integrated accounting in sap

8/4/2019 Integrated Accounting in SAP

1/40

Integrated Accounting in SAP

www.siliconlabs.fi1

From scorekeeper to knowledgeprofessional


2/40

R/3 integrated business process model

COCO--PCPC

COCO--PAPACOCO--

OMOM

StandardCostsVariances

ProductionAdministrationMarketingSales

VVAALLUUEEFFLL

ProductProductandand

customercustomer

2

BusinessProcess

OOWW

ProductionMaterial

ManagementSalesProcurement

PPPP SDSDMMMM MMMM

FIFIIn R/3 the logistical value flows are automatically transformed

to money flows in financial accounting and controlling.


3/40

R/3 modules

COCO--OMOM

Overhead Cost Controlling(cost center accounting, costelement accounting)

COCO--PCPC

Product Costing

MMMM

PPPP

Material Management

Production

3

COCO--PAPA

Profitability Analysis

FIFI Financial Accounting

SDSD Sales and Distribution

The traditional way of presenting SAPmodules


4/40

Why SAP R/3 ?

Many companies had

developed an IT jungle andwere facing the risks of themillennium change.

SAP R/3 was offering an easy

R/3R/3

SDSD

MMMM

PPPP

FIFIC

O

C

OAMAM

4

started implementing R/3 andthe SAP diamond picturebecame familiar all over theworld.

MMPMPM

HRHR

CCWFWF

ISIS

3.x -> 4.x3.x -> 4.x


5/40

From SAP diamond to core SAP

strategy,plan andoptimize

analyze

Supply ChainManagement

Business Information Warehouse

CustomerRelationshipManagement

Strategic

EnterpriseManagement

5

executeInformationproducers

(e.g.D&B, AC

Nielsen)

Core SAP(Finance,

production,

sales)

HeadquartersHuman

Resources

(SAP &Others)

Non-SAPSystems

Over the years SAP had grown to an ERP market leader and hasdeveloped new functionalities. The original SAP diamond has become

the core on which these new satellite modules build.


6/40

R/3 is an integrated information system

Procurement

Production

6

Sales

SAP R/3 changes the world. Every store worker becomes a bookkeeper producingaccounting postings. A horror scenario for accounting department, if the SAP use is

not disciplined.


7/40

Automatic account determination

Goods are in stock

Balance sheet

Inventories

Material process Accounting

Goods receipt orstock transfer

7

goods issue

consumption

Profit and loss

Material usage

SAP has solved the discipline issue with automatic account determination.Behind all logistical transactions are lots of parameters and configuration

settings that steer the process.


8/40

On-line, real time integration

MMMM Material xx

Total: 3200

Postings in material process,generate postings in FI and

CO.

8

FIFI

COCO

P&L Balance sheet

CapitalCosts

PCAPCA

Accounting


9/40

Postings in accounting

The accounting documents are generated mostly outside accountingmodule as by-products of postings in logistics.

9

SAP R/3 is a document based system. Everything you do createsa document in the system.


10/40

Document Relationship Browser

10

The relations between the documents can bee seen with DocumentRelationship Browser (transaction ALO1). From the document list

you can drill down to the documents.


11/40

Statistics from a manufacturing company

Manual postings Automatic postings

Sales invoices from SD 725.380

MM invoices 35.424

Material movements 2.775.875

G/L documents 3.650

Manual cust.invoices 2.346

Manual vendor inv. 9.128

11

Via interfaces

Wages, salaries

Here is an example of a company's document statistics in one year. As youcan see here the store workers produce the most of the accounting

documents.


12/40

Procurement: purchase order

I will order somesupplies to cafeteria.

We in accounting donthave do anything yet.

12

Lets now look at an example and follow a purchase to acost center.


13/40

Integrated purchase process

PurchaseRequisition

Purchaseorder

GoodsReceipt

Invoiceverifiction

Controlling

Material management

Add.Costs

CostsForecast/Commitment

Forecast/Commitment

EC/CO-modul

MM-modul

13

PaymentsReporting

Accounting

Financial accounting

FI-modul

The purchase process starts with a Purchase requisition. At this state a commitment item forthe money to be spend is created in CO. The integration point to FI is at goods receipt. Then a

posting to GR/IR-account is made. When the invoice is posted the second posting to GR/IRaccount takes place. From here the accounting department and accounts payables takes over.


14/40

The buyer makes a purchase order (MM)

Vendor number,purchaseorganization,purchase group,material number,quantity, plant,cafeterias costcenter

14

In this case the purchase is made to a cost center.The creator indicates this by putting a K in the assignment

field. When the goods arrive, this will create a consumptionposting. The price is defaulted from info record.


15/40

The system fills the rest

15

Cost center is the only field to be filled. All the other fields - the account,

business area, controlling area, company code - get values automaticallyon the basis of their assignments. The plant defines the company, costcenter defines profit center. The account is derived from MM Account

determination parameters.


16/40

Goods receipt (MM)

Have some stuff foryou.

16

The recipient mustonly give the

purchase ordernumber and accept

the quantity.


17/40

The goods receipt generates postings in

accounting

17


18/40

Goods receipt posting in accounting

Where does the system

get these accounts from?

18

The goods receipt is posted to a cost account and a GR/IR account,which the system finds from the MM account determination parameters

based on material and MM transactions type.


19/40

Invoice receipt and verification (MM)

.. The invoice clerk

enters the amountpayable, taxinformation and

additional costs likefreight.

19


20/40

Invoice posting in accounting

How can I be sure,

that these accounts are OK?

20

The invoice posting balances the GR/IR-account. The vendor postingsgenerates to postings, one on vendor account in accounts payable and

one on the reconciliation account in general ledger.


21/40

Vendor payment

21

The accounting department continues from here. Goods receipt is posted and

invoice verified. An open item in accounts payables waits for clearing.The accounts payable clerk runs the payments daily.


22/40

What determines the accuracy of the postings?

1) Assignments between organizational structures

2) parameter configurations

3) used transactions

22

MMMM--processesprocesses

4) master data (materials, vendors, cost centers, etc)

The automatic postings rely on correct system settings. The most important settings the skeleton of R/3 - are the assignments between organizational structures. It is

also important, that the user knows how what to do, and picks the right transaction.The quality of master data is crucial to the posting quality.


23/40

The role of organizational structures in integration

The logistics people dont think about accounts, they think about purchaseorganizations, vendors, plants, materials. The logistical structures areassigned to accounting structures in system settings (IMG).

Purch Org Vendor

23

.

CoArea Cost ElementMaterial

The purchase organization determines the company in whose accountingthe posting is made. The plant defines the company, to whom the materialbelongs. The accounts payable account is in the vendor master data.


24/40

Postings in controlling

The goodsreceipt posting

seems to be onthe cafeteriacost center.

24

This example created a posting in CO, because the purchase wasmade to a cost center. Then the account must also be a cost

element. The CO-postings can best be studied in the CO-reports.


25/40

Assignments of organizational structures

1000Hamburg

1100

Berlin 1000

IDES AGCO Europe

1200Dresden

1300Frankfurt

1400Stutt art

Plants

25

IDES UK2000Heathrow

2010London

Companycode (FI)

ControllingArea (CO)

Here is an example of the assignments of organizational structures in SAP IDES.Company codes are the accounting units and can have several plants. All european

companies are assigned to same controlling area. Controlling area is themanagement accounting unit. This means, that common management reports are

obtained for all European companies.


26/40

Transaction type

If I buy, I choosePurchasing. If I make

a receipt, I go toInventory management.

MMMM

26

All MM inventory postings use a transaction type, whichsteers the processing in the system. The transaction type isalso very important in account determination.


27/40

Example of MM account determination parameters

From here thesystem somehow

concludes how goodsreceipt is posted

in accounting.

Process:Goods receipt

27

The account is determined based on Plant (valuation are), materialsvaluation class, movement type and MM transaction type.


28/40

Automatic account determination configurations

img

28

The account for consumption postings can be tracked from IMG. The account modificationcode for Account assignment category is VBR. In transaction GBB Offsetting entry for

inventory posting account 410000 is defined. The valuation class is in material master.

At first sight this might seem difficult, but this is not rocket science and worth studying.


29/40

Who sets the parameters?

Implementing R/3 usually means that an army of SAPconsultants occupy your company. Hopefully they do a

29

leave. You should be the one, who understands thesystem settings and knows the processes.


30/40

Integration requires expert knowledge and new skills

Tax code of

the purchase?

A French taxcode and a US-

vendor?

30

An integrated system demands more knowledge and understanding the process,because also the errors are very integrated.


31/40

Integration requires knowledge of the process

Example: production wants to produce something; where it needs rawmaterial from another plant. Some genius orders the stuff with a sales

order. Consequences: the goods arrive and production is happy. Butthe accountant is not. The sales transaction posts the material to a costcenter. It creates a tax liability for own use and the posting goes towrong accounts.

31

The right way would have been to make a stock transfer. FI


32/40

What are the main causes of the integration problems?

Configuration errors: wrong assignments missing account determinations

Master data errors: wrong or missing master data

Human factors:

32

m sun erstan ngs lack of knowledge ignorance


33/40

Problems, pitfalls

MM:

Balances

master data

moving average prices

SD:

period accounting

rebates

33

InterfacesIntercompany transactions


34/40

Integration management error situations

Errors are usually found:

1. Accounting finds something unusual like posting to a wrongaccounts or unusual amounts. The drill down reveals wrongtransaction type, wrong order type etc.

34

2. The logistics users cannot get the posting through. They getan error message needs cost accounting assignment, error inaccount determination etc.

99% of cases these messages do not come from FICOparameters but erroneous procedures in logistics or missingmaster data.


35/40

Drill down helps only skilled accountants

The Fico users have to understand the basic functions of other modules.They must learn how to purchase, sell and use the MM and SD data. Theymust also have adequate user authorization to have access to thesemodules. They also have to know the processes and integration points.

35

Not working!

Why is

transaction type301 used?

Cultural differences in handling error

situations.

FICO

LOG


36/40

What finance people expect of the integration?

The data is registered at source

The accountings postings are created real-time from original transactions

Error are corrected at source

36


37/40

R/3 is an excellent tool for process management

37

But only if you understand its principles and agree to work according to them.


38/40

ERP Pros

The transparency of processes is increased (gooddrill down functions)

Same figures everywhere in the organization (rightor wrong) Corrections are no longer made in accounting but at

source

38

Common master data Real-time information


39/40

ERP - cons

The errors are also very integrated. Especially the

bad quality of master data creates problems.

Demands more from users, can even disturb thebusiness, particularly at the early stages of the

implementation.

39

The concepts can be strange and do notcorrespond those used in the organization.

The translation to national languages is oftenclumsy and erroneous.


40/40

Is it worth it?

If you survive, yes. Its a giant leap to an

other level as IT user.

40

integrated accounting in sap

Documents