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Lecture 3 Introduction to SAP Controlling (CO) FIN419 Learning Objectives Understand the goal of SAP Controlling (CO) Understand the purpose, master data and reporting of CCA Understand the purpose, master data and reporting of PCA Understand the purpose, master data and reporting of Internal orders Understand the purpose, master data and reporting of Product Costing Understand the purpose, master data and reporting of Profitability Analysis Understand the integration of CO and FI 2 SAP Controlling (CO) Goal The purpose of the Controlling (CO) module in SAP is to provide organizations with a method of slicing and dicing data to view costs from an internal management perspective and provide a view of profitability beyond that of basic financial reporting. Controlling allows an organization to plan and track overhead costs within the company's specific organizational structure. Standard reports include: Cost center performance Profit center performance Budget analysis Goal 3 SAP Controlling (CO) Organizational Structure Client An independent environment in the system Company Code Represents an independent legal accounting unit Balanced set of books, as required by law, are prepared at this level A client may have more than one company code Controlling Area The controlling area identifies a self-contained organizational structure for which costs and revenues can be managed and allocated. May contain one or more company codes, which can operate in different currencies. Company codes within a controlling area must all use the same operational chart of accounts and fiscal year variant Represents the legal and/or organizational views of an enterprise and it forms a framework that supports the activities of a business in the manner desired by management Org SAP Controlling (CO) Organizational Structure (Cont) Operating Concern It represents an organizational unit in your company for which the sales market data has a uniform structure (characteristics/dimensions) It is the valuation level for profitability analysis (CO_PA) Multiple controlling areas can be assigned to one operating concern Plant The plant represents a production unit and is the central organizational unit in Materials Management and Production Planning. A plant is assigned to a company code. Cost Center Hierarchy It is a tree structure representing all the cost centers belonging to a controlling area from a controlling perspective Profit Center Hierarchy It is a tree structure representing all the profit centers belonging to a controlling area from a controlling perspective Org SAP Controlling (CO) Controlling Area and Currencies By assigning more than one company code to a controlling area you can perform cost accounting for all company codes The controlling area and company codes can have different currencies The currency of the controlling area can be the same as that for a company code or different from all the company codes assigned to the controll ...

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Lecture 3 Introduction to SAP Controlling (CO) FIN419 Learning Objectives Understand the goal of SAP Controlling (CO) Understand the purpose, master data and reporting of CCA Understand the purpose, master data and reporting of PCA Understand the purpose, master data and reporting of Internal orders Understand the purpose, master data and reporting of Product Costing Understand the purpose, master data and reporting of Profitability Analysis Understand the integration of CO and FI 2 SAP Controlling (CO) Goal The purpose of the Controlling (CO) module in SAP is to provide organizations with a method of slicing and dicing data to view costs from an internal management perspective and provide a view of profitability beyond that of basic financial
reporting. Controlling allows an organization to plan and track overhead costs within the company's specific organizational structure. Standard reports include: Cost center performance Profit center performance Budget analysis Goal 3 SAP Controlling (CO) Organizational Structure Client An independent environment in the system Company Code Represents an independent legal accounting unit Balanced set of books, as required by law, are prepared at this level A client may have more than one company code Controlling Area The controlling area identifies a self-contained organizational structure for which costs and revenues can be managed and allocated. May contain one or more company codes, which can operate in different currencies. Company codes within a controlling area must all use the same operational chart of accounts and fiscal year variant Represents the legal and/or organizational views of an enterprise and it forms a framework that supports the activities of a business in the manner desired by management
Org SAP Controlling (CO) Organizational Structure (Cont) Operating Concern It represents an organizational unit in your company for which the sales market data has a uniform structure (characteristics/dimensions) It is the valuation level for profitability analysis (CO_PA) Multiple controlling areas can be assigned to one operating concern Plant The plant represents a production unit and is the central organizational unit in Materials Management and Production Planning. A plant is assigned to a company code. Cost Center Hierarchy It is a tree structure representing all the cost centers belonging to a controlling area from a controlling perspective Profit Center Hierarchy It is a tree structure representing all the profit centers belonging to a controlling area from a controlling perspective Org SAP Controlling (CO) Controlling Area and Currencies By assigning more than one company code to a controlling area you can perform cost accounting for all company codes The controlling area and company codes can have different currencies The currency of the controlling area can be the same as that for a company code or different from all the company codes
assigned to the controlling area. Currencies on CO You can use three currencies in management accounting Controlling area currency Company code currency or local currency Transaction currency By default, cross-company code cost accounting displays the company code currency as the object currency Org SAP Controlling (CO) Global Bike Finance Structure One Operating concern Two controlling areas Two company codes Five plants Three in North America Two in Europe Global Bike Global Bike Inc Global Bike Germany GmbH Dallas Client Company code Plants Global Concern North America Europe Operating Concern Controlling Areas San Diego
Miami Heilderberg Hamburg SAP Controlling (CO) Reflection What currencies would be involved in a CO transaction on Global Bike Inc? What currencies would be involved in a CO transaction on Global Bike Germany? Under the GBI Controlling org structure, what needs the financial management team has and why? SAP Controlling (CO) Sub-modules Cost Element and Cost Center Accounting (CCA) Profit Center Accounting (PCA) Internal Orders Product Costing (CO-PC) Profitability Analysis (CO-PA) Controlling SAP Controlling (CO) Master Data Summary Controlling consists of all master data, configuration, and reporting required to analyze both spend and revenues, both within and across organizations. This includes the following master data: 1
Cost elements Cost/revenue accounts 2 Cost centers Departmental units 3 Profit centers Business lines, product lines or divisions 4 Internal orders Projects or events 5 Statistical key figures Statistics for allocation cost 6 Activity types Labor and other activity cost $ Master Data SAP Controlling (CO) Cost and Statistical Objects Cost Objects True cost objects can act as sending or receiving objects during
cost allocation. Cost centers, real internal orders, real projects, networks, make- to-order production orders, cost objects, and profitability segments. Statistical Cost Objects Statistical objects cannot allocate cost to other objects. Statistical orders, statistical projects, and profit centers. Controlling Cost Element & Cost Center Accounting Introduction Financial Accounting is a primary source of data for Management Accounting. Most expense postings in the general ledger result in a cost posting in Management Accounting. These expense postings to the general ledger can be journal postings, vendor invoices, or depreciation postings from Asset Management Cost center Responsible cost containment Common use Finance Planning Shipping Quality Cost accounting
Cost Element & Cost Center Accounting Transactions KA01 Create primary cost element KA06 Create secondary cost element OKEON Cost center hierarchy KS01 Create cost center KL01 Create activity type KK01 Create statistical key figures KP06 Budget entry S_ALR_87013611 Cost Centers: Actual/Plan/Var KSB1 Cost center actual line items Cost accounting Cost Element & Cost Center Accounting Master Data: Secondary Cost Element (KA06) Exist only in CO but not in FI. Used in conjunction with various allocation techniques in CO Used for internal allocations within CO. Do not have any corresponding G/L accounts in FI Used in CO to redistribute costs and these costs must be balanced Cost accounting Controlling Controlling Primarily Cost Element
Secondary Cost Element Controlling area Validity Category Cost Element & Cost Center Accounting Primary Cost Element link with Secondary Cost Element Any transactions that create cost movements within CO are balanced entries. When a cost is moved from one controlling objet to another, the sending object is credited and the receiving object is debited for the same amount. Cost accounting Cost Center Accounting Cost Center Hierarchy (OKEON) Cost Centers require a formal structure called a hierarchy The standard hierarchy is a tree structure representing all the cost centers belonging to a controlling area from a controlling perspective
You can combine cost centers into cost center groups You can then create cost center hierarchies from these groups by combining the groups according to decision making area, area of responsibility, or management area Cost accounting Cost Center Accounting Master Data: Cost Center (KS01) Use cost center for differentiated assignments of overhead costs to organizational activities based on utilization of the relevant areas and for differentiated controlling of costs arising in an organization Define a cost center for each low-level organizational unit that has responsibility for managing costs. The cost center is an organizational unit in a controlling area representing a clearly delimited location where costs occur Cost accounting Basic Data Name and description Cost Center Hierarchy Profit Center Company Code
Responsible person Business Area Other Category Currency Cost Center Accounting Master Data: Statistical Key Figures (KK01) Can be defined as either fixed values or total values. Examples Number of employees Square footage CO impact: None, used for reporting and allocation purposes Represent numerical measures used as a basis for internal cost allocations and can be used by cost centers, profit centers, internal orders. Cost accounting Cost Center Accounting
Master Data: Activity Types (KL01) Usually measured in a time or unit increment Used to allocate cost only from cost centers. Rent Power Telephone CO impact: Costs can flow to other cost objects such as cost centers, internal orders, production orders, ABC processes, etc. It is the productive output of a cost center and transfer cost between cost centers. Cost accounting Basic Data Name and description Allocation type Allocation Activity unit Cost center category Allocation cost element Price indicator
Cost Center Accounting CO postings: Types of Allocation Distribution Method for periodically allocating primarily cost elements Primarily cost elements maintain their identifies in both the sending and receiving objects Sender and receiver cost centers are fully documented in a unique controlling (CO) document Assessment Method of allocation both primarily and secondary cost elements Primary and/or secondary cost elements are grouped together and transferred to receiver cost centers through use of a secondary cost element. Sender and receiver cost centers are fully documented in a unique Controlling (CO) document. Cost accounting Cost Center Accounting CO postings: Distributions The purpose is to allow a cost center to charge a cost object for services or activities provided using a planned rate. Cost allocations do not affect the General Ledger Deals with the measurement, posting, and allocation of an organizational activity. You need to create the corresponding tracing factors known as
activity types in cost center accounting. Cost accounting Cost Center Accounting CO postings: Assessment Assessment affords a higher level of summarization for allocations where the receiving cost center manager has no control over reducing the expense at the sender cost center. All the debits and credits posted to the cost center will be combined on a secondary cost element for allocation. The only way to further allocate secondary costs is to use assessments. Cost accounting Cost Center Accounting Budget (Planning) Involves entering plan figures for costs, activities, prices, or statistical key figures for a particular cost center and a particular planning period. Goal Calculate planning costs to define deviations later and to prepare the allocation to the cost bearers. Based on absorption costing, it allocates all the costs in overhead area to the cost bearers in a company using different procedures Objectives To plan the structure of the organization’s future operations for a clearly defined period. To control business methods within the current settlement
period using plan/actual or target/actual comparisons To monitor the efficiency after the completion of the settlement period using plan/actual or target/actual comparisons To provide a basis for the valuation of organizational activities independent of random fluctuations Cost accounting Cost Center Accounting Budget vs Actuals (S_ALR_87013611) Controlling area Fiscal year From to Period Plan Version Cost centers Cost elements Cost accounting Cost Center Accounting Cost center reporting (KSB1) Controlling area Cost center Cost element Posting date Cost accounting Cost Center Accounting Reflection Which currencies would you think a Global Bike Germany
profit center document would have? What would you recommend GBI in Germany to be its cost center structure and hierarchy and why? What examples can you provide for GBI distribution process? What examples can you provide for GBI allocation process? What would you say is the main purpose of having the distribution and allocation process in SAP? What benefits you can derive for having your cost center budget in SAP? Profit Center Accounting Introduction Purpose is to determine profit for internal areas of responsibility and it is integrated to the New GL Responsible for revenue regeneration and cost containment Common use Region Function Product Profit accounting Profit center Revenue Cost
Profit Center Accounting Transactions KE51 Create profit center KCH1 Create profit center hierarchy KE5Z Profit center actual line items Profit accounting Profit Center Accounting Master Data: Profit Center (KE51) Profit center accounting is a statistical accounting component It takes transaction data posted in other components and represents it from a profit-center-oriented point of view. By assigning balance sheet items to profit centers you can analyze your company’s fixed assets by profit centers making it possible to analyze a number of key figures by profit center, thus using them as investment centers An organizational unit in accounting that reflects a management-oriented structure of the organization for purpose
of internal controls Profit accounting Basic Data Controlling area Validity Name & description Company codes Other Responsible Hierarchy group Profit Center Accounting Data Flow Profits centers can receive data from: Direct postings from GL Automatically generated for AR and AP from document splitting Direct posting from revenue Derived posting from expenses Profit accounting
Profit center Balance sheet Revenue AR and AP Expense Profit Center Accounting Reporting (KE5Z) Controlling area Company code
Posting Period Fiscal Year Profit center Account Document number Profit accounting Profit Center Accounting Reflection Which currencies would you think a Global Bike Germany profit center document would have? What do you think GBI can use profit center accounting for considering they are a manufacturing company. Internal Order Introduction Interim cost collector Usually used to break costs out below the cost center level. Common use Project cost Campaign cost Travel cost Used for tracking individual or recurring events where several cost centers may share the expense Usually short term and gets set to zero at the end. Overhead Orders Used to monitor costs incurred for a particular purpose
Investment Orders Used to monitor costs incurred in the production of a fixed asset Accrual Orders Used to offset postings of accrued costs to cost centers Orders with Revenue Used to replace the cost accounting parts of SD customer orders if SD is not being used. Internal order Internal Order Transactions KO01 Create order Planning Posting and settlement KOB1 Actual line items Internal order Internal Order Master Data (KO01) It can settle cost at its end of its life into: Fixed assets Projects Profit centers Is a self-contained mini project cost object with an interim life. Internal order Basic Data Order and description
Category Other Company code Controlling area Plant Profit center Responsible Currency Internal Order Planning During internal order planning, you enter costs, activities, and business processes that you expect to incur during the lifecycle
of an order. Using internal order planning, you can compare plan and actual costs, and carry out a differentiated variance analysis Planning levels Overall planning is simplest level for planning order costs which allows you plan overall and annual values irrespective of the cost elements. Primary/secondary cost and revenue planning can be used if you have detailed information about the internal order which allows you to plan primary costs, activity inputs, and revenues. Unit Costing can be used to carry out more detailed planning than is possible on cost elements. Internal order Internal Order Posting and Settlement Posting An internal order is a bucket that allows a better view of costs that could not be itemized in detail in a cost center. An order can be real or statistical (informational postings only). If it is a statistical posting, the cost object for that the internal order is attached to would receive the real posting Settlement Another form of periodic cost allocation. Internal orders must be settled because they are interim collectors of costs. The order will be periodically credited and a receiver will debited with cost. Can occur at the end of each period or at the end of the order’s life.
Internal order Internal Order Settlement Rule Settlement rule establishes the sender and receiver relationship as well as how much each receiver will receive during settlement. Receivers must be defined as valid in customizing and no impending system restrictions (such as locks) prevent settlement. Cost centers, other orders, projects, profitability segments, fixed assets, sales order with cost collector, and G/L accounts Orders Internal order Cost center Other orders Projects CO-PA
FI-FA Cost collectors Internal Order Reporting (KOB1) Controlling area Order Cost element Posting date Internal order
Internal Order Reflection What would you say is the difference between a cost center and an internal order? What would you recommend the GBI team to use internal orders for? What the “settlement” activity has to do with the interim life of an internal order? Product Costing Introduction Concerned with all aspects of planning the cost of producing products or services, as well as tracking and analyzing actual costs and consist of the following three components: Product Cost Planning Cost Object Controlling Actual Costing and Material Ledger Product costing Material Cost of material Labor
Cost of labor Overhead Cost of overhead Product Costing Introduction: Product Cost Planning Used to estimate the costs to produce goods or services. If a quantity structure (bill of material and routing) is available in manufacturing Planning, then the system can automatically create a cost estimate based on this data. If no quantity structure is available you can either enter the cost items manually with the unit costing tool or transfer them automatically from a non-SAP system using batch input. Product costing
Product Costing Introduction: Actual Costing Used to provide actual costs for each material at the end of the period. Materials and their movements are valuated with a standard price during the period. Any variances with respect to this standard are collected in the material ledger when invoices are received or orders settled. During period end closing, the variances are used to calculate an actual price for the material in the closed period. Product costing Product Costing Transactions CK40N Costing run CKMLCP Actual costing run Product costing Product Costing Master Data: Material Master Views Basic Sales Purchasing Plant Forecast Storage Quality Accounting Controlling
Product costing Product Costing Master Data: Material Master Contains all of the key information a company needs to manage a material within its organization. The material master defines, among other things, how a product is sold, manufactured, purchased, inventoried and costed. Information is grouped into views that are organized by business function. The majority of views of master data are stored at the plant level. Product costing Basic Data Material Valuation class Accounting and Costing Unit of measure Material group Description Controls account determination Price control Price per unit Standard price
Previous price Last price change Profit center Cost estimate Product Costing Costing Run (CK40N) Once you have carried out a cost estimate for a material, you can transfer the costing results to the material master as prices. Three steps Mark the standard cost estimate Release Update Product costing Product Costing Costing Run (CK40N) Release Standard Cost The system transfers the result of the standard cost estimate into the material master record as the material standard price. The price is then active for Financial Accounting and is used for the valuation of the material until the next time a standard cost estimate is released. You can release a standard cost estimate only once per period, unless you delete the previously released standard cost estimate from the database. Mark Standard Cost
The system writes the result of the cost estimate into the costing view of the material master record as the future standard price. You can use this price to valuate a material component in the cost estimate. Product costing Product Costing Costing Run: Cost Itemizations Itemizations show detailed information about the origin of costs. Cost element itemizations groups the individual cost items into cost elements. The cost element group the costs in order of appearance. Cost component split groups the cost elements into cost components. Product costing Product Costing Costing Run: Reporting (S_ALR_87099930) Costing run Costing date Plant Product costing Product Costing Reflection What it means to “estimate the cost”? What is the inventory effect after a costing run?
What impact would you have in your cost of goods sold when the engineering team may have revisions to the BOM. Profitability Accounting Introduction Enables you to evaluate contribution margins of external market segments which can be classified according to: Products, Customers, Orders Strategic business units, Sales organizations or Business areas, Profitability Accounting components are integrated with Overhead Management and Product Cost Controlling. Profit Center Accounting receives statistical cost postings from all other management accounting components. Profitability Analysis can receive cost assessments from cost centers and Activity-Based Costing processes, settlements of costs from internal orders, and production variances settled from cost objects. PA Profitability Accounting Introduction: Data Flow Data from sales order management is one of the key sources of information.
In costing-based profitability analysis information can be taken when an order is created or changed and when an invoice is generated for the order. In account-based profitability analysis information can be taken when a goods issue is posted and when an invoice is generated for the goods issue. PA Profitability Accounting Transactions KE30 Execute report KE24 Line items display PA Profitability Accounting Reporting (KE24) Currency type Period/year Document number Company code Dimensions Cost element CO order Sales order Customer Product PA
Profitability Accounting Reflection What would be your recommendation for the GBI tem on how to use CO-PA? What type of data would you expect to see on the CO-PA document? SAP Controlling (CO) Reflection It is month end at GBI and the managerial accounting group is working on its month end close, what activities would you need to review in each of the areas below Cost center accounting Profit center accounting Internal order accounting Product costing Profitability analysis SAP Controlling Practice Display
Master data Transactional data Create cost center group Create cost center Create budget/forecast Create statistical key figure Plan number of employees Post rent invoice Create assessment View assessment results Review budget vs actuals
SAP Controlling Practice: Data relationship Display Master data Transactional data Cost center
Cost center group Statistical key figure Plan number employees Assessment Review assessment Post invoice Review budget vs actuals
Budget
SAP Finance User Logon Screen Click on the icon in your desktop. Enter the following information: System ID: BK8 Client: 126 User ID: GBI-XXX Enter your password Enter Client, Server and Password Client is a numeric field and this number represents a whole business entity. Users are client specific which means that having a user identification in one client will only allow access to that particular client. The system settings are stored in a file on your machine called the saplogin.ini file. This file is normally preconfigured centrally and then made available to all the users. Once you
have been provided with the SAP Logon, you need a username and password to logon to the SAP system. The username and password is unique for each user and you do have the option to change your password using the New password button available on the screen. 60 SAP Controlling Create Cost Center Menu path/Tcode (KS01) Accounting ► Controlling ► Cost Center Accounting ► Master Data ► Cost Center ► Individual Processing ► Create Controlling area NA00 On the following screen enter CC-FI### (replace ### with your assigned number) The cost center should be valid from 01/01 of the current fiscal year. Press ENTER or click to confirm. Enter Finance ### as the cost center name and enter your name for the person responsible. Select cost center category Service cost center H and assign the cost center to hierarchy area Internal services N1200. In addition, choose business area Bikes and currency USD. Click to save Cost center:______________ SAP Controlling Create Cost Center (Cont)
Menu path/Tcode (KS01) Accounting ► Controlling ► Cost Center Accounting ► Master Data ► Cost Center ► Individual Processing ► Create Controlling area NA00 On the following screen enter CC-IC### (replace ### with your assigned number) The cost center should be valid from 01/01 of the current fiscal year. Press ENTER or click to confirm. Enter Inventory ### as the cost center name and enter your name for the person responsible. Select cost center category Service cost center H and assign the cost center to hierarchy area Internal services N1200. In addition, choose business area Bikes and currency USD. Click to save Menu path/Tcode (KS01) Accounting ► Controlling ► Cost Center Accounting ► Master Data ► Cost Center ► Individual Processing ► Create Controlling area NA00 On the following screen enter CC-IT### (replace ### with your assigned number) The cost center should be valid from 01/01 of the current fiscal year. Press ENTER or click to confirm. Enter Information Technology ### as the cost center name and enter your name for the person responsible. Select cost center category Service cost center H and assign the cost center to hierarchy area Internal services N1200. In addition, choose business area Bikes and currency USD. Click to save Cost center:______________ Cost center:______________ SAP Controlling
Create Cost Center Group Menu path/Tcode (KSH1) Accounting ► Controlling ► Cost Center Accounting ► Master Data ► Cost Center Group ► Create Create a group called GROUP### (replace ### with your assigned number). Click to continue. Name the display hierarchy “Rent cost receivers and click In the left-hand column, enter the cost centers CC-FI###, CC- IC### and CC-IT### and click to confirm. Click . Then return to the main menu by clicking twice. Cost center group:______________ SAP Controlling Create Budget Menu path/Tcode (KP06) Accounting ► Controlling ► Cost Center Accounting ► Planning ► Cost and Activity Inputs► Change Controlling area NA000, planning version 0 (Plan/Act-Version), From current period and fiscal year Enter cost center group GROUP### replace ### with your assigned number) and hit the overview screen icon Enter cost element 75###5 CC-FI### for rent and enter $90,000 for the current month budget. CC-IC### for rent and enter $30,000 for the current month budget CC-IT### for rent and enter $30,000 for the current month budget
SAP Controlling Create Statistical Key Figure Menu path/Tcode (KK01) Accounting ► Controlling ► Cost Center Accounting ► Master Data ► Statistical Key Figures ► Individual Processing ► Create Enter EMP### (replace ### with your assigned number) as the key figure number and click . Make sure controlling area NA00 was selected. Enter Number of Employees as the name and chose Number of persons (PRS) as the unit. Make sure the category FXD val is selected. Click Click to return to the SAP main menu. Statistical key figure:______________ SAP Controlling Plan number of Employees Menu path/Tcode (KK01) Accounting ► Controlling ► Cost Center Accounting ► Planning ► Statistical Key Figures ► Change Select planning layout statistical key figures: standard (1-301). Choose the Plant/actual version (version 0) and current period (from period), end of the fiscal year (to period) and current
fiscal year. Enter cost center CC-FI### and key figure EMP### Click Form-Based at the bottom f the screen, then click . Enter 15 as the current plan value and click SAP Controlling Plan number of Employees (Cont) Menu path/Tcode (KK01) Accounting ► Controlling ► Cost Center Accounting ► Planning ► Statistical Key Figures ► Change Select planning layout statistical key figures: standard (1-301). Choose the Plant/actual version (version 0) and current period (from period), end of the fiscal year (to period) and current fiscal year. Enter cost center CC-IC### and key figure EMP### Click Form-Based at the bottom f the screen, then click . Enter 5 as the current plan value and click Menu path/Tcode (KK01) Accounting ► Controlling ► Cost Center Accounting ► Planning ► Statistical Key Figures ► Change Select planning layout statistical key figures: standard (1-301). Choose the Plant/actual version (version 0) and current period (from period), end of the fiscal year (to period) and current fiscal year. Enter cost center CC-IT### and key figure EMP### Click Form-Based at the bottom f the screen, then click .
Enter 5 as the current plan value and click SAP Controlling Post AP for Rent Menu path/Tcode (FB60) Accounting ► Financial Accounting ► Accounts Payable► Document entry ► Invoice Select company code :US00 and confirm that transaction is set as Invoice Header data: basic data view, enter vendor number you created on your FI case (Cardinal Rent) today's date as invoice and posting date, Invv-### as reference, and $150,000 USD as amount. Line items view. Enter your expense account 75###5, D/C Debit, Amount in document currency $150,000 and cost center CC-FI###. Remember to replace ### with your assigned number Use the to see the postings Click to post the document Document number:______________ SAP Controlling Execute Assessment Menu path/Tcode (KSUB) Accounting ►Controlling ►Cost Center Accounting ►Planning
►Allocations ►Assessment In the Execute Plan Assessment: Initial Screen, choose Extras ►Cycle ►Create. Enter cycle number C### (replace ### with your assigned number), valid from the beginning of the fiscal year until the end of the current fiscal year and click Enter Cycle CC-FI### as text, uncheck the iterative field and click On the Segment Header tab type in SEG###. Enter PLA### as the Assessment CEle (replace ### with your assigned number). On the Senders/Receivers tab, enter CC-FI### as Sender cost element on the form column and cost center group GROUP### as receiver in the Group column SAP Controlling Execute Assessment (Cont) Menu path/Tcode (KSUB) Accounting ►Controlling ►Cost Center Accounting ►Planning ►Allocations ►Assessment On the Receiver Tracing Factor tab choose the value Plan Stat. Key Figures in the Var. portion type field. The following information popup indicates that new fields are displayed. Click , in the Selection Criteria section choose Plan/actual version and statistical key figure EMP### (replace ### with your assigned number) Click and three times to go back, and confirm the subsequent confirmation In the Execute Plan Assessment: Initial Screen enter your cycle C### and click . Uncheck Test Run and click
The system should notify you that processing was completed without errors. The number of senders should be 1 (CC-FI###) and the number receivers 3 (Cost center group GROUP###) Click . Choose when asked for exiting the assessment list. Click to return to SAP main menu Cycle:______________ SAP Controlling View Assessment Results Menu path/Tcode (KSBL) Accounting ►Controlling ►Cost Center Accounting ►Information System ►Reports for Cost Center Accounting ►Planning Reports ►Cost Centers: Planning Overview On the Planning Report: Initial Report Screen, find your CC- FI### cost center. Enter current fiscal year, current period and version 0. Click and view the results of the assessment. Repeat the process for cost centers CC-IC### and CC-IT###. Click on twice to return to SAP main menu. You should notice that the system did a cost reallocation of $150,000 posted originally to cost center CC_FI### to the rest of the cost centers of group GROUP### using the number of
employees allocated on the statistical key figure. SAP Controlling Review Budget vs Actuals Menu path/Tcode (S_ALR_87013611) Accounting ► Financial Accounting ► General Ledger ► Master Records ► G/L Accounts ► Individual Processing ► Centrally Enter controlling area NA00, current fiscal year, current period and plan version 0 Enter cost center group GROUP### and click . Review cost centers planning and compare with actuals SAP Controlling FICO Use Case Assignment Beginning of the month: You just received the revisions to the building rent’s budget for the current month as follow: Finance (cost center CC-FI###) for € 9,000 Inventory (cost center CC-IC###) for € 13,000 IT (cost center CC-IT###) for € 3,000 You just received the rent’s allocation for the current month as follow: Finance (cost center CC-FI###) 10 employees Inventory (cost center CC-IC###) 12 employees IT (cost center CC-IT###) 8 employees During the month: The vendor called Cardinal Properties has a subsidiary in
Germany with the following address: 1500 Unification Ave, Berlin XXXXX. The agreement for payment terms and payment is global. The invoice’s rent for the current month is for € 20,000 with a document date of the 15th of the current month and invoice number A120057 The payment is schedule for the end of the current month for € 20,000 You are part of the Finance department for the GBI Germany company and will be supporting the month end activities to close the financial books and review the managerial accounting reports. SAP Controlling FICO Use Case Assignment End of the month: Review your vendor balances and line items Review your rent balances and line items Create assessment for rent allocation. The cost center group for allocation follow the same directions established by corporate. Review your allocation results and review your budget. Org structure Company code: DE01 Controlling area: EU00 Hierarchy area E1200 Business area: Bikes Cost center group for allocation GROUP### Statistical key figure EMP### Global CoA AP reconciliation account 300000 Rent GL account and cost element 75###5 Cash
You are part of the Finance department for the GBI Germany company and will be supporting the month end activities to close the financial books and review the managerial accounting reports. SAP Controlling FICO Use Case Assignment Provide an excel file documenting every master record created, transaction posted and display document revised using the following headers: Sequence (e.g. 1) Task (e.g. Review GL account master record in company code DE00) Transaction code (e.g. FS02) Master record/Document (e.g. 75###5) Lecture 2 Introduction to SAP Finance (FI) FIN419 Learning Objectives Review of basic Finance management topics Understand the goal of SAP Finance (FI) Understand the purpose, master data and reporting of New GL Understand the purpose, master data and reporting of AR Understand the purpose, master data and reporting of AP
Understand the purpose, master data and reporting of AM Understand the integration points between FI and the rest of the FI sub-modules. 2 Finance Review Financial Statements Statement of financial position - Balance Sheet Reports the firm’s assets, liabilities and equity at a given point of time Income Statement Reports the firm’s income, expenses, and profits over a period of time Statement of cash flow Reports the firm’s cash flow activities (operation, investing and financing) Statement of changes in equity Explain the changes of the firm’s equity over a period of time Finance Review Balance Sheet The Balance Sheet Reports the firm’s assets, liabilities and equity at a given point of time Assets Current (life less than one year) Fixed (life longer than one year)
Liabilities and Owners’ Equity Current (life less than one year) Long term ( life longer than one year) Balance Sheet Identity Assets = Liabilities + Stockholders’ Equity Review Assets Fixed Liabilities+ Equity Equity Current Current Long term
Finance Review Working Capital and Liquidity Net working capital Difference between Current Assets and Current Liabilities It indicate whether the firm has sufficient short term assets to cover its short term obligations Liquidity It refers to the speed and ease in which an asset can be converted to cash without significant loss of value Liquidity is valuable in avoiding financial distress Net working capital Review Assets Fixed Liabilities+ Equity Equity Current
Current Long term Finance Review Debt vs. Equity Debt and Equity are sources of financing for the firm The use of debt in a firm’s capital structure is called financial leverage The more leverage, the higher the risk of financial distress Review Assets Fixed Liabilities+ Equity
Equity Current Current Long term Finance Review Income Statement The income statement measures performance over a specified period of time (period, quarter, year). Income Statement Equation(s): EBIT = Net sales – COGS – Operating expense Net Income = EBIT – Interest - Tax Addition to REA = Net income - dividends Net income elements Dividends paid to shareholders Addition to retained earnings
Review Sales (Revenue) Net income Dividends Return to Equity COGS Operating exp (General expenses, depreciation, etc) Interest Tax Gross Profit
EBIT Finance Review Market versus Book Value Book value corresponds to the balance sheet value (according to US GAAPs) of the assets, liabilities, and equity and is generally not what they are actually worth. Market value or true value corresponds to the price at which the assets, liabilities, or equity can actually be bought or sold and it is relevant for managers and investors.US Firm Balance Sheets Book vs. Market ValueAssetsLiabilities and EquityBMBMCurrent100300Current70100Net fixed assets500600Long term200200Equity330600Total Assets600900Total L&E600900 Review Finance Review Difference between Accounting Income and Cash Flow Income Statement is not a measurement of Cash Flow Accrual Basis Accounting Recognize revenue when it is fully earned, not when cash is
received Net Sales of $5,000 but AR increase of $1,500. Cash from sales = $3,500 ($5,000 - $1,500) Recognized expenses needed for the generation of revenue, not when cash is paid Inventory cost of $3,000 but AP increase of $500. Cash to vendors = $2,500 ($3,000 - $500) Noncash Items in the Income Statement Expenses charged against revenue that do not affect cash flow. The most important is depreciation. Review Finance Review Statement of Cash Flow The Statement of Cash flow identify the sources of cash over a period of time and its use. It is classified by: Financing: Loans or financing activity Operating. From the operation of the company Investing. Asset investing Review Financing Operating Investing
SAP Finance (FI) Goal Financial accounting is designed to collect the transactional data that provides a foundation for preparing the standard portfolio of reports. In general, these reports are primarily, but not exclusively, directed at external parties. Standard reports include: Balance Sheet Income Statement Statement of Cash Flows 11 Internal Executives Senior Management External Legal authorities
Admin Staff Employees Banks Auditors Shareholders Insurance Tax authorities Media Financial Analysts SAP Finance (FI) Organizational Structure
Client An independent environment in the system Company Code Represents an independent legal accounting unit Balanced set of books, as required by law, are prepared at this level A client may have more than one company code Chart of Accounts A classification scheme consisting of a group of general ledger accounts Provides a framework for the recording of values to ensure an orderly reporting Credit Control Area An organizational entity which grants and monitors a credit limit for customers It can include one or more company codes Represents the legal and/or organizational views of an enterprise and it forms a framework that supports the activities of a business in the manner desired by management Org SAP Finance (FI) Organizational Structure (Cont) Ledger (leading and parallel) An organization unit that allows you to produce financial statements according to different accounting principles Chart of Depreciation An organization unit that allows you to control the legal valuation of assets. They are usually country specific and can be assigned to multiple company codes. Business Area (could be use for regional reporting) An organizational unit that represents separate areas of
operations or locations within an organization Segment (could be use for divisions) An organizational unit that represents separate areas of a company with activities that generate expenses and revenues Org SAP Finance (FI) Company Code and Currencies Company codes can have independent currencies and share one for financial consolidation purposes (group currency). You can use up to four currencies in financial accounting Company code (local) currency Group currency Hard currency Transaction currency Org Transaction Document currency Local Reporting currency Group
Consolidation currency SAP Finance (FI) Global Bike Finance Structure One Operating concern Two controlling areas Two company codes One chart of accounts Two business areas One credit control area Global Bike Global Bike Inc Global Bike Germany GmbH Global CoA Bikes Global Credit Control Accessories Client Company code Chart of Accounts
Business Areas Credit Control Global Concern North America Europe Operating Concern Controlling Areas SAP Finance (FI) Reflection What currencies would be involved in a FI transaction on Global Bike Inc? What currencies would be involved in a FI transactions on Global Bike Germany? What would be the most likely currency for the GBI financial consolidation and why? What type of regulations may apply the setting of currencies and its configuration at the company code level? SAP Finance (FI) Sub-modules New General Ledger (GL) use to record the financial impacts of business process steps. It constrains the data for financial reporting. Accounts Receivables (AR) is associated with the fulfillment process and is used to manage money owned by customers for good and services sold Accounts Payables (AP) is associated with the procurement process and is used to managed money owned by vendors for the purchase of materials and services Asset Management (AM) is used to record data related to the purchase, use and disposal of assets.
Bank Ledger (BL) is used to record the transactions related to the deposits and disbursements of cash SAP Finance (FI) Master Data Summary Finance consists of all master data, configuration, and reporting required to analyze external oriented financial statements. This includes the following master data: 1 General Ledger Financial transactions (balance sheet, P&L) 2 Customer master AR sub-ledger 3 Vendor master AP sub-ledger 4 Asset master Asset sub-ledger New General Ledger Introduction
The central task of G/L accounting is to provide a comprehensive picture of external accounting and accounts. The general ledger serves as a complete record of all business transactions. Managed at the company code level, where all accounting- relevant transactions are recorded here Benefits Parallel accounting to recognized multiple GAAP’s Segment reporting in adherence with US GAAP and IAS Document splitting Integration of FI and CO data Procurement to Pay Order to Cash AR AP GL GL Stock Vendor invoice Vendor paymt Customer paymt Billing
Bank Acct Asset Acct New General Ledger Document splitting New General Ledger functionality that allows organizations to split documents line
Advantages Reduces the time and effort for the user to enter documents by deriving segment from profit center which can be derived from a cost object cost center, internal order, or project Allow a company to create real time balance sheets for segments GL New General Ledger Document Principle Each business transaction impacting FI writes data to the SAP database creating a uniquely numbered electronic document. The document number can be used to recall the transaction at a later date. It contains, for example, such critical and necessary information as: Responsible person, date and time of transaction, commercial content Once written to the SAP database, a financial document (one impacting the financial position of the company) can not be deleted from the database, although it can be changed to some degree. The SAP document principle provides a solid and important framework for a strong internal control system – a requirement of law for companies that operate in the United States and in most other countries in the world. GL
New General Ledger Transactions FS00, FSP0, FSS0. GL master record FB50L Enter GL account document for ledger group FB03 Display document FB08, FB80 Reverse document and mass reversal FAGLL03 GL Account line items FAGLB03 Display balances S_ALR_87012284 or F.01 Run Financials FAGL_FC_VAL Foreign Currency Valuation FBB1 Post Foreign Currency GL New General Ledger Master Data (FS00) General Ledger Account are master data that in the GL that belongs to the Chart of Account (CoA). GL Client level Company code level Account Description
Currency and tax data Account group Group accounts depending of a defined criteria P&L or Balance sheet Reconciliation account Control sub ledgers Field status group It controls fields requirements during posting Line control Open item management Line item display
New General Ledger Global Bike Chart of Accounts Balance Sheet Current Assets 1XXXXX Inventory 20XXXXX Fixed Assets 22XXXX Current Liabilities 3XXXXX GRIR 31XXXX Long term liabilities 32XXXX Equity 329XXX Retained earnings 330000 Profit & Loss Revenue 6XXXXX Labor 700000 Consumption expense 72XXXX Expenses 74XXXX Price variance 760000 Production variance 760100 R&D 78XXXX COGS 79XXXX New General Ledger Master data: Account Group Classify G/L account into user defined segments Determine the number range of the accounts that will fall into these segments Determine field status (suppress, required, display, and optional GL
New General Ledger Master Data: Reconciliation account For each sub ledger account you must keep at least one reconciliation account in the general ledger. Sub ledger postings automatically posts to the corresponding reconciliation account in the general ledger. You can not manually post directly to reconciliation accounts. Ensures real-time integration of sub ledger accounts and the general ledger GL New General Ledger Master Data: Primarily Cost Element (KA01) When an expense is occurred in FI it is passed into CO by cost element accounting as a single sided posting. Primary cost elements have to exist in the FI GL maser record before they can be created as primary cost elements in CO. Primary cost elements create the link between FI and CO GL Finance Controlling GL Master Record
Primary Cost Element to link FI and CO P&L accounts Controlling area Validity Category (1 or 11) New General Ledger GL account link with Primary Cost Element When an entry is posted in FI to a G/L Account that is a cost or revenue account and a corresponding primary cost element exists in CO, then a corresponding entry is posted in CO. This is a one sided entry to get the expense or revenue into CO. A controlling object needs to be specified in the FI document to define where to post the costs in CO GL New General Ledger Document entry (FB50L) Company code
Posting & Document date Currency Document type Ledger Line items GL accounts Posting key Amounts GL New General Ledger Document entry: Document type Two character alphanumerical key that distinguish different business transactions and classify accounting documents Controls Document ranges Account types allowed Type of transactions allowed *List on the right is a sample of the document type list GL New General Ledger Document entry: Posting Key Two character numerical key that controls the entry of line items Determines Account type D for customers K for vendors S for GL A for assets
M for materials Debit/credit posting Field status of additional data Layout of entry screens GL New General Ledger Document entry: Simulate, Parking, Post Simulate. It allows you to review a document before posting or parking it. Parking. It allows you to save a document in a transit space allocating a document but not creating a financial effect. Post. It saves the document in the system allocating a document and creating a financial effect. GL Simulate Park Post
New General Ledger Run Financials (F.01) Chart of Accounts Company Code Financial Statement Version Reporting Year and comparison periods List output GL New General Ledger Run Financials: Financial Statement Version To meet various reporting requirements, various financial statement versions have been created in the system. You define exactly which accounts appear in which line items of the financial statement GL New General Ledger Reflection What implications/benefits/uses may have document splitting functionality for finance? What functionality or functionalities of the new GL would your recommend to implement to address GAAP differences between countries and why?
What internal control benefits would you highlight from the implementation of SAP ECC? Accounts Receivable Introduction Records and manages accounting data of all customers. Integral part of Order to Cash business process. All billing and cash collections are executed by AR sub-module allowing to report on AR activity. Postings made to accounts receivable are also recorded directly in the G/L. AR is integrated with SD and Treasury (order to cash process) AR GL Customer payment Billing
Accounts Receivable Transactions XD01 or FD01. Customer master record FB70 Enter Invoice FB03 Display document F-28 Incoming payments FB08, FB80. Reverse document and mass reversal FBL1N AR Account line items FD10N Display balances AR Accounts Receivable Master Data (FD01) Customer Master Account is data needed to conduct business with customers and execute transactions related with fulfillment process. AR General (Client) Accounting (Company code) Account Name Address
Bank information Payment terms Payment method Reconciliation account Cash management group Accounts Receivable Credit Management Accounts are processed on the basis of credit segment in the customer master record. This is maintained in a separate data basis in SAP credit management. Credit data includes all information about a business partner that is required to monitor credit risk Credit profile data Credit segment data Credit Profile Contains the procedure for scoring and credit limit calculation, the internal scoring, and sometimes external business partner ratings.
Also includes risk class, check rules for controlling credit limit check, and notes. Credit Segment Contains all the data required for checking credit when a sales order is accepted and the resulting order-related credit decision. You can define a main credit segment as well as additional credit segments for company codes. AR Accounts Receivable Invoice entry (FB70) Company code Customer and Reference Posting and Invoice date Document type Amount and currency Line items GL accounts Posting key Amounts Additional info tabs AR Accounts Receivable Incoming Payments (F-28) Company code Posting & document date Document type Currency
Bank Data (debit) Value Data (collection date) Customer Data (credit) Additional selections for line items identification AR 41 Accounts Receivable Display Balances (FD10N) Customer Company Code Fiscal Year & Currency Outcome Beginning balance Debits and Credits per period Balance Ending Balance Sales related transactions Drilldown capability AR Accounts Payable Introduction Records and manages accounting data for all vendors Integral part of the Procure to pay business process All invoices and payments are executed by AP sub-module allowing to report on AP activity Postings in accounts payable are simultaneously recorded in the G/L
AP is integrated with IMWM and Treasury (procurement to pay process) AP GL Stock Vendor invoice Vendor payment Accounts Payable Transactions XK01 or FK01. Vendor master record FB60 Enter Invoice FB03 Display document F-53 Outgoing payments F110 Mass payments FB08, FB80 Reverse document and mass reversal
FBL5N AR Account line items FK10N Display balances AP Accounts Payable Master Data (FK01) Vendor Master Account is data needed to conduct business with vendors and execute transactions related with the purchasing process AP General (Client) Accounting (Company code) Account Name Address Payment terms Payment method Bank information
Reconciliation account Accounts Payable Invoice entry (FB60) Company code Vendor and Reference Posting and Invoice date Document type Amount and currency Line items GL accounts Posting key Amounts Additional info tabs AP Accounts Payable Outgoing Payments (F-53) Company code Posting & document date
Document type Currency Bank Data (credit) Value Data (payment date) Vendor Data (debit) Additional selections for line items identification AP 47 Accounts Payable Mass Payments (F110) Run date Payment ID Parameters Posting date Doc entry date reference Company code Payment terms Next payment Vendor range Select printout/data medium AP 48 Accounts Payable Display Balances (FK10N) Vendor
Company Code Fiscal Year & Currency Outcome Beginning balance Debits and Credits per period Balance Ending Balance Purchase related transactions Drilldown capability AP Account Payable and Receivable Reflection What recommendations would you give to a new SAP implementation in regards the settings for vendor and customer master records? What are the benefits of AP and AR subledger? How do you link the AP and AR sub-ledger and the postings to FI? What are the benefits of the open item management functionality in accounts payable and accounts receivable? Why the multi-currency functionality of SAP is one of its greatest benefits? Asset Management Introduction Records and manage accounting data for all fixed assets All asset transactions (acquisitions, transfers, sells, retirement,
depreciation) are controlled by asset management during its life and calculate asset depreciation AM is integrated with AR and AP Postings in AR and AP are simultaneously recording in asset management Postings in asset management are simultaneously recorded in the G/L AP Asset Acquisition Depreciation Retirement
Asset Management Transactions AS01 Asset master record F-90 Acquisition with vendor AW01N Asset Explorer F-92 Retirement with customer AFAB Depreciation run AB08 Reverse document AP Asset Management Master Data (AS01) Asset Master Record contains data to track the financial consequences associated with the entire lifecycle of an asset. AP General (Company code) Dep. Areas (Chart of Depreciation) Description Depreciation key
Account determination Controls the GL postings based on the asset class Asset class Cost centers and plant Origin data Useful life Dep. Start date Change over year Asset Management Master data: Asset Class Grouping of assets with possess similar characteristics Asset classes created at client level (apply to all company codes) Each asset class is associated to a reconciliation account via
account determination Each asset has to be assigned to an asset class. There is at least one special asset class for assets under construction and one for low-value assets. AP Asset Management Master data: Account Determination It create the link between the asset master record and the GL Each asset class is assigned to an account determination but it is possible to have unique account determination per chart of depreciation Each account determination is associated with a depreciation area Each account determination holds the GL accounts for Acquisitions, depreciation and retirement AP Asset Management Master data: Dep. areas and dep. keys Depreciation area Chart of depreciation specific Used to calculate different values in parallel for each fixed asset for different purposes an can be linked to different ledgers. Various data is stored in the asset master record for depreciation areas which control the calculation of normal and special depreciation for the special depreciation areas. Depreciation key Depend from the depreciation area Can use different depreciation method for general business
procedures from the depreciation method required by tax authorities. CoD Dep area 01 Dep area 02 Dep area 03 GL Dep keys Dep keys Dep keys AP Asset Management Acquisition with vendor (F-90) Company code Posting and document date Document type Line items Vendor account Posting key (31 for vendor and 70 for asset debit) Transaction type to classify the asset transaction Amount AP Asset Management Depreciation run (AFAB) Only after the depreciation posting run has been completed is
the depreciation actually posted in asset accounting and in the General Ledger The depreciation is posted to the corresponding depreciation accounts in the General Ledger and to the assigned CO cost object assigned to the asset master record. AP Asset Management Retirement with customer (F-92) Company code Posting and document date Document type Line items Customer account Posting key (01 for customer and 75 for asset credit) Transaction type to classify the asset transaction Amount AP Asset Management Asset Explorer (AW01N) Offers a clear overview of the activity for an asset. You can see transactions that have been posted to the asset plus planned and posted depreciation per depreciation area, per period for each fiscal year. You can drill down to the details of the FI transactions It is possible to branch to master data, other cost objects, and perform simulations
AP Asset Management Reflection What is the relevancy of the asset master records in the asset life cycle process? What role do you think the chart of depreciation play to address GAAP differences between countries and why? How do you link the asset sub-ledger and the postings to FI? SAP Finance (FI) Reflection It is month end at GBI and the accounting group is working on its month end close, what activities would you need to review in each of the areas below Accounts Receivable Accounts Payable Asset Management General Ledger SAP Finance
Practice Create account in CoA Create cost element Expense account Create AR invoice Run financial statements Post payment Post cash collection Display balances Display line items Create vendor Park AP invoice
Create customer Post park document Create asset master Post asset Display Account in CoA Reconciliation account
SAP Finance Display account CoA: Reconciliation Account Menu path/Tcode (FS00) Accounting ► Financial Accounting ► General Ledger ► Master Records ► G/L Accounts ► Individual Processing ► Centrally Enter 300000 and US00 as Company Code. Click Type/Description
Account group P&L or Balance Sheet account Description Control data Account currency Reconciliation account SAP Finance Create account CoA: Expense Account Menu path / Tcode (FS00) Accounting ► Financial Accounting ► General Ledger ► Master Records ► G/L Accounts ► Individual Processing ► Centrally Enter 75###5 (replace ### with your assigned number) as your G/L Account number and US00 as Company Code. Copy data from the account 740300 in Company Code US00 by choosing G/L account ► Create with reference and entering the necessary data. Confirm with Enter Rent Expense ### as Short Text and Rent Expense ### as G/L Acct Long Text. Again, replace ### with your assigned number. Then, click on GL account:______________ SAP Finance Create cost element
Menu path/Tcode (KA01) Accounting ► Controlling ► Cost Element Accounting ► Master Data ► Cost Element ► Individual Processing ► Create Primary Enter 75###5 as cost element. (replace ### with your assigned number) using controlling area NA00 Choose the first of the current month as valid from and 12/31/9999 as the valid to Copy from reference using cost element 740300 out of NA00 controlling area Proceed with Enter Name Rent Expense ### and Rent Expense ### as Description. Then click Cost element:______________ SAP Finance Create Vendor Menu path/Tcode (FK01) Accounting ► Financial Accounting ► Accounts Payable ► Master Records ► Create Leave Vendor blank and select account group KRED Enter Company Code US00. Reference Vendor number 105### (replace ### with your assigned number) and Company Code US00. Proceed with Address view, enter Cardinal Properties ### as Name, Search term ###, Street 1090 Grand Lake Dr, Postal code 55347, City Eden Prairie, Country US, Region MN. Make sure English is selected as language and click on three times. Account information view: Reconciliation account 300000 Click
Payment terms 0001 and select Check double inv. Payment methods C. Then click Vendor number:______________ SAP Finance Create Customer Menu path /Tcode (FD01) Accounting ► Financial Accounting ► Accounts Receivables► Master Records ► Create Leave customer blank and select 0001 Sold to party on account group and enter company code US00. Proceed with Address view: enter The Bike Zone ### as Name, Search term ###, Street 2590 Kennedy Ave. Postal code 33790, City Orlando, Country US, Region FL Make sure English is selected as language Under company code data: Account management: Reconciliation account 110000 Payment terms 0001 under payment transactions. Then click Customer number:______________
SAP Finance Create Asset Master Record Menu path/Tcode (AS01) Accounting ► Financial Accounting ► Fixed Assets► Assets ► Create Enter asset class 2000 and company code US00. Proceed with General view: enter Asset test ### as description Time dependent view: Cost center NAHR2###. Remember to replace ### with your assign number, plant MI00 Depreciation areas. Take a look at the depreciation areas. Enter a useful life of 5 years. Then click Asset number:______________ SAP Finance Post Asset Menu path/Tcode (F-90) Accounting ► Financial Accounting ► Fixed Assets► Posting► Acquisition ► External acquisition ► With vendor Header data, enter today's date as invoice and posting date, US00 as company code, Invasset-### as reference, and USD as currency Enter account the vendor number you previously created, proceed with Line item data, enter $3,000 amount, payment term 0001, Enter posting key 70, account the asset number created previously, proceed with
Line item data, enter $3,000 amount Then click Document number:______________ SAP Finance Park AP document Menu path/Tcode (FB60) Accounting ► Financial Accounting ► Accounts Payable► Document entry ► Invoice Select company code :US00 and confirm that transaction is set as Invoice Header data: basic data view, enter vendor number you created previously, today's date as invoice and posting date, Invv-### as reference, and $1,500 USD as amount. Line items view. Enter your expense account 75###5, D/C Debit, Amount in document currency $1,500, Text Invoice Cardinal Rent Expenses-### and cost center NAHR2###. Remember to replace ### with your assigned number Use the to see the postings Click to park the document
Document number:______________ SAP Finance Create AR document Menu path/Tcode (FB70) Accounting ► Financial Accounting ► Accounts Receivable► Document entry ► Invoice Select company code :US00 and confirm that transaction is set as Invoice Header data: basic data view, enter customer number you created previously, today's date as invoice and posting date, Invc-### as reference, and $5000 USD as amount. Line items view. Enter revenue account 600000, D/C Credit, Amount in document currency $5,000, Revenue-###. Remember to replace ### with your assigned number Use the to see the postings Click on Document number:______________ SAP Finance Post park document Menu path/Tcode (FBV0) Accounting ► Financial Accounting ► General Ledger► Document ► Park document ►Post/Delete
Select company code:US00, document number parked and current fiscal year. Confirm with Review posting and confirm posting with Document number:______________ SAP Finance Post payment Menu path/Tcode (F-53) Accounting ► Financial Accounting ► Accounts payable► Document entry► Outgoing payment ►Post Enter current date as document and posting date, US00 as company code and USD as currency Bank data: Account 100000, amount $1,500 and Payrent-### as text. Open item selection: Account your vendor created previously Select and match the line item information. When assigned has been made correctly, the “non assigned” value should be equal to $0.00 Click on Document number:______________ SAP Finance
Post cash collection Menu path/Tcode (F- 28) Accounting ► Financial Accounting ► Accounts receivable► Document entry► Incoming payments Enter current date as document and posting date, US00 as company code and USD as currency Bank data: Account 100000, amount $5,000 and Collection- ### as text. Open item selection: Account your customer created previously Select and match the line item information. When assigned has been made correctly, the “non assigned” value should be equal to $0.00 Click on Document number:______________ SAP Finance Display balances Menu path/Tcode (FBL3N) Accounting ► Financial accounting ► General ledger ► Account ► Display Balances Enter account number 75###5, company code US00, and the current year as fiscal year. Then click Double click on month balance to see line items
SAP Finance Display line items (AR and AP) Menu path/Tcode (FD10N) Accounting ► Financial accounting ► Accounts Receivable ► Account ► Display Balances Enter account number your previously created customer, company code US00, and the current year as fiscal year. Then click Double click on month balance to see line items Menu path/Tcode (FK10N) Accounting ► Financial accounting ► Accounts Payable ► Account ► Display Balances Enter account number your previously created vendor, company code US00, and the current year as fiscal year. Then click Double click on month balance to see line items SAP Finance Run financial statements Menu path/Tcode (F.01) Accounting ► Financial accounting ► General ledger ► Information system ► General ledger reports (new) ► Financial Statement / Cash Flow ► General ► Actual/actual comparisons ► Financial statement Enter chart of accounts GL00, company code US00, financial statement version G###, and current year as reporting year. Choose ALV tree control with the layout 1SAP for the list output. Click
Lecture1 Finance Review and Introduction to ERP FIN419 Learning Objectives Review Finance basic concepts Introduction to SAP Review an Introduction to SAP Understand the definition of ERP and business processes Understand the inter-related nature of an ERP system and the impact on finance Explain the silo effect Review SAP Business Suite and basic concepts (master data and transactional data) Understand Accounting in SAP Explain the goal of FI and CO Understand the basics of SAP navigation Finance Review Forms of Business Organizations The corporate form of business is the standard method for
solving the problems encountered in raising large amounts of cash. Three major forms in the United States Sole proprietorship, a business own by one person Partnership, a business own by two or more individuals or entities General, with unlimited debt liability Limited, with some partners with limited debt liability Corporation, a legal “person” distinct from owners and with limited liability General, subject to double taxation S Corporation is taxed through its shareholders avoiding double taxation Limited liability company allows to operate and tax like a partnership but retain limited liability for its owners Finance Review A Comparison Fall 2015 4 Corporation Partnership
Liquidity Shares can be easily exchanged Subject to substantial restrictions Voting Rights Usually each share gets one vote General Partner is in charge; limited partners may have some voting rights Taxation Double Partners pay taxes on distributions
Reinvestment and dividend payout Broad latitude All net cash flow is distributed to partners Liability Limited liability General partners may have unlimited liability; limited partners enjoy limited liability Continuity Perpetual life Limited life
4 Corporations account for the largest volume of business (in dollar terms) in the U.S. Advantages include limited liability, unlimited life, separation of ownership and management (ability to own shares in several companies without having to work for all of them), liquidity, and ease of raising capital. Disadvantages include separation of ownership and management (agency costs) and double taxation. Recent tax laws reduce the level of double taxation, but it has not been eliminated. Although the corporate form of organization has the advantage of limited liability, it has the disadvantage of double taxation. A small business of 75 or fewer stockholders is allowed by the IRS to form an S Corporation. The S Corp. organizational form provides limited liability but allows pretax corporate profits to be distributed on a pro rata basis to individual shareholders, who are only obligated to pay personal income taxes on the income. A similar form of organization is the limited liability corporation, or LLC. LLC’s are a hybrid form of organization that falls between partnerships and corporations. Investors in LLC’s have the protection of limited liability, but they are taxed like partnerships. LLC’s first appeared in Wyoming in 1977 and have skyrocketed since. They are especially beneficial for small- and medium-sized businesses such as law firms or medical practices. A Corporation by Another Name…Corporations exist around the world under a variety of names. Table 1.2 lists several well- known companies, along with the type of company in the original language.
Finance Review The Goal of Financial Management The goal is to increase the value of the firm by maximizing investments while minimizing financing. V = Σ CFt / (1+ i)t Maximize the current value per share of the exiting stock Fall 2015 5 5 Learning Objective: Apply goals of financial management in making decisions Possible Goals Profit Maximization – this is an imprecise goal. Do we want to maximize long-run or short-run profits? Do we want to maximize accounting profits or some measure of cash flow? Because of the different possible interpretations, this should not be the main goal of the firm. Other possible goals that students might suggest include minimizing costs or maximizing market share. Both have potential problems. We can minimize costs by not purchasing new equipment today, but that may damage the long-run viability of the firm. Many dot.com companies got into trouble in the late 1990’s because their goal was to maximize market share. They raised substantial amounts of capital in IPO’s and then used the money on advertising to increase the number of “hits” on their site. However, many firms failed to translate those “hits” into enough revenue to meet expenses, and they
quickly ran out of capital. The stockholders of these firms were not happy. Stock prices fell dramatically, and it became difficult for these firms to raise funds. In fact, many of these companies have gone out of business. The Goal of Financial Management From a stockholder (owner) perspective, the goal of buying the stock is to gain financially. Thus, the goal of financial management in a corporation is to maximize the current value per share of the existing stock. Is it ethical to sell a product that is known to be addictive and dangerous to the health of the user even when used as intended? Is the fact that the product is legal relevant? Do recent court decisions against the companies matter? What about the way companies choose to market their product? Are these issues relevant to financial managers? How do we go about maximizing shareholder wealth? Finance Review Agency Cost and Agency Problem Agency relationship is the relationship that exist between stockholders and management Principal hires an agent to represent its interests Stockholders (principals) hire managers (agents) to run the company Agency cost is the conflict of interest between stockholders and management Stockholders goal is to increase the return on its investments (firm’s higher value) Management may be more concern about its compensation or job security Agency problem Conflict of interest between principal and agent
Finance Review Do Managers Act in the Stockholders’ Interest? Alignment between management and stockholders goals? Managerial compensation Incentives can be used to align management and stockholder interests Incentives need to be carefully structured to insure that they achieve their goal Can management be removed if goals are different? Corporate control Proxy fights is the mechanism on which unhappy stockholders can remove management Poorly manage firms are more attractive to takeovers Finance Review Regulation The Securities Act of 1933 and the Securities Exchange Act of 1934 Issuance of Securities (1933) Creation of SEC and reporting requirements (1934) Sarbanes-Oxley (“SOx”) Increased reporting requirements and responsibility of corporate directors Financial Statements and Cash Flow Fall 2015 8 8 Historically, most regulation has focused on the disclosure of
relevant information, thereby putting all investors on an equal playing field. The Securities Act of 1933 and the Securities Exchange Act of 1934 These Acts provide the basic regulatory framework for the public trading of securities in the United States. The 1933 Act focuses on the issuance of securities, while the 1934 Act established the SEC and addressed other regulatory issues, such as insider trading and corporate reporting. Sarbanes-Oxley Following the scandals at Enron, WorldCom, and Tyco, among others, “Sarbox” was enacted in 2002. This Act significantly increased the auditing and reporting requirements that public firms face, and it also explicitly placed the responsibility for any fraud on the corporate directors. As with any law, however, there is a cost. In response to the added burden, many (particularly small) firms have delisted and others have foregone going public. For others, the cost of compliance has significantly increased, thereby reducing profits. SAP Introduction SAP stands for Systems, Applications, and Products in Data processing Very successful Enterprise Resource Planning (ERP) solution which is used to highly integrate business processes. Fall 2015 9
9 SAP Introduction Name of Company and Software Name of the Company SAP AG (Walldorf) SAP America (New Town Square) Name of the Software SAP R/2 SAP R/3 SAP ERP Fall 2015 10 10 SAP Introduction Company Statistics SAP AG Founded in Walldorf, Germany in 1972 World’s Largest Business Software Company World’s Third-largest Independent Software Provider Company Statistics Over 40,000 employees in more then 50 countries 1500 Business Partners 36,200 customers in more then 120 countries
12 million users 100,600 installations Fall 2015 11 SAP is the world's largest inter-enterprise software company and the world's third-largest independent software provider overall. We have a rich history of innovation and growth that has made us a true industry leader. SAP Americas 12 Million Users. 100,600 Installations. 1,500 Partners. SAP Americas is a subsidiary of SAP AG, the world's largest inter-enterprise software company and the third-largest software supplier overall. SAP Americas's corporate headquarters is located in Newtown Square, PA, a suburb of Philadelphia. Our officers and executives lead a team of professionals dedicated to delivering high-level customer support and services. Founded in 1972 as Systems Applications and Products in Data Processing, SAP has a rich history of innovation and growth that has made us the recognized leader in providing collaborative business solutions for all types of industries -- in every major market. The company, headquartered in Walldorf, Germany, employs more than 37,700 people in more than 50 countries, and serves more than 34,600 customers worldwide. Experience, Knowledge, and Technology for Maximizing Business SAP has leveraged our extensive experience to deliver mySAP Business Suite, the definitive family of business solutions for today's economy. These solutions are open and flexible, supporting databases, applications, operating systems, and hardware from almost every major vendor. What's more, mySAP Business Suite allows employees, customers, and business partners to work together successfully -- anywhere, anytime.
By deploying the best technology, services, and development resources, SAP has delivered a business platform that unlocks valuable information resources, improves supply chain efficiencies, and builds strong customer relationships. And through the Global Solution Center, SAP Americas identifies customer needs and develops solutions to meet these needs. SAP is listed on several exchanges, including the Frankfurt Stock Exchange and the New York Stock Exchange, under the symbol "SAP." 11 SAP Introduction From SAP R/3 to HANA Database layer From Oracle/ Ms SQL To SAP HANA Presentation layer From SAP GUI To SAP Fiori
Fall 2015 12 Central database stores all data and application programs. The application gives access to the database to read and write data. The presentation allows for input/output of data to the users 3-tier client server system Web server Internet transaction server Brings it to a single database across the world. What is Client-server Computing? The short answer: Client/server is a computational architecture that involves client processes requesting service from server processes. The long answer: Client/server computing is the logical extension of modular programming. Modular
programming has as its fundamental assumption that separation of a large piece of software into its constituent parts ("modules") creates the possibility for easier development and better maintainability. Client/server computing takes this a step farther by recognizing that those modules need not all be executed within the same memory space. With this architecture, the calling module becomes the "client" (that which requests a service), and the called module becomes the "server" (that which provides the service). The logical extension of this is to have clients and servers running on the appropriate hardware and software platforms for their functions. For example, database management system servers running on platforms specially designed and configured to perform queries, or file servers running on platforms with special elements for managing files. It is this latter perspective that has created the widely-believed myth that client/server has something to do with PCs or Unix machines. 12 SAP Introduction Software Applications Industry
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Lecture 3Introduction to SAP Controlling (CO)FIN419 .docx

  • 1. Lecture 3 Introduction to SAP Controlling (CO) FIN419 Learning Objectives Understand the goal of SAP Controlling (CO) Understand the purpose, master data and reporting of CCA Understand the purpose, master data and reporting of PCA Understand the purpose, master data and reporting of Internal orders Understand the purpose, master data and reporting of Product Costing Understand the purpose, master data and reporting of Profitability Analysis Understand the integration of CO and FI 2 SAP Controlling (CO) Goal The purpose of the Controlling (CO) module in SAP is to provide organizations with a method of slicing and dicing data to view costs from an internal management perspective and provide a view of profitability beyond that of basic financial
  • 2. reporting. Controlling allows an organization to plan and track overhead costs within the company's specific organizational structure. Standard reports include: Cost center performance Profit center performance Budget analysis Goal 3 SAP Controlling (CO) Organizational Structure Client An independent environment in the system Company Code Represents an independent legal accounting unit Balanced set of books, as required by law, are prepared at this level A client may have more than one company code Controlling Area The controlling area identifies a self-contained organizational structure for which costs and revenues can be managed and allocated. May contain one or more company codes, which can operate in different currencies. Company codes within a controlling area must all use the same operational chart of accounts and fiscal year variant Represents the legal and/or organizational views of an enterprise and it forms a framework that supports the activities of a business in the manner desired by management
  • 3. Org SAP Controlling (CO) Organizational Structure (Cont) Operating Concern It represents an organizational unit in your company for which the sales market data has a uniform structure (characteristics/dimensions) It is the valuation level for profitability analysis (CO_PA) Multiple controlling areas can be assigned to one operating concern Plant The plant represents a production unit and is the central organizational unit in Materials Management and Production Planning. A plant is assigned to a company code. Cost Center Hierarchy It is a tree structure representing all the cost centers belonging to a controlling area from a controlling perspective Profit Center Hierarchy It is a tree structure representing all the profit centers belonging to a controlling area from a controlling perspective Org SAP Controlling (CO) Controlling Area and Currencies By assigning more than one company code to a controlling area you can perform cost accounting for all company codes The controlling area and company codes can have different currencies The currency of the controlling area can be the same as that for a company code or different from all the company codes
  • 4. assigned to the controlling area. Currencies on CO You can use three currencies in management accounting Controlling area currency Company code currency or local currency Transaction currency By default, cross-company code cost accounting displays the company code currency as the object currency Org SAP Controlling (CO) Global Bike Finance Structure One Operating concern Two controlling areas Two company codes Five plants Three in North America Two in Europe Global Bike Global Bike Inc Global Bike Germany GmbH Dallas Client Company code Plants Global Concern North America Europe Operating Concern Controlling Areas San Diego
  • 5. Miami Heilderberg Hamburg SAP Controlling (CO) Reflection What currencies would be involved in a CO transaction on Global Bike Inc? What currencies would be involved in a CO transaction on Global Bike Germany? Under the GBI Controlling org structure, what needs the financial management team has and why? SAP Controlling (CO) Sub-modules Cost Element and Cost Center Accounting (CCA) Profit Center Accounting (PCA) Internal Orders Product Costing (CO-PC) Profitability Analysis (CO-PA) Controlling SAP Controlling (CO) Master Data Summary Controlling consists of all master data, configuration, and reporting required to analyze both spend and revenues, both within and across organizations. This includes the following master data: 1
  • 6. Cost elements Cost/revenue accounts 2 Cost centers Departmental units 3 Profit centers Business lines, product lines or divisions 4 Internal orders Projects or events 5 Statistical key figures Statistics for allocation cost 6 Activity types Labor and other activity cost $ Master Data SAP Controlling (CO) Cost and Statistical Objects Cost Objects True cost objects can act as sending or receiving objects during
  • 7. cost allocation. Cost centers, real internal orders, real projects, networks, make- to-order production orders, cost objects, and profitability segments. Statistical Cost Objects Statistical objects cannot allocate cost to other objects. Statistical orders, statistical projects, and profit centers. Controlling Cost Element & Cost Center Accounting Introduction Financial Accounting is a primary source of data for Management Accounting. Most expense postings in the general ledger result in a cost posting in Management Accounting. These expense postings to the general ledger can be journal postings, vendor invoices, or depreciation postings from Asset Management Cost center Responsible cost containment Common use Finance Planning Shipping Quality Cost accounting
  • 8. Cost Element & Cost Center Accounting Transactions KA01 Create primary cost element KA06 Create secondary cost element OKEON Cost center hierarchy KS01 Create cost center KL01 Create activity type KK01 Create statistical key figures KP06 Budget entry S_ALR_87013611 Cost Centers: Actual/Plan/Var KSB1 Cost center actual line items Cost accounting Cost Element & Cost Center Accounting Master Data: Secondary Cost Element (KA06) Exist only in CO but not in FI. Used in conjunction with various allocation techniques in CO Used for internal allocations within CO. Do not have any corresponding G/L accounts in FI Used in CO to redistribute costs and these costs must be balanced Cost accounting Controlling Controlling Primarily Cost Element
  • 9. Secondary Cost Element Controlling area Validity Category Cost Element & Cost Center Accounting Primary Cost Element link with Secondary Cost Element Any transactions that create cost movements within CO are balanced entries. When a cost is moved from one controlling objet to another, the sending object is credited and the receiving object is debited for the same amount. Cost accounting Cost Center Accounting Cost Center Hierarchy (OKEON) Cost Centers require a formal structure called a hierarchy The standard hierarchy is a tree structure representing all the cost centers belonging to a controlling area from a controlling perspective
  • 10. You can combine cost centers into cost center groups You can then create cost center hierarchies from these groups by combining the groups according to decision making area, area of responsibility, or management area Cost accounting Cost Center Accounting Master Data: Cost Center (KS01) Use cost center for differentiated assignments of overhead costs to organizational activities based on utilization of the relevant areas and for differentiated controlling of costs arising in an organization Define a cost center for each low-level organizational unit that has responsibility for managing costs. The cost center is an organizational unit in a controlling area representing a clearly delimited location where costs occur Cost accounting Basic Data Name and description Cost Center Hierarchy Profit Center Company Code
  • 11. Responsible person Business Area Other Category Currency Cost Center Accounting Master Data: Statistical Key Figures (KK01) Can be defined as either fixed values or total values. Examples Number of employees Square footage CO impact: None, used for reporting and allocation purposes Represent numerical measures used as a basis for internal cost allocations and can be used by cost centers, profit centers, internal orders. Cost accounting Cost Center Accounting
  • 12. Master Data: Activity Types (KL01) Usually measured in a time or unit increment Used to allocate cost only from cost centers. Rent Power Telephone CO impact: Costs can flow to other cost objects such as cost centers, internal orders, production orders, ABC processes, etc. It is the productive output of a cost center and transfer cost between cost centers. Cost accounting Basic Data Name and description Allocation type Allocation Activity unit Cost center category Allocation cost element Price indicator
  • 13. Cost Center Accounting CO postings: Types of Allocation Distribution Method for periodically allocating primarily cost elements Primarily cost elements maintain their identifies in both the sending and receiving objects Sender and receiver cost centers are fully documented in a unique controlling (CO) document Assessment Method of allocation both primarily and secondary cost elements Primary and/or secondary cost elements are grouped together and transferred to receiver cost centers through use of a secondary cost element. Sender and receiver cost centers are fully documented in a unique Controlling (CO) document. Cost accounting Cost Center Accounting CO postings: Distributions The purpose is to allow a cost center to charge a cost object for services or activities provided using a planned rate. Cost allocations do not affect the General Ledger Deals with the measurement, posting, and allocation of an organizational activity. You need to create the corresponding tracing factors known as
  • 14. activity types in cost center accounting. Cost accounting Cost Center Accounting CO postings: Assessment Assessment affords a higher level of summarization for allocations where the receiving cost center manager has no control over reducing the expense at the sender cost center. All the debits and credits posted to the cost center will be combined on a secondary cost element for allocation. The only way to further allocate secondary costs is to use assessments. Cost accounting Cost Center Accounting Budget (Planning) Involves entering plan figures for costs, activities, prices, or statistical key figures for a particular cost center and a particular planning period. Goal Calculate planning costs to define deviations later and to prepare the allocation to the cost bearers. Based on absorption costing, it allocates all the costs in overhead area to the cost bearers in a company using different procedures Objectives To plan the structure of the organization’s future operations for a clearly defined period. To control business methods within the current settlement
  • 15. period using plan/actual or target/actual comparisons To monitor the efficiency after the completion of the settlement period using plan/actual or target/actual comparisons To provide a basis for the valuation of organizational activities independent of random fluctuations Cost accounting Cost Center Accounting Budget vs Actuals (S_ALR_87013611) Controlling area Fiscal year From to Period Plan Version Cost centers Cost elements Cost accounting Cost Center Accounting Cost center reporting (KSB1) Controlling area Cost center Cost element Posting date Cost accounting Cost Center Accounting Reflection Which currencies would you think a Global Bike Germany
  • 16. profit center document would have? What would you recommend GBI in Germany to be its cost center structure and hierarchy and why? What examples can you provide for GBI distribution process? What examples can you provide for GBI allocation process? What would you say is the main purpose of having the distribution and allocation process in SAP? What benefits you can derive for having your cost center budget in SAP? Profit Center Accounting Introduction Purpose is to determine profit for internal areas of responsibility and it is integrated to the New GL Responsible for revenue regeneration and cost containment Common use Region Function Product Profit accounting Profit center Revenue Cost
  • 17. Profit Center Accounting Transactions KE51 Create profit center KCH1 Create profit center hierarchy KE5Z Profit center actual line items Profit accounting Profit Center Accounting Master Data: Profit Center (KE51) Profit center accounting is a statistical accounting component It takes transaction data posted in other components and represents it from a profit-center-oriented point of view. By assigning balance sheet items to profit centers you can analyze your company’s fixed assets by profit centers making it possible to analyze a number of key figures by profit center, thus using them as investment centers An organizational unit in accounting that reflects a management-oriented structure of the organization for purpose
  • 18. of internal controls Profit accounting Basic Data Controlling area Validity Name & description Company codes Other Responsible Hierarchy group Profit Center Accounting Data Flow Profits centers can receive data from: Direct postings from GL Automatically generated for AR and AP from document splitting Direct posting from revenue Derived posting from expenses Profit accounting
  • 19. Profit center Balance sheet Revenue AR and AP Expense Profit Center Accounting Reporting (KE5Z) Controlling area Company code
  • 20. Posting Period Fiscal Year Profit center Account Document number Profit accounting Profit Center Accounting Reflection Which currencies would you think a Global Bike Germany profit center document would have? What do you think GBI can use profit center accounting for considering they are a manufacturing company. Internal Order Introduction Interim cost collector Usually used to break costs out below the cost center level. Common use Project cost Campaign cost Travel cost Used for tracking individual or recurring events where several cost centers may share the expense Usually short term and gets set to zero at the end. Overhead Orders Used to monitor costs incurred for a particular purpose
  • 21. Investment Orders Used to monitor costs incurred in the production of a fixed asset Accrual Orders Used to offset postings of accrued costs to cost centers Orders with Revenue Used to replace the cost accounting parts of SD customer orders if SD is not being used. Internal order Internal Order Transactions KO01 Create order Planning Posting and settlement KOB1 Actual line items Internal order Internal Order Master Data (KO01) It can settle cost at its end of its life into: Fixed assets Projects Profit centers Is a self-contained mini project cost object with an interim life. Internal order Basic Data Order and description
  • 22. Category Other Company code Controlling area Plant Profit center Responsible Currency Internal Order Planning During internal order planning, you enter costs, activities, and business processes that you expect to incur during the lifecycle
  • 23. of an order. Using internal order planning, you can compare plan and actual costs, and carry out a differentiated variance analysis Planning levels Overall planning is simplest level for planning order costs which allows you plan overall and annual values irrespective of the cost elements. Primary/secondary cost and revenue planning can be used if you have detailed information about the internal order which allows you to plan primary costs, activity inputs, and revenues. Unit Costing can be used to carry out more detailed planning than is possible on cost elements. Internal order Internal Order Posting and Settlement Posting An internal order is a bucket that allows a better view of costs that could not be itemized in detail in a cost center. An order can be real or statistical (informational postings only). If it is a statistical posting, the cost object for that the internal order is attached to would receive the real posting Settlement Another form of periodic cost allocation. Internal orders must be settled because they are interim collectors of costs. The order will be periodically credited and a receiver will debited with cost. Can occur at the end of each period or at the end of the order’s life.
  • 24. Internal order Internal Order Settlement Rule Settlement rule establishes the sender and receiver relationship as well as how much each receiver will receive during settlement. Receivers must be defined as valid in customizing and no impending system restrictions (such as locks) prevent settlement. Cost centers, other orders, projects, profitability segments, fixed assets, sales order with cost collector, and G/L accounts Orders Internal order Cost center Other orders Projects CO-PA
  • 25. FI-FA Cost collectors Internal Order Reporting (KOB1) Controlling area Order Cost element Posting date Internal order
  • 26. Internal Order Reflection What would you say is the difference between a cost center and an internal order? What would you recommend the GBI team to use internal orders for? What the “settlement” activity has to do with the interim life of an internal order? Product Costing Introduction Concerned with all aspects of planning the cost of producing products or services, as well as tracking and analyzing actual costs and consist of the following three components: Product Cost Planning Cost Object Controlling Actual Costing and Material Ledger Product costing Material Cost of material Labor
  • 27. Cost of labor Overhead Cost of overhead Product Costing Introduction: Product Cost Planning Used to estimate the costs to produce goods or services. If a quantity structure (bill of material and routing) is available in manufacturing Planning, then the system can automatically create a cost estimate based on this data. If no quantity structure is available you can either enter the cost items manually with the unit costing tool or transfer them automatically from a non-SAP system using batch input. Product costing
  • 28. Product Costing Introduction: Actual Costing Used to provide actual costs for each material at the end of the period. Materials and their movements are valuated with a standard price during the period. Any variances with respect to this standard are collected in the material ledger when invoices are received or orders settled. During period end closing, the variances are used to calculate an actual price for the material in the closed period. Product costing Product Costing Transactions CK40N Costing run CKMLCP Actual costing run Product costing Product Costing Master Data: Material Master Views Basic Sales Purchasing Plant Forecast Storage Quality Accounting Controlling
  • 29. Product costing Product Costing Master Data: Material Master Contains all of the key information a company needs to manage a material within its organization. The material master defines, among other things, how a product is sold, manufactured, purchased, inventoried and costed. Information is grouped into views that are organized by business function. The majority of views of master data are stored at the plant level. Product costing Basic Data Material Valuation class Accounting and Costing Unit of measure Material group Description Controls account determination Price control Price per unit Standard price
  • 30. Previous price Last price change Profit center Cost estimate Product Costing Costing Run (CK40N) Once you have carried out a cost estimate for a material, you can transfer the costing results to the material master as prices. Three steps Mark the standard cost estimate Release Update Product costing Product Costing Costing Run (CK40N) Release Standard Cost The system transfers the result of the standard cost estimate into the material master record as the material standard price. The price is then active for Financial Accounting and is used for the valuation of the material until the next time a standard cost estimate is released. You can release a standard cost estimate only once per period, unless you delete the previously released standard cost estimate from the database. Mark Standard Cost
  • 31. The system writes the result of the cost estimate into the costing view of the material master record as the future standard price. You can use this price to valuate a material component in the cost estimate. Product costing Product Costing Costing Run: Cost Itemizations Itemizations show detailed information about the origin of costs. Cost element itemizations groups the individual cost items into cost elements. The cost element group the costs in order of appearance. Cost component split groups the cost elements into cost components. Product costing Product Costing Costing Run: Reporting (S_ALR_87099930) Costing run Costing date Plant Product costing Product Costing Reflection What it means to “estimate the cost”? What is the inventory effect after a costing run?
  • 32. What impact would you have in your cost of goods sold when the engineering team may have revisions to the BOM. Profitability Accounting Introduction Enables you to evaluate contribution margins of external market segments which can be classified according to: Products, Customers, Orders Strategic business units, Sales organizations or Business areas, Profitability Accounting components are integrated with Overhead Management and Product Cost Controlling. Profit Center Accounting receives statistical cost postings from all other management accounting components. Profitability Analysis can receive cost assessments from cost centers and Activity-Based Costing processes, settlements of costs from internal orders, and production variances settled from cost objects. PA Profitability Accounting Introduction: Data Flow Data from sales order management is one of the key sources of information.
  • 33. In costing-based profitability analysis information can be taken when an order is created or changed and when an invoice is generated for the order. In account-based profitability analysis information can be taken when a goods issue is posted and when an invoice is generated for the goods issue. PA Profitability Accounting Transactions KE30 Execute report KE24 Line items display PA Profitability Accounting Reporting (KE24) Currency type Period/year Document number Company code Dimensions Cost element CO order Sales order Customer Product PA
  • 34. Profitability Accounting Reflection What would be your recommendation for the GBI tem on how to use CO-PA? What type of data would you expect to see on the CO-PA document? SAP Controlling (CO) Reflection It is month end at GBI and the managerial accounting group is working on its month end close, what activities would you need to review in each of the areas below Cost center accounting Profit center accounting Internal order accounting Product costing Profitability analysis SAP Controlling Practice Display
  • 35. Master data Transactional data Create cost center group Create cost center Create budget/forecast Create statistical key figure Plan number of employees Post rent invoice Create assessment View assessment results Review budget vs actuals
  • 36. SAP Controlling Practice: Data relationship Display Master data Transactional data Cost center
  • 37. Cost center group Statistical key figure Plan number employees Assessment Review assessment Post invoice Review budget vs actuals
  • 39. SAP Finance User Logon Screen Click on the icon in your desktop. Enter the following information: System ID: BK8 Client: 126 User ID: GBI-XXX Enter your password Enter Client, Server and Password Client is a numeric field and this number represents a whole business entity. Users are client specific which means that having a user identification in one client will only allow access to that particular client. The system settings are stored in a file on your machine called the saplogin.ini file. This file is normally preconfigured centrally and then made available to all the users. Once you
  • 40. have been provided with the SAP Logon, you need a username and password to logon to the SAP system. The username and password is unique for each user and you do have the option to change your password using the New password button available on the screen. 60 SAP Controlling Create Cost Center Menu path/Tcode (KS01) Accounting ► Controlling ► Cost Center Accounting ► Master Data ► Cost Center ► Individual Processing ► Create Controlling area NA00 On the following screen enter CC-FI### (replace ### with your assigned number) The cost center should be valid from 01/01 of the current fiscal year. Press ENTER or click to confirm. Enter Finance ### as the cost center name and enter your name for the person responsible. Select cost center category Service cost center H and assign the cost center to hierarchy area Internal services N1200. In addition, choose business area Bikes and currency USD. Click to save Cost center:______________ SAP Controlling Create Cost Center (Cont)
  • 41. Menu path/Tcode (KS01) Accounting ► Controlling ► Cost Center Accounting ► Master Data ► Cost Center ► Individual Processing ► Create Controlling area NA00 On the following screen enter CC-IC### (replace ### with your assigned number) The cost center should be valid from 01/01 of the current fiscal year. Press ENTER or click to confirm. Enter Inventory ### as the cost center name and enter your name for the person responsible. Select cost center category Service cost center H and assign the cost center to hierarchy area Internal services N1200. In addition, choose business area Bikes and currency USD. Click to save Menu path/Tcode (KS01) Accounting ► Controlling ► Cost Center Accounting ► Master Data ► Cost Center ► Individual Processing ► Create Controlling area NA00 On the following screen enter CC-IT### (replace ### with your assigned number) The cost center should be valid from 01/01 of the current fiscal year. Press ENTER or click to confirm. Enter Information Technology ### as the cost center name and enter your name for the person responsible. Select cost center category Service cost center H and assign the cost center to hierarchy area Internal services N1200. In addition, choose business area Bikes and currency USD. Click to save Cost center:______________ Cost center:______________ SAP Controlling
  • 42. Create Cost Center Group Menu path/Tcode (KSH1) Accounting ► Controlling ► Cost Center Accounting ► Master Data ► Cost Center Group ► Create Create a group called GROUP### (replace ### with your assigned number). Click to continue. Name the display hierarchy “Rent cost receivers and click In the left-hand column, enter the cost centers CC-FI###, CC- IC### and CC-IT### and click to confirm. Click . Then return to the main menu by clicking twice. Cost center group:______________ SAP Controlling Create Budget Menu path/Tcode (KP06) Accounting ► Controlling ► Cost Center Accounting ► Planning ► Cost and Activity Inputs► Change Controlling area NA000, planning version 0 (Plan/Act-Version), From current period and fiscal year Enter cost center group GROUP### replace ### with your assigned number) and hit the overview screen icon Enter cost element 75###5 CC-FI### for rent and enter $90,000 for the current month budget. CC-IC### for rent and enter $30,000 for the current month budget CC-IT### for rent and enter $30,000 for the current month budget
  • 43. SAP Controlling Create Statistical Key Figure Menu path/Tcode (KK01) Accounting ► Controlling ► Cost Center Accounting ► Master Data ► Statistical Key Figures ► Individual Processing ► Create Enter EMP### (replace ### with your assigned number) as the key figure number and click . Make sure controlling area NA00 was selected. Enter Number of Employees as the name and chose Number of persons (PRS) as the unit. Make sure the category FXD val is selected. Click Click to return to the SAP main menu. Statistical key figure:______________ SAP Controlling Plan number of Employees Menu path/Tcode (KK01) Accounting ► Controlling ► Cost Center Accounting ► Planning ► Statistical Key Figures ► Change Select planning layout statistical key figures: standard (1-301). Choose the Plant/actual version (version 0) and current period (from period), end of the fiscal year (to period) and current
  • 44. fiscal year. Enter cost center CC-FI### and key figure EMP### Click Form-Based at the bottom f the screen, then click . Enter 15 as the current plan value and click SAP Controlling Plan number of Employees (Cont) Menu path/Tcode (KK01) Accounting ► Controlling ► Cost Center Accounting ► Planning ► Statistical Key Figures ► Change Select planning layout statistical key figures: standard (1-301). Choose the Plant/actual version (version 0) and current period (from period), end of the fiscal year (to period) and current fiscal year. Enter cost center CC-IC### and key figure EMP### Click Form-Based at the bottom f the screen, then click . Enter 5 as the current plan value and click Menu path/Tcode (KK01) Accounting ► Controlling ► Cost Center Accounting ► Planning ► Statistical Key Figures ► Change Select planning layout statistical key figures: standard (1-301). Choose the Plant/actual version (version 0) and current period (from period), end of the fiscal year (to period) and current fiscal year. Enter cost center CC-IT### and key figure EMP### Click Form-Based at the bottom f the screen, then click .
  • 45. Enter 5 as the current plan value and click SAP Controlling Post AP for Rent Menu path/Tcode (FB60) Accounting ► Financial Accounting ► Accounts Payable► Document entry ► Invoice Select company code :US00 and confirm that transaction is set as Invoice Header data: basic data view, enter vendor number you created on your FI case (Cardinal Rent) today's date as invoice and posting date, Invv-### as reference, and $150,000 USD as amount. Line items view. Enter your expense account 75###5, D/C Debit, Amount in document currency $150,000 and cost center CC-FI###. Remember to replace ### with your assigned number Use the to see the postings Click to post the document Document number:______________ SAP Controlling Execute Assessment Menu path/Tcode (KSUB) Accounting ►Controlling ►Cost Center Accounting ►Planning
  • 46. ►Allocations ►Assessment In the Execute Plan Assessment: Initial Screen, choose Extras ►Cycle ►Create. Enter cycle number C### (replace ### with your assigned number), valid from the beginning of the fiscal year until the end of the current fiscal year and click Enter Cycle CC-FI### as text, uncheck the iterative field and click On the Segment Header tab type in SEG###. Enter PLA### as the Assessment CEle (replace ### with your assigned number). On the Senders/Receivers tab, enter CC-FI### as Sender cost element on the form column and cost center group GROUP### as receiver in the Group column SAP Controlling Execute Assessment (Cont) Menu path/Tcode (KSUB) Accounting ►Controlling ►Cost Center Accounting ►Planning ►Allocations ►Assessment On the Receiver Tracing Factor tab choose the value Plan Stat. Key Figures in the Var. portion type field. The following information popup indicates that new fields are displayed. Click , in the Selection Criteria section choose Plan/actual version and statistical key figure EMP### (replace ### with your assigned number) Click and three times to go back, and confirm the subsequent confirmation In the Execute Plan Assessment: Initial Screen enter your cycle C### and click . Uncheck Test Run and click
  • 47. The system should notify you that processing was completed without errors. The number of senders should be 1 (CC-FI###) and the number receivers 3 (Cost center group GROUP###) Click . Choose when asked for exiting the assessment list. Click to return to SAP main menu Cycle:______________ SAP Controlling View Assessment Results Menu path/Tcode (KSBL) Accounting ►Controlling ►Cost Center Accounting ►Information System ►Reports for Cost Center Accounting ►Planning Reports ►Cost Centers: Planning Overview On the Planning Report: Initial Report Screen, find your CC- FI### cost center. Enter current fiscal year, current period and version 0. Click and view the results of the assessment. Repeat the process for cost centers CC-IC### and CC-IT###. Click on twice to return to SAP main menu. You should notice that the system did a cost reallocation of $150,000 posted originally to cost center CC_FI### to the rest of the cost centers of group GROUP### using the number of
  • 48. employees allocated on the statistical key figure. SAP Controlling Review Budget vs Actuals Menu path/Tcode (S_ALR_87013611) Accounting ► Financial Accounting ► General Ledger ► Master Records ► G/L Accounts ► Individual Processing ► Centrally Enter controlling area NA00, current fiscal year, current period and plan version 0 Enter cost center group GROUP### and click . Review cost centers planning and compare with actuals SAP Controlling FICO Use Case Assignment Beginning of the month: You just received the revisions to the building rent’s budget for the current month as follow: Finance (cost center CC-FI###) for € 9,000 Inventory (cost center CC-IC###) for € 13,000 IT (cost center CC-IT###) for € 3,000 You just received the rent’s allocation for the current month as follow: Finance (cost center CC-FI###) 10 employees Inventory (cost center CC-IC###) 12 employees IT (cost center CC-IT###) 8 employees During the month: The vendor called Cardinal Properties has a subsidiary in
  • 49. Germany with the following address: 1500 Unification Ave, Berlin XXXXX. The agreement for payment terms and payment is global. The invoice’s rent for the current month is for € 20,000 with a document date of the 15th of the current month and invoice number A120057 The payment is schedule for the end of the current month for € 20,000 You are part of the Finance department for the GBI Germany company and will be supporting the month end activities to close the financial books and review the managerial accounting reports. SAP Controlling FICO Use Case Assignment End of the month: Review your vendor balances and line items Review your rent balances and line items Create assessment for rent allocation. The cost center group for allocation follow the same directions established by corporate. Review your allocation results and review your budget. Org structure Company code: DE01 Controlling area: EU00 Hierarchy area E1200 Business area: Bikes Cost center group for allocation GROUP### Statistical key figure EMP### Global CoA AP reconciliation account 300000 Rent GL account and cost element 75###5 Cash
  • 50. You are part of the Finance department for the GBI Germany company and will be supporting the month end activities to close the financial books and review the managerial accounting reports. SAP Controlling FICO Use Case Assignment Provide an excel file documenting every master record created, transaction posted and display document revised using the following headers: Sequence (e.g. 1) Task (e.g. Review GL account master record in company code DE00) Transaction code (e.g. FS02) Master record/Document (e.g. 75###5) Lecture 2 Introduction to SAP Finance (FI) FIN419 Learning Objectives Review of basic Finance management topics Understand the goal of SAP Finance (FI) Understand the purpose, master data and reporting of New GL Understand the purpose, master data and reporting of AR Understand the purpose, master data and reporting of AP
  • 51. Understand the purpose, master data and reporting of AM Understand the integration points between FI and the rest of the FI sub-modules. 2 Finance Review Financial Statements Statement of financial position - Balance Sheet Reports the firm’s assets, liabilities and equity at a given point of time Income Statement Reports the firm’s income, expenses, and profits over a period of time Statement of cash flow Reports the firm’s cash flow activities (operation, investing and financing) Statement of changes in equity Explain the changes of the firm’s equity over a period of time Finance Review Balance Sheet The Balance Sheet Reports the firm’s assets, liabilities and equity at a given point of time Assets Current (life less than one year) Fixed (life longer than one year)
  • 52. Liabilities and Owners’ Equity Current (life less than one year) Long term ( life longer than one year) Balance Sheet Identity Assets = Liabilities + Stockholders’ Equity Review Assets Fixed Liabilities+ Equity Equity Current Current Long term
  • 53. Finance Review Working Capital and Liquidity Net working capital Difference between Current Assets and Current Liabilities It indicate whether the firm has sufficient short term assets to cover its short term obligations Liquidity It refers to the speed and ease in which an asset can be converted to cash without significant loss of value Liquidity is valuable in avoiding financial distress Net working capital Review Assets Fixed Liabilities+ Equity Equity Current
  • 54. Current Long term Finance Review Debt vs. Equity Debt and Equity are sources of financing for the firm The use of debt in a firm’s capital structure is called financial leverage The more leverage, the higher the risk of financial distress Review Assets Fixed Liabilities+ Equity
  • 55. Equity Current Current Long term Finance Review Income Statement The income statement measures performance over a specified period of time (period, quarter, year). Income Statement Equation(s): EBIT = Net sales – COGS – Operating expense Net Income = EBIT – Interest - Tax Addition to REA = Net income - dividends Net income elements Dividends paid to shareholders Addition to retained earnings
  • 56. Review Sales (Revenue) Net income Dividends Return to Equity COGS Operating exp (General expenses, depreciation, etc) Interest Tax Gross Profit
  • 57. EBIT Finance Review Market versus Book Value Book value corresponds to the balance sheet value (according to US GAAPs) of the assets, liabilities, and equity and is generally not what they are actually worth. Market value or true value corresponds to the price at which the assets, liabilities, or equity can actually be bought or sold and it is relevant for managers and investors.US Firm Balance Sheets Book vs. Market ValueAssetsLiabilities and EquityBMBMCurrent100300Current70100Net fixed assets500600Long term200200Equity330600Total Assets600900Total L&E600900 Review Finance Review Difference between Accounting Income and Cash Flow Income Statement is not a measurement of Cash Flow Accrual Basis Accounting Recognize revenue when it is fully earned, not when cash is
  • 58. received Net Sales of $5,000 but AR increase of $1,500. Cash from sales = $3,500 ($5,000 - $1,500) Recognized expenses needed for the generation of revenue, not when cash is paid Inventory cost of $3,000 but AP increase of $500. Cash to vendors = $2,500 ($3,000 - $500) Noncash Items in the Income Statement Expenses charged against revenue that do not affect cash flow. The most important is depreciation. Review Finance Review Statement of Cash Flow The Statement of Cash flow identify the sources of cash over a period of time and its use. It is classified by: Financing: Loans or financing activity Operating. From the operation of the company Investing. Asset investing Review Financing Operating Investing
  • 59. SAP Finance (FI) Goal Financial accounting is designed to collect the transactional data that provides a foundation for preparing the standard portfolio of reports. In general, these reports are primarily, but not exclusively, directed at external parties. Standard reports include: Balance Sheet Income Statement Statement of Cash Flows 11 Internal Executives Senior Management External Legal authorities
  • 61. Client An independent environment in the system Company Code Represents an independent legal accounting unit Balanced set of books, as required by law, are prepared at this level A client may have more than one company code Chart of Accounts A classification scheme consisting of a group of general ledger accounts Provides a framework for the recording of values to ensure an orderly reporting Credit Control Area An organizational entity which grants and monitors a credit limit for customers It can include one or more company codes Represents the legal and/or organizational views of an enterprise and it forms a framework that supports the activities of a business in the manner desired by management Org SAP Finance (FI) Organizational Structure (Cont) Ledger (leading and parallel) An organization unit that allows you to produce financial statements according to different accounting principles Chart of Depreciation An organization unit that allows you to control the legal valuation of assets. They are usually country specific and can be assigned to multiple company codes. Business Area (could be use for regional reporting) An organizational unit that represents separate areas of
  • 62. operations or locations within an organization Segment (could be use for divisions) An organizational unit that represents separate areas of a company with activities that generate expenses and revenues Org SAP Finance (FI) Company Code and Currencies Company codes can have independent currencies and share one for financial consolidation purposes (group currency). You can use up to four currencies in financial accounting Company code (local) currency Group currency Hard currency Transaction currency Org Transaction Document currency Local Reporting currency Group
  • 63. Consolidation currency SAP Finance (FI) Global Bike Finance Structure One Operating concern Two controlling areas Two company codes One chart of accounts Two business areas One credit control area Global Bike Global Bike Inc Global Bike Germany GmbH Global CoA Bikes Global Credit Control Accessories Client Company code Chart of Accounts
  • 64. Business Areas Credit Control Global Concern North America Europe Operating Concern Controlling Areas SAP Finance (FI) Reflection What currencies would be involved in a FI transaction on Global Bike Inc? What currencies would be involved in a FI transactions on Global Bike Germany? What would be the most likely currency for the GBI financial consolidation and why? What type of regulations may apply the setting of currencies and its configuration at the company code level? SAP Finance (FI) Sub-modules New General Ledger (GL) use to record the financial impacts of business process steps. It constrains the data for financial reporting. Accounts Receivables (AR) is associated with the fulfillment process and is used to manage money owned by customers for good and services sold Accounts Payables (AP) is associated with the procurement process and is used to managed money owned by vendors for the purchase of materials and services Asset Management (AM) is used to record data related to the purchase, use and disposal of assets.
  • 65. Bank Ledger (BL) is used to record the transactions related to the deposits and disbursements of cash SAP Finance (FI) Master Data Summary Finance consists of all master data, configuration, and reporting required to analyze external oriented financial statements. This includes the following master data: 1 General Ledger Financial transactions (balance sheet, P&L) 2 Customer master AR sub-ledger 3 Vendor master AP sub-ledger 4 Asset master Asset sub-ledger New General Ledger Introduction
  • 66. The central task of G/L accounting is to provide a comprehensive picture of external accounting and accounts. The general ledger serves as a complete record of all business transactions. Managed at the company code level, where all accounting- relevant transactions are recorded here Benefits Parallel accounting to recognized multiple GAAP’s Segment reporting in adherence with US GAAP and IAS Document splitting Integration of FI and CO data Procurement to Pay Order to Cash AR AP GL GL Stock Vendor invoice Vendor paymt Customer paymt Billing
  • 67. Bank Acct Asset Acct New General Ledger Document splitting New General Ledger functionality that allows organizations to split documents line
  • 68. Advantages Reduces the time and effort for the user to enter documents by deriving segment from profit center which can be derived from a cost object cost center, internal order, or project Allow a company to create real time balance sheets for segments GL New General Ledger Document Principle Each business transaction impacting FI writes data to the SAP database creating a uniquely numbered electronic document. The document number can be used to recall the transaction at a later date. It contains, for example, such critical and necessary information as: Responsible person, date and time of transaction, commercial content Once written to the SAP database, a financial document (one impacting the financial position of the company) can not be deleted from the database, although it can be changed to some degree. The SAP document principle provides a solid and important framework for a strong internal control system – a requirement of law for companies that operate in the United States and in most other countries in the world. GL
  • 69. New General Ledger Transactions FS00, FSP0, FSS0. GL master record FB50L Enter GL account document for ledger group FB03 Display document FB08, FB80 Reverse document and mass reversal FAGLL03 GL Account line items FAGLB03 Display balances S_ALR_87012284 or F.01 Run Financials FAGL_FC_VAL Foreign Currency Valuation FBB1 Post Foreign Currency GL New General Ledger Master Data (FS00) General Ledger Account are master data that in the GL that belongs to the Chart of Account (CoA). GL Client level Company code level Account Description
  • 70. Currency and tax data Account group Group accounts depending of a defined criteria P&L or Balance sheet Reconciliation account Control sub ledgers Field status group It controls fields requirements during posting Line control Open item management Line item display
  • 71. New General Ledger Global Bike Chart of Accounts Balance Sheet Current Assets 1XXXXX Inventory 20XXXXX Fixed Assets 22XXXX Current Liabilities 3XXXXX GRIR 31XXXX Long term liabilities 32XXXX Equity 329XXX Retained earnings 330000 Profit & Loss Revenue 6XXXXX Labor 700000 Consumption expense 72XXXX Expenses 74XXXX Price variance 760000 Production variance 760100 R&D 78XXXX COGS 79XXXX New General Ledger Master data: Account Group Classify G/L account into user defined segments Determine the number range of the accounts that will fall into these segments Determine field status (suppress, required, display, and optional GL
  • 72. New General Ledger Master Data: Reconciliation account For each sub ledger account you must keep at least one reconciliation account in the general ledger. Sub ledger postings automatically posts to the corresponding reconciliation account in the general ledger. You can not manually post directly to reconciliation accounts. Ensures real-time integration of sub ledger accounts and the general ledger GL New General Ledger Master Data: Primarily Cost Element (KA01) When an expense is occurred in FI it is passed into CO by cost element accounting as a single sided posting. Primary cost elements have to exist in the FI GL maser record before they can be created as primary cost elements in CO. Primary cost elements create the link between FI and CO GL Finance Controlling GL Master Record
  • 73. Primary Cost Element to link FI and CO P&L accounts Controlling area Validity Category (1 or 11) New General Ledger GL account link with Primary Cost Element When an entry is posted in FI to a G/L Account that is a cost or revenue account and a corresponding primary cost element exists in CO, then a corresponding entry is posted in CO. This is a one sided entry to get the expense or revenue into CO. A controlling object needs to be specified in the FI document to define where to post the costs in CO GL New General Ledger Document entry (FB50L) Company code
  • 74. Posting & Document date Currency Document type Ledger Line items GL accounts Posting key Amounts GL New General Ledger Document entry: Document type Two character alphanumerical key that distinguish different business transactions and classify accounting documents Controls Document ranges Account types allowed Type of transactions allowed *List on the right is a sample of the document type list GL New General Ledger Document entry: Posting Key Two character numerical key that controls the entry of line items Determines Account type D for customers K for vendors S for GL A for assets
  • 75. M for materials Debit/credit posting Field status of additional data Layout of entry screens GL New General Ledger Document entry: Simulate, Parking, Post Simulate. It allows you to review a document before posting or parking it. Parking. It allows you to save a document in a transit space allocating a document but not creating a financial effect. Post. It saves the document in the system allocating a document and creating a financial effect. GL Simulate Park Post
  • 76. New General Ledger Run Financials (F.01) Chart of Accounts Company Code Financial Statement Version Reporting Year and comparison periods List output GL New General Ledger Run Financials: Financial Statement Version To meet various reporting requirements, various financial statement versions have been created in the system. You define exactly which accounts appear in which line items of the financial statement GL New General Ledger Reflection What implications/benefits/uses may have document splitting functionality for finance? What functionality or functionalities of the new GL would your recommend to implement to address GAAP differences between countries and why?
  • 77. What internal control benefits would you highlight from the implementation of SAP ECC? Accounts Receivable Introduction Records and manages accounting data of all customers. Integral part of Order to Cash business process. All billing and cash collections are executed by AR sub-module allowing to report on AR activity. Postings made to accounts receivable are also recorded directly in the G/L. AR is integrated with SD and Treasury (order to cash process) AR GL Customer payment Billing
  • 78. Accounts Receivable Transactions XD01 or FD01. Customer master record FB70 Enter Invoice FB03 Display document F-28 Incoming payments FB08, FB80. Reverse document and mass reversal FBL1N AR Account line items FD10N Display balances AR Accounts Receivable Master Data (FD01) Customer Master Account is data needed to conduct business with customers and execute transactions related with fulfillment process. AR General (Client) Accounting (Company code) Account Name Address
  • 79. Bank information Payment terms Payment method Reconciliation account Cash management group Accounts Receivable Credit Management Accounts are processed on the basis of credit segment in the customer master record. This is maintained in a separate data basis in SAP credit management. Credit data includes all information about a business partner that is required to monitor credit risk Credit profile data Credit segment data Credit Profile Contains the procedure for scoring and credit limit calculation, the internal scoring, and sometimes external business partner ratings.
  • 80. Also includes risk class, check rules for controlling credit limit check, and notes. Credit Segment Contains all the data required for checking credit when a sales order is accepted and the resulting order-related credit decision. You can define a main credit segment as well as additional credit segments for company codes. AR Accounts Receivable Invoice entry (FB70) Company code Customer and Reference Posting and Invoice date Document type Amount and currency Line items GL accounts Posting key Amounts Additional info tabs AR Accounts Receivable Incoming Payments (F-28) Company code Posting & document date Document type Currency
  • 81. Bank Data (debit) Value Data (collection date) Customer Data (credit) Additional selections for line items identification AR 41 Accounts Receivable Display Balances (FD10N) Customer Company Code Fiscal Year & Currency Outcome Beginning balance Debits and Credits per period Balance Ending Balance Sales related transactions Drilldown capability AR Accounts Payable Introduction Records and manages accounting data for all vendors Integral part of the Procure to pay business process All invoices and payments are executed by AP sub-module allowing to report on AP activity Postings in accounts payable are simultaneously recorded in the G/L
  • 82. AP is integrated with IMWM and Treasury (procurement to pay process) AP GL Stock Vendor invoice Vendor payment Accounts Payable Transactions XK01 or FK01. Vendor master record FB60 Enter Invoice FB03 Display document F-53 Outgoing payments F110 Mass payments FB08, FB80 Reverse document and mass reversal
  • 83. FBL5N AR Account line items FK10N Display balances AP Accounts Payable Master Data (FK01) Vendor Master Account is data needed to conduct business with vendors and execute transactions related with the purchasing process AP General (Client) Accounting (Company code) Account Name Address Payment terms Payment method Bank information
  • 84. Reconciliation account Accounts Payable Invoice entry (FB60) Company code Vendor and Reference Posting and Invoice date Document type Amount and currency Line items GL accounts Posting key Amounts Additional info tabs AP Accounts Payable Outgoing Payments (F-53) Company code Posting & document date
  • 85. Document type Currency Bank Data (credit) Value Data (payment date) Vendor Data (debit) Additional selections for line items identification AP 47 Accounts Payable Mass Payments (F110) Run date Payment ID Parameters Posting date Doc entry date reference Company code Payment terms Next payment Vendor range Select printout/data medium AP 48 Accounts Payable Display Balances (FK10N) Vendor
  • 86. Company Code Fiscal Year & Currency Outcome Beginning balance Debits and Credits per period Balance Ending Balance Purchase related transactions Drilldown capability AP Account Payable and Receivable Reflection What recommendations would you give to a new SAP implementation in regards the settings for vendor and customer master records? What are the benefits of AP and AR subledger? How do you link the AP and AR sub-ledger and the postings to FI? What are the benefits of the open item management functionality in accounts payable and accounts receivable? Why the multi-currency functionality of SAP is one of its greatest benefits? Asset Management Introduction Records and manage accounting data for all fixed assets All asset transactions (acquisitions, transfers, sells, retirement,
  • 87. depreciation) are controlled by asset management during its life and calculate asset depreciation AM is integrated with AR and AP Postings in AR and AP are simultaneously recording in asset management Postings in asset management are simultaneously recorded in the G/L AP Asset Acquisition Depreciation Retirement
  • 88. Asset Management Transactions AS01 Asset master record F-90 Acquisition with vendor AW01N Asset Explorer F-92 Retirement with customer AFAB Depreciation run AB08 Reverse document AP Asset Management Master Data (AS01) Asset Master Record contains data to track the financial consequences associated with the entire lifecycle of an asset. AP General (Company code) Dep. Areas (Chart of Depreciation) Description Depreciation key
  • 89. Account determination Controls the GL postings based on the asset class Asset class Cost centers and plant Origin data Useful life Dep. Start date Change over year Asset Management Master data: Asset Class Grouping of assets with possess similar characteristics Asset classes created at client level (apply to all company codes) Each asset class is associated to a reconciliation account via
  • 90. account determination Each asset has to be assigned to an asset class. There is at least one special asset class for assets under construction and one for low-value assets. AP Asset Management Master data: Account Determination It create the link between the asset master record and the GL Each asset class is assigned to an account determination but it is possible to have unique account determination per chart of depreciation Each account determination is associated with a depreciation area Each account determination holds the GL accounts for Acquisitions, depreciation and retirement AP Asset Management Master data: Dep. areas and dep. keys Depreciation area Chart of depreciation specific Used to calculate different values in parallel for each fixed asset for different purposes an can be linked to different ledgers. Various data is stored in the asset master record for depreciation areas which control the calculation of normal and special depreciation for the special depreciation areas. Depreciation key Depend from the depreciation area Can use different depreciation method for general business
  • 91. procedures from the depreciation method required by tax authorities. CoD Dep area 01 Dep area 02 Dep area 03 GL Dep keys Dep keys Dep keys AP Asset Management Acquisition with vendor (F-90) Company code Posting and document date Document type Line items Vendor account Posting key (31 for vendor and 70 for asset debit) Transaction type to classify the asset transaction Amount AP Asset Management Depreciation run (AFAB) Only after the depreciation posting run has been completed is
  • 92. the depreciation actually posted in asset accounting and in the General Ledger The depreciation is posted to the corresponding depreciation accounts in the General Ledger and to the assigned CO cost object assigned to the asset master record. AP Asset Management Retirement with customer (F-92) Company code Posting and document date Document type Line items Customer account Posting key (01 for customer and 75 for asset credit) Transaction type to classify the asset transaction Amount AP Asset Management Asset Explorer (AW01N) Offers a clear overview of the activity for an asset. You can see transactions that have been posted to the asset plus planned and posted depreciation per depreciation area, per period for each fiscal year. You can drill down to the details of the FI transactions It is possible to branch to master data, other cost objects, and perform simulations
  • 93. AP Asset Management Reflection What is the relevancy of the asset master records in the asset life cycle process? What role do you think the chart of depreciation play to address GAAP differences between countries and why? How do you link the asset sub-ledger and the postings to FI? SAP Finance (FI) Reflection It is month end at GBI and the accounting group is working on its month end close, what activities would you need to review in each of the areas below Accounts Receivable Accounts Payable Asset Management General Ledger SAP Finance
  • 94. Practice Create account in CoA Create cost element Expense account Create AR invoice Run financial statements Post payment Post cash collection Display balances Display line items Create vendor Park AP invoice
  • 95. Create customer Post park document Create asset master Post asset Display Account in CoA Reconciliation account
  • 96. SAP Finance Display account CoA: Reconciliation Account Menu path/Tcode (FS00) Accounting ► Financial Accounting ► General Ledger ► Master Records ► G/L Accounts ► Individual Processing ► Centrally Enter 300000 and US00 as Company Code. Click Type/Description
  • 97. Account group P&L or Balance Sheet account Description Control data Account currency Reconciliation account SAP Finance Create account CoA: Expense Account Menu path / Tcode (FS00) Accounting ► Financial Accounting ► General Ledger ► Master Records ► G/L Accounts ► Individual Processing ► Centrally Enter 75###5 (replace ### with your assigned number) as your G/L Account number and US00 as Company Code. Copy data from the account 740300 in Company Code US00 by choosing G/L account ► Create with reference and entering the necessary data. Confirm with Enter Rent Expense ### as Short Text and Rent Expense ### as G/L Acct Long Text. Again, replace ### with your assigned number. Then, click on GL account:______________ SAP Finance Create cost element
  • 98. Menu path/Tcode (KA01) Accounting ► Controlling ► Cost Element Accounting ► Master Data ► Cost Element ► Individual Processing ► Create Primary Enter 75###5 as cost element. (replace ### with your assigned number) using controlling area NA00 Choose the first of the current month as valid from and 12/31/9999 as the valid to Copy from reference using cost element 740300 out of NA00 controlling area Proceed with Enter Name Rent Expense ### and Rent Expense ### as Description. Then click Cost element:______________ SAP Finance Create Vendor Menu path/Tcode (FK01) Accounting ► Financial Accounting ► Accounts Payable ► Master Records ► Create Leave Vendor blank and select account group KRED Enter Company Code US00. Reference Vendor number 105### (replace ### with your assigned number) and Company Code US00. Proceed with Address view, enter Cardinal Properties ### as Name, Search term ###, Street 1090 Grand Lake Dr, Postal code 55347, City Eden Prairie, Country US, Region MN. Make sure English is selected as language and click on three times. Account information view: Reconciliation account 300000 Click
  • 99. Payment terms 0001 and select Check double inv. Payment methods C. Then click Vendor number:______________ SAP Finance Create Customer Menu path /Tcode (FD01) Accounting ► Financial Accounting ► Accounts Receivables► Master Records ► Create Leave customer blank and select 0001 Sold to party on account group and enter company code US00. Proceed with Address view: enter The Bike Zone ### as Name, Search term ###, Street 2590 Kennedy Ave. Postal code 33790, City Orlando, Country US, Region FL Make sure English is selected as language Under company code data: Account management: Reconciliation account 110000 Payment terms 0001 under payment transactions. Then click Customer number:______________
  • 100. SAP Finance Create Asset Master Record Menu path/Tcode (AS01) Accounting ► Financial Accounting ► Fixed Assets► Assets ► Create Enter asset class 2000 and company code US00. Proceed with General view: enter Asset test ### as description Time dependent view: Cost center NAHR2###. Remember to replace ### with your assign number, plant MI00 Depreciation areas. Take a look at the depreciation areas. Enter a useful life of 5 years. Then click Asset number:______________ SAP Finance Post Asset Menu path/Tcode (F-90) Accounting ► Financial Accounting ► Fixed Assets► Posting► Acquisition ► External acquisition ► With vendor Header data, enter today's date as invoice and posting date, US00 as company code, Invasset-### as reference, and USD as currency Enter account the vendor number you previously created, proceed with Line item data, enter $3,000 amount, payment term 0001, Enter posting key 70, account the asset number created previously, proceed with
  • 101. Line item data, enter $3,000 amount Then click Document number:______________ SAP Finance Park AP document Menu path/Tcode (FB60) Accounting ► Financial Accounting ► Accounts Payable► Document entry ► Invoice Select company code :US00 and confirm that transaction is set as Invoice Header data: basic data view, enter vendor number you created previously, today's date as invoice and posting date, Invv-### as reference, and $1,500 USD as amount. Line items view. Enter your expense account 75###5, D/C Debit, Amount in document currency $1,500, Text Invoice Cardinal Rent Expenses-### and cost center NAHR2###. Remember to replace ### with your assigned number Use the to see the postings Click to park the document
  • 102. Document number:______________ SAP Finance Create AR document Menu path/Tcode (FB70) Accounting ► Financial Accounting ► Accounts Receivable► Document entry ► Invoice Select company code :US00 and confirm that transaction is set as Invoice Header data: basic data view, enter customer number you created previously, today's date as invoice and posting date, Invc-### as reference, and $5000 USD as amount. Line items view. Enter revenue account 600000, D/C Credit, Amount in document currency $5,000, Revenue-###. Remember to replace ### with your assigned number Use the to see the postings Click on Document number:______________ SAP Finance Post park document Menu path/Tcode (FBV0) Accounting ► Financial Accounting ► General Ledger► Document ► Park document ►Post/Delete
  • 103. Select company code:US00, document number parked and current fiscal year. Confirm with Review posting and confirm posting with Document number:______________ SAP Finance Post payment Menu path/Tcode (F-53) Accounting ► Financial Accounting ► Accounts payable► Document entry► Outgoing payment ►Post Enter current date as document and posting date, US00 as company code and USD as currency Bank data: Account 100000, amount $1,500 and Payrent-### as text. Open item selection: Account your vendor created previously Select and match the line item information. When assigned has been made correctly, the “non assigned” value should be equal to $0.00 Click on Document number:______________ SAP Finance
  • 104. Post cash collection Menu path/Tcode (F- 28) Accounting ► Financial Accounting ► Accounts receivable► Document entry► Incoming payments Enter current date as document and posting date, US00 as company code and USD as currency Bank data: Account 100000, amount $5,000 and Collection- ### as text. Open item selection: Account your customer created previously Select and match the line item information. When assigned has been made correctly, the “non assigned” value should be equal to $0.00 Click on Document number:______________ SAP Finance Display balances Menu path/Tcode (FBL3N) Accounting ► Financial accounting ► General ledger ► Account ► Display Balances Enter account number 75###5, company code US00, and the current year as fiscal year. Then click Double click on month balance to see line items
  • 105. SAP Finance Display line items (AR and AP) Menu path/Tcode (FD10N) Accounting ► Financial accounting ► Accounts Receivable ► Account ► Display Balances Enter account number your previously created customer, company code US00, and the current year as fiscal year. Then click Double click on month balance to see line items Menu path/Tcode (FK10N) Accounting ► Financial accounting ► Accounts Payable ► Account ► Display Balances Enter account number your previously created vendor, company code US00, and the current year as fiscal year. Then click Double click on month balance to see line items SAP Finance Run financial statements Menu path/Tcode (F.01) Accounting ► Financial accounting ► General ledger ► Information system ► General ledger reports (new) ► Financial Statement / Cash Flow ► General ► Actual/actual comparisons ► Financial statement Enter chart of accounts GL00, company code US00, financial statement version G###, and current year as reporting year. Choose ALV tree control with the layout 1SAP for the list output. Click
  • 106. Lecture1 Finance Review and Introduction to ERP FIN419 Learning Objectives Review Finance basic concepts Introduction to SAP Review an Introduction to SAP Understand the definition of ERP and business processes Understand the inter-related nature of an ERP system and the impact on finance Explain the silo effect Review SAP Business Suite and basic concepts (master data and transactional data) Understand Accounting in SAP Explain the goal of FI and CO Understand the basics of SAP navigation Finance Review Forms of Business Organizations The corporate form of business is the standard method for
  • 107. solving the problems encountered in raising large amounts of cash. Three major forms in the United States Sole proprietorship, a business own by one person Partnership, a business own by two or more individuals or entities General, with unlimited debt liability Limited, with some partners with limited debt liability Corporation, a legal “person” distinct from owners and with limited liability General, subject to double taxation S Corporation is taxed through its shareholders avoiding double taxation Limited liability company allows to operate and tax like a partnership but retain limited liability for its owners Finance Review A Comparison Fall 2015 4 Corporation Partnership
  • 108. Liquidity Shares can be easily exchanged Subject to substantial restrictions Voting Rights Usually each share gets one vote General Partner is in charge; limited partners may have some voting rights Taxation Double Partners pay taxes on distributions
  • 109. Reinvestment and dividend payout Broad latitude All net cash flow is distributed to partners Liability Limited liability General partners may have unlimited liability; limited partners enjoy limited liability Continuity Perpetual life Limited life
  • 110. 4 Corporations account for the largest volume of business (in dollar terms) in the U.S. Advantages include limited liability, unlimited life, separation of ownership and management (ability to own shares in several companies without having to work for all of them), liquidity, and ease of raising capital. Disadvantages include separation of ownership and management (agency costs) and double taxation. Recent tax laws reduce the level of double taxation, but it has not been eliminated. Although the corporate form of organization has the advantage of limited liability, it has the disadvantage of double taxation. A small business of 75 or fewer stockholders is allowed by the IRS to form an S Corporation. The S Corp. organizational form provides limited liability but allows pretax corporate profits to be distributed on a pro rata basis to individual shareholders, who are only obligated to pay personal income taxes on the income. A similar form of organization is the limited liability corporation, or LLC. LLC’s are a hybrid form of organization that falls between partnerships and corporations. Investors in LLC’s have the protection of limited liability, but they are taxed like partnerships. LLC’s first appeared in Wyoming in 1977 and have skyrocketed since. They are especially beneficial for small- and medium-sized businesses such as law firms or medical practices. A Corporation by Another Name…Corporations exist around the world under a variety of names. Table 1.2 lists several well- known companies, along with the type of company in the original language.
  • 111. Finance Review The Goal of Financial Management The goal is to increase the value of the firm by maximizing investments while minimizing financing. V = Σ CFt / (1+ i)t Maximize the current value per share of the exiting stock Fall 2015 5 5 Learning Objective: Apply goals of financial management in making decisions Possible Goals Profit Maximization – this is an imprecise goal. Do we want to maximize long-run or short-run profits? Do we want to maximize accounting profits or some measure of cash flow? Because of the different possible interpretations, this should not be the main goal of the firm. Other possible goals that students might suggest include minimizing costs or maximizing market share. Both have potential problems. We can minimize costs by not purchasing new equipment today, but that may damage the long-run viability of the firm. Many dot.com companies got into trouble in the late 1990’s because their goal was to maximize market share. They raised substantial amounts of capital in IPO’s and then used the money on advertising to increase the number of “hits” on their site. However, many firms failed to translate those “hits” into enough revenue to meet expenses, and they
  • 112. quickly ran out of capital. The stockholders of these firms were not happy. Stock prices fell dramatically, and it became difficult for these firms to raise funds. In fact, many of these companies have gone out of business. The Goal of Financial Management From a stockholder (owner) perspective, the goal of buying the stock is to gain financially. Thus, the goal of financial management in a corporation is to maximize the current value per share of the existing stock. Is it ethical to sell a product that is known to be addictive and dangerous to the health of the user even when used as intended? Is the fact that the product is legal relevant? Do recent court decisions against the companies matter? What about the way companies choose to market their product? Are these issues relevant to financial managers? How do we go about maximizing shareholder wealth? Finance Review Agency Cost and Agency Problem Agency relationship is the relationship that exist between stockholders and management Principal hires an agent to represent its interests Stockholders (principals) hire managers (agents) to run the company Agency cost is the conflict of interest between stockholders and management Stockholders goal is to increase the return on its investments (firm’s higher value) Management may be more concern about its compensation or job security Agency problem Conflict of interest between principal and agent
  • 113. Finance Review Do Managers Act in the Stockholders’ Interest? Alignment between management and stockholders goals? Managerial compensation Incentives can be used to align management and stockholder interests Incentives need to be carefully structured to insure that they achieve their goal Can management be removed if goals are different? Corporate control Proxy fights is the mechanism on which unhappy stockholders can remove management Poorly manage firms are more attractive to takeovers Finance Review Regulation The Securities Act of 1933 and the Securities Exchange Act of 1934 Issuance of Securities (1933) Creation of SEC and reporting requirements (1934) Sarbanes-Oxley (“SOx”) Increased reporting requirements and responsibility of corporate directors Financial Statements and Cash Flow Fall 2015 8 8 Historically, most regulation has focused on the disclosure of
  • 114. relevant information, thereby putting all investors on an equal playing field. The Securities Act of 1933 and the Securities Exchange Act of 1934 These Acts provide the basic regulatory framework for the public trading of securities in the United States. The 1933 Act focuses on the issuance of securities, while the 1934 Act established the SEC and addressed other regulatory issues, such as insider trading and corporate reporting. Sarbanes-Oxley Following the scandals at Enron, WorldCom, and Tyco, among others, “Sarbox” was enacted in 2002. This Act significantly increased the auditing and reporting requirements that public firms face, and it also explicitly placed the responsibility for any fraud on the corporate directors. As with any law, however, there is a cost. In response to the added burden, many (particularly small) firms have delisted and others have foregone going public. For others, the cost of compliance has significantly increased, thereby reducing profits. SAP Introduction SAP stands for Systems, Applications, and Products in Data processing Very successful Enterprise Resource Planning (ERP) solution which is used to highly integrate business processes. Fall 2015 9
  • 115. 9 SAP Introduction Name of Company and Software Name of the Company SAP AG (Walldorf) SAP America (New Town Square) Name of the Software SAP R/2 SAP R/3 SAP ERP Fall 2015 10 10 SAP Introduction Company Statistics SAP AG Founded in Walldorf, Germany in 1972 World’s Largest Business Software Company World’s Third-largest Independent Software Provider Company Statistics Over 40,000 employees in more then 50 countries 1500 Business Partners 36,200 customers in more then 120 countries
  • 116. 12 million users 100,600 installations Fall 2015 11 SAP is the world's largest inter-enterprise software company and the world's third-largest independent software provider overall. We have a rich history of innovation and growth that has made us a true industry leader. SAP Americas 12 Million Users. 100,600 Installations. 1,500 Partners. SAP Americas is a subsidiary of SAP AG, the world's largest inter-enterprise software company and the third-largest software supplier overall. SAP Americas's corporate headquarters is located in Newtown Square, PA, a suburb of Philadelphia. Our officers and executives lead a team of professionals dedicated to delivering high-level customer support and services. Founded in 1972 as Systems Applications and Products in Data Processing, SAP has a rich history of innovation and growth that has made us the recognized leader in providing collaborative business solutions for all types of industries -- in every major market. The company, headquartered in Walldorf, Germany, employs more than 37,700 people in more than 50 countries, and serves more than 34,600 customers worldwide. Experience, Knowledge, and Technology for Maximizing Business SAP has leveraged our extensive experience to deliver mySAP Business Suite, the definitive family of business solutions for today's economy. These solutions are open and flexible, supporting databases, applications, operating systems, and hardware from almost every major vendor. What's more, mySAP Business Suite allows employees, customers, and business partners to work together successfully -- anywhere, anytime.
  • 117. By deploying the best technology, services, and development resources, SAP has delivered a business platform that unlocks valuable information resources, improves supply chain efficiencies, and builds strong customer relationships. And through the Global Solution Center, SAP Americas identifies customer needs and develops solutions to meet these needs. SAP is listed on several exchanges, including the Frankfurt Stock Exchange and the New York Stock Exchange, under the symbol "SAP." 11 SAP Introduction From SAP R/3 to HANA Database layer From Oracle/ Ms SQL To SAP HANA Presentation layer From SAP GUI To SAP Fiori
  • 118. Fall 2015 12 Central database stores all data and application programs. The application gives access to the database to read and write data. The presentation allows for input/output of data to the users 3-tier client server system Web server Internet transaction server Brings it to a single database across the world. What is Client-server Computing? The short answer: Client/server is a computational architecture that involves client processes requesting service from server processes. The long answer: Client/server computing is the logical extension of modular programming. Modular
  • 119. programming has as its fundamental assumption that separation of a large piece of software into its constituent parts ("modules") creates the possibility for easier development and better maintainability. Client/server computing takes this a step farther by recognizing that those modules need not all be executed within the same memory space. With this architecture, the calling module becomes the "client" (that which requests a service), and the called module becomes the "server" (that which provides the service). The logical extension of this is to have clients and servers running on the appropriate hardware and software platforms for their functions. For example, database management system servers running on platforms specially designed and configured to perform queries, or file servers running on platforms with special elements for managing files. It is this latter perspective that has created the widely-believed myth that client/server has something to do with PCs or Unix machines. 12 SAP Introduction Software Applications Industry