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Accounting Foundation

SAP R/3 Accounting System

The accounting system with its various sub-units is a critical part of the SAP solution. The integration of the various aspects of accounting with each other and with logistic and human resource applications become a management tool for all company departements.

The efficiency of this kind of solution is increased by including cross-company business process with customers, suppliers or financial institutions.

For international companies, SAP R/3 offers flexible software that can be used in different countries. The system meets the needs of major industrial nations of the world with its multingiual approach, flexsible currency handling and country-specific functions for taxes, reporting and payment transaction.

The SAP R/3 Accounting System consists of several components :

Financial Accounting (FI) includes :

• G/L Accounting
• Accounts Payable and Accounts Receivable
• Asset Accounting

Corporate Finance Management (CFM) includes :

• Corporate Finance Management ( planning, analysis, decision support, financial transactions, payment and risk capablities in various group environment)
• Treasury Management (cash, stock, bonds and derivstives) Enterprise Controlig includes :
• EIS
• Profit Center Accounting
• Legal Consilidation
• Planning

Profitability and Sales Accounting includes :

• Profitability Analysis

Product Cost Controling includes :

• Product Cost Planning
• Cost Object Controling

Overhead Cost Controling  includes :

• Cost Centers
• Internal Orders
• Activity-Based Costing

Invesment Management (IM) : Allows company-wide planning of capital inevesment program and control of individual capital invesment measure.

Project Management : Allows efficient planning, cost-sensitive control and target-oriented implementation of projrct with comperhensive integration with Controling and Logistic.

As the central integration element in SAP R/3 FI, the general ledger offers a broad range of features for external accounting. The flexsible repoting feature with multiple finacial statement versions provides clear and customizes views of relevant data with the desired level of summarization.

Organizational Elements

An effecrive accounting system includes more tha ledgers, accounts, and documents. Organizational structure is also an essential component. Structure establishes the parameters for corporate, tax, and management requirments.

Assigning all relevant business transactions to these organizational unit by using explicit or implicit account assigment updates the ledgers. The SAP R/3 FI-SL system also conveys actual values for the integrated controlling objects (cost center, order, cost object, profit center) countained in SAP R/3 Controlling (CO) application. The depiction of current stucture and future strategies has bearing on how you use the orgazational terms in SAP accounting system :

• Corporate group
• Company
• Company Code
• Business are
• Functonal area
• Profit center

In the simplest case, a company that operates as a single company at national level and has no substanial internal reporting requirements is represented as a company code. In more complex corporate structures, the SAP R/3 systems scaling function is used to either separate or integrate company components. This leads to two general company concepts-centralized and decentralized.

Customer Master-Accounts Receivable

A customer master record contains all teh information that a company needs for its business relations with a customers. This data controls teh posting procedure and subsequent processing such as payments and dunning. Customer master recods also provide information on customers fot the acconting and sales depatements. The customers master record is characterized by the following features :

• Provides an overview of all of a customres data at any time
• Allows flexsible acces to the data
• Forms the data base that controls automatic dunning and automatic payment transaction

The layout of customers master record also leaves room for special requirements. If dunning notices are not to be sent to the customer from whom teh receivable is due, a different dunning receipient can be indicated. If can affliated company is invoiced, this must be reflected in a group must be eliminited (elimination of IC sales).

The three-part structure of master record makes it possible to flexibly depicit the various organizational structures of an operation:

1. 1.      General Data : This data is equally to every company code and every sales organization with in a company.
2. 2.      Data for Company Codes : This data reflects the company-specific agreements with the customer.
3. 3.      Data for Sales : This data has differnt charactersitic for a company’s sales organizatio and chanels.

Vendor Master-Accounts Payable

Teh vendor master record contains all the infomation a company needs for its business relationship with vendors. Vendor master record are centrally stored in the system. This ensures that data is always consistent, up-to-date and without duplication. The vendor master record provides the following:

• Over view of all data for given vendor
• Flexible data access
• Baseline data used to control payment transaction and to represnt business process. In addtion, the vendor master record’s flexibke design is well suited needs.

Vendor master recrd are also used to represent divusions of labir that differ from one vendor branch to the next. Accounting and incoming payment functions can be centrally combined for vendors with several branch offices who have autonomous selling authorithy.

Assets Management

Increasing automation makes palnning and monitoring of fixed assets for external and internal accounting purposes aver more important. In addtion to puree accounting and balace sheet preparation, there are extensive requirements for controlling and maintenance monitoring.

Here you can represent various valuation methods in anumber of depreciation areas for commercial balance sheet, tax requirements, conrolling purposes, coporate police, and other free valuations. You can carry out these activities in domestic or in forgein currencies. A variety of country-spesific vslustion plans and depreciation keys are deliverd with the system.

Even in the asset class, you distinguish between assential asset types, sch as assets under contruction, ;ow-value economic units, leased assets and that are to be capitalized normally. For the vertical classification of complex economic units, there are group assets, asssets sper-numbers, as well main assets sub-numbers.

Accounts Balance

Aline item display provides an overview of the open, cleard and parked items from an account. You determine which information about the individual line items is to be displayed on teh screen. Various sort option (by assigment, document number aor clearing data) allow ypu to interactiviley select, vary and total the required document on teh screen. Search and summarization function are available on the initial screen as well, so it is not necessary to display all items. Line item display function are availble for :

• An account in company code
• An account group in group af company code

Whenever documents are posted to an account, the system automatically updates the account balance.

Tah account balance offers an overview of transaction figures for each period by debits and crdits. Possible differenting criteria include account number, company code, fiscal year, business area and currency. Worklist foe several accounts can also be creasted.

Financial Accounting

General Ledger

General Ledger posting may be the result of :

• Operational transaction
• Posting transaction
• Transaction originally assigned to the ledger, if the General Legder (FI-GL) system is active

At the same time, interrelationship with Controlling and its components can be taken inti account. The extent and type of the integrated system used determine how entris, account assignments and updates are processed for business transaction.

Subsidiary ledgers are completely and comperhensive integrated with G/L accounting on the following levels :

• Maste Data
• Transaction Data
• Reporting

Intergration of master data comprises the shared chart of accounys and all acount assigment elements of the subsidiary ledgers including cost accounting. This integration is also teh crusial advantage of complete data integration at individual transaction level.

Accounts Receivable

The FI Accounts Receivable compnent is responsible for monitoring and controlling customers accounts with in SAP R/3’s Finacial Accounting component. Accounts analyses, alarm reports, due date lists and a flexible dunning system all make it easier to keep track of open times.

Accounts Payable

SAP R/3’s FI Accounts Payable component manages accounting data for all vendors. Payment are made so that maximum advanatage is taken of available discount, using either standard written forms or electronic means. The system supports all international methods of payment. Balance aidit trails, accounts balances and journals document transaction in Account Payable.

Accouting Document

Accounting documents are the result of posting in Finacial Accounting. There are two types of documets :

• Original Documents
• Processing Documents

Example Original Documents :

• Receipts
• Invoice
• Checks
• Bank statements

Example of Processing Documents :

• Accouting Documents
• Sampel Documents
• Recuring Entry Documents

Data must also be enterd in all other fields that were defined as required fileds when making system setting.

Payments

Its for data when you entered documents, teh system checks whether the minimum accounts assigments have been made.

Travel Management and Expense Reimbursement

SAP R/3 Travel Management gives you a flexible, high-performance tool wih you can :

• Plan trips
• Book Travels services
• Approve trips via SAP Business Workflow
• Record trip data
• Detemine and valuate reimbursement amounts according to statutory and enterprise-specific provisions
• Account for travel expneses according to specified statuory provision

Payment and Transfer to Payroll Accounting

Payments of expenses can be accomplished via Finalcial Accounting, Payroll Accounting, or data medium exchange (DME) with credit instituions. SAP R/3 Travels Managment the triggres teh transfer of trvel expenses accounting result.

Management Accounting

FI and CO : Standards Versus Flexbility

The mySAP Financials applicatons compnets Conroling (CO) contains all accounting functions necessary for effective conrolling. If an organizations divides accounting into enternal and external viewpoints, CO represent the internal accounting perspective because it provides information for managers –those who are inside an organization and are charged with controlling its operations. CO includes cot and revenue accounting.

Components of Management Accounting

The mySAP Financials key functional area : Management Accounting is comprised of application components in the Controlling (CO) and Enterprise Controlling (EC) areas. This involves recording oth the cumsumption of productio factors of production factors ang the services provied by an organization.

Master Data

The Controlling Area forms a framework within which CO processes cot and revenus elements transactions an all CO documents. The assigment of multiple company codes to a controlling area can be uesed to support centralized cost accounting for an entire organization.

Cost and revenue element accounting records and groups the cost incurred during a particular settlement period.

Overhead Cost Controlling

Overhead in planning, monitoring, control and coordination in such areas as research and development, procurement, work scheduling and maintenace is gaining more impotance.

The mySAP Financials Overhead Cost Controlling (CO-OM) component helps you plan, allocated, control, and monitor overheadin your organization. You can assign overhead to tehe cost centers where it accurred or to the activities that generated the overhead.

Cost Center Accounting

The Cost Center Accounting component determinies where cost appear in the organization. You should structure cost centers so that they represent areas of responbility, meaning that given person manages the cost with in that subarea. In the SAP R/3, cost accouting takes place within a defined controlling area. You must assign each center o a single controlling area.

Internal Order

The SAP R/3 anables you to monitor your internal orders throughout their entire life cycle; from initial creation, through the planning and posting of all the actual cost, to the final settlement and archving.

Activity Based Costing (ABC)

ABC is relatively new cost accounting method used by some companies to monitor cost by business process rather than cost centers. Costs that were previously hidden in various ovehead expanses can now be clearly identified and addressed.

Product Cost Controlling

Product Cost Controlling includes the following tools :

• Product Cost Planning
• Cost Object Controlling
• Actual Costing
• Information System

Product Cost Controlling can help you :

• Paln your product costs accurately
• Compare alternative cost estimares to optimze your business decisions
• Monitor your product costs in every stage of the manufacturing process
• Carry out detailed variance analysis on each order, product and product group
• Calculate actual costs by period
• Put alternative values on your inventory for balance sheet purposes
• Answer recurring question on the cost of goods manufactured by plant product group, product or order
• Answer one-of questions about the cost of goods manufactured

Profitability Management

mySAP Financial provides you with two tools for evaluating profitability in such a decentalized environment :

• Profitability Analysis (CO-PA)
• Profitabilty Center Accounting (EC-PCA)

Posting in Controling

When an FI ducument is created that posts to an expenses (or revenue) account for which a corresponding primary cost element was created in CO, and a valid controlling object is identified for the expense/revenue line item, a controlling document is also created.

This CO document with its own unique numbers contains the following details:

• Controlling object posted to
• The cost element used
• The amount
• The date