

• Gradual replacement of older services by the end of 2025 at the latest.
• Migration to a new cloud-based DRC architecture
• Consolidation of e-invoicing, reporting and communication with authorities
• Close integration with SAP S/4HANA

This transformation is not merely a technical upgrade. It represents a strategic repositioning. Compliance functions will no longer operate in isolation, but will be more strongly integrated into core transactional processes.
For companies, this means specifically:

• Technical migrations of existing implementations
• Review and adjustment of reporting workflows
• Harmonization of global compliance processes
• Integration of DRC into ongoing S/4HANA transformations

3. Regulatory Dynamics in Europe

Parallel to the technological transformation, regulatory requirements in Europe are becoming significantly stricter. The introduction of mandatory electronic invoices and the planned EU reform "VAT in the Digital Age" (ViDA) are leading to a structural realignment of VAT compliance.
Germany is gradually introducing mandatory electronic invoicing in the B2B sector. Starting in 2025, there will initially be an obligation to receive electronic invoices. In subsequent years, the obligation to issue electronic invoices will be expanded until ultimately all B2B transactions must be processed electronically. This development is not an isolated national process, but rather part of a Europe-wide trend towards standardized, digital reporting procedures.
The EU initiative ViDA goes even further. It envisions transmitting transaction data to tax authorities in near real-time. This shifts the focus from periodic reporting to continuous transaction monitoring. For companies, this means:

• Shorter reporting deadlines
• Higher data quality requirements
• Technical standardization of invoice formats
• More intensive integration of authorities

This regulatory dynamic increases the pressure on companies to systematically modernize and centrally manage their compliance architecture.

4. International Developments and Continuous Transaction Controls (CTC)

Outside of Germany, numerous countries are also pushing forward with mandatory electronic invoicing and reporting systems. In many cases, these are so-called Continuous Transaction Controls (CTC), where transactions must be validated or pre-approved in near real time. The individual countries are pursuing different regulatory approaches, ranging from centralized government clearance systems and reporting models to network-based transmission structures. The following overview presents selected European initiatives and their basic design. 

Parallel national initiatives are leading to an increasing fragmentation of regulatory requirements, while at the same time the need for technical standardization within corporate systems is growing. For internationally operating companies, this means that national compliance requirements must be increasingly integrated into global IT and process architectures. Platform solutions such as SAP Document and Reporting Compliance (DRC) They can act as a central integration layer, through which different national reporting requirements can be implemented in a standardized way. 

5. Technological advancement and automation

In addition to regulatory requirements, SAP's technological roadmap significantly shapes the further development of DRC. The platform is increasingly being positioned as an integral component of cloud-based ERP architectures.

5.1. Integration into SAP S/4HANA

• Use of standardized data models (Universal Journal, harmonized tax data)
• Direct integration into financial and logistics processes
• Reduction of external interfaces

5.2. Cloud architecture via SAP BTP

• API-based government connection
• Scalable multi-country deployments
• Central maintenance of regulatory updates

5.3. Automated validation and transmission processes

• Real-time verification of invoice data
• Automatic error classification
• Electronic transmission without manual intermediate steps

5.4. Monitoring and audit capability

• Central dashboards
• Transparent status tracking of messages
• Traceable audit trails

Furthermore, SAP is working on intelligent functions for data validation and error analysis. The goal is to identify compliance risks early and address deviations system-wide. This transforms DRC from a reactive reporting solution into a proactive management tool within the financial architecture.

6. Impact on companies

The developments described above are leading to a fundamental reassessment of the role of compliance technology. Companies are not only facing technical migrations, but also a structural transformation of their tax and reporting processes. Particularly in the context of S/4HANA transformations, DRC is gaining strategic importance. If compliance is not integrated early on, subsequent adaptation costs and operational risks will arise. Furthermore, the increasing regulatory dynamism is driving the need for clear governance structures. Companies must define how regulatory changes are identified, assessed, and implemented within their systems. In addition, responsibility is increasingly shifting from purely operational departments to interdisciplinary teams from IT, tax, and finance. Compliance is thus becoming a strategic management issue and no longer merely an administrative obligation.

7. Recommendations for action

7.1. Regulatory Roadmap Analysis

• Evaluation of national mandates (e-invoicing, CTC, ViDA)
• Identification of time-critical countries
• Prioritization according to risk profile

7.2. System Assessment

• Analysis of existing SAP compliance services
• Cloud migration capability assessment
• Evaluation of integration and interface architectures

7.3. Architecture and Implementation Strategy

• Definition of a global compliance template
• Integration into existing S/4HANA programs
• Planning standardized rollout models

7.4. Governance and operating model

• Clear division of roles between IT, Tax and Finance
• Establishment of a regulatory monitoring process
• Documentation and standardization of global compliance guidelines

Best practices from transformation projects show that early strategic integration of DRC into the ERP roadmap significantly reduces implementation risks.

8. Perspective 2025–2026

In the coming years, a further expansion of mandatory real-time reporting models is expected. National initiatives will increasingly be complemented by harmonized European initiatives. At the same time, SAP will consistently expand its cloud strategy and further standardize compliance functionalities. The role of DRC will continue to evolve from a purely localization and reporting solution to a global compliance integration layer. Companies that define a consistent target architecture early on can not only meet regulatory requirements but also use them as a lever for process standardization and increased efficiency.

9. Summary

Recent developments surrounding SAP Document and Reporting Compliance illustrate that companies are undergoing a phase of structural reorganization of their compliance architecture. The migration to cloud-based solutions, mandatory e-invoicing regulations, and the ViDA initiative are fundamentally changing the requirements for financial and tax processes. SAP DRC should therefore no longer be viewed as an isolated reporting tool, but rather as a strategic component of modern ERP and tax technology architectures. An early, systematic roadmap is crucial to minimizing regulatory risks while simultaneously realizing sustainable efficiency gains.

A differentiation and decision aid

With the introduction of IFRS 16 Lease accounting has fundamentally changed. Lessees are now required to recognize almost all lease agreements on their balance sheet – with a right-of-use asset on the asset side and a corresponding lease liability on the liability side. For many companies, this means significantly greater complexity in processes, data management, and valuation.

SAP S / 4 HANA provides with SAP RE-FX (Flexible Real Estate Management) and SAP Contract and Lease Management (CLM) Two established approaches are available for implementing IFRS 16 in a compliant, integrated, and audit-proof manner. This article provides a structured overview of both options, their application scenarios, and decision criteria from a consultant's perspective.

IFRS 16 – Requirements from an IT perspective

IFRS 16 sets clear professional and technical requirements for IT systems:

• Identification and classification of leasing contracts
• Separation of leasing and service components
• Initial valuation of the lease liability (present value of the lease payments)
• Subsequent valuation including interest expense, depreciation and revaluation
• Handling of contract changes
• Extensive appendix information and reporting

SAP S/4HANA does not address these requirements via a separate module, but rather integrates IFRS 16 deeply into existing contract, asset and financial processes.

Mapping IFRS 16 with SAP RE-FX

SAP RE-FX This is the classic SAP module for managing real estate and leases. It is particularly suitable for companies with a high proportion of... Real estate and land leasing, such as:

• Real Estate Management
• Trading company
• Industrial companies with production and storage areas
• banks and insurance companies

IFRS 16 functionalities in SAP RE-FX

SAP RE-FX offers extensive standard functions for IFRS 16 mapping:

• Classification of contracts as leases
• Automatic determination of usage rights and lease liabilities
• integration into SAP FI, FI-AA and CO
• Regulation-compliant subsequent valuation including interest calculation
• Mapping of contract changes and term adjustments
• IFRS 16-compliant reporting

The activation of IFRS 16 logic is achieved via valuation rules and valuation areas, so that parallel accounting standards (e.g., German Commercial Code (HGB), IFRS) can be mapped.

Implementation of IFRS 16 using SAP Contract and Lease Management (CLM)

SAP CLM CLM is the strategic SAP solution for the central management of all types of leasing and contractual relationships. Its modular design makes CLM particularly attractive for companies with heterogeneous leasing portfolios, e.g.:

• fleets
• IT and hardware leasing
• Machine and plant leasing
• Service-related contracts with leasing components

IFRS 16 functionalities in SAP CLM

SAP CLM was explicitly developed with IFRS 16 in mind and offers:

• Central contract registration and classification
• Separation of leasing and non-leasing components
• Automatic valuation according to IFRS 16
• Integrated mapping of modifications
• Direct integration with SAP FI (Universal Journal)
• Standardized IFRS 16 reports

SAP CLM is fully S/4HANA optimized and uses modern data models and Fiori interfaces.

SAP RE-FX or SAP CLM – which module is the right one?

Decision criteria for using SAP RE-FX or SAP CLM can include the focus of the type of leasing, the company's orientation, and the SAP technology already in use.

If both real estate and fixed asset leasing exist, a combination of SAP RE-FX for real estate leasing and SAP CLM for other leasing contracts may be useful.

In a nutshell:

Success factors for IFRS 16 implementation

Regardless of the chosen module, the following points are crucial:

• Clean contract data and clear leasing definitions
• Clear distinction between service and leasing components
• Well-thought-out customization of the evaluation logics
• Close coordination between the specialist department, accounting, and IT
• Early involvement of SAP and IFRS experts

SAP S/4HANA provides powerful tools to implement IFRS 16 efficiently, transparently and in an audit-proof manner. SAP RE-FX impresses with its depth in real estate leasing, while SAP CLM It scores points as a flexible, future-oriented solution for a broad leasing portfolio.

The right module strategy is less a technical decision than a strategic one. A thorough analysis of the leasing landscape and experienced SAP consulting are key to a sustainable and audit-proof IFRS 16 implementation.

EU Taxonomy Update 2026: Greater focus through the materiality principle 

With the publication of Delegated Regulation (EU) 2026/73 am 8 January 2026 In the Official Journal of the European Union, the EU makes targeted adjustments to the delegated acts of the EU taxonomy. The aim is to improve the application of the taxonomy, particularly in the context of Article 8 disclosures to make it more practical without lowering the level of regulatory protection. 

The changes focus on the Introduction of a materiality principle in taxonomy reporting – a step that represents a noticeable relief for many companies. 

Introduction of the materiality principle in taxonomy reporting 

The central element of Delegated Regulation (EU) 2026/73 is the formal introduction of a materiality principle. 

What exactly is changing? 

(Financial) companies will in future no longer obliged, activities or exposures that are considered not financially significant to be classified, to fully check their taxonomy compliance. 

Impact on companies 

• Clear Reduction of testing and documentation effort 
• Stronger focus on essential, control-relevant activities 
• Better prioritization of resources in the ESG and finance areas 

The EU is thus following a practical approach that is already known from other regulatory areas (e.g. CSRD). 

Revision of the Article 8 reporting templates 

In addition to the materiality principle, the regulation also provides for a structural revision of the Article 8 templates . 

The goal of the adaptation 

• Shortening and simplifying the templates 
• A clearer structure for disclosure obligations 
• Reduction of redundant information 

For companies, this means a clearer reporting logic and easier integration into existing reporting and system landscapes. 

Clarifications regarding technical evaluation criteria (DNSH) 

Another focus of the Delegated Regulation is on the Clarification of technical evaluation criteria, particularly in connection with the “Do No Significant Harm” principle (DNSH). 

Affected areas 

Clarifications concern, among other things, the environmental objective of the 
"Avoidance and reduction of environmental pollution". 

These clarifications are intended to reduce room for interpretation and lead to a more uniform application contribute to the taxonomy in practice. 

INSIRE assessment: Now is the time to review structures and processes 

Even though the new regulations bring some relief, the EU taxonomy remains a demanding set of rules. The materiality principle still requires a clean derivation, documentation and governancein order to remain resilient to auditors and regulatory authorities. 

INSIRE helps companies to 

• to correctly classify the new requirements 
• To derive materiality decisions on a technically sound basis, 
• To efficiently integrate taxonomy reporting into existing ESG and finance processes. 

Do you want to know how the changes will specifically affect your taxonomy reporting?  Feel free to contact us – we will support you from analysis to operational implementation.