Tuesday 26 March 2013

Document structure/ control

Document structure/ control

1) A document is saved for every posting. Every Document is uniquely identified by the Document Number, Company Code and Fiscal Year.

2) A Document contains Document header + 2 to 999 line items.

3) Document Type : Controls the Document header and classify the business transactions to be posted.

>> Posting Key : Controls the Line items.

4) Document types are defined at client level. Document types define the following:

a) Number ranges for Document number.

b) Account types permitted for postings. And also

c) The field status of “document header Text” and “Reference number” in the Document header.

d) Whether the invoices are posted with net procedure.

5) Standard Document types are :

KR – Vendor Invoice DR – Customer Invoice.

KG – Vendor Cr.Memo. DG – Customer Cr.Memo.

KZ – Vendor Payment DZ – Customer Payment.

AB – General Document SA – G/L a/c posting.

6) Document numbers can have internal or external number assignment.

7) Up to a future fiscal year – Number range will continue irrespective of year end.

For each fiscal year – At the start of a new year the system starts the number assignment again at the start of the number range. (You need to define number range for every new fiscal year)

8) The document number range must not over lap.

9) Document type AB allows postings to all account types.

10) One number range can be assigned to several document types.

11) Posting keys are defined at client level.

12) Posting keys control:

i) On which type of account the line item can be posted to

ii) The item is posted as a Debit or Credit.?

iii) The field status of additional fields.

In addition to this posting key specifies the following:

>> Whether line item is connected to payment transaction or not.

>> Whether posting is sales relevant.


13) Document line item fields are controlled by :

a) G/L Account specific field status group assigned to the G/L account while creating. (Account specific field status groups are summarized under field status variant which is assigned to company code) If the document is posted to a sub ledger a/c, the field status group of the reconciliation a/c is used.

b) Posting key specific field status group.

(The field status HIDE cannot be combined with the field status REQUIRED entry which causes an error.)

14) Document type does not have default posting key or vise versa. For each FI transaction (E.g. Invoice, Credit memo, Out going payment) you can define a document type and default posting key at:


IMG:FI A/cing>F.A.Global Settings>Document>Default values for document processing>Default values.

(E.g. When posting outgoing invoices, you use the document type "DR" and

posting key "01". You can store these specifications in the system. They

are proposed by the system when you call up the corresponding

transaction).

SAP Finance Terminology

SAP Finance Terminology


Client: In commercial, organizational and technical terms, a self-contained unit in an R/3 System with separate master records and its own set of tables.
Company Code: The smallest organizational unit of Financial Accounting for which a complete self-contained set of accounts can be drawn up for purposes of external reporting.
Business Area: An organizational unit of financial accounting that represents a separate area of operations or responsibilities within an organization and to which value changes recorded in Financial Accounting can be allocated.
Enterprise structure: A portrayal of an enterprise's hierarchy. Logical enterprise structure, including the organizational units required to manage the SAP System such as plant or cost center.
Social enterprise structure, description of the way in which an enterprise is organized, in divisions or user departments. The HR application component portrays the social structure of an enterprise
fiscal year variant: A variant defining the relationship between the calendar and fiscal year. The fiscal year variant specifies the number of periods and special periods in a fiscal year and how the SAP System is to determine the assigned posting periods.
Fiscal Year: A period of usually 12 months, for which the company produces financial statements and takes inventory.
Annual displacement/Year shift: For the individual posting periods various entries may be necessary. For example, in the first six periods the fiscal year and calendar year may coincide, whereas for the remaining periods there may be a displacement of +1.
Chart of Accounts: Systematically organized list of all the G/L account master records that are required in a company codes. The COA contains the account number, the account name and control information for G/L account master record.
Financial statement version: A hierarchical positioning of G/L accounts. This positioning can be based on specific legal requirements for creating financial statements. It can also be a self-defined order.
Account group: An object that attributes that determine the creation of master records. The account group determines: The data that is relevant for the master record A number range from which numbers are selected for the master records.
Field status group: Field status groups control the additional account assignments and other fields that can be posted at the line item level for a G/L account.
Posting Key: A two-digit numerical key that determines the way line items are posted. This key determines several factors including the: Account type, Type of posting (debit or credit),Layout of entry screens .
Open item management: A stipulation that the items in an account must be used to clear other line items in the same account. Items must balance out to zero before they can be cleared. The account balance is therefore always equal to the sum of the open items.
Clearing: A procedure by which the open items belonging to one or more accounts are indicated as cleared (paid).
Reconciliation account: A G/L account, to which transactions in the subsidiary ledgers (such as in the customer, vendor or assets areas) are updated automatically.
Special G/L indicator: An indicator that identifies a special G/L transaction. Special G/L transactions include down payments and bills of exchange.
Special G/L transaction: The special transactions in accounts receivable and accounts payable that are shown separately in the general ledger and sub-ledger.
They include:
  • Bills of exchange
  • Down payments
  • Guarantees
House Bank: A business partner that represents a bank through which you can process your own internal transactions.
Document type: A key that distinguishes the business transactions to be posted. The document type determines where the document is stored as well as the account types to be posted.
Account type: A key that specifies the accounting area to which an account belongs.
Examples of account types are:
  • Asset accounts
  • Customer accounts
  • Vendor accounts
  • G/L accounts
Dunning procedure: A pre-defined procedure specifying how customers or vendors are dunned.
For each procedure, the user defines
  • Number of dunning levels
  • Dunning frequency
  • Amount limits
  • Texts for the dunning notices
Dunning level: A numeral indicating how often an item or an account has been dunned.
Dunning key: A tool that identifies items to be dunned separately, such as items you are not sure about or items for which payment information exists.
Year-end closing: An annual balance sheet and profit and loss statement, both of which must be created in accordance with the legal requirements of the country in question.
Standard accounting principles require that the following be listed:
  • All assets
  • All debts, accruals, and deferrals
  • All revenue and expenses
Month-end closing: The work that is performed at the end of a posting period.
Functional area: An organizational unit in Accounting that classifies the expenses of an organization by functions such as:
  • Administration
  • Sales and distribution
  • Marketing
  • Production
  • Research and development
Classification takes place to meet the needs of cost-of-sales accounting.
Noted item: A special item that does not affect any account balance. When you post a noted item, a document is generated. The item can be displayed using the line item display. Certain noted items are processed by the payment program or dunning program - for example, down payment requests.
Accrual and deferral: The assignment of an organization's receipts and expenditure to particular periods, for purposes of calculating the net income for a specific period.
A distinction is made between:
  • Accruals -
An accrual is any expenditure before the closing key date that represents an expense for any period after this date.
  • Deferral -
Deferred income is any receipts before the closing key date that represent revenue for any period after this date.
Statistical posting: The posting of a special G/L transaction where the offsetting entry is made to a specified clearing account automatically (for example, received guarantees of payment).
Statistical postings create statistical line items only.
Valuation area: An organizational unit in Logistics subdividing an enterprise for the purpose of uniform and complete valuation of material stocks.
Chart of depreciation: An object that contains the defined depreciation areas. It also contains the rules for the evaluation of assets that are valid in a specific country or economic area. Each company code is allocated to one chart of depreciation. Several company codes can work with the same chart of depreciation. The chart of depreciation and the chart of accounts are completely independent of one another.
Asset class: The main criterion for classifying fixed assets according to legal and management requirements.
For each asset class, control parameters and default values can be defined for depreciation calculation and other master data.
Each asset master record must be assigned to one asset class.
Special asset classes are, for example:
  • Assets under construction
  • Low-value assets
  • Leased assets
  • Financial assets
  • Technical assets
Depreciation area: An area showing the valuation of a fixed asset for a particular purpose (for example, for individual financial statements, balance sheets for tax purposes, or management accounting values).
Depreciation key: A key for calculating depreciation amounts.
The depreciation key controls the following for each asset and for each depreciation area:
  • Automatic calculation of planned depreciation
  • Automatic calculation of interest
  • Maximum percentages for manual depreciation
The depreciation key is defined by specifying:
  • Calculation methods for ordinary and special depreciation, for interest and for the cutoff value
  • Various control parameters
Period control method: A system object that controls what assumptions the system makes when revaluating asset transactions that are posted partway through a period.
Using the period control method, for example, you can instruct the system only to start revaluating asset acquisitions in the first full month after their acquisition.
The period control method allows different sets of rules for different types of asset transactions, for example, acquisitions and transfers.
Depreciation base: The base value for calculating periodic depreciation.
The following base values are possible, for example:
  • Acquisition and production costs
  • Net book value
  • Replacement value

Difference between FS10N ad FBL3N

Difference between FS10N ad FBL3N

FBL3N – Display Change Line Items (gives the open item list)
FS10N – Display Acct Balances (gives the balance of transaction figure)

To say it very plain - Transaction FS10N displays balances, this balance could include many different asset numbers, drill down required for individual asset numbers. FBL3N displays detail, drill down not required.

In case you find that balances in the 2 transactions dont match:
1. Line item display was switched on after there had already been postings to the account (Check your master record for changes in FSS4 and see if the line item display was changed at any point. )
2. Archiving has been done (archiving line items but obviously keeping the account balance correct). It can be very time consuming, but you can always use SE16 on table BSEG (with your company code and account number as selection fields) to check the actual line items. Line item display uses one of the index tables (BSIS) and there can be differences between that and the actual document database, which SE16 will show you.
3. Check search criteria of FBL3N
4. Check the G/L account whether it is enabled to Line Item Display
5. Run the programm SAPF190 to check the gap
6. Check for your user role, if you have the complete authorization objects for T Codes FS10N and FBL3N. Please take the help of your Basis Consultant for that.
7. Execute the report TFC_COMPARE_V2 from SE38 and also see the program documentation (blue information button) on the selection screen of the report.
8. Run transaction SE38 and execute program RFSEPA01

Business Process associated with SAP FI module


Monday 25 March 2013

Create Company Code

Create Company Code



The first step of FI configuration is to
 Create Company Code.
Company Code is a unique four alphanumeric characters that represents an independent and legal accounting entity. It’s the smallest and minimum necessary organizational structure in SAP that required by law to provide a set of financial reports (such as Balance Sheet and Profit/Loss Statements). In the real world, a company code can be a company of a corporate group. In an SAP client, there can be one or several company codes. The general ledger is kept at company code level. For consolidation process in SAP EC module, a company code must be assigned to a company. A company can comprise one or more company codes.
With SAP FI module, we can generate the financial reports of a company code. A company code’s financial reports are used for external purpose, such as for external auditors, shareholders/stock exchange commission, tax office, etc.
Company code is one of the two main organizational units of SAP FI module. The other one is Business Area. Business areas are used for internal purpose, such as for company’s management. Business areas represent separate areas of operation within one or some companies. With business areas, for example, SAP can generate financial reports of a specific regional area of a company. Let’s say Coca Cola Company has one company code in USA (and several company codes in the whole world). With company code, SAP can only generate one set of financial reports for USA office. But, with business areas (depends on how it configured), SAP can generate sets of financial reports per state in the USA. By doing so, the management can analyze the performance of each branch in each state better. It gives more useful information that can be used in decision making process. The use of Business Areas is optional in SAP FI module.
All SAP transactions that have impact to the financial reports from all SAP modules (such as FI, MM, HR, etc) will generate accounting journals in company code’s general ledger. The transaction can determine the company code involved either from the user input for the company code (such as in FI module) or from other organizational unit that related to the company code (such as in MM module, company code can be determined from the plant that input by user).
In MM module (Logistics), each plant must be assigned to a company code. A company code can have several plants. A plant can also be assigned to a business area; a business area can be assigned to several plants.

Material valuation can be set at company code level or plant level
We create company code from the following menu path of “SPRO” t-code: Enterprise Structure – Definition – Financial Accounting – Edit, Copy, Delete, Check Company Code.
There are two options to create company code:
§  Copy from other company code (or from SAP standard company code)
§  Create from the scratch
SAP recommends that we copy a company code from an existing company code. The advantage is SAP will also copy the existing company code-specific parameters. Then we can change certain data in the relevant application if necessary. This is much less time-consuming than creating a new company code. But if we create company code from the scratch then we have to define other parameters need in other relevant configuration process manually. 

What is ERP?

What is ERP?


What is ERP?
ERP stands for Enterprise Resources Planning. ERP system was originally used in manufacturing company as it has a complicated business processes. Today, ERP system has been applied in various companies, such as manufacturing, retail, oil and gas, banking, telecommunication, and many more.
ERP software system has an objective to integrate all of the business data and process so it can be managed in most effective and efficient way. It reduces the redundant data and process by making all data from various business processes in a company can be accessed by all departments of that company (of course, with an appropriate authorization according to that company’s policy). By doing so, a data only needs to be entered once by a department that triggers it in its business process, and then it can be used by other departments according to their business process needs. 
Without an ERP system, a company usually has several computer software systems, such as:
§  Accounting software
§  Fixed asset software
§  Payroll software
§  Inventory control software, including Material Requirement Planning (MRP) software
§  Purchasing software
§  Manufacturing software / Production planning software
§  Sales software
§  Order tracking software
§  Invoicing software
§  Project management software
§  etc.
Each of them can have their own database, even their own platform. In the worst case, each system has no interface with others, so the data from one system can’t be used by another. The data that should flow from a business process to the other does not flow. It must be re-entered to the other system. Beside the additional unnecessary business process, this also can lead to the possibility of the mistake in the data re-enter process which cause low data integrity assurance.
With ERP software, the data integrity can be assured better, because the data only needs to be entered by the responsible department in its business process/transaction. Then this same data can trigger another business process/transaction in other department.
For example, typical business processes in a manufacturing company are:
Demand for finished products from customer will be recorded by Sales department in a sales order document. Sales order data can be analyzed by Inventory department. If there are not enough finished products in current stock, with MRP function, the sales order can trigger a planned order that can be converted to a production order that requests the Production department to start producing the finished products. In order to produce the finished products maybe it requires some raw materials that have to be bought from vendors. The production order can trigger a purchase requisition for the raw materials. The purchase requisition will be processed by Procurement department to be a purchase order that is sent to vendor. Vendor will deliver the raw materials and Inventory department will receive them. Accounting department will record the vendor’s invoice and Finance department will process the payment. Once the raw materials are available, the Production process begins. Then the finished products will be delivered to the customer, and Finance department will send invoice to the customer.
All of business processes in the above example can be integrated in one ERP system. The ERP system usually consist of several modules such as Customer Relationship Management (CRM), Sales, Inventory, Production Planning, Plant Maintenance, Purchasing, Supplier Releationship Management (SRM), Accounting, Human Resources, etc. But, all of them are in the same platform and same database. ERP system is one of the largest software code ever written. It’s so complicated because it tries to be flexible, so it can adopt all business process in all companies. It’s been designed with a standard set of tables, transaction programs, and report programs. It also provides a configuration/customizing program, so it can be configured / customized according to a specific business process or company need.
There are some ERP software vendors that provide an off-the-shelf ERP System. Although they say their ERP system is off-the-shelf products, usually it can’t be used / implemented as soon as you’ve installed it, not like other application such as office application. Before it can be used, we must first configure and or customize it based on our business processes and needs. Usually, the configuration process needs expert consultant services. The consultants will map our business process into the ERP System configuration. This process is usually called ERP Implementation Project. This project can take months or even years, depends on its scope. After the ERP System configured based on our needs, then it will ‘Go Live’, and ready to be used in a daily operational activities in our company.
Here are some companies that provide ERP system product, sorted by its ERP product’s revenue:
§  SAP
§  Oracle Applications
§  Infor Global Solutions
§  The Sage Group
§  Microsoft Dynamics (Formerly Microsoft Business Solutions)
§  Unit 4 Agresso
§  Lawson Software
§  Epicor
§  Visma
§  Industrial and Financial Systems
§  QAD
§  ABAS Software
§  Ramco Systems
§  NetSuite
§  SIV.AG

SAP and SAP FICO Introduction

SAP Introduction and SAP FICO Outline



SAP is Dynamic ERP package which serves almost all sectors with its integrity and diversity.

SAP is short form of Systems, Applications and Products in Data Processing. It is founded by IBM engineers in 1972 with its Headquarters in Waldorf, Germany.


For those who are in the Finance/Accounting Profession who wish to delve into a creative and
interactive scenario by which they can apply their hands-on experience & expertise to another level of
fantastic intellectual stimulation, SAP FI/CO Implementation & Configuration is truly the ultimate.  Their
expertise will render them to very swiftly master its technical configuration – for the concepts are all
part of every Finance/Accounting Professional’s innate thought-process – and - the SAP modules follow
a thorough schematic pattern by which all functionalities & technicalities are logically laid-out.
SAP Financial Accounting (FI) is an important core module where in live-time, the financial processing
transactions are all captured to provide the basis via which data is drawn for external reporting.  This
SAP FI Module is integrated with many parallel modules that enable a company to unify processes that
may have needed the utilization of many software packages.   

Other Modules of SAP that commonly find a role of integration with FI are (but not limited to) Material
Management (MM), Sales & Distribution (SD), Human Resources (HR), Product Planning (PP), Controlling
(CO), etc.   Amongst these CO – Controlling is another major focus for those coming from the
Finance/Accounting/Auditing/Budgeting and Financial Reporting/Analysis Backgrounds/Professions.
SAP FI:  There are many sub-modules that streamline and specialize in each aspect of the Financial
Accounting Processes:  
AA – Asset Accounting
AP – Accounts Payable
AR – Accounts Receivable
BL – Bank Accounting
FM – Funds Management
GL – General Ledger Accounting
LC – Legal Consolidations
SL – Special Purpose Ledger
TM – Travel Management
Out of the above, FI-AR, FI-AP, & FI-AA are the three sub-modules that send simultaneous
postings to FI-GL.


Now, the new SAP GL – integrates many streamlined processes to be unified more closely to further
alleviate any duplication of live-time tasks.   This New General Ledger Accounting in mySAP ERP has
some dynamic advantages in comparison to the classic General Ledger Accounting (as used in SAP R/3
Enterprise Version) – such as the ability to run real-time reconciliation between Management
Accounting (CO) and Financial Accounting (FI) – i.e. – there is a real-time integration with Controlling. 
Previously time-consuming reconciliations are hence now rendered obsolete.  The new SAP GL further
allows the management of multiple ledgers within the General Ledger Accounting Module itself.  This
creates the scope for portraying parallel accounting scenarios within the SAP System.
Controlling (CO) is the term by which SAP refers to “Managerial Accounting”.   The Organizational
Elements in CO are Operating Concern, Controlling Area, and Cost Centers.  Hence, the SAP CO Module
helps management by providing reports on cost centers, profit centers, contribution margins,
profitability, etc.  It focuses on internal users, in contrast to FI – which focuses on data drawn for
external reporting.  The transactions posted in FI are transferred to CO for cost accounting processing,
analytical reporting, and audit-controlling spectrums.
There can be either a one-to-one relationship or there can be one-to-many relationship between
Controlling Areas Verses Company Codes.  Hence, CO becomes the governing module that oversees the
consolidation of costing data whereby management can derive their perspectives for analysis.
The SAP Controlling (CO) Module’s Components are:
Cost Element Accounting
Cost Controlling
Cost Center Accounting
Internal Orders
Activity-Based Costing
Product Cost Controlling
Profitability Analysis
Profit Center Accounting
Some methodologies that are unique in their structural concepts are – for example – CO PA & PCA.  PA
refers to Profitability Analysis that derives from how profitable your market-segments are on their
external sides.  EC-PCA refers to Profit Center Accounting that produces the analysis that portrays how
your internal  ‘profit centers’ are functioning in terms of their profitability.  To further expand the
potential, we also have CO-PC in SAP – which streamlines Product Cost Controlling.


CO-PA supports two forms of Profitability Analysis:  Costing-based & Account-based.   
Costing-Based Profitability Analysis groups costs and revenue according to value fields and
costing-based evaluation approaches.  Both of these may be defined by the client.  It provides the client
with a complete short-term profitability reporting capability at all times.   
Account-Based Profitability Analysis is organized in accounts using an account-based valuation
process.  Its use of cost and revenue elements gives it a distinguishing characteristic.  This provides the
client with a profitability report that is permanently reconciled with financial accounting.
Hence, Profitability Analysis (CO-PA), alongside Profit Center Accounting (EC-PCA), is one of the
application components of Profitability Analysis. 
The SAP Control (CO) Module is integrated with FI, AA, SD, PP, and HR.  While FI is the main source for
data for CO, the others such as SD, MDD, and PP have many integration points with CO.  Revenue
postings in FI will result in postings in CO-PA & EC-PCA.  The HR Module also generates various types of
costs to CO.  In addition, Planned HR Costs can be passed on to CO as well for CO planning purposes.
Above is a brief outline and write-up about the dynamics of SAP FI/CO.  It would be well worthwhile for
Finance/Accounting Professionals to explore the depths of this innovative software for the enrichment
of their career spectrum