SAPin FICO

Introduction to SAP in Finance & Control Functions
What is ERP?
ERP integrates the information across functions, and
provides a set of tools for planning and monitoring the various functions and processes and ensuring progress towards a common purpose A business management system that integrates all facets of the business, including planning, manufacturing, sales, and marketing. ERP helps business managers to implement ERP in business activities such as inventory control, order tracking, customer service, finance and human resources
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What is an ERP?
An Enterprise Resource Planning system is a packaged business software system that allows a company to: Automate and integrate the majority of its business processes Share common data and practices across the entire enterprise Produce and access information in a real-time environment
www.sapendusers.com
What are ERP Systems ?

Distribution Manufacturing Marketing
Materials
Planning and Execution
Finance
Engineering Human Resources
Sales
Accounting and Finance Information Systems
Learning Objectives
Describe the differences between financial and managerial
accounting. State and describe Accounting and Finance functional area activities Identify and describe problems associated with accounting and financial reporting in un-integrated information systems. Describe how ERP systems can help solve accounting and financial reporting problems in an un-integrated system. Describe how the Enron scandal and the Sarbanes-Oxley Act will affect accounting information systems Explain accounting and management-reporting benefits that accrue from having an ERP system. 6
Introductions
Accounting system data is used: By decision-makers throughout a company to plan
and manage day-to-day activities By managers to make long-range operating forecasts By accountants to generate a companys financial statements and other reports Accounting is a functional area that is tightly integrated with other functional areas like: Marketing and Sales Supply Chain Management
Types of Accounting
Firms require three types of accounting activities Financial Accounting Documents all transactions that have an impact
on the firm Uses this transaction data to make external reports for various agencies (FASB, SEC, IRS) Managerial Accounting Determine costs and profitability of a companys activities Managerial Information is used for planning and to control a companys day-to-day activities Tax Accounting is a specialized field that used Financial Accounting information
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Financial Accounting
Common Financial Accounting statements include: Balance Sheet Shows account balances at a particular point in time Gives a good picture of the overall financial health of
a company Income Statement Shows sales, cost of sales and overall profit for a period of time (quarter, year) Closing the books means checking to see that financial statements are accurate and up to date. Usually done quarterly or monthly.
ERP for Accounting Information

Early information systems gathered data primarily for
their own functional area (sales, production, payroll, etc.) Data sharing with accounting did not occur in real time Accountants and functional area clerks frequently had to do significant research to gather the data needed for reports ERP systems, with centralized databases, avoid these problems Materials Management module sees a goods receipt as an increase in inventory Accounting module sees goods receipt as an increase in the value of inventory A single data entry transaction provides the data for both 10
Using ERP for Accounting and Finance

ERP systems capture accounting data in real time as
business transactions occur Transfer of finished goods from assembly line to warehouse results in changes to Accounting records as well as Materials Management records.
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SAP R/3 Modules and Accounting Sales and Distribution (SD) Production Planning (PP) Materials Management (MM) Financial Accounting (FI) Controlling (CO) Human Resources (HR) Asset Management (AM)
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Unit Overview
FI Organizational Structure FI Master Data FI Processes FI Reporting Audit Trails
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Goal of Financial Accounting (FI)

Financial Accounting is designed to collect the
transactional data that provides a foundation for preparing the standard portfolio of reports. In general, these reports are primarily, but not exclusively, directed at external parties. Standard reports include: Balance Sheet Income Statement Statement of Cash Flows
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Target Audience
Internal Executives Senior
Management Administrative Staff Employees
External Legal Authorities Banks Auditors Shareholders Insurance Taxing Authorities Media Financial Analysts
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FI Organizational Structure
Represents the legal and/or organizational views of an
enterprise Forms a framework that supports the activities of a business in the manner desired by management Permits the accurate and organized collection of business information Supports the development and presentation of relevant information in order to enable and support business decisions
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Client An independent environment in the system Company Code Represents an independent legal accounting unit Balanced set of books, as required by law, are prepared
at this level. A client may have more than one company code United States Germany United Kingdom Liabilities & Assets Owners Equity Australia
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Chart of Accounts A classification scheme consisting of a group of general
ledger (G/L) accounts Provides a framework for the recording of values to ensure an orderly rendering of accounting data The G/L accounts it contains are used by one or more company codes. Credit Control Area An organizational entity which grants and monitors a credit limit for customers. It can include one or more company codes
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Business Area An organizational unit that represents a separate area of
operations or responsibilities within an organization and to which value changes recorded in Financial Accounting can be allocated Financial statements can be created for business areas, and these statements can be used for various internal reporting purposes.
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GBI 2.0 Structure for Financial Accounting

Global Bike
Client
Global Bike Inc.
Global Bike Germany GmbH
Company Code
Global Bike Chart of Accounts
Chart of Accounts
Bikes
Business Area
Global Credit Control
Credit Control Area
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GBI 2.0 Enterprise Structure in SAP ERP (Accounting)
Business Area Bikes BI00
CC US00
CC DE00
Company Code
Chart of Accounts (global) GL00
Credit Control Area (global) GL00

CA North Am. NA00 CA Europe EU00
CA Asia AS00
Controlling Area
(see Controlling unit)
Operating Concern (global) GL00 Client GBI
Operating Concern
(see Controlling unit)
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FI Master Data
General Ledger (G/L) Accounts The unique combination of Company Code and Chart
of Account creates a data storage area called a General Ledger. The General Ledger contains a listing of the transactions effecting each account in the Chart of Accounts and the respective account balance. It is utilized in the preparation of financial accounting statements.
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FI Master Data
Customer and Vendor Master Data Customer and vendor account balances are
maintained in FI through fully integrated accounts receivable and accounts payable sub-modules. Financial postings for customers and vendors are made directly to their respective individual accounts and accompanied by a concurrent automatic posting to the General Ledger.
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Customer Accounts
Accounts Receivable Sub-Module (FI-AR) Information with respect to customers who purchase
the enterprises goods and services such as sales and payments made Substantive and important integration between Sales and Distribution (SD) and Financial Accounting (FI) Billings in SD generate FI journal entries for sales activity
Customer 189 Customer 142
100
Customer 135
300
Customer 123
Accounts Receivable Accounts (GeneralReceivable Ledger) (General Ledger)
950 400 150

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Vendor Accounts
Accounts Payable Sub-Module (FI-AP) Information with respect to Vendors from whom the
enterprise purchases goods and services such as purchases and payments made Substantive and important integration between Materials Management (MM) and Financial Accounting (FI) Purchase and goods receipt activities in MM generate FI journal entries
Vendor 100234 Vendor 100435
200
250
Accounts Payable (General Ledger)
850
Vendor 100621 Vendor 100846
100
300
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FI Processes
Posting a G/L Entry
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FI Reporting G/L Account Summary
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FI Reporting Balance Sheet Presentation of an organizations Assets, Liabilities,
and Equity at a point in time Assets: What the company owns Liabilities: What the company owes Equity: The difference between Assets and Liabilities Assets = Liabilities + Equity
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FI Reporting
Balance Sheet Example
Assets Cash Accounts Receivable Equipment Total Assets
1,000 3,000 500 4,500
Liabilities Accounts Payable Taxes Payable Total Liabilities Equity Common Stock Retained Earnings Total Equity
Total Liabilities and Equity
750 250 1,250
2,000 250 2,250
4,500
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FI Reporting Income Statement Presentation of an organizations revenues and
expenses for a given period of time (e.g. monthly, quarterly, or yearly) Revenues, in a simple sense, are inflows of cash as a result of selling activities or the disposal of company assets. Expenses, in a simple sense, are outflows of cash or the creation of liabilities to support company operations. Revenues - Expenses = Net Income
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FI Reporting Income Statement Example

Revenue Sales Deductions Total Revenue Operating Expenses Cost of Goods Sold Operating Expenses Total Expenses Net Income Before Taxes Taxes Net Income
11,000 750 10,250
4,500 3,750 8,250

2,000 750 1,250
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FI Reporting
Statement of Cash Flows Considers the associated changes, both inflows and
outflows, that have occurred in cash arguably the most important of all assets over a given period of time (e.g. monthly, quarterly, or annually)
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Accountants and Audit Trails

Audit trails allow an auditor to begin with an account
balance on a financial statement and trace through the accounting records to the transactions that support the account balance. Audit trails enable an auditor to trace individual transactions to the effected account balance(s) on a financial statement.
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SAP Document Principle

Each business transaction impacting FI writes data to the
SAP database creating a uniquely numbered electronic document. The document number can be used to recall the transaction at a later date. It contains, for example, such critical and necessary information as: Responsible person Date and time of the transaction Commercial content Once written to the SAP database, a financial document (one impacting the financial position of the company) can not be deleted from the database. 34

It can be changed to some degree. The SAP document principle provides a solid and important
framework for a strong internal control system a requirement of law for companies that operate in the United States and in most other countries in the world.
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SAP FI Module
Fully integrated with other SAP modules including, but
not limited to: Sales and Distribution (SD) Materials Management (MM) Production Planning and Execution (PP) Managerial Accounting (CO)
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Controlling (CO)
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Unit Overview
CO Organizational Structure CO Master Data CO Processes
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Goal of Controlling (CO)

Managerial Accounting also termed Controlling is
designed to collect transactional data that provides a foundation for preparing internal reports that support decision-making within the enterprise. These reports are exclusively for use within the enterprise and include: Cost center performance Profit center performance Budgets analyses
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Target Audience
Executives Senior Management Department Managers Controllers Cost Accountants
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CO Organizational Structure
Represents the legal and/or organizational views of an
enterprise Forms a framework that supports the activities of a business in the manner desired by management Permits the accurate and organized collection of business information Supports the development and presentation of relevant information in order to enable and support business decisions
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Client An independent environment in the system Company Code Represents an independent legal accounting unit Balanced set of books, as required by law, are
prepared at this level. A client may have more than one company code United States Germany United Kingdom Liabilities & Assets Owners Equity Australia
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Chart of Accounts A classification scheme consisting of a group of general
ledger (G/L) accounts Provides a framework for the recording of values to ensure an orderly rendering of accounting data The G/L accounts it contains are used by one or more company codes. Controlling Area A self-contained, organizational unit for which the management of revenues and expenses can be performed May include one or more company codes; therefore, an enterprise can perform management accounting analyses 44 and reports across several companies
incurred for evaluation purposes Operating Concern Represents a part of an organization for which the sales market is structured in a uniform manner A operating profit for the individual market segments can be calculated. Multiple controlling areas can be assigned to one operating concern.
A way to identify and track where revenues and costs are
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GBI 2.0 Structure for Controlling

Global Bike
Client
Global Concern
Operating Concern
Controlling North America Global Bike Inc.
Controlling Europe Global Bike Germany GmbH
Controlling Area
Company Code
Global Bike Chart of Accounts
Chart of Accounts
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GBI 2.0 Enterprise Structure in SAP ERP (Accounting)
Business Area
(see FI unit)
Business Area Bikes BI00
CC US00
CC DE00
Company Code Credit Control Area

(see FI unit)
Chart of Accounts (global) GL00
Credit Control Area (global) GL00

CA North Am. NA00 CA Europe EU00
CA Asia AS00
Controlling Area
Operating Concern (global) GL00 Client GBI

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CO Master Data
Profit Center Responsible for revenue generation and cost containment Evaluated on profit or return on investment Enterprises are commonly divided into profit centers based
on
Region Function Product
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CO Master Data
Cost Center Responsible for cost containment, not responsible for
revenue generation One or more value-added activities are performed within each cost center. Unit that is distinguished, for example, by area of responsibility, location, or type of activity Copy center Security department Maintenance department
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CO Master Data
Internal Order Temporary cost center responsible for cost
containment, not responsible for revenue generation It is used to plan, collect, and monitor the costs associated with a distinct short-term event, activity, or project Company picnic Trade show/Fair Recruiting campaign
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CO Master Data
Revenue Element A one-to-one linkage (mapping) between General
Ledger revenue accounts and CO revenue elements is established to permit the transfer of FI revenue information to CO. Posting in FI that impact revenue accounts lead to a posting in CO to a revenue element. In other words, revenue account = revenue element just different words depending on whether FI object or CO object.
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CO Master Data
Cost Element A one-to-one linkage (mapping) between General
Ledger expense accounts and CO cost elements is established to permit the transfer of FI expense information to CO. Postings in FI that impact cost accounts lead to a posting in CO to a cost element. In other words, expense account = cost element just different words depending on whether FI object or CO object.
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CO Master Data Primary Cost Element Originate in the General Ledger within FI and are
automatically transferred to CO when an FI transaction is recorded in the General Ledger Secondary Cost Element Used exclusively in CO for allocations and settlements between and amongst cost centers
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Primary vs. Secondary Cost Elements

Managerial Accounting (CO) Financial Accounting (FI)
Aggregated Cost Elements
General Ledger Accounts
Income Statement
Balance Sheet
Secondary Cost Elements
Primary Cost Elements
Expense Accounts Revenue Accounts

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CO Master Data
Statistical Key Figures Provide the foundation for accurate and effective cost
allocations between cost objects Utilized to support internal cost allocations involving allocations, assessments, and distributions Examples: number of employees square footage minutes of computer usage
Copy Center Activity (20 Hours)
6 Hours
10 Hours 4 Hours
Executive Offices Maintenance Department

IT Department
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CO Processes Posting Primary Cost Element

Financial Accounting (FI) Supplies Expense Debit 1,500 Credit Cash Debit Credit 1,500
Managerial Accounting (CO)

Cost Center A
Primary Cost Element
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CO Processes Posting Primary Cost Element

Financial Accounting (FI) (FI) Transaction Document Amount G/L Account # Cost Center 1900012432 (CO) Transaction Document Cost Center Cost Element 20000657
Supplies Expense Debit Credit 1,500 Cash Debit Credit 1,500

Cost Center
1,500
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CO Processes Posting Secondary Cost Element

Financial Accounting (FI) Supplies Expense Debit 1,500 Credit Cash Debit Credit 1,500

Cost Center A CC 1 CC 2 Secondary Cost Element
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CO Processes Posting Secondary Cost Element

Rent Expense
Executive Offices
Debit
1,500
Credit
1,800
Copy Center
1,500 2,500
Sec. Cost Element
Maintenance Department
Supplies Expense
Debit 2,500
Credit
3,000
2,000
Information Services
Labor Expense
Debit Credit 2,000
1,200
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Types of Allocation
Distribution Method for periodically allocating primary cost
elements Primary cost elements maintain their identities in both the sending and receiving objects Sender and receiver cost centers are fully documented in a unique Controlling (CO) document.
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Types of Allocation
Assessment A method of allocating both primary and secondary
cost elements Primary and/or secondary cost elements are grouped together and transferred to receiver cost centers through use of a secondary cost element. Sender and receiver cost centers are fully documented in a unique Controlling (CO) document.
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Distribution
Sending cost center
Primary cost element maintains its identity
D010 550 sft A005 400 sft A010 600 sft
Receiving cost centers
A010 Administration Rent Expense $1,500
Distribution
D005 900 sft
S010 100
A015 A020 150 100 S005 200
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Distribution
Sending cost center
Primary cost element maintains its identity
D010 $275 A005 $200 A010 $300
A010 Administration Rent Expense $1,500
Distribution
D005 $450
S010 $50
A015 A020 $75 $50 S005 $100
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Assessment
Sending cost center
Primary and secondary cost elements A020 IT Software Expense $4,200 A020 IT Supplies Expense $500
D010 10%
A005 15%
A010 5%
D005 20%
Assessment
S010 10%
A015 10%
A020 0% S005 30%
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Assessment
Sending cost center
Primary and secondary cost elements A020 IT Software Expense $4,200 A020 IT Supplies Expense $500
A005 $705 D010 $470 D005 $940 A010 $235 A015 $470 A020 $0
Assessment
S010 $470
S005 $1,410
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SAP CO Module
Fully integrated with other SAP modules
not limited to: Financial Accounting (FI) Materials Management (MM) Sales and Distribution (SD) Production Planning and Execution (PP)
including, but
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General Ledger
A companys accounts are kept in the general ledger In SAP R/3, input to the general ledger occurs
simultaneously with the business transaction in the functional module Sales and Distribution (SD) Sales to customers create accounts receivable entries Materials Management (MM) Purchase orders create accounts payable entries Human Resources (HR) Payroll processing creates expense entries
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General Ledger
Other modules also create general ledger entries Financial Accounting (FI) Manages the accounts receivable and accounts
payable items created in SD and MM Module where general ledger accounts are closed at the end of a fiscal period Controlling (CO) Tracks the costs associated with producing products Asset Management (AM) Manage fixed-asset purchases (plant, machinery, etc.) and associated depreciation
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Operational Decision Making Problem: Credit Management
A company with an un-integrated information system
can have accounting data that is out-of-date or inaccurate Out-of-date or inaccurate data can lead to bad operational decisions Companies routinely sell to customers on credit Sound credit management gives customers enough credit to promote sales while minimizing the risk from default Making the correct credit management decision requires accurate and timely sales and payment data
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Credit Management in a non ERP situation
The sales clerk uses a weekly printout of all customer
balances and credit limit to see if credit should be granted for a new order Sales data are transmitted to accounting multiple times per week Both sales and accounting work off data that is not real-time and may be more than a week old Customer orders that would bring them over the credit limit may be accepted Customers may be denied credit because recent payments are not available to the sales clerk
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Credit Management in SAP R/3

SAP R/3 allows for a number of configuration options to
determine how the system responds to an order that would cause a customer to exceed its credit limit The system may block the sales order The system may prevent the sales order from being saved The system may issue warning messages to the sales order clerk Credit is a sensitive issue, so the system response must be configured to match a companys procedures Typically, sales orders are blocked, with no warning given to the sales order clerk A credit specialist would regularly review blocked orders and take corrective action 71
Credit management configuration
Dynamic credit check
Only orders for the next two months are considered Reaction C: warning message is issued when order is saved
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Blocked sales order
Options to release, reject or forward blocked sales orders
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Product Profitability Analysis

Accounting data is used to determine the profitability of
a company and its products Inaccurate and/or incomplete data can lead to a flawed analysis The three main causes of data problems are: Inconsistent record keeping Inaccurate inventory costing Problems consolidating data from subsidiaries
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Product Profitability Analysis
Accurate data required to properly determine the profitability of a companys products Inaccurate data can result from: Inconsistent record keeping Inaccurate inventory-costing systems Problems consolidating data from subsidiaries
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Inconsistent Record Keeping

Sales data is maintained manually so that sales reports
are easily generated Analyzing sales data by region or division usually must be done by hand Production data is maintained with paper records Data must be typed into a spreadsheet from paper records before it can be analyzed Manual entry leads to errors Without an integrated information system, much of the effort in generating reports is devoted to working around the limitations of the systems
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Inconsistent Record Keeping

Companies may have divisions that keep records in
different systems or with different structures Summarizing the data to provide management summaries may require additional processing by middleware systems (e.g. spreadsheets)
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Inventory Costing
A manufactured items costs consist of three elements: Cost of raw materials Cost of direct labor Cost of overhead (utilities, general factory labor,
supplies, managers salaries, storage and insurance costs)
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Inventory Costing
Direct costs (material and direct labor) can be associated
with products or batches of materials relatively easily Indirect costs (overhead) are difficult to assign to particular products or batches, but are a significant portion of a products cost
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Direct and Indirect Costs

Materials and labor are called direct costs Direct costs are relatively easy to tie to the
production of specific products Overhead is an indirect cost Indirect costs are difficulty to associate with a specific product e.g. the relationship between the cost of heating and lighting and a specific batch of NRG-A bars To determine the cost of a manufactured product, indirect costs must be allocated to products
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Inaccurate Inventory-Costing Systems
Correctly calculating inventory costs is an important and
challenging task in any manufacturing company A manufactured items cost has three elements: Cost of raw materials used in the item Labor used specifically to produce the product (direct labor) Overhead: all other costs Factory utilities General factory labor (custodial services, security) Managers salaries Storage Insurance 81
Direct and Indirect Costs

Allocating indirect costs One method is to use total machine hours Total overhead cost divided by the total
machine production time (hours) available for a period to get an overhead rate per machine hour Another method is to use direct labor hours The assumption with this method is that overhead costs are incurred so workers can do their jobs
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Distribution of Indirect Costs

Indirect costs are frequently allocated based on machine
hours or labor hours used to make a product Standard costs are used to adjust accounting records for changes due to production and sale of products Cost variances must be recorded to reconcile actual and standard costs
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ERP and Inventory Cost Accounting

Adjusting accounting records for cost variances can be
difficult with unintegrated information systems ERP systems are configured with methods for computing variances so that the process is automated Real time data in ERP systems means that accurate cost data will be available
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Standard Costs
Costs are typically recorded using standard costs, which
are based on historical cost data At the end of an accounting period, adjustments to accounts must be made as actual costs will differ from estimates made using standard costs Balance sheet: cost of inventory held will need to be adjusted Income statement: cost of goods sold will have to be adjusted Difference between actual costs and standard costs are called cost variances Cost variances arise with both direct and indirect costs
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Activity-Based Costing (ABC)

In ABC, records are kept on overhead costs and the
activities associated with overhead cost generation The goal is to more precisely associate costs with the causes (drivers) and avoid rough allocation procedures Profitability of particular products is more accurately determined ABC is often used when: Competition is stiff Overhead costs are high Products are diverse Not all overhead costs can be linked to activities
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Activity-Based Costing (ABC) and ERP

In ABC, activities associated with overhead-cost
generation are used to allocate costs more precisely Defining activities to relate overhead costs to products can be difficult ABC requires more record keeping, which can be simplified using an ERP system
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Activity-Based Costing (ABC)

ABC requires more bookkeeping than traditional cost-
accounting approaches ABC is often used for strategic purposes in parallel with standard cost accounting A recent study noted that: ERP companies had nearly twice as many costallocation bases to use in management decisionmaking ERP companies managers rated their cost-accounting system much higher
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Companies with Subsidiaries

Companies with subsidiaries must prepare financial
statements for each subsidiary, plus be able to provide a consolidated statement for the entire company Different currencies and transactions between subsidiary companies can make the consolidation task challenging Currency translation is challenging because exchange rates fluctuate daily Intercompany transactions must be handled properly Sales from one subsidiary to another within a company do not result in a profit or loss, because no money has entered or left the consolidated company
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Example: Microsoft
Microsoft must consolidate financial information from
130 subsidiaries Prior to installing SAP R/3, each subsidiary did accounting in its own system, then transmitted the files to another system, where manipulation of the data was required Subsidiaries used different systems, with different field sizes, types of characters, account structures, etc. Consolidation took over a week With SAP R/3, Microsoft can look directly at financial activity at any subsidiary around the world
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Management Reporting with ERP Systems
Reporting accounting information is often challenging Without an ERP system, obtaining the information
needed for a report is frequently a monumental task With ERP, the information is in a single system, however: The system configuration must be set to gather the correct raw data The appropriate reports are needed, which may require custom coding (e.g. ABAP)
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Management Reporting with ERP

Document Flow allows for better management of the
numerous transactions that are related to a customer order
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Sales Order Document Flow in SAP R/3
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Management Reporting and Analysis

Storing accounting records in a database allows for
easier analysis Data warehousing provides separate, summarized data for reporting to avoid disruption of transaction processing SAP R/3 provides specialized information systems for analysis (LIS, SIS)
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Document Flow for Customer Service

In SAP R/3, Document Flow is a tool that finds,
organizes and displays a summary of all documents related to a sales order Sales orders can be very complicated, with: multiple products multiple shipments multiple invoices multiple payments Being able to find all related documents easily is important in providing efficient customer service
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Document flow of a transaction in SAP R/3
Details of any document can be viewed from the document flow screena process known as drilling down
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Management-Reporting and Analysis Tools
Because ERP systems use a database, the database can

be queried to provide a wide range of reports and analyses Because reports access the same database where transactions are recorded, reporting and analysis requests can slow down the processing of regular business transactions SAP R/3 has built-in information systems (SIS, LIS, etc.) with their own data tables for analysis Business Warehouse (BW) is a completely separate system that extracts data from the SAP R/3 system BW provides greater reporting flexibility and can combine data from other information systems
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Problems in Closing Books

Currency Translation Daily fluctuation of exchange
rates more easily handled by ERP systems Intercompany Transactions Companies cannot make profits by selling products to themselves, so profits cant be recorded from intercompany sales
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Enron Collapse
Enron was a trailblazing energy company that was
revolutionizing the oil and gas business and making millionaires of its investors On Oct. 16, 2001, Enrons creative financial arrangements began to unravel On Dec. 2, 2001, Enron made the largest bankruptcy filing in history A primary cause of the collapse was Enrons partnerships that shifted billions of debt off Enrons books so that Enron could borrow money more cheaply Arthur Andersen, a highly regarded accounting firm, had annually issued annual reports attesting to the validity of Enrons financial statements 99
Enron Collapse Arthur Andersen was indicted for, among other things, the
destruction of Enron documents in the face of an SEC investigation As a result of the Enron collapse: Enrons 20,000 creditors will receive approximately 20% of the $63 billion they are owed Shareholders will receive nothing Many employees invested large sums of money in Enron stock via 401K savings plans Arthur Andersen, once a firm with 28,000 employees, has been all but dismantled 31 individuals either have been tried or will be tried on criminal charges 100 The Sarbanes-Oxley Act was passed
Sarbanes-Oxley
The Sarbanes-Oxley Act is designed to encourage top
management accountability Top managers in recent scandals (Enron, WorldCom, Global Crossing) have claimed ignorance of accounting abuses Title IX of Sarbanes-Oxley requires a companys CEO and CFO to sign a statement that financial statements comply with SEC rules Penalties can be up to $5 million and 20 years in prison Title II restricts the non-audit services that an auditor can provide
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Sarbanes-Oxley and ERP

Title IV of the act specifies more stringent requirements
for financial reporting Section 404 requires a public companys annual report contain managements internal control report The control report outlines managements responsibility for: Establishing and maintaining adequate internal control over financial reporting Assess the effectiveness of its internal control over financial reporting To meet the internal control report requirements, a company must document the controls that are in place and verify that they are not subject to error or manipulation 102
Sarbanes-Oxley and ERP

An integrated information system provides the tools to
implement internal controls Controls cannot necessarily prevent a pervasive effort to circumvent standard processes by a companys leadership (e.g. Enron) Companies with ERP systems in place will have an easier time complying with Sarbanes-Oxley than those without
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Archiving
In SAP R/3, there are limited situations where data can
just be deleted If data could just be deleted, an unscrupulous employee could: Create a fictitious vendor Post an invoice from the vendor Make payment to a Swiss bank account Delete all records of the transactions so the fraud wont be detected In SAP R/3, most data must be archived before it can be removed from the system, so auditors can reconstruct the companys financial position at any point in time
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Transaction options for material master data
Data on a companys materials cannot be deleted directly, but must be archived for deletion
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Change record for material master
SAP R/3 maintains detailed records on all changes made to material master data
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User Authorizations
A fundamental tool to avoid fraud is separation of duties
and user authorizations To complete critical business processes, more than one employee must participate so that a single employee cannot commit a fraud User authorizations ensure that employees can only perform those transactions required for their job SAP R/3s Profile Generator provides a simple method for creating user authorizations based on the functions (transactions) a user should be allowed to perform Pre-defined roles make developing authorizations easier 107
Role for material management master data
Menu paths/transactions that a person assigned the role of maintaining management master data can perform
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Tolerance Groups
Another way to ensure that employees do not exceed
their authority (and to minimize the risk from fraud and abuse) is to set limits on the size of a transaction that an employee can process Tolerance groups are predefined limits on an employees ability to post a transaction Tolerance limits can be set on items like: Line items in a document Total document amount Payment difference Discounts
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Default tolerance group
No group specified, so this is the default tolerance The default only allows posting of documents for $1,000 or less
Payments can differ by $10 or 1%
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Financial Transparency
An advantage of an ERP system is the ability to drill
down from a report to the source documents (transactions) that created it Drill down capability makes it easier for auditors to verify the integrity of reports and financial statements By double-clicking on an item in a report in SAP R/3, the user will be taken to the document(s) that created the created the item
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G/L (general ledger) account balance for raw material consumption
Double-clicking on the 8,810.00 debit will provide details on the transactions that make up the item
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Documents that make up G/L Account Balance for Raw Material Consumption
Selecting the 10.00 item and clicking on the details icon will provide more information on the item
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Details on $10.00 line item in G/L account for raw material consumption
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Another LookThe One-Day Close

Some companies strive to close the books in one day Other companies take days, weeks and even months
to get all the financial figures correct and in balance Some companies perform virtual closings, simulating the closing process at various times during the month to see how well the company is doing Ciscos closing went from 2 weeks to 1 day by switching from un-integrated systems to Oracle ERP With ERP, companies can streamline their financial supply chains, holding less cash in the same way supply chains hold less inventory
115
Summary
Companies need accounting systems to record transactions and generate financial statements. The accounting system should let the user summarize data in meaningful ways. The data can then be used to assist managers in their day-to-day work and in longrange planning. With un-integrated information systems, accounting data might not be current, and this can cause problems when trying to make operational decisions, such as granting credit. Data can also be inaccurate because of weaknesses in un-integrated systems, and this problem can have an effect on decision-making and therefore on profitability.
116
Summary

Closing the books at the end of an accounting period can be difficult with an un-integrated IS, but it is relatively easy with an integrated IS. Closing the books means zeroing out the temporary accounts. Using an integrated IS and a common database to record accounting data has important inventory costaccounting benefits. More precise record keeping is possible, and this can lead to more accurate product cost calculations. These, in turn, can help managers decide which products are profitable and which are not.
117
Summary

The use of an integrated system and a common database to record accounting data has important management-reporting benefits. The user has built-in drill-down and query tools available as a result. The introduction of the Sarbanes-Oxley Act, a 2002 U.S. federal regulation written and passed in the wake of the Enron collapse, promotes top management accountability by requiring extra financial approval and reporting. Because ERP systems can help companies meet the requirements of this legislation, the act has increased the need for integrated data reporting.
118
Summary
Accounting systems are required to record transactions
for preparing financial statements and providing information for managerial analysis and planning Unintegrated information systems have difficulty providing up-to-date and accurate accounting information Closing the books at the end of an accounting period can be difficult with an unintegrated IS, but is relatively easy with an integrated IS Integrated IS systems with a common database can provide more accurate record keeping, providing better cost data for managerial decision making The use of an integrated IS and common database to record data has important management reporting benefits, allowing built-in drill-down and query tools
119
Course Agenda
Overview Module 1: SAP System Landscape Module 2: Financial Accounting (FI) Module 3: Controlling (CO) Module 4: Funds Management (FM) Module 5: Grants Management (GM) Module 6: Reconciliation Review and Summary
120
Course Learning Objectives

Upon completion of this course, you should be able to: Describe the high level process flow Identify all financial modules Explain how account postings are transferred among financial modules. Describe how each Finance (FI) module interacts with the others to perform business functions
121
Benefits of the SAP Financial System
Integrated system Real-time queries and reports Documents can be parked Drill down capabilities Direct postings Real time reporting Postings to one ledger
122
FI Data Structure & Integration
123
Module 1: SAP System Landscape
124
Module 1 Learning Objectives

Upon completion of this module, you should be able to: Define key terms and concepts. Describe the SAP modules and how they interact with the finance modules. Explain what each Finance (FI) module does.
125
Key Terms and Concepts

Master Data Transactional Data
126
SAP Modules
Every business process is supported by
MM SD SRM Sales and Distribution GM Grant FI Management Financial
one or more ECC applications or modules. ECC is the underlying technology upon which the individual SAP components or modules are built.
MM Materials Management PP Production Planning QM Quality Management PM Plant Maintenance HR Human Resources
FM Fund
Management
FI Financial CO Controlling
AM AM Fixed Assets Asset Mgmt. Management
PS Project System WF Work Flow Industry Industry Solutions Solution
IS
IS
127
SAP Modules (continued)

All the SAP modules are tightly interlinked and feed
data to one another. Data entered in one module are available to all modules. Data are available for display or print immediately after entry.
128
SAP Modules (continued)
SAP Database
129
Financial Modules Overview

Finance and Accounting functions are
primarily practiced in the FI (Financial Accounting) and the CO (Controlling) Modules. These components of SAP ECC are independent applications, but most data in these modules are fed IS automatically Industry Solutions from the others.
MM SD SRM Sales and Distribution FI Financial MM Materials Management PP Production Planning QM Quality Management PM Plant Maintenance HR IS Human Resources Industry Solution FM Fund Management GM Grant
FI Management
Financial
CO
Controlling
AM AM
Asset Fixed Assets Management Mgmt.
PS Project System WF
Work Flow
130
Financial Modules Overview (continued)

The Financial Accounting (FI) Module represents the
Financial General Ledger, Accounts Payable & Accounts Receivable sub-modules. It is primarily used for external financial statement reporting, vendor payments and credit / collection and receivables management activities.
131

FI is made up of several sub-modules: The General Ledger (G/L) is the Financial Book of Record. Asset Management (AM) manages assets and their
depreciation. Treasury (TR) accounts for payments and receipts of cash. Accounts Payable (AP) manages vendor invoices. Accounts Receivable (AR) manages customer billing. Funds Management (FM) budgets all relevant revenues and expenditures for individual areas of responsibility. Grants Management (GM) accounts for grants from government and other entities.
132

Controlling (CO) is used: For internal reporting and planning. Internal orders, cost centers and cost elements collect and categorize costs. Costs can be allocated within CO without affecting other modules. Information flows from FI to CO through cost elements. CO may be used for cost reporting and managerial decision making analysis. This is the module to use in determining the cost of a program or project (direct and indirect).
133
Module 2: Financial Accounting
134

Upon completion of this module, you should be able to: Define key terms and concepts. Identify each sub-module within FI. Describe the account code structure terminology Identify FI master data. Explain how AR, AP and AM elements affect each module.
135

Chart of Accounts Business Area General Ledger Account Asset Class
136
Key Terms and Concepts (continued)

Cost Element Cost Center Internal Order Posting Key Document Type
137
Financial Accounting Overview (FI)

General Ledger Accounts Payable Accounts Receivable Asset Management
Financial Accounting is composed of the general ledger and

the AP, AR and AM sub-modules: AP is used to pay vendors. AR is used to bill customers. AM is used to track and depreciate assets. Financial Accounting is focused on the accounting required for external reporting requirements. 138
FI General Ledger
The base application in Financial Accounting (FI) is the
general ledger. All business transactions with financial implications are collected in FI-GL. The general ledger serves as a complete record of all business transactions. It is the centralized, up-to-date reference for the rendering of accounts. It can be updated: automatically from other SAP modules; using manual GL posting documents; or, through rollups from subsidiary ledgers.
139
FI General Ledger Master Data

The general ledger is set up according to the chart of accounts. A typical companys GL account ranges may be as follows:
General Ledger Accounts Cash and Cash equivalents Number Range 1000000000 1299999999
Assets
Fixed Assets Liabilities Fund Balance
1300000000 1799999999
1800000000 1999999999 2000000000 2999999999 3000000000 3999999999
Revenue
Expenditures Transfers Conversions
4000000000 4999999999
5000000000 5999999999 6000000000 7999999999 9000000000 9999999999
140
FI General Ledger Master Record

Detailed
information about a G/L account is listed in the master record. G/L account master records are created and maintained centrally. Authorization to create and change master records is limited.
141
Integration with Financial Accounting

General ledger contains
AP
AR GL
AM
a complete record of financial postings at a summary level. Most financial postings are generated through sub-ledgers, which store detailed information. Sub-ledgers are tied to the general ledger through the Chart of Accounts.
142
FI Accounts Receivable
Accounts Receivable (AR) sub-module records and manages
the accounting data with regards to customers. Purpose of the Accounts Receivable process: Maintains and manages accounting data for all customers. Stores data according to the customer. The AR module is used to: Process customer invoices and credit memos. Maintain customer payments and payment history. Manage deposits received from customers. Administer financial records and account balances related to customers.
143
FI Accounts Receivable (continued)

The FI-GL (General Ledger) module supports the AR
module.
There are separate sub-ledgers maintained for the AR and
GL modules. Postings made in the AR sub-ledger are linked to the GL reconciliation ledger. All AR customer transactional details are kept in the AR sub-ledger.
144
FI Accounts Receivable Master Data The customer master record controls data for the
processing of the customer transaction (invoice, credit memo, Account Statements, etc.).
145
FI Accounts Receivable Transactional Data

Standard Document Types Customer Document Customer Invoice Customer Credit Memo Customer Payment ACH/Wire Deposits General Deposits (cash & checks) Clearing Document
146
FI Accounts Receivable Process

The 4 main traditional process steps in AR area: Invoicing (billing) and credit memos. Receipting of customer payments Clearing A/R accounts Other steps Examples of these activities within Accounts
Receivable are write offs, year-end closure, etc.
147
FI Accounts Payable Purpose of the Accounts Payable process: Maintains and manages accounting data for all vendors
of goods, materials, and services. Stores data according to the vendor.
AP is a sub-ledger of the General Ledger integrated by: Master data. Transactional data. Reporting system. Business function of AP: Records invoices and payments for each vendor. Manages invoice exceptions.
148
FI Accounts Payable (continued)

Modules that support the AP process: Finance (FI) A/P sub-ledgers, vendor account balances,
posting, invoices, vendor master record, asset accounting, G/L reporting Controlling (CO) Cost Center Accounting, Reports Purchasing (MM) Purchase Orders, Goods Receipt
149

Important organizational elements of AP consist of vendor
master record and account groups. Vendor accounts may be combined in various account groups, so that they can be organized and managed more easily. Number ranges are assigned to these account groups for reporting and management purposes.
150

Output from the Accounts Payable process: Accounts Payable Master Data Vendor Invoice Vendor Credit Memo Payments Accounts Payable Reports
151
FI Accounts Payable Transactional Data

Payment Document Types: Vendor Payment Check Payment Posting Manual Payment Posting Payment Clearing Payment Posting Travel Payment Clearing Wire Transfer Live Agency
152
FI Asset Management
Asset Management is used for managing and supervising
assets (capital and low-value) within the system. It is a module of the FI area providing detail information on transactions involving fixed assets. Traditional asset accounting manages the entire life of the asset.
153
FI Asset Management (continued)

All postings made for assets (acquisitions, retirements, You may also assign an asset
depreciation, etc.) are posted in the company code and business area. to various CO objects (cost center, internal order, etc.).
Each asset must be assigned to an asset class. Fixed assets and accumulated depreciation accounts
automatically reconcile to the GL.
154
FI Assets Process
SRM Materials Management Assets
Purchase Requisition
Purchase Order (Asset is created)
Goods Receipt
Invoice Asset Master Data Activity
Additions Depreciation
Transfers Retirements 155
FI/MM Integration
Financial account assignments
are listed on requisitions and purchase orders. When a goods receipt is created, there is no financial document generated. The GR is non-valuated and will create only a material document.
FI
MM
156
Module 3: Controlling
157
Upon completion of this module, you should be able to:

Define key terms and concepts. Explain the purpose of the CO module and its relationship with the other modules. Describe the account code structure terminology. State the master data elements within the CO module. Explain how this module interfaces with the other Finance (FI) modules.
158

Controlling Area Company Code Cost Element Cost Center Internal Order
159
Controlling Module (CO)

Controlling is : Focused on internal monitoring and control. Internal orders, cost centers and cost elements collect
and categorize costs. Managerial (cost) accounting. Costs can be allocated within CO without affecting other modules.
160
CO Master Data SAP organizational units for financial records are company
codes and controlling areas: FI uses company code CO uses controlling area A company code defines an independent accounting entity for which P&L, balance sheet, and trial balance can be generated. Every financial-based transaction entered in SAP ECC needs a company code designation.
161
CO Master Data (continued)

You have to create the correct organizational structures in place to support your management accounting processes.
CLIENT
CHART OF ACCOUNTS
CONTROLLING AREA
COMPANY CODE 162
CO Master Data (continued)

Master data is entered into the system once and shared
across modules. Master data remains unchanged over an extended period of time and contains information that is used in the same manner over and over again. The CO modules use the following types of master data to perform management accounting: Cost Centers Internal orders Primary cost elements Secondary cost elements
163
CO Master Data-Cost Center

Cost centers are master data objects that represent a
business areas organizational structure. They can be posted to directly, cleared to/from orders and assessed or allocated to/from other cost centers. You will need a cost center if: There is an individual who is responsible for the cost and plan. You want to assign an employee to this level. You want to allocate cost out to other cost centers. You have to receive cost from other cost centers. The cost center represents a long-term, stable component of your reporting structure.
164
CO Master Data-Cost Center (continued)
165
FI/CO Integration Equivalent cost element for each

general ledger expenditure and revenue account. Controlling documents are generated automatically from revenue & expenditure financial postings. Internal orders are entered on financial postings to collect costs. Internal orders and cost centers are tied to business areas in FI.
CO
FI
166
Module 4: Funds Management (FM)
167
Module 4 Learning Objectives Upon completion of this module, you should be able to: Define key terms and concepts. Identify the basic structure and function of the Funds
Management module. Describe the account code structure terminology. Explain how this module interacts with the other modules.
168

Business Area Fund Functional Area Funded Program Fund Center Commitment Items Grants
169
Funds Management (FM)

The function of Funds Management is to: Maintain the Organizations budget. Budget all revenue and expenditures for individual
Business Areas and programs. Monitor budget-relevant transactions. Monitor budget consumption, warn when funds run low and prevent the budget from being exceeded. Track pre-encumbrance and encumbrance transactions.
170
Funds Management: Organizational Units

SAP ECC Module
FINANCIAL ACCOUNTING
CONTROLLING
FUNDS MANAGEMENT
Organizational Unit
COMPANY CODE
____________________
Independent balance sheet unit
CONTROLLING AREA ___________

Organizational unit in cost accounting
FM AREA
________________
Organizational unit in Funds Management
171
Funds Management Master Data

Funds Monies provided by a financial source, such as a public
organization, which is managed separately for a specific purpose. Internal funds derive revenue internally; external funds derive funds from sources outside. A complete set of self-balancing accounts may be generated for each fund.
172

(continued)
Funds Centers: Represent particular organizational units for which
budget is created and controlled. Are assigned to managers. 8-digit SAP funds centers are for budget purposes. First 4-digits are equivalent to the business area Characters five through eight represent agency hierarchy 10-digit SAP funds centers are for posting actual transactions. The additional 2 digits represent the detail cost center Each funds center has an equivalent cost center.
173

(continued)
Commitment Items Expenditure and
Revenue accounts in FM Equivalent to G/L accounts in FI and cost elements in CO Correspond to balance sheet, revenue source and expenditure object codes
Commitment Items
Number Range
Assets Liabilities Fund Balance Revenue Expenditures Transfers Conversions
1000000000 1999999999 2000000000 2999999999 3000000000 3999999999 4000000000 4999999999 5000000000 5999999999 6000000000 7999999999 9000000000 9999999999
174
FI/FM Integration
Equivalent commitment
item for each general ledger account FM documents are generated automatically from financial postings FM Master Data items on financial documents
FI
FM
175
Module 5: Grants Management (GM)
176
Module 5 Learning Objectives Upon completion of this module, you should be able to: Define key terms and concepts. Identify the basic structure and function of the Grants
Management (GM) module. Identify GM master data. Explain how the GM module interacts with the other modules.
177

Fund Grant Sponsor Sponsored Class Sponsored Program
178
Grants Management
Fund External / Internal Only one external fund per grant An internal fund or funds can be used if the grant requires cost sharing or matching
Grant Establishes a funding relationship between the grantor and grantee. Has a ten digit naming structure. Grant names will be assigned by user..
179
Grants Management (GM)

Grant (continued) Has six lifecycle statuses Proposal Application Award Closing Closed Cancelled Sponsor Also known as the Grantor Provides the funding source for a project or projects. Will determine the grant requirements and objectives.
180
Grants Management (GM) (continued)

Sponsored Class Represents the expenditure and revenue categories Linked to other objects within the FI modules: FI: G/L accounts CO: cost elements FM: commitment items ex.: supplies & materials, salaries, other operating Sponsored Program Identify the project for which the Sponsor provides funding. Grouped in accordance with the Sponsors requirements. ex.: administration, teen pregnancy prevention, etc. 181

GM Function Grants Management is used to create, monitor and control budgets for grants. Tracks available funds, expenditures and encumbrances charged to grants. Bills sponsors in coordination with Accounts Receivable. Provides information and reports in accordance with the sponsors requirements.
182

GM Function (continued): Grants are funds given by a sponsor for a specific purpose. Outlines financial conditions and legal rules to be followed
in exchange for the funds. A budget is maintained for each grant.
183
FI/GM Integration
General ledger expenditure
and revenue accounts are grouped and mapped to sponsored classes. Grant is entered on the purchasing documents and listed on the financial documents. Grants management documents are generated automatically from financial documents.
FI
GM
184
Module 6: Reconciliation
185

Upon completion of this module, you should be able to: Describe where the reconciliation activities reside and
how to access them.
186
Reconciliation Accounts
Relationship within Finance
Accounts Receivable
AR
Accounts Payable
AP
Asset Management
AM
General Ledger
GL
187
Reconciliation Accounts - FM & GM

Users should reconcile budgetary fund balances to fund
balances calculated on a modified accrual basis. Transactions may be posted in FI and Controlling (CO) that should not be reflected against budgeted amounts in FM such as depreciation (statistical). Statistical posting of these transactions can be done in FM to facilitate reconciliation with FI and CO.
Grants Management
GM
Funds Management
FM
General Ledger
188
GL
SAP Finance: An Overview
189
This overview will cover:

SAP Navigation Variants Budget Status Report Downloading into Excel Printing Deficit Report Budget Transfers
190
The SAP Window
191
Standard Toolbar / Navigation The navigation options in the SAP R/3 System are intended
to give the user as much freedom as possible when moving between screens and tasks. To support this, a number of standard functions (such as "Back", "Exit", and "Cancel") are offered. Note the green checkmark and colored arrows on the following screen (Green, yellow and red). Their functionality is explained in this section. The following screenshot is a blown-up version of the Standard Toolbar
192
Standard Toolbar Buttons / Icons

Green Checkmark This icon is used as the ENTER key that allows you to continue to the next step. It is used when you require the system to validate your field entries and then move to the next function, or screen, in a system task. This key does NOT save the information that you enter. For that, you will have to use the SAVE icon. Green Arrow This icon is used as the BACK key. It is typically used to go back to the previous screen or menu level.
193

Yellow Arrow This icon is used as the EXIT key. It is used when you want to exit the current menu level or system task without saving the data. Red X This icon is used as the CANCEL key. It is used when you want to cancel the data you entered in the current system task.
Save This icon is used as the SAVE key. It is used to save data or save changes to data in a system task.
194

Delete This icon is used as the DELETE key. Print This icon is used as the PRINT key.
195

Paging You can use the four paging buttons to move through a long list or report.
To move: A page up: click on the single up arrow A page down: click on the single down arrow To the first page: click on the up double arrows To the last page: click on the down double arrows
196
Required Input Fields

When you work in the SAP System, you will sometimes encounter input fields containing a checkmark icon. These are required input fields. An example is shown below:
Use If the screen you are working in contains any required input fields, you must enter data in these input fields before you can proceed to the next screen or tab (if the screen is using tabs).
197
Required Input Fields

Generally, if a screen has no required input fields, you can go to the next screen or tab without entering data in any fields. Some screens, however, have required input fields that are not identified. This situation can occur when You enter data in an optional field that has required fields associated with it You need to enter data in one of several input fields For example; freight can be delivered by a specific day or week. Neither the Day field nor the Week field are identified as required input fields; however, you must 198 complete one of the fields (not both).
Variants
A variant is a set way of bringing up a report that is
unique and uses criteria set by you Variants are unique to each report Variants are saved under your user logon and SHOULD follow a logical naming LOGICAL SEQUENCE 35XX-NN where XX = division and NN = logical name For example a budget variant for all SM&T funds center operating budget may be 35SMT_OPEX
199
To Save the Report as a Variant
While in a report and prior to executing it: Click the Save icon Variant name enter the name of your report. Meaning enter a short description of your
report . Click the Save icon
200
Enter Variant Name and Meaning
201
Run the Budget Report
Select the saved variant: Click the Get Variant icon Click the Enter icon If you only have one variant saved the information

will come up automatically, if you have more than one, highlight your saved report Click the green check icon Click to run report Wait . . . .
202
Budget Status Report (zbudstat_nocf)
Click on
to drilldown
203
Click on
Funds Center
204
Expand by clicking on the hierarchy icon, then Expand
all
205
Get a full budget report on one cost center by double clicking on its title.
206
Switch between cost centers to view each budget by clicking on the arrows
207
Downloading SAP report to Excel
While a report is displayed on the screen: Select List Export Spreadsheet Green Check Table Green Check Excel Green Check SAP then opens the file in Excel Need to copy and paste the output into an actual excel spreadsheet To keep the file, save in your desired directory as an Excel file This doesnt work well with some SAP reports
208
Printing in SAP Select Printer Icon Select All Columns Enter LOCL in printer device Click on Properties Make sure Time of Printing is Immediately To change to Immediately double click on Time of
Printing and select Immediately Click green check Be sure your Microsoft default printer is your desktop printer Click green check
209
Printing in SAP
Setup LOCL as a Default printer
Click on
Properties
210
Printing in SAP
Click on
Settings
211
Printing in SAP
Click Copy Settings after Output Device is Always LOCL. Click on 3 green checks.
212
Display Budget Deficits The budget deficits for expenditures report will
pull those commitment items with a negative budget This is a very useful report to identify those CIs with a deficit FMRP_RFFMAVO3X
213
Budget Deficit Report

(FMRP_RFFMAV03X)
Must enter
Click on green check to run the report.
214
Budget Deficit Report
215
Budget Transfers
Budget transfers are initiated using the
FR69 function The process essentially consists of 3 steps Initial screen identifying funds Identifying accounts to transfer to/from Saving/parking the transaction
Proper authorization for budget transfers are still required
216
Enter FR69 in the command field

(white rectangular box) located on the standard toolbar. Press Enter or green check.
217
Enter To/From Fund and the sender year. Click on green check.
218
Transfer detail is keyed in. Click on Save icon to park the transfer.
Click on
document header to add

text to explain the reason for the transfer.
219
Add Text to budget transfers
220
Budget transfer request is parked.
BE SURE TO: Write down the document number. This is what you will use to refer to this transfer.
221
Transaction Codes
ZBUDSTAT_NOCF Budget Status Report FMRP_RFFMAV03X Deficit Report FR69 Budget Transfers FR72 Display parked documents FR73 Change parked documents
222
SAP Financial Reporting
223
SAP Financial Reporting

Aims & Objectives
Introduction to SAP financial modules Understanding of SAP cost objects Overview of University accounting structure Outline of available reports Confidence in using reports
224
Reporting Requirements Income & Expenditure Balance Sheet Cash Flow

Department Costs Project costs Costs v plan
225
Management Accounting
SAP Finance Modules

Financial Accounting External Accounting Financial Statements Legal Requirements Standards Controlling Internal Accounting Cost Reporting Management Accounting Flexible
226
FI
CO
Components of Controlling
Overhead Cost Controlling How high are the costs of organisational activities? Are they within budget?
CO OM
CO CEL
Cost & Revenue Element Accounting What costs occur within our organisation?
Profit Centre Accounting How profitable are the enterprise areas?
EC PCA
227
High-Level Requirements
Financial Reporting Facilitate financial reporting needs regarding close process. Provide P&Ls at the Business Unit (BU) level. Month-end allocations design to provide for faster financial & management reporting by using standard SAP functionality. Allocations methodology to facilitate accountability & decision support, profit for all levels of management reporting Statutory reporting needs are fulfilled via SAP interfaces.
228
High-Level Requirements
Management Reporting Provide detail level of reporting based on Organizations reporting dimensions (Business Unit, Product, Brand, Customer, Sales Org., Channel, Team etc.) Provide comparisons to both prior year, AOP, Outlook and LE Realign weekly sales history for hierarchy changes within dimensions Accommodate redistribution/FS indirect P&L reporting requirements Design to support business decision making and accountability reporting, P&L for all levels of management reporting dimensions 229
GL, CO-PA and BI Functionality

General Ledger (SAP - FI/CO) Record Transactions Statutory external reporting Profit Center is the lowest level at which a Balance Sheet will be available Fully balanced Balance Sheets Supports close process Profit Center by function close concept Costs to Profit Center Assessments are performed at month-end Visibility of Ledger P&L by Profit Center
230

SAP CO-PA All reporting allocations are performed in CO-PA Provides allocated Profitability Reporting that is concurrent to the ledger CO-PA provides current period close Profitability Reporting by BU, Product, Customer, and Sales Org. Dimensions Summary reporting measures
231

BI
Delivers detailed management reporting and decision

supporting data Provides Profitability Reporting by BU, Product, Customer, and Sales Org. Dimensions Detailed reporting measures Daily, Weekly, and Monthly views Comparisons vs. history and plans Drill Down functionality by dimension Standard and ad-hoc reporting and analysis capabilities
232
SAP Cost Objects

Used to track where costs occur within the organisation
CO & PS
Controlling & Project System
Balance Sheet
Cost Objects
Internal Orders
Cost Centres
Project System WBS Elements
Profit Centres
233
Cost Centres An organisational unit within SAP to which costs (and

income) can be assigned Six digit number Used to track costs of departments/major activities
234
Cost Elements
Used to collect and summarise costs according to classification Five digit number e.g 50010 Main ranges: 40000 to 49999 External Income 50000 to 69999 External Costs 70000 to 74999 Internal Income 75000 to 75999 Internal Costs 80000 to 89999 Secondary Transfers
235
Cost Element Groups

Cost elements can be combined into groups of the same type Used to create reports Standard reporting group REP_01 Displays costs within main budget headings
Example KAH3
- Display cost element group
236
Cost Centre Structures (1)

Standard hierarchy
Tree structure containing all cost centres Reflects organizations accounting structure Core activities - DC Other services - DS Restricted funds - OR Endowment funds - EN Research awards - RG
237

Department Codes
AUVI - Media Services CSER - Careers INSS - ISS LACE - Language Centre LIBR Library Example:
DC-RC-LIBR Library core activities
238

Alternative cost centre groups
Academic Services
Library
ISS
Careers
381513 SAP Support
381652 SAP Projects
Can report on individual cost centres or groups of cost centres

239
Internal Orders Cost object used to monitor costs at a detailed level Eight digit number e.g. 95000001 Linked to cost centre provides sub-analysis Simplifies cost centre structure Used to track costs of individual activities e.g. projects,
short courses
240
Internal Order Groups
Orders can be grouped into a structure Many levels as required Maintained by departments no standard hierarchy Used for planning and reporting
241
Reports
Cost centre reports Internal order reports Report navigation Printing reports Exporting to Excel
242
May I help you with any clarifications?
Thank You, Friends

243

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Introduction to SAP in Finance & Control Functions

What are ERP Systems ?

Planning and Execution

Engineering Human Resources

Accounting and Finance Information Systems

ERP for Accounting Information

Using ERP for Accounting and Finance

Goal of Financial Accounting (FI)

Management Administrative Staff Employees

GBI 2.0 Structure for Financial Accounting

Global Bike Inc.

Global Bike Germany GmbH

Global Bike Chart of Accounts

Global Credit Control

Credit Control Area

GBI 2.0 Enterprise Structure in SAP ERP (Accounting)

Business Area Bikes BI00

Chart of Accounts (global) GL00

Credit Control Area (global) GL00

Operating Concern (global) GL00 Client GBI

Accounts Receivable Accounts (GeneralReceivable Ledger) (General Ledger)

950 400 150

Accounts Payable (General Ledger)

FI Reporting G/L Account Summary

FI Reporting Balance Sheet Presentation of an organizations Assets, Liabilities,

750 250 1,250

2,000 250 2,250

FI Reporting Income Statement Presentation of an organizations revenues and

FI Reporting Income Statement Example

11,000 750 10,250

4,500 3,750 8,250

Accountants and Audit Trails

SAP Document Principle

SAP Document Principle

SAP Document Principle

Goal of Controlling (CO)

A way to identify and track where revenues and costs are

GBI 2.0 Structure for Controlling

Controlling North America Global Bike Inc.

Controlling Europe Global Bike Germany GmbH

Global Bike Chart of Accounts

GBI 2.0 Enterprise Structure in SAP ERP (Accounting)

Business Area Bikes BI00

Company Code Credit Control Area

Chart of Accounts (global) GL00

Credit Control Area (global) GL00

Operating Concern (global) GL00 Client GBI

Region Function Product

Primary vs. Secondary Cost Elements

Aggregated Cost Elements

General Ledger Accounts

Secondary Cost Elements

Primary Cost Elements

Expense Accounts Revenue Accounts

Executive Offices Maintenance Department

CO Processes Posting Primary Cost Element

Managerial Accounting (CO)

Primary Cost Element

CO Processes Posting Primary Cost Element

Managerial Accounting (CO)

CO Processes Posting Secondary Cost Element

Managerial Accounting (CO)

CO Processes Posting Secondary Cost Element