Unit 3: Financial Accounting

FI Focuses on:
1.

G/L

2.

Processing of Receivables

3.

Asset Accounting

Major Processes:
A/R O2C Customer
A/P P2P Supplier

Parties and Factors Involved:

4.

Bank

5.

Treasury

6.

FSCM

7.

Asset Management

8.

Bank Ledger supports booking of cash flows

Important Tasks of FI:

9.

Recording of monetary and value flows

10.

Evaluation of inventories

The General Ledger

11.

Contains records of all accounting-relevant business transactions via G/L Accounts in a business
perspective

12.

Is structured according to a Chart of Accounts

1.

13.

Contains Definitions of all G/L accounts

1.

Account #

2.

G/L Account Designation

3.

Categorization of G/L Accounts as I/S or B/S

Often contains ONLY collective postings

1.

Subledgers pass data in compressed form to G/L via Reconciliation Accounts

14.

Managed at CC level
1.

B/S & I/S complied from this

15.

Transactions entered into Subledgers, MM (material stock) and Treasury flow into B/S in real-time

16.

The component Treasury (TR) focuses on functions such as:

17.

1.

Payment means

2.

Treasury Management (financial means, Forex, derivatives, bonds)

3.

Loans

4.

Market Risk Management

One Leading Ledger in each Client for New G/L Accounting

1.

Other ledgers can exist within the G/L

SAP FSCM:
18.

Helps enterprises to optimize their cash flows

19.

Improvements in invoicing, reconciliation, preventing arrear and process related delays in payments
(printing + sending invoices)

20.

Represents a major area of process innovation and improvement in a broad range of industries

Four Key Functionalities:

1.

Evaluate the Customer (SAP Credit Management)

2.

Helping to contact customers

3.

Dispute management

4.

Collections

Process Steps in FSCM:

1.

Check credit worthiness

2.

Issue Invoice

3.

Forecast Cash

4.

Finance Working Capital

5.

Resolve Disputes

6.

Collect Cash

7.

Settle and Pay

8.

Reconcile

FSCM Components:

1.

2.

3.

SAP Biller Direct (Electronic Bill Presentment and Payment)

1.

Send and receive invoices electronically

2.

Customers access info via internet

3.

Reduces media fragmentation, allows vendors to interact w/ customers

SAP Dispute Management

1.

System support for processing payment deductions

2.

Cross-departmental resolution of dispute cases

3.

Collaboration w/ customers supported by correspondence with them via internet (using SAP
Biller Direct)

4.

Improves receivables management and speeds up invoice settlement

SAP Collections Management

1.

4.

5.

6.

7.

Structure, classify, minimize receivables owed

SAP Credit Management

1.

Provides companies w/ large customer base the opportunity to monitor total liabilities of
customers, using appropriate credit lines

2.

Advantage of centralized and company-wide management of credit lines

3.

Eliminates risk of customer exceeding credit limit

4.

Different Distribution Channels use same data to check credit worthiness

SAP Cash and Liquidity Management

1.

Effectively manage liquidity and currency risk

2.

Redundant data entry eliminated

3.

All corporate sectors operate on unique and consistent database

SAP In-House Cash

1.

Allows diversified companies to optimize intra-group payment transactions by opening an inhouse bank

2.

In-house cash center is a virtual bank within the corporate group

3.

Saves on costs of external netting services + gives flexibility when processing payment netting
transactions

SAP Treasury and Risk Management

1.

Set of functions for managing financial transactions and risk

FI vs. CO
FI

CO

Audience

External

Internal

Objective

Legal Reporting

Internal Management of Costs and

Revenues

Requirements

Determined by Law

Up to company

Level

Defined by Law

Costs and Revenues at a higher level

than FI

*costs and revenues from FI used in CO

FI Organizational Levels

Company Code
8.

Should create based on tax law, commercial law, other FI criteria

9.

Usually created based on geographic considerations

10.

CC key is a 4 digit alphanumeric code

Segment
11.

Available as of SAP ERP 2004 (ECC 5.0)

12.

In New G/L, can be used as a dimension for reporting purposes

13.

Aim is to provide insight into different business activities of a diversified company and info about the
general environment

14.

Purpose is to provide a better overview of the companys economic performance, improve forecasting
and better anticipate risks and opportunities

15.

IAS Definition

16.

1.

Business Segment is a sub-activity of a company, involving manufacture of product or provision

of service, with risks and revenue that differ from other segments

2.

Geographical Segment risks and revenues that differ from other geographic segments in terms
of economic or political factors

US GAAP part of a company that incurs costs, generates revenue, has own financial data w/ regard to
profit + resource consumption

Controlling Area
17.

Self-contained Organizational Structure for which costs and revenues can be managed and allocated

18.

Represents a separate unit of cost accounting

19.

Assign multiple CCs to carry out Cross-CC cost accounting

1.

Same operating COA and fiscal year required

General Ledger Accounting

20.

Represents a companys set of books

Chart of Accounts
21.

each G/L set up according to a COA

22.

contains definitions of all G/L accounts in an ordered form

23.

consists of

24.

1.

Account #

2.

Account Name

3.

Type of G/L Account (B/S or I/S)

Can specify an unlimited # of COAs

GL Account Master Record

Comprised of:
25.

26.

Chart of Accounts Segment

1.

Description of account

2.

Type: B/S I/S

3.

Account Group (controls CC segment fields)

4.

Consolidation Account #

Company Code Segment

1.

Details how specific CC will manage account

1.

Account control

2.

Account management

3.

Bank/financial details

4.

Joint ventures

5.

Interest calculation

6.

Document control

Account Groups
27.

Classify G/L accounts into user defined segments (cash/asset/material/PL/liabilities,etc)

28.

Determine # range of accounts that will fall into those segments

29.

Field status (Supress/Required/Display/Optional)

Reconciliation Accounts and Subledgers

30.

Ensures real-time integration of subledger accounts with G/L

Financial Statement versions

31.

Helps to meet various reporting requirements

32.

Define exactly which accounts appear in which line items of the financial statements

Profit Centers (previously CO only, a profit area of responsibility]

33.

Like CCs, function as a dimension for reporting

1.

34.

Financial statements can be created for PCs

Can represent:
1.

An organizational unit (plant)

2.

A line of business

3.

A geographical location

35.

Since SAP ERP 2004 (ECC 5.0), are now an integral part of G/L

36.

Still considered master data

G/L Account Posting page 68

Posting Key

37.

Used for internal control

38.

Account type/Debit or Credit/Field Status

Accounts Payable (P2P)

PO GR IV Payment

Vendor Master Record

39.

Contains data that controls how transaction data is posted and processed

40.

Includes all info about a vendor needed to do business w/ them

41.

Client Level
1.

Vendor specific info

2.

Name, address, etc

3.

any CC will have access to Vendor General Info

42.

Company Code

43.

Purchasing Organization
1.

Data specific to purchasing in VMR must be entered before suppliers master record can be used

Document Splitting
44.

Used because corporate groups are required to create a B/S at segment level

Vendor Payment
1.

Select Payment Method and Bank

2.

Select items for payment

3.

Calculate payment amount, take account of cash discount periods

4.

Post payment document

5.

Print payment medium

If Automatic
1.

Post payment document

2.

Clear open items

3.

Prepare data for printing

Purchase to Pay Process (Accounting View)

4.

Purchasing organization MUST create purchase specific data in VMR before that can use Supplier Master
record

PO
5.

No accounting documents generated

GR
6.

System checks quantity of goods received vs. Order quantity

7.

Material document created to update stock

8.

At the same time, FI Document created (Debit Materials, Credit GR/IR)

IV
9.

Invoice received in Logistics invoice verification

10.

Vendor invoice checked for correctness

11.

Vendor invoice posted (PO history updated)

12.

At the same time, FI document generated (Debit GR/IR, Credit A/P)

Payment
13.

Debit A/P, Credit Bank Reconciliation when payment made

14.

Once payment verified, Debit Bank Reconciliation, Credit Bank Account

Accounts Receivable (O2C)

SO Delivery Billing Payment

Customer Master Data

15.

Client

16.

CC

17.

Sales Area (Sales Org + Distribution Channel + Division)

1.

Sales area-specific settings

2.

Must be defined before it can do business

Credit Management (SAP Credit Management)

18.

Accounts are processed on the basis of Credit Segment in the CMR

1.

Credit segment data contains all data required for checking credit when sales order is accepted
and for resulting order-related credit decisions

2.

Data updated from Sales and FI

1.

SD Sales Order outbound delivery (ECC 6.0) Billing Document

2.

FI Transferred in report UKM_TRANSFER_ITEMS

19.

Maintained in a separate data basis in SAP Credit Management

20.

Includes all information about business partner required for monitoring credit risk

21.

Credit Profile
1.

Contains data related to scoring, limit calculations [Role UKM00 (Credit Mgt Bus Post) used to
maintain data]

SO
22.

Sales Order Created (No FI document)

Delivery
23.

Outbound delivery document created (SD)

24.

Goods delivered posted as Goods Issue (MM)

25.

At the same time, FI Goods Issue (COGS Debit/Inventory Credit)

Billing
26.

SD Billing document created, invoice sent to customer

27.

At the same time, FI Invoice (A/R Customer Debit/Revenue Credit) *Revenue Recognized

Payment
28.

FI (Credit A/R customer/Debit Bank)

Service O2C
29.

Expenses incurred when services procured outside company and provided internally

30.

External services posted without, internal services posted with an account assignment to Cost Center
performing activity (personnel expenses)

Customer Payments
31.

Maximum amount that constitutes a minor payment difference is defined in tolerance group settings

32.

Any larger deal with manually

1.

Partial payment item doesnt clear

2.

Residual Item open invoice cleared

3.

New open item (Residual Item) in amount of payment difference is created

Fixed Asset Accounting

Allows organizations to:

33.

Manage asset info

34.

Post transactions during life of an asset

35.

Calculate asset depletion

Asset Master Record

36.

Each asset belongs to a Company Code and Business Area (postings made for asset change both)

37.

Can also assign assets to CO Objects (Cost Center/Internal Order/Activity Type/Logistics Org. Units)

38.

Assets Business Area = 1 1 // Business Area Assets = 1 many

Asset Class
39.

Each asset MUST be assigned to one

40.

Costs that dont appear on same line item of B/S have to be assigned to different ones

41.

At least 1 special asset class for assets under construction and low value assets (4000, 5000)

42.

Can also create for intangible and leased assets

43.

Application Component PM (Plant Maintenance) used for technical management of assets

44.

Application Component TR (Treasury) used for managing Financial Assets

10

Asset Transactions (acquisitions, retirements)

45.

Can be posted in various ways:

1.

w/o a vendor or PO offsetting entry made to a G/L clearing account

2.

to a vendor, w/o reference to a PO

3.

Via MM using MM functions (PO, GR, Invoice Receipt)

Transaction Type
46.

An addition to Posting Keys 70(debit) and 75(credit)

47.

Must be included when posting to an asset

account

48.

Necessary, because it specifies exactly

where the asset posting is listed in the asset
history sheet

49.

Details the distinguishing characteristics of

various asset postings which include:
1.

Buying and Selling

2.

Credit Memos

3.

Acquisition from Internal

Production

4.

Adjustment Postings

5.

Retirement w/o Revenue

6.

Depreciation and Appreciation

Asset Explorer
50.

Offers overview of activity for an asset

51.

Can drill down details to FI transactions

11

52.

Possible to branch master data, cost

objects, perform simulations

Depreciation Areas
53.

Often asset balances need to be

valuated differently for various
purposes

54.

To keep more than one valuation basis, depreciation areas are kept in SAP

55.

Data stored in Asset Master Record

Depreciation Run
56.

Depreciation only posted into asset accounting and G/L after depreciation run

57.

Posted to corresponding depreciation accounts in G/L and to assigned CO Cost object assigned to Asset
Master

58.

Can be run in direct or batch mode

12