How To Fix FARR_CONTRACT_MAIN422 - Performance obligation &1 has no deferral items

SAP Error Message - Details

• Message type: E = Error

• Message class: FARR_CONTRACT_MAIN - Revenue Accounting: Contract Management

• Message number: 422

• Message text: Performance obligation &1 has no deferral items

Self-Explanatory Message

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Smart SAP Assistant

• What is the cause and solution for SAP error message FARR_CONTRACT_MAIN422 - Performance obligation &1 has no deferral items ?

  The SAP error message FARR_CONTRACT_MAIN422 indicates that there is an issue with a performance obligation in a contract that does not have any associated deferral items. This typically occurs in the context of revenue recognition and contract management within SAP, particularly when using the SAP Revenue Accounting and Reporting (RAR) module.
  Cause:
  The error arises when:
  
  A performance obligation is created in the system, but there are no deferral items linked to it. Deferral items are necessary for recognizing revenue over time, especially in cases where the revenue recognition is based on the completion of certain performance obligations.
  The configuration of the contract or the performance obligation may be incomplete or incorrect, leading to the absence of deferral items.
  There may be a data entry error or oversight during the contract setup process.
  
  Solution:
  To resolve this error, you can take the following steps:
  
  
  Check Performance Obligation Configuration:
  
  Review the configuration of the performance obligation in the contract. Ensure that it is set up correctly and that it is supposed to have deferral items.
  
  
  
  Create Deferral Items:
  
  If the performance obligation is valid and should have deferral items, you may need to create them. This can typically be done through the contract management or revenue recognition transaction in SAP.
  
  
  
  Review Contract Settings:
  
  Ensure that the contract settings allow for deferral items. Check if the contract type supports deferral items and if the necessary settings are enabled.
  
  
  
  Consult Documentation:
  
  Refer to SAP documentation or help resources for guidance on how to properly set up performance obligations and deferral items.
  
  
  
  Check for Updates or Notes:
  
  Look for any SAP Notes or updates that may address this specific error. Sometimes, there are patches or updates that resolve known issues.
  
  
  
  Engage with SAP Support:
  
  If the issue persists after checking the above points, consider reaching out to SAP support for assistance. They can provide more detailed insights based on your specific system configuration.
  
  
  
  Related Information:
  
  SAP RAR Module: Understanding how the Revenue Accounting and Reporting module works can help in troubleshooting issues related to performance obligations and deferral items.
  Revenue Recognition Standards: Familiarity with accounting standards (like IFRS 15 or ASC 606) that govern revenue recognition can provide context for why deferral items are necessary.
  Transaction Codes: Familiarize yourself with relevant transaction codes in SAP that pertain to contract management and revenue recognition, such as FARR_CONTRACT, FARR_RECOGNITION, etc.
  
  By following these steps, you should be able to identify the root cause of the error and implement a solution to resolve it.