Financial Accounting in R3 Part 2 continued

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Financial Accounting in R/3Part 2 (continued)

• Cheryl Calvert
• Lecturer in Accounting
• Victoria University

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Revision

• During the last two lectures I outlined the
  requirements for posting documents
• The document principle
• Document types
• Document number ranges
• Posting keys
• Field status group
• Account Assignment
• Reversing
• To Post, Park or Hold
• While the focus of discussion has been on FI, the
  above principles are applicable across the R/3
  system

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More about the FI module

• 1. The variant principle
• 2. Closing Financial Periods
• Period end closing
• Year end closing
• 3. FI and CO Organizational Structure

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1. The Variant Principle (1)

• 3-step method used in R/3 to assign properties to
  objects. The steps are
• Define the variant (for example chart of accounts
  CAUS)
• Populate variant with values (e.g., key,
  description, maintenance language, length of G/L
  account no.)
• Assign variant to one or more R/3 objects (e.g.,
  assign Chart of Accounts CAUS to Company Codes
  3000 and 4000)

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The Variant Principle (2)

• 1. The variant CAUS is created using trans OBY7
• 2. By copying an existing Chart of Accounts, CAUS
  is populated with values
• 3. CAUS is then assigned to company codes 3000
  and 4000 using trans OB62.
• The advantage of using the variant approach is
  that the same variant can be used by many
  objects. The variant K4 (fiscal-year variant) is
  used by many company codes (see trans OB37 and
  next slide).

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Fiscal Year Variant (1)

• Fiscal year is the financial reporting year
• Differs depending on country
• Australia fiscal year Jul 1 to Jun 30
• USA fiscal year Jan 1 to Dec 31
• Multinational companies typically use fiscal year
  of parent company.
• Posting periods are defined in the fiscal year
  variant.

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Fiscal Year Variant (2)

• Procedures for creating FYV
• Define a fiscal year variant (for example K4,
  OB29)
• Populate variant with values (for example,
  calendar year, OB29)
• Assign variant to one or more objects (eg assign
  fiscal year variant K4 to Company Codes 3000 and
  4000, OB37)

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Fiscal Year Variants in IDES
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2. Closing Financial Periods

• Two types of closing periods
• closing for reporting periods (period end)
• closing for fiscal year period (year-end)
• SAP module independent
• CO and FI-AA have no specific period-end closing
  procedures
• In FI-AA year-end closing procedure
• Two posting periods open at same time

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Period End Closing (1)

• Posting periods are defined in the fiscal year
  variant.
• To prevent documents from being posted to a wrong
  posting period, desired periods can be closed.
• Usually the current period is open and all other
  periods are closed.
• A period is opened by entering a range in the
  posting period variant which encompasses this
  period.

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Period End Closing(2), trans OB52
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Year-end Closing

• FI has special programs to close fiscal year.
• Other SAP modules such FI-AA and LO-MM have
  specific procedures and programs to close the
  fiscal year.
• Two programs must be run to carry forward the
  balances into the next fiscal year.
• Carry forward GL account balances
• Carry forward customer and vendor balances
• A, L and P are carried forward.
• R and E are transferred to reserves and the new
  fiscal year balances is zero.

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Financial Accounting in R/3Part 3FI and CO
Organizational Structures

• Cheryl Calvert
• Lecturer in Accounting
• Victoria University

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Financial vs Management Accounting

• Financial accounting
• Financial reports for external users
• Format governed by Accounting Standards
• Financial Accounting Module of R/3
• Management accounting
• Financial and non-financial reports for internal
  users
• No legislation governing format
• Controlling module of R/3

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Organizational Structures

• Org. Structures represent the legal and/or
  organizational views of an enterprise.
• Org. Structures form a framework that supports
  recording of all business activities.

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SAP Organizational Structures

• SAP R/3 uses the following concepts (and more) to
  represent organizational structures in financial
  and management accounting
• Company code
• Group Company
• Business Area
• Controlling Area
• Operating Concern
• Profitability Segment
• Cost and Profit Centers

Financial Accounting
Controlling
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The Org Structures used in FI are used in all
sub-modules of FI
This is the old picture
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1. Company Code

• A company code identifies an independent
  accounting entity (the smallest organizational
  unit for which a complete self-contained set of
  accounts can be drawn up).
• An example is a company within a corporate group.

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Company Code (2)
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2. Group Company
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Multiple Company Codes
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3. Business Areas
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e.g., Three countries, three companies
http//help.sap.com/saphelp_46c/helpdata/en/5d/a77
d74ec1111d2bc1000105a5e5b3c/content.htm
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Three business areas (PCs, Printers, and
Monitors) in the 3 companies
http//help.sap.com/saphelp_46c/helpdata/en/5d/a77
d77ec1111d2bc1000105a5e5b3c/content.htm
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Alternative configuration for PC, Printer, and
Monitor businesses in 3 countries
http//help.sap.com/saphelp_46c/helpdata/en/7e/d43
420455911d189400000e8323c4f/frameset.htm
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Which is better?

• The choice of which way to configure the system
  depends on the ease with which transactions can
  be recorded, desired reports generated,
  organization structure changed, and so on.
• Wrong choices at configuration can cause lot of
  angst later, since it is hard to reformat data
  from one data structure to another.
• So the implementation team needs deep knowledge
  of the consequences of different configuration
  choices.

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4. Controlling Area
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5. Operating Concern
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6. Profitability Segments
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7. Cost and Profit Centers

• Controlling areas are broken down into cost
  centers and/or profit centers
• A cost center is responsible for monitoring costs
  only
• A profit center monitors both revenues and costs
• The cost center hierarchy is displayed via trans.
  OKENN (profit center hierarchy is KCH6N)

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Summary

• Organizational Elements used in Financial
  Reporting
• Group Company
• Company code
• Business Area
• Organizational Elements used in Controlling
• Controlling Area
• Operating Concern
• Profitability Segments
• Cost Centre
• Profit Centre

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IDES International

• International Demonstration and Education System
• Model company in R/3 system
• Demonstrates integration and functionality of
  system.
• IDES assembles motorcycles from components that
  come from plants located through North America,
  Europe and Asia.

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IDES Structure and Company Codes
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IDES Business Areas
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IDES Business Areas
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IDES Controlling Areas
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IDES Operating Concern
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IDES Organizational Structure Summary
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Summary

• To enable reporting for various decision makers,
  PEAS must be able to associate each transaction
  with different parts of the organization.
• Today we saw how IDES uses concepts such as
• Company code
• Business Area
• Controlling Area
• Operating Concern, etc.
• There are many more organizational structure
  elements to come, e.g., sales area, distribution
  channel, plant.

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SAPs Organizational Elements