Business blueprint financial accounting v1

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Submitted to
ZUARI CEMENT LIMITED
By
Wipro Ltd.
Version 1.0

SPICY Project Business Blueprint
Financial Accounting
Wipro Ltd. Page 2 of 78
© Wipro Limited, 2007 All Rights Reserved.
This document is proprietary to Wipro Infotech, a division of Wipro Limited.
You may not modify, copy, reproduce, republish, upload, post, transmit or distribute any material from this document, in
any form or by any means, nor may you modify or create derivative works based on the text of any file, or any part
thereof for public, private or commercial use, without prior written permission from Wipro Limited.
Gabriel Morin
Executive Sponsor Date
Peter Pavlov
ITCG Project Manager Date
Anish Kumar
Wipro Program Manager Date
Raman Kumar
ZCL Project Manager Date
Senthil Manickavasagar
Wipro Project Manager Date
Vinod Krishnan
Wipro Consultant Date
Babu Divagaran
ZCL FI-Core Team Leader Date
DOCUMENT APPROVALS

DOCUMENT INFORMATION
Project Name Document Name Document Location
SPICY FI Business Blueprint V1.0 SAP BACKUP
DOCUMENT HISTORY
Version Document
Name
Date Author Reviewed
BY
Change
Control
1.0 FI Business
Blueprint
26/04/2007 VINOD
KRISHNAN
Draft
Version

TABLE OF CONTENTS
1 EXECUTIVE SUMMARY .................................................................................................. 5
1.1 Background ........................................................................................ 5
1.2 Business Blueprint Overview.................................................................... 7
1.3 Financial Accounting.............................................................................. 8
1.4 Implementation Scope.......................................................................... 10
1.5 Module Integration .............................................................................. 11
2 ORGANISATION STRUCTURE ......................................................................................13
2.1 Organizational Structures...................................................................... 13
2.2 Client .............................................................................................. 13
2.3 Company ......................................................................................... 13
2.4 Credit Control area.............................................................................. 14
2.5 Company Code.................................................................................. 15
2.6 Chart of Accounts ............................................................................... 15
3 MASTER DATA...............................................................................................................17
3.1 General Ledger Master Data .................................................................. 17
3.2 Vendor Master ................................................................................... 18
3.3 Customer Master................................................................................ 20
3.4 Asset Master ..................................................................................... 22
4 BUSINESS PROCESSES ...............................................................................................24
4.1 Basic Setting ..................................................................................... 24
4.2 General Ledger Accounting ................................................................... 31
4.3 Accounts Payable ............................................................................... 37
4.4 Bank Accounting................................................................................ 48
4.5 Accounts Receivable ........................................................................... 53
4.6 Asset Accounting................................................................................ 59
4.7 Accounting of Taxes ............................................................................ 65
4.8 New GL accounting .................................................................................................686
5.0 MODULE INTEGRATION..............................................................................................686
5.1 Material Purchase accounting and accounts payable..................................... 68
5.2 Input Consumption & Production Accounting............................................... 72
5.3 Material At Subcontractor Vendor Site....................................................... 73
5.4 Material Valuation ............................................................................... 74
5.5 Sales Accounting and Accounts Receivable................................................ 75
5.6 New GL Accounting............................................................................. 75
6 STANDARD INFORMATION SYSTEM ...........................................................................76

1 EXECUTIVE SUMMARY
1.1 BACKGROUND
BACKGROUND:
Zuari Cement is now fully owned by the Italcementi group, the fifth largest cement producer in
the world and the biggest in the Mediterranean region. With net sales of five billion Euros in
2006 and a capacity of 70 million tones, Italcementi has a strong presence in over 19 countries.
Now in India, with its inherent strengths, Italcementi is all set to give the building industry,
cement that’s truly international.
Italcementi believes in customer satisfaction through continuous quality improvement. This
belief reflects in the group’s Quality Management System that complies with ISO 9001:2000
standards. This system covers all the processes, across all the group companies, to ensure
that the end product delivered to customers is nothing short of world class.
Commitment to customer satisfaction has seen the Italcementi group’s Zuari Cement group
from a modest 0.5 million tonne capacity in 1995 to 3.5 million tones today. Strengthening this
commitment further is Zuari’s various technology initiatives: setting up of a new 5500 tonnes per
day Clinker Line at Yerraguntla, a region renowned for its rich Narji limestone deposits, a
captive power plant at the company’s cement manufacturing facility at Sitapuram and a grinding
center in Chennai. Also in the pipeline are acquisitions and plans to execute Greenfield projects,
backed by state-of-art manufacturing techniques, stringent quality control and innovative
marketing.
The export market is Zuari’s another key focus area. In fact, in the year 2005-06, the
company’s innovative marketing strategies have earned it the reputation of being the leading
exporter of cement in South India. Recognizing Zuari’s noteworthy efforts in the exports front is
the fact that, Sri Vishnu Cement Limited has won the prestigious CAPEXIL certificate of merit for
the year 2005-06
As part of the Italcementi group, the company’s commitment to product quality is blended
perfectly with its commitment to the quality of life in the community. The reason why, after over
10 years of solid research and testing, the group’s Centro Tecnico di Gruppo (CTG) finalized the
TX formulation. Further, the efficacy of TX has been tested and certified by prestigious
independent research centers like CNR, ARPA and Ispra Research Centre.

Process technology advantages
Complete homogenization of limestone is achieved by stacking the limestone in stock-piles with
the use of stackers and reclaiming it through recliners
The optimum ratio of raw mix is attained by the use of X-ray analyzer and automatic with feeder
which are linked to the centralized computer control room
Reduced variability in kiln feed and complete homogenization of raw meal is attained through
Continuous Flow Silo. This ensures that every grain of cement is of consistent quality.
The totally computerized monitoring system enables quality clinkerisation. It dictates the
optimum retention time in the Precalciner and the kiln. Equipped with a six stage double stream
pre-heater cyclone system, the precalciner only adds to the quality.
The modern closed circuit grinding units have a high efficiency separator that produces finer
particles of cement. This yields cement matrix with a lower pore diameter. This in turn gives
concrete of higher density and lower permeability.
State-of-the-art wagon tippler efficiently handles good quality coal, which is further homogenized
with stacker and precalciner to be used in kiln and precalciner. The plant is also equipped with
a Vertical Coal Mill.
Zuari Cement uses Ventomatic Packers to ensure that the customer gets exactly 50 Kg’s per
bag. To minimize damages during transport, advanced loading techniques are used.
To minimize dust emission, Zuari Cement has installed the latest pollution control equipment
such as electrostatic precipitators in the kiln, raw mills, coal mills and cement mills.
Zuari products are used in various applications including:
Construction of Residential, Commercial, multi-storied buildings and complexes.
Mass concreting – dams, canals, spillways.
Construction and repair of pavements, roads, flyovers & runways.
Spun Pipes and poles manufacturing.
Pre-fabricated elements such as pipes, hollow block, pavers, sleepers, jails, manhole covers,
windows, door frames, asbestos, cement products etc.
Slip form construction,
Cold weather concreting.
Marketing & Distribution Network:
Zuari Cements has got regional marketing offices one each in Karnataka, Kerala, Tamilnadu
and Andhra Pradesh.
It has got numerous Sales depots in all the above states to strengthen its Sales function.

The R/3 Modules, which are being implemented, are
• FI Financial Accounting
• CO Controlling
• SD Sales and Distribution
• PP Production Planning
• MM Materials Management
• QM Quality Management
• PM Plant Maintenance
• Investment Management
1.2 BUSINESS BLUEPRINT OVERVIEW
This document summarizes the findings of the Wipro consulting team and ZCL SPICY Team
with respects to SAP processes to be implemented in Zuari cement Limited.
Following activities were carried out during different phases of the project.
• CSBP-Current State Business Process Mapping
• Understanding of Italcementi’s template
• FSBP-Future State Business Process Mapping
• GAP Analysis
• Stakeholders Workshop
The information was gathered through above activities carried out during different phases of
projects i.e. reviews of business processes, business procedures, template documentation and
relevant reports
The purpose of Business Blueprint document is to prepare to move forward with the
implementation of ZCL’s & CTG’s SAP R/3 system. At the conclusion of the blueprint, the Wipro
consultants will determine the SAP functionality required to run the ZCL & CTG business.
The Blueprint and its associated appendices present a summarized perspective of all functional
business processes that will be implemented. As such, the Blueprint document will serve - from
this point forward the dual role of both official project scope as well as system acceptance
criteria.
The body of this document describes the organizational structure, Master Data, and
R/3 functional process flows to be implemented at ZCL & CTG. Generally, requirements that
can be met using standard R/3 functionality through routine configuration tasks are not explicitly
documented. However, certain key requirements are explicitly identified and summarized to
highlight their importance to ZCL & CTG and to document the approach proposed to meet the
requirement.

One section of the document summarizes identified gaps between requirement and the
template. The project team has discussed this list with agreement on the approach going
forward. Acceptable approaches may require:
• Additional programming or technical effort
• Recognition and acceptance of procedural changes ("Workarounds") using standard
R/3 Additional resource commitment
• Simply the recognition and acceptance of a limitation.
The Blueprint reiterates the R/3 organizational structures that have been identified and will
serve as the basis for the initial configuration activities. No significant configuration and
customization choices have been identified that will prevent the future implementation of
additional capabilities within the R/3 environment.
The information gathered and documented in the Blueprint is sufficient for the team to go
forward into the Realization phase. However, it is critical that both the Wipro and ZCL team
agree on the scope of the project as presented in this document. Acceptance - by both teams -
is required to move the project into the next phase.
1.3 FINANCIAL ACCOUNTING
1.3.1 Overview of the Financial Accounting setup
Purpose
The Financial Accounting (FI) module components address the requirements of the financial
accounting department of an organization. It provides the following features:
• Management and representation of all accounting data: All business transactions are
recorded with an unbroken audit trail from the financial statements to the individual
documents.
• Open and integrated data flow: Data is available in real time within Financial Accounting.
Postings made in the sub ledgers always generate a corresponding posting in the
General Ledger.
• All accounting-relevant transactions made in Logistics (LO) are posted real-time to
Financial Accounting by means of automatic account determination. This data can also
be passed on to Controlling (CO). This ensures that logistical goods movements (such
as goods receipts and goods issues) are exactly reflected in the value-based updates in
accounting.
Financial Accounting:

The Financial Accounting (FI) application component fulfils all the external reporting
requirements that must be met by the organization whether national or international. The
SAP FI application provides the following features, which shall be used in Zuari Cements.
General Ledger:
The central task of G/L accounting is to provide a comprehensive picture for external
accounting and accounts. Recording all business transactions (primary postings as well
as settlements from internal accounting) in a software system that is fully integrated with
all the other operational areas of Zuari ensures that the accounting data is always
complete and accurate.
Accounts Payable:
The Accounts Payable application component records and manages accounting data for all
vendors with respect to Zuari as a whole. It is also an integral part of the purchasing system:
Deliveries and invoices are managed according to vendors. The system automatically triggers
postings in response to the operative transactions in MM.
Accounts Receivable:
The Accounts Receivable application component records and manages accounting data of all
customers with respect to Zuari. It is also an integral part of sales management. All postings in
Accounts Receivable are also recorded directly in the General Ledger. Different G/L accounts
are updated depending on the transactions involved (for example, receivables, down payments,
and bills of exchange).
Bank Accounting:
This component is used to handle accounting transactions that Zuari processes with its banks. It
includes the management of bank master data, cash balance management and the creation and
processing of incoming and outgoing payments.
Asset Accounting:
The Asset Accounting component is used for managing and supervising fixed assets with the
SAP R/3 System. In SAP R/3 Financial Accounting, it serves as a subsidiary ledger to the FI
General Ledger, providing detailed information on transactions involving fixed assets with
respect to Zuari.
Country Version India
Most of the country-specific functions for India relate to Financials and Logistics. The main
areas are as follows:
• Excise duty and the central value-added tax system (CENVAT) & Service Tax.
• Withholding tax (also known as tax deducted at source)
• Maintenance of statutory excise registers
The above features are required in Zuari with respect to Excise duty, Withholding tax (TDS in
India). Maintaining the Excise registers like RG-1, RG -23A, RG-23C & PLA .

Withholding tax (TDS in India):
Country Version India uses the standard functions for calculating and collecting withholding
taxes. However, Withholding Tax come with additional functions for tax remittance, journal
vouchers, creating withholding tax certificates, and preparing annual returns which will be useful
to Zuari.
Sales Tax:
There are two types of sales tax. Interstate sales (for example, between Hyderabad and Delhi)
are subject to central sales tax (CST). The tax rate is the same throughout the country.
Intrastate sales, on the other hand, are subject to local Value added tax (VAT), which differs
from state to state. The SAP System handles these using tax jurisdiction codes. Zuari can make
use of this component to define different CST / VAT required with respect to the states Zuari is
dealing with. For VAT input credit the calculation of ratio is going to be manual process and it
will be a formula based. Based on the calculated ratio the input credit has to be availed.
Excise:
In MM, the R/3 System comes with two ways of determining excise duties (and sales taxes) on
input materials: formula-based excise determination and condition-based excise determination.
The system calculates excise duties using a tax procedure.
SD also supports formula-based and condition-based excise determination, but in SD, the
system calculates the taxes using a pricing procedure, not the tax procedure
Depending on the requirement Zuari can make use of both types of excise determination for its
purposes either in MM or SD as the case may be.
Excisable transactions are posted using the Materials Management (MM) and Sales and
Distribution (SD) components. The system calculates the excise duty in these components and
creates the appropriate line items in Financial Accounting (FI).
1.4 Implementation Scope
1.4.1 Geographical Coverage
The following units are within the scope of SAP Implementation at ZCL & CTG:
Plant Dedicated Unit
ZCL DIVISION
Yeraguntla Kadapa
Sitapuram Nalgonda
Corporate Office Bangalore
CTG - Plant

Plant Dedicated Unit
Corporate office-Bangalore
Regional Offices:
• Bangalore
• Chennai
• Hyderabad
• Cochin
1.4.2 Functional Scope
In Zuari Cements following are the implementation scope in SAP FI Module
•
• General Ledger
• Accounts Receivable
• Accounts Payable
• Banks
Cash Journal
• Fixed Assets
1.5 MODULE INTEGRATION
In addition to financial application Module, following module integration are required.
Integration in SAP is the pivotal role and involves lot of updating with other modules. The basic
concept of SAP integration is document once entered should not be entered twice anywhere in
all the applications. As FI module is the important module and involves monetary issues
whether external or internal, all the documents in other modules pertaining to accounting will be
automatically updated in FI module. The following is a partial list of some of the integrations: -
Materials Management (MM):
All accounting-relevant transactions with respect to the following will be made automatically in
FI.
ü Goods receipt against the Purchase order.
ü Goods issue against production order / Process order.
ü Finished Goods receipt.
ü Valuation of material from time to time.
ü Invoice verification

Sales and distribution:
FI.
ü Billing document
ü Material issue
Production Planning:
FI.
ü Material issue against the Production / Process order
Plant Maintenance:
FI.
ü Maintenance order
ü Cost settlement with respect to maintenance order.
Investment Management:
The Budget control for any procurement of Asset is through the WBS Elements.
Integration within Financial Accounting (with respect to FI and CO):
Every posting that is made in the sub ledgers generates a corresponding posting to the
assigned G/L accounts. This ensures that the sub ledgers are always reconciled with the
general ledger. Controlling (CO) and Financial Accounting (FI) are independent components in
the SAP system. The data flow between the two components takes place on a regular basis.
Therefore, all the data relevant to cost flows automatically to Controlling from Financial
Accounting.

2 ORGANISATION STRUCTURE
2.1 Organizational Structures
In the R/3 System the user can use several structures to represent the organizational structure
of the entity from the point of view of financial Accounting, Controlling, materials management,
and sales and distribution. The organizational structures form a framework in which all business
transactions can be processed. An organizational structure consists of several organizational
levels, which are used by different functional groups within an organization. The organizational
levels relevant to Financial Accounting (FI) are given below.
2.2 Client
The client is the highest hierarchical level in the SAP system. Specifications that you have to
make or data that you enter at this level are valid for all company codes and for all other
organizational structures, such as sales organization and purchase organization. Consequently,
these specifications are to be entered only once. Central maintenance ensures standardized
data. For example, Customer addresses are stored at client level so that all company codes can
access this central data. Different functional areas also use this data like the customer’s
address used for sending out an order confirmation as well as for printing a dunning notice
(reminder letter).
Each client is a self-contained unit with separate master records and a complete set of tables.
A client key is used in all master records, which ensures that they are stored per client. Each
user must specify a client key when he or she logs on to the system. By doing this, the user
specifies the client in which he or she wishes to work. All entries are stored per client. Data
processing and analysis are carried out per client. For example, it is not possible to produce a
report on customer Accounts from different clients in one dunning notice run. Access
authorization is assigned per client. A user master record must be created for each user in the
client where he or she wishes to work.
2.3 Company
A Company represents a group of entities (one or more Company codes) in SAP.
This entity is used for consolidation of accounts of multiple entities (Company Codes).
All company codes within a company must use the same transaction Chart of accounts and the
same Fiscal Year breakdown. However, the company code currencies can be different.

2.4 Credit Control area
Credit control area is an organizational unit that represents an area responsible for granting and monitoring credit.
This organizational unit is either a single company code or, if credit control is performed across several company
codes, multiple company codes. Credit information can be made available per customer within a credit control area.
The Credit Control area for ZCL is 1317- Zuari Credit Control Area.
The Credit Control area for CTG is 1403- CTG Credit Control Area.

2.5 Company Code
A Company Code represents an independent legal accounting entity in SAP.
Balance Sheets and Profit/Loss statements required by law will be created at the Company
Code level. In other words, the organizational unit for which a complete self-contained set of
accounts can be drawn up for external reporting purpose. The process of external reporting
involves recording all relevant transactions and generating all supporting documents required
for financial statements.
The Company Codes of SPICY project,
• 1317 – ZUARI CEMENTS (ZCL)
• 1403 – CTG India
ZCL & CTG will use Indian Rupee (INR) as the Company Code Currency.
2.6 Chart of Accounts
A Chart of Accounts is a classification consisting of a group of General Ledger (G/L) accounts
under a Client.
• It provides a framework for the recording of values, in order to ensure an orderly
rendering of accounting data.
•
• The chart of accounts contains the definitions of all G/L accounts in an ordered form.
•
• The definitions consist mainly of the account number, account name, and the type of
G/L account, that is, whether the account is a P&L type account or a balance sheet
type account.
•
• One or more Chart of Accounts can be created for the same Client
•
A Chart of Accounts can be used by one or more Company Codes.
• Chart of Accounts “1000” will be used by ZCL & CTG as Operational Chart of
Accounts.
• Chart of Accounts “GNCA” will be used by ZCL & CTG as Group Chart of
Accounts.
• Chart of Accounts “INCA” will be used by ZCL & CTG as Alternative Chart of
Accounts.

3 MASTER DATA
3.1 General Ledger Master Data
Transactions will be processed in the FI module using G/L accounts grouped under Chart of
Accounts.
§ Zuari Cements will use “1000” as Operational Chart of Accounts, to post the daily
transactions.
§ Zuari Cements will use “GNCA” as Group Chart of Accounts, to do Group consolidation.
§ Zuari Cements will use “INCA” as Alternative Chart of Accounts, to meet the country
specific requirements.
The following points have to be considered with respect to G/L accounts:
• Master records for each Operational and Group G/L account will be created and
maintained by the Template Owners. The Alternative Gl account has to be created &
maintained locally.
•
• The master record contains information and controlling parameters which control the
entry and processing of business transactions in that G/L account.
•
• G/L accounts will also be used for posting transactions from other modules of SAP
•
• There are two segments in the General Ledger Master record:
•
• Chart of Accounts Segment
• Company Code segment
•
• Chart of Accounts Segment :
• In this segment, specifications that apply to the entire G/L account master record
are captured. These include:
• The G/L account number and G/L account name
•
• Whether the account is a balance sheet account or an income statement account
•
• Data that controls the creation of a master record in a company code, such as the
account group.

The information, which is specific to a particular Company, is maintained in the Company code
segment of the General Ledger Master record. This data controls how one enters and
processes business transaction data in the appropriate account as well as how the account is
managed within a company code. The following are some of the specifications which will be
made for each G/L account:
• Alternative Account Number
• Currency - account currency
• Reconciliation Account for Account Type - to specify the control accounts for the sub
ledgers
•
• Open Item Management - will be maintained for accounts that required open item
management. – Ex. Bank sub-accounts, GR/IR Clearing account, etc., are maintained
in Open Item Management.
•
• Line Item Display - will be retained for accounts for which line items are to be stored
separately. Ex: Bank main accounts, all expense accounts, all balance sheet
accounts, excepting accounts which are of the nature of reconciliation accounts.
•
• The Operational COA is Still to be Mapped with Legacy.
•
• The Group COA is available in the link below,
•
Z:SPICYFICOA
Group Chart of Accounts.xls
• The Alternative COA is available in the line below,
3.2 Vendor Master
• The vendor master contains the data of all vendors with which a company conducts
business. The Vendor master record contains the information necessary for any
contact with a certain vendor, in particular for conducting business transactions.
•
• The Vendor Master record is created and maintained by both the FI and MM modules.
The Information maintained in a record consists of General data, Company code data
and Purchase organization data.
•
The Material Suppliers, Freight service renders and Employees are considered as Vendors.
Even the statutory organizations like Customs Commissioner are going to be created as
vendors. The Plants which are all created for Stock movement will also be created as vendors.

The Account groups,
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
The Following are the Vendor account groups we are going to use for project SPICY,
ZNGT No Group Suppliers - Tax
ZNGR No Group Suppliers - No Tax
ZINT International Suppliers
ZEMP Employees
ZADD Address
ZGRP Group Suppliers
Vendor Reconciliation Account
Vendor Reconciliation account is the G/L account for a group of vendors in FI-AP module. The
number of Vendor Reconciliation accounts will depend on the grouping of the vendor in FI.
When you post items to a subsidiary ledger, the system automatically posts the same data to
the general ledger. These reconciliation accounts ensure that the difference balance of G/L
accounts and subsidiary ledger is always zero. This means that you can draw up balance
sheets at any time without having to transfer totals from the sub ledgers to the general ledger
You have to specify a reconciliation account in every vendor master record
The Following are the reconciliation accounts used in SPICY implementation,
Vendor Recon Accounts Description
Group
GL
Operational
GL
Alternative
Gl
31121 3111500000 4301 SUNDRY CREDITORS (SUPPLIERS & CONTRACTORS)
31121 3111500001 4302 SUNDRY CREDITORS - CAPITAL
31121 3111500002 4303 SUNDRY CREDITORS - PROJECT
31121 3111500003 4304 SUNDRY CREDITORS - ADVT. & PUBLICITY
35211 3521300000 4581 EMPLOYEE BALANCES

31121 3111506001 4642 SERVICE COMMISSION PAYABLE A/C
With Holding Tax Codes (TDS).
TDS tax codes will be assigned to the individual vendors, wherever applicable, for processing
invoices/payment and relevant tax deductions.
Multiple Tax details can also be assigned to a Vendor. Relevant tax code will be selected at the
time of posting of the individual line item.
The TDS tax codes are given in detail in the Business process.
Vendor Payment terms
Raw materials purchases 7 to 15 days.
Transportation for raw materials within 7 days.
Purchase of spares and consumables normally within 30 days.
Purchases of coal, diesel, lubricants, from Government Parties advance Payment.
LC’s for material purchases will be 100% advance.
Advance against bank guarantees.
C & F Expenditure -15 days
Payment terms will be defined in SAP and assigned to individual Vendors.
3.3 Customer Master
Creation and maintenance of Customer Master Records is documented in SD blue print.
All business transactions are posted to and managed by means of accounts. You have to create
a master record for each account that you need. The master record contains data that controls
how business transactions are entered in the account and how posting data is processed. In the
master record, you can also store all the data that you need for conducting business with the
customer.
Customer master records are used by both the financial accounting department (accounts
receivable processing) and the sale department (SD) in the Company.
Customer Account Groups
Code Discription
Numbering
rule
From To
ZGEC Group customers EC Internal
ZGNE Group customers No EC Internal

ZHIE No Group customers EC Internal
ZNEC No Group customers EC Internal
ZNEO No Group cust. EC-tax optional Internal
ZNNE No Group customers No EC Internal
ZPLA Customer per plant External
ZPAY Payer role only Internal
ZSHI Ship-to role only Internal
ZBIL Bill-to role only Internal
ZCPD One-time customer Internal
ZPRO Prospective customer Internal
ZADD Address customer Internal
ZN01 ZCL-Account Group Internal
Customer Reconciliation Account
Customer Reconciliation account is the G/L account for a group of customers in FI-AR module.
The number of Customer Reconciliation accounts will depend on the grouping of the customers
in FI.
The following are examples of reconciliation accounts to be used by Spicy implementation.
Customer Recon Account Description
Group
GL
Operational
GL
Alternative
GL
12221 1222100000 5401 SUNDRY DEBTORS - DOMESTIC
12221 1222100001 5402-N SUNDRY DEBTORS - EXPORTS
12211 1221101000 5403-N SUNDRY DEBTORS - AFFILIATED
31121 3521606001 4610 INCENTIVES PAYABLE IN KIND
31121 3521604000 4602
SECURITY DEPOSIT FROM STOCKISTS /
CONSINGNMENT AGE
35221 3521701000 4601 ADVANCE FROM CUSTOMERS
31121 3521604003 4607 RETENTION MONEY-DEBTORS
Customer Payment Terms
The Customer payment terms are defined based on the Quantity sale. The Detail is available in
business process.

3.4 Asset Master
In order to make it easier for the user to create, maintain and evaluate master data, varied
individual information is structured according to its area of use and the relevant functions in the
system. The asset master record consists of two main parts:
General Master Data
This part of the master record contains concrete information about the fixed asset. The following
field groups exist:
General information (description, quantity, etc.)
Posting information (for example, capitalization date)
Time-dependent assignments (for example, cost center)
Information on the origins of the asset
Physical inventory data
Insurance data
Data for Calculating Asset Values
You can specify depreciation terms in the asset master record for each depreciation area in the
chart of depreciation. In order to make these specifications, the master record contains an
overview of the depreciation areas. In addition, there is a detailed display available for each
depreciation area. If the depreciation areas that are not needed for a specific asset, it is possible
to deactivate these depreciation areas at the asset level.
Fixed assets can be structured or classified in the Asset Accounting component using asset
classes. The items in the balance sheet are generally used to define these asset classes. Asset
classes are defined for all clients and contain key control parameters, such as number
assignment, account determination, and screen layout. The following asset classes are defined
in the system:
The following are the asset classes identified for SPICY Implementation,
Asset Classes
Land P&M Instrumentation
Land lease hold P&M Battery system
Land Registration charges P&M Power House (DG)
Buildings- Colony Plant & Machinery Main
Buildings –Compound wall P&M Mining equipment
Buildings- Factory Vehicles- cars & Motor cycles
Buildings-Non factory & Roads Vehicles- Tractor & Tanker

Railway Siding Furniture & Fittings
P&M E.D.P. (Computers ) Office equipment
P&M Electrical Machinery Asset under construction

4 BUSINESS PROCESSES
4.1 Basic Setting
The purpose of this chapter is to document the global configuration settings in Financial
Accounting for the Spicy implementation. These settings control the transaction entry and the
dependant controls in SAP across all the modules.
Parameter Settings
• Posting of transactions in SAP require the following settings
• Currency
• Fiscal Year in which the transaction is to be posted
• Fiscal year variant for determining the posting periods
• Document Types
• Document Numbering
• Document Posting Keys (debit/credit)
• Posting Period Variant to determine the open and close periods
• Sales and Purchase Tax, Excise duty
• Tax Deducted at Source (Extended Withholding Tax)
4.1.1 Currency
For each company code a currency must be specified. Accounts are managed in the company
code currency. All other currencies are indicated as foreign. The system converts the amounts
posted in a foreign currency into this currency. The currency defined in the company code is
known as the local currency within SAP.
• SPICY implementation will use Indian Rupee (INR) as their Company Code’s
Currency.
4.1.2 Fiscal Year and Fiscal Year Variant
To separate business transactions into different periods, a fiscal year with posting periods has
to be defined.
• The fiscal year is defined as a variant which is assigned to the company code.
Standard fiscal year variants are already defined in the system and can be used as
templates. The fiscal year variant contains the definition of posting periods and
special periods.

• Special periods are used for postings which are not assigned to time periods, but to
the process of year-end closing.
• A fiscal year will consist of maximum of 12 posting periods and maximum 4 special
periods.
1317-Zuari Cements, 1403 - CTG India has the fiscal year from January to December; therefore
SAP standard variant – K4 will be used.
For Tax Accounting and for marinating books of accounts as per Indian Accounting Practice, we
need to use parallel ledger accounting using the New GL Concept.
4.1.3 Document Types
The document type controls the document header and is used to differentiate the business
transactions to be posted, e.g. customer invoice, vendor payments, etc.
• Document types are required in SAP to create and post financial documents (e.g.
Bank Payment Voucher, Receipt Voucher etc.).
•
• Document types are defined at the client level and are therefore valid for all company
codes.
• The standard system is delivered with document types which can be used, changed,
or copied.
Convergence system has defined the Document Types, which will be adopted for Spicy
implementation.
The document number range defines the allowable range in which a document number must be
positioned and cannot overlap.
• The document number range has to be defined for the year in which it is used.
• The system stores the last used document number from the number range in the field
“current number” and takes the subsequent number for the next document
Standard SAP allows a single Document Number range for each document type only at the
company code level.
Document
Type
Description
Document
Type
Description
1D Take Over Dowries DZ Customer payment
2S AM Take Over EA
Expense Travel
Agenc

3S G/L Take Over EE Employee Expenses
4D Take Over Unpaid AR EP Employee Payroll
5D T.Over BoE not remit ET Expenses of travel
5K BoE AP Take Over GL Manuel GL clearing
5S Bank Take Over GM Interface Accruals
6D T.Over BoE remitted GT Interface Transport
6K AP Take Over K1 AP Transfer Batch
7D AR Take Over K2 AP BoE Batch
7K T.Over non CGS AP K3 AP BoE Bk Domiciliat
88 Consolidat. 8 series K4 AP Direct
8D Take Over other AR K5 AP Export Payments
8K Other CGS AP K6 AP Down Payments
9D Take Over EUR Rd.Dif KA Vendor document
9Y Merger Take Over KB
Investment
Document
AA Asset posting KG Vendor credit memo
AB Accounting document KL Vendor clearing
AC Fixed assets exit KM Int. External Purcha
AD Fixed assets other KN Net vendors
AF Depreciat. Postings KP Account maintenance
AI Assets under constr. KR Vendor invoice
AN Net asset posting KY Vendor invoice
AR Obsolete assets KZ Vendor payment
AT Fixed assets transfe MI Mineral request (FR)
BM Interface Treasury ML ML settlement
BR Cash Pooling PR Price change
BS G/L Treasury RA Sub.cred.memo stlmt
CM
Maintenance
Assessm. RE Invoice - gross
CO Assessment RN Invoice - net
CP Process Assessment RV Billing doc. SAP SD
D0 AR BoE Request SA
G/L account
document
D1 AR Transfer Batch SB G/L account posting
D2 AR BoE Batch SK Cash document
D3
AR BoE Bk
Remittance SU
Adjustment
document
D4 AR Direct Debit TX Taxes
D5 AR Export Payments WA Goods issue
D6 AR Mandat WE Goods receipt
D7 AR Credit Card WI Inventory document
D8 AR Checks WK Stocks Others
D9 AR collec./Portfolio WL Goods issue/delivery
DA Customer document WM Interface Stocks
DB Dowries WN Net goods receipt

DG Customer credit memo YA Merger 674
DL Customer clearing YB Merger 674
DM Interf.Legacy Inv.Mt YE Merger 674
DN Interf.Legacy Inv.Da YY Gral Merge Postings
DO Unpaid items Tech. Z1 AR Checks
DR Customer invoice Z2 Delivered Not Invoic
DS Interf.Legacy Inv.Mt Z3 Customer document
DT Customer payment ZB
DU Unpaid items Fin. ZP Payment posting
DV Customer credit memo ZR Bank statement
ZS Payment by check
ZV Payment clearing
4.1.4 Posting Key
Posting Key controls Debit or Credit account indicator for each line item.
• The posting key also describes the type of transaction that is entered in a line item
and allowable account type, which will be entered for the respective line item.
•
• SAP provides certain predefined posting keys. These predefined posting keys will be
used wherever applicable. For every posting key, properties control the entry of the
line item.
•
• For each Posting Key, a reversal-posting key may be defined. The reversal-posting
key is used to reverse a document posted in financial accounting.
Some of the Posting Keys are:
Posting
keys
Transaction Debit/Cr
edit
Account
Types
Reversal
01 Invoice Dr D 12
02 Reverse credit memo Dr D 11
09 Special G/L debit Dr D 19
11 Credit memo Cr D 02
15 Incoming payment Cr D 05
19 Special G/L credit Cr D 09
21 Credit memos Dr K 32
25 Outgoing payment Dr K 35
29 Special G/L debit Dr K 39
31 Invoice Cr K 22

Posting
keys
Transaction Debit/Cr
edit
Account
Types
Reversal
32 Reverse credit memo Cr K 21
35 Incoming payment Cr K 25
39 Special G/L credit Cr K 29
40 Debit entry Dr S 50
50 Credit entry Cr S 40
70 Debit asset Dr A 75
75 Credit asset Cr A 70
86 GR/IR debit Dr S 96
89 Stock inward movement Dr M 99
92 Inventory difference Cr S 82
93 Price difference Cr S 83
94 Consumption Cr S 84
Standard Account Types in SAP are as follows:
• S-General Ledger
• A-Assets
• K-Vendors
• D- Customers
• M- Materials
We will be using the convergence system prescribed Posting Keys & Account types.
4.1.5 Account Groups
Since a chart of accounts contains many different types of accounts, they can be bundled into
different “account groups”. Account group is a logical grouping of accounts, which have got
similar properties and the same tasks within the General Ledger
•
• The Account code of an account depends upon the number range that is assigned to
that Account group.
• The account group has to be entered in the chart of accounts-segment and controls
the appearance of the company code segment of a G/L account.
CoA Code Discription From To

1000 8GL General Ledger 8 Series 8000000000 9999999999
1000 8P&L P&L 8 Series accounts 8000000000 9999999999
1000 AM Fixed Assets Accounts 9999999999
1000 CASH Liquid funds accounts 9999999999
1000 FIN. Bank Accounts 9999999999
1000 GL General G/L accounts 9999999999
1000 MAT
Materials management
accounts 9999999999
1000 PL P&L Statement Accounts 9999999999
1000 RECN Recon.account (AR / AP) 9999999999
We will be using the Account groups prescribed by the Convergence system.
4.1.6 Field Status Group
The field status group is a logical grouping of various field status combinations. The field status
influences the appearance and creation of an account's master data.
S.No. Field Status Function
1 Suppressed No Display
2 Display
Can be viewed, but not changed (even in
change mode)
3 Required Entry is mandatory
4 Optional Entry can be made if required
The Following are the Field Status Groups Prescribed by convergence system.
Group Discription
Z001 General Accounts (direct postings)
Z002 Gral.Long term acct. w/cons.T.Type Req.
Z003 Asset Transit Account
Z004 Fixed Asset Accts (Reconciliation accts)
Z005 Material Accounts
Z006 Reconciliation Accts. (AR/AP)
Z007 GR/NI Clearing account.

Z008 Accrual Expense Accts. CC Req & IO opt.
Z009 Accrual Expense Accts. IO required
Z010 Accrual Revenue Accts. Profit Ctr. Opt.
Z011 General Cash Accts. (Value date opt.)
Z012 Expense Accounts (CO Object Optional).
Z013 Expense Accounts (I.Order Optional).
Z014 Accts. Fixed Assets Retirement
Z015 Revenue Accts. (Profit Centre)
Z016 Asset Clearing Account (WBS Mand.)
Z017 VAT Accounts
Z021 Revenue Accts. (Profit Centre)
Z023 Asset Clearing Account (WBS Mand.)
Subject to Profit center accounting, we might create the New Field Status groups. The Fields
status of the Segment and Partner segment will be determined based on the decision on
implementing New GL accounting.
For 1317-ZCL , Field status variant – 1000 will be assigned to Company code “1317” &
1403 -CTG.
•
4.1.7 Extended Withholding Tax ( TDS )
As SAP standard system allow defining two different tax types in withholding tax namely one for
invoice posting and one for payment posting, the customer requirement can be achieved with
SAP standard functionality. The tax collected will be deposited in a separate GL accounts and
can be made automatic assignment, so at the time of posting automatically tax account will be
updated. All the withholding settings can be done by using Country India version so that the
requisite forms will be automatically updated and available for printing.
In the spicy implementation the following Section of Income tax will be covered in Extended
Withholding Tax of SAP:
Section Description
194A Interest paid, other than Interest on securities

194C Payment to contractors
194I Rent
194J Prof/Technical services
195 Payment to foreign nationals
194H Brokerage & commission
192 Salary to a resident / non-resident
206C Tax Collected at Source
4.2 General Ledger Accounting
General ledger is a comprehensive financial management solution that dramatically enhances
financials controls, data collection, information access and financial reporting through the
organization. General ledger is the central repository of all the accounting information of the
organization. Most of the transactions will be handled in respective sub-ledgers and
subsequently consolidated and posted to General Ledger. However the module shall provide
specific functions of passing journal entries (Manual, Provisional, Recurring and Reversal
Journals) and posting them, which will be purely rectification and provisional in nature.

4.2.1 Purpose
The central task of G/L accounting is to provide a comprehensive picture for external accounting
and accounts. Recording all business transactions (primary postings as well as settlements from
internal accounting) in a software system that is fully integrated with all the other operational
areas of a company ensures that the accounting data is always complete and accurate.
4.2.2 Features to ZCL & CTG (Assuming the similar accounting of ZCL)
The SAP FI General Ledger has the following features:
• Automatic and simultaneous posting of all sub-ledger items in the appropriate
general ledger accounts (reconciliation accounts)
• Simultaneous updating of general ledger and cost accounting areas
• Real-time evaluation of and reporting on current accounting data, in the form of
account displays, financial statements with different financial statement versions and
additional analyses.
Essentially, the general ledger serves as a complete record of all business transactions of.
Actual individual transactions can be checked at any time in real-time processing by displaying
the original documents, line items, and transaction figures at various levels such as:
• Account information

• Journals
• Totals/transaction figures
• Balance sheet/profit and loss evaluations
• Parked documents
An incomplete document may be parked and then posted at a later date; this may be done by
the same or a different user.
Generally the documents are parked when the user is waiting for an approval from his superior.
Subsequently the user can book the same as a G/L document.
One advantage of parking is that you can evaluate the data in documents online for reporting
purposes from the moment they are parked, rather than having to wait until they have been
completed and posted.
• A list of parked documents can be generated in the SAP for the benefit of the
supervisor/manager. The document can then be checked and corrected by the user.
This document can then be posted in the General ledger. Parked documents can be
modified or deleted before post.
•
The concept of sub ledger in the legacy accounting as explained in the CSBP document number
“ZCL_CSBP_01_01” , is no longer exist in the convergence system as well as in the standard
SAP.
The Information of the sub-ledger cannot be captured from the expenditure GL account. This
analysis cannot be done on a list basis, but to identify in a particular transaction which is the
sub-ledger account got affected. It can be tracked through the document overview option.
4.2.2.1 GR/NI Clearing account: (Prescribed by Convergence System)
A.) Goods receipts / Not-invoice account treatment (GR/NI)
Since the GR/NI account needs to be split and differentiated by purchases of stock,
services and investments the following strategy will be used in order to fulfill this
requirement:
§ Valuation class will be used in order to allocate an specific GR/NI account for
purchases of stock.
§ The rest of the purchases (services, investments, etc) will use a different GR/NI
account by not fulfilling the field with any valuation class.
§ In order to split the investment from the other transactions, FI substitutions will be
used. As a first approach, the idea is to recognise the investment transactions by
the assignment of the WBS elements within the goods receipt. Further
investigations, within the realization phase, will be done in order to finish
describing this process.

This account will also be set up with the purchase order sort key for matching purposes
and within its master records, it will be set up as automatic posting only.
B.) GR/NI clearing accounts: Investment
In order to split the investment from the other transactions, FI substitutions will be used. If
the purchase order is created with the investment flag (standard field), the account posted
is a specific investment GRNI account.
When a GR document is posted for investment PO, the normal GRNI clearing account is replaced
by special GRNI account for Investments
4.2.2.2 Recurring Entries
For postings that recur on a regular basis, such as payments for rent , legal fees, and property
taxes, the recurring entry program can be used to have the necessary documents generated
automatically.
• The recurring business transactions must be stored in the system as recurring entry
original documents.
• Each recurring entry original document contains the date of the first and last posting,
the frequency at which posting should be made, and the date of the next planned
posting.
• The recurring entry program must be started at regular intervals within a specified
period. The program selects all recurring entry original documents in which the date
of the next posting falls within the specified period, and then generates a batch input
session.
• When the session is processed, an FI document that corresponds to the original
document is posted, and the date of the next posting is changed accordingly in the
recurring entry original document.
• ZCL & CTG will use this option for booking expenses for Monthly rentals.
• We assume that CTG also will use the same.
4.2.2.3 Interest Calculation for Bank Cash Credit accounts.
• As per the Convergence system there is no balance interest calculation is available.
Refer “CP-Finance-06- General Accounting” - 3.1.1.6. As of now there is no
customizing values for the same.
• But using the standard SAP features we can do the balance interest calculation.

4.2.2.4 Document Reversals
It is possible for a user to make an input error. As a result, the document created will contain
incorrect information. In order to provide an audit of the correction, the user must first reverse
the document in error, and then capture the document correctly.
• The system provides a function to reverse G/L, A/R and A/P documents both
individually or in mass.
• When reversing a document, a reversal reason code must be entered to explain the
reversal. The reason code also controls if the reversal date is allowed to be different
from the original posting date.
• Documents with cleared items cannot be reversed. The document must first be reset.
• Using FB08 T.code, any open document can be reversed. Except the cross module
documents like Sale Invoice, Vendor Invoice posted with reference to Purchase
order.
• Using the FBRA T.code, we can reset and reverse the documents got cleared.
• Using the VF11 T.code, we can reverse the Sale Invoice.
• Using MR8M T.code, we can reverse the Vendor Invoice, posted using the transaction
MIR4, MIR6, MIRO.
• However, it needs to be noted that reversal of any document will effect the allocation
cycles in case if these processes are completed. It will be required to re-run all these
cycles once again after reversing the document.
4.2.2.5 Taxes
• The SPICY implementation is going to use the standard Tax procedure - TAXINN.
Which is condition based tax accounting.
• The Tax codes will be created based on the region specific Tax liabilities.
4.2.2.6 Closing Procedures
The closing operations are to be performed on a monthly or quarterly or yearly basis which will
be discussed in detail in the Operational Manual. Some of the Closing Procedures are explained
below:
• Foreign Currency Valuation for Open Items
• Accruals and Reversal of provisions
• Closing & opening of posting periods
• Balance carried forward

4.2.2.6.1 Foreign Currency Valuation for Open Items
This process performs the revaluation of all foreign currency open items, primarily in customer
and vendor accounts, using the month end rate.
This process (program SAPF100) carries out foreign currency valuation for accounts managed
on an open item basis. Valuation takes place according to the single valuation principle. This
means that individual open item on the key date only are taken into consideration for the
valuation.
SAP selects open items for customers, vendors, and G/L accounts posted in foreign currencies.
Based on the exchange rate on the key date, exchange rate difference is calculated
automatically and valuation document is posted.
The balance of the foreign currency balance sheet accounts, i.e., the balance of the G/L
account managed in a foreign currency forms the basis of the valuation. The exchange rate
profit or loss from the valuation is posted to a separate expense or revenue account for
exchange rate differences.
4.2.2.6.2 Closing Of Open Periods (Monthly And Yearly)
ZCL & CTG can open and close these posting periods using the posting period variant 1317
and 1403 (CTG).
Usually, only the current posting period is open for posting, all other posting periods are closed.
At the end of this posting period, the period is closed, and the next posting period is opened.
Special periods can be open for closing postings during the period-end closing.
4.2.2.6.3 Closing the Fiscal year for asset accounting
The program blocks the current fiscal year to further posting to assets.
4.2.2.6.4 Balance Carried Forward
Account balances are carried forwarded from one fiscal year to the next fiscal year by using the
standard SAP carry forward program after the accounts are finalized.
The balance sheet accounts are carried forward onto themselves. The income statement
accounts are carried forward into retained earnings accounts.
• The following are the transaction code for carry forward balances, sub module wise.
Sub Module
Carry
Forward
Transaction
General Ledger F.16

Accounts Payable F.07
Accounts
Receivable F.07
Asset Accounting AJRW
4.2.2.7 Consolidation
This Section will be updated later. Based on the comments from the domain
owners.
4.3 Accounts Payable
Accounts payable module streamlines the procure-to-pay process while providing financial
controls and information. It supports booking of invoices, matching of invoices against purchase
orders and approval of invoices. It facilitates recording of debit memos as well as payments. It
helps monitor supplier invoices and creates supplier balance overviews.
The employee related functionality, which covers employee advances, recoveries and
reimbursements, is included within the Accounts Payable module.

4.3.1 Purpose
The Accounts Payable application component records and administers accounting data for all
vendors. It is also an integral part of the purchasing system: Deliveries and invoices are
managed according to vendors. The system automatically makes postings in response to the
operative transactions. In the same way, the system supplies the Cash Management application
component with figures from invoices in order to optimize liquidity planning.
4.3.2 Master Data
Vendor Master
4.3.3 Features to Spicy Implementation.
In ZCL business:
• Payables are paid with the automatic and manual payment program.
• Dunning notices can be created for outstanding payable.
• Postings made in Accounts Payable are simultaneously recorded in the General
Ledger where different G/L accounts are updated based on the transaction involved
(payables and down payments, for example).

• Balance confirmations, account statements, and other forms of reports to suit your
requirements in business correspondence with vendors.
In CTG business: Yet to receive the process documents.
4.3.4 Business Process
4.3.4.1 Vendor Down Payment
Advance payments will be made according to the terms of payments with the vendor.
The advance payments made to the vendor will be tracked as distinct from the normal payments
made to the vendor. The posting for down payments will be carried out to a G/L account other
than the standard General Ledger account for the vendor called as special G/L account. The
following types of Advances to vendors will be tracked separately using special GL indicator.
Vendor Recon Accounts Description
Group
GL
Operational
GL
Alternative
GL
31121 3111500006 4306 PAYABLES - RECOVERIES FROM EMPLYOEES
31121 3521604000 4602 SECURITY DEPOSIT FROM STOCKISTS / CONSINGNMENT AGE
31121 3521604001 4603 SECURITY DEPOSIT FROM SUPPLIERS
12511 1251100001 6702 ADVANCE TO STAFF - LTA
12511 1251102000 6703 ADVANCE TO STAFF - T.A
12511 1251104000 6705 ADVANCE TO STAFF - MEDICLAIM
12511 1251106000 6706 ADVANCE TO STAFF - HOUSE RENT ADVANCE
12511 1251106001 6707 ADVANCE TO STAFF - OTHERS
12511 1251106002 6708 ADVANCE TO STAFF - IMPREST
12511 1251106003 6709 ADVANCE TO STAFF - HOUSING LOAN
12511 1251106004 6710 ADVANCE TO STAFF - FURNITURE LOAN
12511 1251106005 6711 ADVANCE TO STAFF - VEHICLES LOAN
12511 1251106006 6712 ADVANCE TO STAFF - MARRIAGE LOAN
12511 1251106007 6713 ADVANCE TO STAFF - EDUCATION LOAN
F Down payment request and Payment of Advance
A Down Payment request is raised by the authorized person requesting for payment. Based on
the request, a down payment may be released to the particular vendor and request item is
cleared. Down payment request is a noted Item special General Ledger account which will not
be displayed in the Balance Sheet.
• The accounting entry for making the down payment will be:

Vendor account (Spl. G/L: Down Payment) Dr
Bank –Check Outward A/c Cr
For Detailed process on Down payment request refer,
S.No.
Major Process
Description
Sub Process
Description
FSBP Documents
1.
GENERAL
PAYMENTS
ACCOUNTING OF
BILLS AND
ADVANCES
ZCL_FSBP_FI_12_1.0
2
EMPLOYEE
LOANS/ADVANCES
LOANS/ADVANCES-
REQUISITION
ZCL_FSBP_FI_14_1.0
4.3.4.2 Vendor Invoice verification.
Vendor invoices will be processed based on the invoices received from the vendors. In invoice
verification, vendor invoices are compared with the purchase order and the goods receipt, and
are checked for the price and quantity
• When an invoice is entered with reference to a purchase order, the system suggests data
from the purchase order and the goods receipts for the purchase order (for example,
vendor, material, quantity still to be invoiced, terms of payment, and so on).
• The posting of the invoice completes the invoice verification process. The system
updates the purchase order history and Financial Accounting initiates payment for
the open invoice items. Invoice Verification creates a link between Materials
Management and accounting document.
Vendor Invoice Processing is discussed under the following heads:
• Domestic Purchases (Raw Material, Packing Material, Consumables and Finished
goods)
• C&F Expenditure reimbursements
• Imports
• Service Vendor Invoices
• Service Commission Agent bills
Invoice Verification of Domestic Purchases
Invoice verification will be performed by referring the PO with the vendor invoice. On posting the
document with the Vendor Invoice value, the following entry is automatically generated.
GR/NI clearing account Dr
Cenvat Clearing Account Dr
Vendor acct Cr

Invoice Verification of Freight Vendor
On receipt of the invoice from the freight vendor, invoice verification will be done by referring the
PO with the vendor invoice and the following entry is automatically generated.
Freight clearing account Dr
Service Tax Clearing Account Dr
Freight Vendor account Cr
Freight Vendor will be assigned in the PO as a condition record, if the vendor is different from
the material vendor.
• If freight charges are not part of PO, then freight charges are booked by the finance
department using the FB60 transaction.
Invoice Verification for Imported Goods
•
• Vendor Invoice Verification in respect of imported goods is discussed as under:
• Invoice Verification for Foreign vendor
• Invoice Verification for Custom vendor
• Invoice Verification for Freight / Clearing agent
Based on the Purchase order and the quantity as per the vendor delivery note, a Goods
Receipts (GR) will be raised in MM module. The following accounting entry gets automatically
passed in the Financial Accounts.
Invoice Verification for Foreign Vendor
On receipt of the vendor , Invoice verification will be done and the following entry gets passed:
GR/IR Account Dr
Cenvat Clearing a/c Cr
Vendor Account Cr
Whenever the import vendor invoice is getting entered, the order currency has to be entered
first.
Before the goods receipt of imported item. The Invoice verification for customs duty has to be
completed.
Invoice Verification for Custom vendor

Customs Clearing Account Dr
Cenvat Clearing Account Dr
Vendor A/c (Customs Authority) Cr
F
Invoice Verification for Freight / Clearing Agent
Freight Clearing Account Dr
Vendor A/c (Freight / Clearing Agent) Cr
Invoice Verification for Clearing and Forwarding Agent - Reimbursement
Dr. Warehouse handling Exp
Dr. Standardization Exp
Dr. C&F Service Charges
Dr. Secondary freight from Rail head to Godown Exp
Dr. Secondary freight from godown/railhead to customer exp
Dr. Service Tax input credit a/c (for service Tax claims)
Cr. Tax deducted at source - contractors a/c
Cr. Sundry Creditor a/c
Processing Of Service Vendors Invoice
Vendor Invoices for Services will be processed at the respective locations using service entry
sheet in MM module. TDS will be calculated and deducted.
The following entry will be passed on preparation of service entry sheet :
Expenses Account Dr
GR/IR Account Cr
Processing Of Service Vendors Invoice
In this scenario, whatever commission got accrued by the sale’s invoice, will be credited.
Service Dealer is entitled to a Service Commission for the sale canvassed for Non Trade
customers. Commission is fixed on Quantity basis. i.e. Commission @ Rs. xx / pmt.
The Accrual A/c Dr
The With holding tax payable Dr
To Service commission agent A/c Cr
The following entry is passed, during Invoice Verification
GR/IR Account Dr
Vendor Account Cr
TDS Account Cr

Whenever there is price change, after the Invoice verification has been completed for the PO,
GR/NI clearing accounts Dr
Inventory account Dr (With Price Difference)
Purchasing account (631X1) Dr
To Vendor acct Cr
To Stock variation acct (6111X) Cr
When the goods have been consumed, the entry will be similar, but the price difference will not
go to the inventory, instead it goes to the stock variation account.
4.3.4.3 Clearing of Vendor invoice and advance.
The concept of authorizing the document entry can be achieved by the standard SAP
functionality creating and authorizing the payment request. Payment request will be created by
one person and authorized by another person to keep the control.
It is also possible to post invoices from FI (FB60) without the necessity of purchase order. That
can be used to fulfill the requirement of postings like miscellaneous payments, employee related
payments, travel agent payments, hotel bills, school subsidy and consultancy payments. We
can also maintain the templates with the help of sample document function (f-01).
The various taxes, which must be calculated, based on vendor transactions are Excise duty,
sales tax, entry tax, customs and TCS , and at the time of vendor payment TDS and ST TDS
will be calculated. Defining the different tax types and codes will be done using country India
version and different tax types and tax codes will be attached with the vendor master record.
An information message will be flashed at the time of invoice booking that a down payment
exists for the particular vendor.
Settlement of down payments to the vendor account and clearing of Invoice against Down
Payment
Vendor A/c Debit
Vendor account (Spl. G/L: Down Payment) Credit
Wherever, TDS is applicable, the TDS will be deducted at the time of down-payment to the
vendor and will be adjusted at the time of settlement of advances. Using transaction code F-51.

4.3.4.4 Tax Deducted at Source (TDS) (Other than salaries)
TDS procedures will be implemented using withholding tax functionality of standard SAP
including CIN. The aspects related to TDS are discussed under the following heads:
• Location for TDS Processing
TDS processing, accounting will takes place in the respective regions and Payments will be
done at corporate office.
• Information Required to Process TDS Calculation
Vendor account will be assigned with one TDS code, if applicable. This TDS code will be the
default TDS code for all the transactions with the vendor. A user can however, change the TDS
code during the transaction entry. This is provided to ensure correct deduction of tax in cases
where more than one TDS rate is applicable to the same vendor due to different nature of
transactions.
• Time of Tax deduction
• As per Income Tax Act, TDS is required to be deducted on accrual of expenses or
payment whichever is earlier. Accordingly, TDS has to be deducted at the time of
bill passing. In respect of Advances given to vendors, TDS will be deducted while
making payment. TDS will be deducted on a transaction-to-transaction basis.
• TDS will be deducted on all the transactions with a vendor once a TDS code is
defined in master record of such vendor.
• Each of these TDS codes will be defined separately for deduction at the time of
booking the expenses or at the time of payment.
• Printing of TDS Certificates
TDS Certificates can be printed vendor wise at Corporate Office or location. Once TDS
certificate has been generated at corporate or location, system will not allow to print TDS
certificate, only duplicate copy can be printed. System will provide for generation of Annual
Return on a yearly basis.
• Printing of Annual Return.
• CIN Extended Withholding functionality provide to take TDS E File return.
For Detail process, refer the following FSBP files,
S.No.
Major Process
Description
Sub Process
Description
FSBP Documents
1 TDS/TCS-Accounting Capturing of TDS data ZCL_FSBP_FI_33_1.0

Classifying the Vendor's for calculating with holding tax, whether Individual, Company,
Partnership firm, etc 01 & 02. Standard SAP has only two classifications. Individual and
company. There is no separate classification as Partnership firm.
4.3.4.5 Advances/Loans To Employees And Travel Expenses
Generally the Advances to Employees are tracked separately using the Accounts Payable sub
ledger. For this purpose employee will be created as a vendor. The employee advances will be
tracked separately with Special G/L Indicators:
All the employee payments can be captured by using special GL accounts and special GL
indicators for each type of employee advances like travel advance, medical advance etc., and
all employees will be created as vendors accounts.
The Following are the Loans and advances provided to the employees as per FSBP file -
ZCL_FSBP_13_01 & ZCL_FSBP_14_01.
ADVANCE TO STAFF – LTA
ADVANCE TO STAFF - T.A
ADVANCE TO STAFF – MEDICLAIM
ADVANCE TO STAFF - HOUSE RENT ADVANCE
ADVANCE TO STAFF – OTHERS
ADVANCE TO STAFF – IMPREST
ADVANCE TO STAFF - HOUSING LOAN
ADVANCE TO STAFF - FURNITURE LOAN
ADVANCE TO STAFF - VEHICLES LOAN
ADVANCE TO STAFF - MARRIAGE LOAN
ADVANCE TO STAFF - EDUCATION LOAN
4.3.4.5.1 Employee Travel and Advances
The travel plan of the employee has to be confirmed by the head of the department.
Then only he will be eligible to avail advances for the travel. Once the travel has been
completed the employee has to submit the travel bills. The travel bills will be adjusted
towards the advances, after duly booking the expenditure.
If there is any balance in the travel bill either the debit or credit. It will be debited or
credited to the employee. The Debits are recovered through their salary. The recovery
has to take place through the external payroll system. And no salary related posting is
allowed. The Entry has to be passed separately to recover the amount from the
employee.

The Detail process description is available in the FSBP document, ZCL_FSBP_13_01.
4.3.4.5.2 Salary Accounting
The Accounting and processing of salaries are classified in two,
- Salary to management Staff
- Salary to Factory Workers
The process of salary to management staff is outsourced. The detail of the salary of
individual is provided by the outsourcing company.
At the end of the month the salary is uploaded through a Batch data program.
For the Process detail and the accounting detail refer the FSBP document -
ZCL_FSBP_14_01.
The process of salary to factory staff is processed by the personnel department of the
factory. The details for accounting the same is provided by the personnel department.
For the Process detail and the accounting detail refer the FSBP document -
ZCL_FSBP_14_01
4.3.4.5.3 Contract Labour Bills
There will be a contract created by the purchasing department for hiring the labour
contractors. Every month the purchasing department will complete the service entry
sheet, to confirm the no of hours of the labour worked for the company.
Based on the contract and confirmation of the personnel department the bills of the
labour contractor are accounted.
The details of process and accounting of labour contractor bills, are available in the
FSBP document - ZCL_FSBP_14_01.
4.3.4.5.4 Employee Welfare Accounting
Zuari maintains staff clubs. The Employee will contribute some amount from their salary
and company will contribute 2.5 times of the employee contribution to these welfare
clubs. As explained in 4.3.4.5.1 Employee travel advances, it has to be passed
seperateley.

Every month these expenditures are deducted in proportion, from the employee salary.
Following are the expenditures, recovered from the employee salary every month,
- Canteen expenditure
- Electricity charges for house. When it exceeds the limits as per HR policies.
For detail description on the process and solution refer the FSBP document
ZCL_FSBP_15_01.
4.3.4.6 Vendor Payment
By using the SAP standard functionality all the cheque payments can be managed. The typical
procedure under SAP with respect to cheque will be
a) Defining the cheque lots for each and every house bank of ZCL & CTG(assuming CTG will
have house bank number) .
b) Entering the vendor invoice.
c) Entering the vendor payment by clearing the open item created by invoice.
d) Attach cheque to the payment document number generated in step ( c ).
e) Check the cheque register to see the cheque updating.
R/3 Business Blueprint for ACE
Vendor Payments can be manual or automatic. The general aspects related to vendor payment
are Terms of Payment, Method / Media of Payment, manual payment & Automatic Payment.
4.3.4.6.1 Method/ Mode of Payment
The payment methods used in SPICY implementation are as follows:
• C = Cheque
• E = ECS
• T = Bank Transfer
• A = Cash
• D = Demand Draft / Pay Order. (Needs to be created for SPICY).
4.3.4.6.2 Automatic Payments
Automatic payments are configured to make vendor payments based on payment terms. The
due date wise / vendor invoice wise payment proposal will be generated and this proposal can
be edited to make the selective payments.

After the payment list has been finalized, the payment run will be executed and accounting entry
will be posted automatically. Payment Advice and cheque will be printed through system.
4.3.4.6.3 Manual Payments
• Manual Payments are those payments, where the user selects vendor and invoices
to be paid. This selection can be used for cheque printing or other methods of
payment (like Instruction to bank). Usually this procedure is preferred where the
number of selection/payments is less.
S.No.
Major Process
Description
Sub Process
Description
FSBP Documents
1. HOUSE BANKS
Creation and
operation of Cash
credit accounts
ZCL_FSBP_FI_27_1.0
4.4 Bank Accounting.

4.4.1 Maintenance of Bank Master
• A House Bank is a combination of a Bank and a Branch. Account id is the account
number. A house bank can have multiple account IDs. Each house bank and
account ID combination will have one main General Ledger account. Bank Account
Master Data will be maintained by the Finance Department centrally.
• In Spicy Implementation , for Automatic Reconciliation purpose, the following
intermediate G/L accounts are created for each house bank and account ID
combination,
• House Bank :00
• Cheques Out : 02
• Transfers Out : 03

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