4103 sap transfer pricing solution overview at cmc

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SAP Transfer Pricing Solution Overview at CMC

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  • Orange County Convention Center

    Orlando, Florida | June 3-5, 2014

    SAP Transfer Pricing Solution Overview at CMCKumar Kalidindi

  • Utilize SAP standard solution to fulfill your companies transfer pricing requirements

    Transfer Price Structures and their maintenance

    Parallel valuation approach and its use for Transfer Pricing

    Standard solution to support intra-company transfers

    Master Data requirements and their maintenance

    LEARNING POINTS

  • Americas Operating Locations

  • 4SAP Parallel Valuation Approach

    Parallel Valuation Views

    Legal View - Represents the transfer of goods and services between independent companies according to legal reporting requirements

    Group View - Valuate the exchange of goods and services within the group using Cost Of Goods Manufactured eliminating internal profits between member companies

    Profit Center View - Valuate the exchange of goods and services between Profit Centers using internal prices to determinate profitability of each Profit Center for Management Reporting

    Each Valuation view is assigned to a single currency type

    Valuation View + Currency Type = Valuation Approach

  • 5Parallel Valuation Approach

    CMC decided to use the following two valuation approaches

    Company Code Currency, Legal Valuation (10) Group Currency, Profit Center Valuation (32)

    Valuation Approaches

    10= Legal Valuation (0) + Currency Type (10) 32= Profit Center Valuation (2) + Currency Type (30)

    Currency

    types

    Valuation

    view 0

    210 30

    X

    X

    10

    Leg.

    32

    PrCtr.

  • Transfer of Material For Intra-Company

    L 100

    G N/A

    P 100

    L 100

    G N/A

    P 120

    Profit Center

    Sender

    Profit Center

    Receiver

    Company Code XXXX

    Stock Transport Order

    (STO)

    Transfer Price

    $120/TON

  • Legal Valuation - T-Account Entries

    Plant xxxx

    PC Sender

    Plant xxxx

    PC Receiver

    Inventory

    $100 $100

    Intra-Company

    Offset

    $100 $100

    Inventory

    Intra-Company

    Offset

  • Profit Center Valuation - T-Account Entries

    $100$120

    Intra-Company

    Sales

    $120

    Intra-Company

    COGS

    $100

    $120

    $120

    Plant xxxx

    PC Sender

    Plant xxxx

    PC Receiver

    Intra-Company

    Offset InventoryInventory

    Intra-Company

    Offset

  • Conditions for SD Billing Documents

    SD Conditions for Inter-Company Billing Documents (affiliated companies)

    PC00 refers to IV01 condition and carries the same value

    Type Valuation Condition Cond Cat COPA

    Revenue

    Legal IV01 Sales

    Profit Center PC00 c Sales

    COGS

    Legal VPRS G COGS

    Profit Center PCVP h COGS

    Type Valuation Condition Cond Cat COPA

    Revenue

    Legal PR00 Sales

    Profit Center PC00 c Sales

    COGS

    Legal VPRS G COGS

    Profit Center PCVP h COGS

    SD Conditions for External Billing Documents

    PC00 refers to PR00 condition and carries the same value

  • Master Data

    An Access sequence is assigned to each condition type which determines the priority of the condition record and its maintenance levels

    The condition record

    determines the amount or

    percentage to be applied

    for each set of values in the

    condition table

  • Master Data Upload Tool

    Custom Program to upload transfer prices from excel spreadsheet

    Excel Template for

    loading transfer prices

  • Intra-Company STO

    Stock Transport Orders are used as a vehicle to transfer stocks from plant to plant within the company

    The goods Receipt can be planned in the receiving plant

    The entire process can be monitored via the Purchase Order History

  • Post Goods Issue

    Post Goods Issue transaction generates a material transfer document to track logistical movement of goods from sender to receiver plant

    The material document also generates an accounting document to transfer the stock across valuation areas

  • Price Determination

    The sending and receiving plants belong to different profit centers

    Transfer across profit center invokes pricing procedure

    The pricing procedure with different conditions determine the markup of the stock transfer

  • Accounting Document- Legal Valuation

    Legal Valuation with currency type 10 transfers inventory from sender to receiver profit center

    No Revenue and COGS postings in legal valuation

    If the material is valuated in receiver plant with price control S, the difference between the sender and receiver valuation will post to a Variance account

  • Accounting Document- PC Valuation

    Profit Center Valuation with currency type 32 transfers inventory from sender to receiver profit center and records markup

    Revenue and COGS are posted in this valuation

    If the material is valuated in receiver plant with price control S, the difference between the sender and receiver valuation will post to a Variance account

  • Reporting: Financial Reports

    Standard Financial Reports: Use currency type 32 to report in Group Currency, Profit Center Valuation

    Custom Report Painter/Writer

    reports: Use basic key figure

    KSL (Second Currency) in

    FAGLFLEXT to report in

    Group Currency, Profit Center

    Valuation

  • Controlling Reports

    Cost Center Accounting: Use Actual Valuation 2 to report on Profit Center Valuation for all cost center reporting

    Product Cost Controlling:

    Use Actual Valuation 2 to report on Profit Center

    Valuation for Product

    Costing Reports

  • Controlling Reports

    Profitability Analysis: Use Currency Types B2 or 12 for Profitability Analysis reporting

    Material Ledger: Use

    Currency Type 32 to report on Profit Center

    Valuation for Material

    Ledger Reports

  • Transfer Pricing in SAP is a valuation approach that will allow CMC to transfer inventory between Profit Centers within the Company Code (Intra-Company) using Stock Transport Orders

    Maintenance and timing of transfer price conditions is critical; master data must be in place prior to post goods issue transactions

    Adequate training and education for Accounting end users to fully understand concepts and approach prior to go live

    Reporting and consolidation teams have to use the appropriate currency valuations based on the managerial objectives

    Extensive testing and validation required prior to rolling out the solution

    KEY LEARNINGS

  • FOLLOW US

  • THANK YOU FOR PARTICIPATING

    Please provide feedback on this session by completing a short survey via the event mobile application.

    SESSION CODE: 4103

    For ongoing education on this area of focus,visit www.ASUG.com

    THANK YOU