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CTX LABS

FINANCIAL ACCOUNTING
BUSINESS BLUEPRINT

SUBMITED
TO

1.

EXECUTIVE SUMMARY................................................................................................ 2
1.1

Overview................................................................................................................. 2

1.2

Business Blueprint Purpose..................................................................................... 3

1.3

Project Scope.......................................................................................................... 4

1.4

Financial Accounting............................................................................................... 4

1.5

Financial Accounting Scope.................................................................................... 4

2.

Audience.................................................................................................................... 5

3.

Organizational Structure............................................................................................ 5
3.1 Client.......................................................................................................................... 6
3.2

Company................................................................................................................. 6

3.3

Company Code........................................................................................................ 7

3.4

Chart of Accounts.................................................................................................... 7

4.

Master Data............................................................................................................... 7
4.1

General Ledger Master............................................................................................ 7

4.2

Accounts Payable Master........................................................................................ 7

4.3

Accounts Receivable Master................................................................................... 7

4.4

Bank Accounting Maser........................................................................................... 7

4.5

Asset Accounting Master......................................................................................... 8

5.

Business Process........................................................................................................ 8
5.1

General ledger Purpose.......................................................................................... 8

5.2

Accounts Payable ledger purpose...........................................................................9

5.3

Accounts Receivable ledger purpose....................................................................10

5.4

Asset accounting ledger purpose..........................................................................12

5.5

Gap analysis......................................................................................................... 13

1.

EXECUTIVE SUMMARY
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1.1

Overview

ITC is one of India's foremost private sector companies with a market capitalization of
over US $ 33 billion and a turnover of US $ 7 billion. ITC is rated among the World's Best
Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes
magazine and among India's Most Valuable Companies by Business Today. ITC ranks
among India's '10 Most Valuable (Company) Brands', in a study conducted by Brand
Finance and published by the Economic Times. ITC also ranks among Asia's 50 best
performing companies compiled by Business Week.
ITC has a diversified presence in FMCG, Hotels, Paperboards & Specialty Papers,
Packaging, Agri-Business, and Information Technology. While ITC is an outstanding market
leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and AgriExports, it is rapidly gaining market share even in its nascent businesses of Packaged
Foods & Confectionery, Branded Apparel, Personal Care and Stationery.

ITC's production facilities and hotels have won numerous national and international
awards for quality, productivity, safety and environment management systems. ITC was
the first company in India to voluntarily seek a corporate governance rating.

ITC employs over 26,000 people at more than 60 locations across India. The Company
continuously endeavors to enhance its wealth generating capabilities in a globalizing
environment to consistently reward more than 4,07,000 shareholders, fulfill the
aspirations of its stakeholders and meet societal expectations.
This over-arching vision of the company is expressively captured in its corporate
positioning statement: "Enduring Value. For the Nation. For the Shareholder."

1.2

Business Blueprint Purpose


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This document summarizes the findings of the SAP CTX Labs consulting team and I T C
team with respect to SAP processes to be implemented in I T C FMCG & Tobacco
The purpose of Business Blueprint document is to prepare to move forward with the
implementation of I T C SAP R/3 system. At the conclusion of the blueprint, the SAP CTX
Labs consultants will determine the SAP functionality required to run the I T C business.
The Blueprint reiterates the R/3 organizational structures that have been identified and
will serve as the basis for the initial configuration activities. No significant configuration
and customization choices have been identified that will prevent the future
implementation of additional capabilities within the R/3 environment.
The information gathered and documented in the Blueprint is sufficient for the team to go
forward into the Realization phase. However, it is critical that both the SAP CTX Labs and I
T C team agree on the scope of the project as presented in this document. Acceptance
by both teams is required to move the project into the next phase.

1.3

Project Scope

This project covers almost all the areas of Production, Purchases, Sales and Finance as
well. It describes the components of Finance such as General Ledger, Accounts Payable,
Accounts Receivable, and Asset Accounting in Finance Module. Apart from this Cost
Accounting, Internal Orders, Production Orders, and Sales Orders covered under
Controlling Module.

1.4

Financial Accounting

The Financial Accounting is designed to capture organizations business transactions in a


manner that will satisfy external reporting requirements. Financial accounting has the
capability of meeting all the accounting and financial needs of an organization. This
module provides integrated, on-line, real-time functionality for processing, recording and
maintaining the functional account transactions of the business for external reporting
purpose. The mangers who have an access of SAP FI module within an organization can
review the financial position of the company in real time as compared to legacy systems
which often require overnight updates before financial statements can be generated and
run for management review.

1.5

Financial Accounting Scope

The real-time functionality of the SAP modules allows for better decision making and
strategic planning. The FI (Financial Accounting) Module integrates with other SAP
Modules such as MM (Materials Management),
PP (Production Planning), SD (Sales and Distribution), PM (Plant Maintenance),and sub
components of FI are General Ledger, Accounts Payable, Accounts Receivable, and Asset
Accounting in Finance Module.

Financial Accounting includes the following sub-modules:


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General Ledger (FI-GL)

Accounts Payable (FI-AP)

Accounts Receivable (FI-AR)

Bank Accounting (FI-BL)

Asset Accounting (FI-AA)

General Ledger (FI-GL):- G/L accounting is to provide a comprehensive picture for


external accounting and accounts. Recording all business transactions (primary postings
as well as settlements from internal accounting) in a software system that is fully
integrated with all the other operational areas of I T C group ensures that the accounting
data is always complete and accurate. Accounts Payable, Accounts Receivable, Asset etc.,
will be categorized as subsidiary ledgers.
Accounts Payable (FI-AP):- The Accounts Payable application component records and
manages accounting data for all vendors with respect to I T C group as a whole. It is also
an integral part of the purchasing system: Deliveries and invoices are managed according
to vendors
Accounts Receivable (FI-AR):-The Accounts Receivable application component records
and manages accounting data of all customers with respect to I T C group. It is also an
integral part of sales management. All postings in Accounts Receivable are also recorded
directly in the General Ledger. Different G/L accounts are updated depending on the
transactions involved (Example, receivables, down payments, bills of Exchange).
Bank Accounting (FI-BL):- This component is used to handle accounting transactions
that I T C group processes with its banks. It includes the management of bank master
data, cash balance management (check and bill of exchange management), and the
creation and processing of incoming and outgoing payments.
Asset Accounting (FI-AA):- The Asset Accounting component is used for managing and
supervising fixed assets with the SAP R/3 System. In SAP R/3 Financial Accounting, it
serves as a subsidiary ledger to the FI General Ledger, providing detailed information on
transactions involving fixed assets with respect to I T C group.

2. Audience
The audience of this document is :

I T C Team:

SAP CYX LABS Team:

I T C Group

Controlling Area

I T C Fmcg

ITC
Tobacco

Profit
Center

PC F 2

PC F 1

PC T 1

I T Manager

Project Manager

Finance

FICO

Purchase

M.M

Sales

S.D

PC T 2

3. Organizational Structure
An organizational structure is made up of organizational units , which represent the
departments, work groups etc. in your enterprise.

Organizational Structure of I T C Groups


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3.1 Client
Clients are part of the defining technical structure of the SAP System. Each client contains its own
master records and set of tables. Customizing is either client-specific or cross-client, depending on
which business data is configured. Cross-client customizing is valid for all clients in an SAP System.

3.2 Company
A company is an organizational unit in Accounting which represents a business organization according
to the requirements of commercial law in a particular country. A company can comprise one or more
company codes. All company codes for a company must work with the same operational chart of
accounts and fiscal year . The currencies used can be different.

3.3 Company Code


The company code is the organizational unit that allows you to structure your enterprise from a
financial accounting perspective. It usually corresponds to a legally independent company. Each
company code has exactly one domestic currency, in which you create the balance sheet. You can
define up to two additional currency roles, for example global company currency. This means that you
can disclose transaction figures for the company code not only in the transaction currency or in the
domestic currency for that company code, but also in up to two additional currencies.

3.4 Chart of Accounts


The chart of accounts list is a directory of all charts of accounts that can be used in a client. The chart
of accounts is shared by Financial Accounting as well as cost/revenue accounting. The items in a
chart of accounts can be both expense or revenue accounts in Financial Accounting and cost or
revenue elements in cost/revenue accounting.

4. Master Data
Master data is data that remains unchanged over a long period of time. Master data contains
information that is needed again and again in the same way. Characteristics can bear master data in
BI. Master data can be attributes, texts, or hierarchies. If characteristics have attributes, texts, or
hierarchies, they are referred to as characteristics that bear master data.

4.1 General Ledger Master


The central task of G/L accounting is to provide a comprehensive picture for external accounting and
accounts. Recording all business transactions (primary postings as well as settlements from internal
accounting) in a software system that is fully integrated with all the other operational areas of a
company ensures that the accounting data is always complete and accurate.

4.2 Accounts Payable Master


SAP Accounts Payable (A/P) sub-module is tightly integrated with the Materials Management (MM)
module and other modules. This sub-module allows us to manage the most complex of A/P
transactions. With SAPs A/P sub-module, an entity can easily manage its payables to provide
automated cash disbursement, maximize cash discounts

4.3 Accounts Receivable Master


Account receivable is sub-component of SAP financial Accounting application. Very often accounts
receivables sub-module interacts with Sales and Distribution component of SAP application.

4.4 Bank Accounting Maser


This component is used to handle accounting transactions that you process with your bank. It
includes the management of bank master data, cash balance management (check and bill of
exchange management), and the creation and processing of incoming and outgoing payments. It is
possible to freely define all country-specific characteristics, such as the specifications for manual and
electronic payment procedures, payment forms, or data media.

4.5 Asset Accounting Master


The Asset Accounting (FI-AA) component is used for managing and supervising fixed assets with the
SAP R/3 System. In SAP R/3 Financial Accounting, it serves as a subsidiary ledger to the FI General
Ledger, providing detailed information on transactions involving fixed assets.

5. Business Process

SAP business processes that can span many functional areas within a company. Instead of navigating
through multiple screens, business users often stage the data for SAP transactions it provides a
complete view of the data. The above picture tells the flow of the business process from SD to FICO
and FICO to MM.

5.1

General ledger Purpose

Purpose
The central task of G/L accounting is to provide a comprehensive picture of external accounting and
accounts. Recording all business transactions (primary postings as well as settlements from internal
accounting) in a software system that is fully integrated with all the other operational areas of a
company ensures that the accounting data is always complete and accurate.

The SAP FI General Ledger Accountant has the following features:

Free choice of level: corporate group or company


Automatic and simultaneous posting of all sub-ledger items in the appropriate
General Ledger Accountant accounts (reconciliation accounts)

Simultaneous updating of General Ledger Accountant and cost accounting areas

Real-time evaluation of and reporting on current accounting data, in the form of


account displays, financial statements with different financial statement versions
and additional analyses. Essentially, the General Ledger Accountant serves as a complete record
of all business transactions. It is the centralized, up-to-date reference for the rendering of accounts.
Actual individual transactions can be checked at any time in real-time processing by displaying the
original documents, line items, and transaction figures at various levels such as:

Account information

Journals

Totals/transaction figures

Balance sheet/profit and loss evaluations

Process Flow

Posting General Ledger Account Documents

Displaying the Document Journal

Displaying G/L Balances (List)

Carrying Out Recurring Entries

Account Maintenance: Automatic and Manual Clearing

Key Points

Provides a comprehensive picture of external accounting and accounts

Records all business transactions in a software system that is fully integrated

Ensures that the accounting data is always complete and accurate

Automatic and simultaneous posting of all sub-ledger items in the appropriate


general ledger accounts (reconciliation accounts)

Simultaneous updating of general ledger and cost accounting areas

Real-time evaluation of and reporting on current accounting data

Financial statements with different versions and additional analyses

Actual individual transactions can be checked at any time in real time processing
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5.2

Accounts Payable ledger purpose

Purpose
This scenario deals with posting accounting data for vendors in Accounts Payable. From there, the
data is sorted by vendor and made available to other areas such as the purchasing system. When
posting data in Accounts Payable, the system creates a document and passes the data entered to the
general ledger. General ledger accounts and vendor accounts are then updated according to the
transaction concerned (payable, down payment, credit memo and so on) vendor payment activities.
All business transactions are posted to and managed by means of accounts and for this a vendor
master records are created.

Business Process Accounts Payable focuses on the following activities:


Down payment request / clearing
Post down payments using the payment program
Post vendor invoice
Enter vendor credit memo
Review and Release Blocked Invoices
Select invoices to be Paid
Review and block invoices for payment as needed
Post payment using the payment program
Creation of payment media using Payment Media Workbench (Alternative 1)
Creation of payment media using Classical Payment Medium program( Alternative 2)
Manual payment
Manual bank statement processing
Display of posted documents

Process Flow

Post Accounts Payable Documents


Manual and automatic clearing of open items
Post down payments using the payment program
Post manual and automatic outgoing payments.

Key Points

When posting data in Accounts Receivable, the system creates a document and
passes the data to the general ledger
Profit, Loss and customer accounts are updated according to the transaction
concerned customer payment activities
All business transactions are posted to accounts
All business transactions are managed by means of accounts and for this customer
master records are created
One time Customers are used for avoiding building up of huge master data volume

5.3

Accounts Receivable ledger purpose

Purpose
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This component deals with posting accounting data for customers in Accounts Receivable. From
there, the data is sorted by customer and made available to other areas such as the Sales and
Distribution system. When posting data in Accounts Receivable, the system creates a document and
passes the data entered to the general ledger. General ledger (Profit and Loss) accounts and
customer accounts are then updated according to the transaction concerned (receivable, down
payment, credit memo and so on) customer payment activities. All business transactions are posted
to and managed by means of accounts and for this a customer master records are created. One time
Customers are used for avoiding building up of huge master data volume.

Business Process Accounts Receivable focuses on the following activities:

Post down payment request


Post down payment manually
Post customer invoice
Post a credit note with invoice reference
Posting Payments Using the Payment Program
Posting Manual Payment
Automatic Clearing of open items in customer accounts
Manual Clearing of open items in customer accounts
Manual Bank Statement Processing
Reprocessing an Account Statement
Dunning
Account Balance Interest Calculation
One-Time-Accounts Postings
Setting a Credit Limit
Credit Control Reporting

General Business Processes: In this document you can find some transactions which cover
the following general business processes

Displaying an accounting document.


Displaying and Changing Line Items
Displaying Balances
Reversing a Document
Reversing a Document Individual Reversal
Reversing a Document Mass Reversal

Process Flow

Post down payment request/ manually


Posting customer invoice and
Post a credit note with invoice reference
Posting payments using the payment program
Posting manual payment
Automatic clearing of open items in customer accounts
Manual clearing of open items in customer accounts
Manual bank statement processing
Reprocessing an account statement
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Dunning
Account balance interest calculation
One-Time-Accounts postings
Setting a credit limit and credit control reporting

Key Points

When posting data in Accounts Receivable, the system creates a document and
passes the data to the general ledger
Profit, Loss and customer accounts are updated according to the transaction
concerned customer payment activities
All business transactions are posted to accounts
All business transactions are managed by means of accounts and for this customer
master records are created
One time Customers are used for avoiding building up of huge master data volume

5.4 Asset accounting ledger purpose


Purpose
The functions for Tangible Asset Handling enable illustration and documentation of the development
of fixed assets for accounting purposes. Asset accounting is a subsidiary ledger of the general ledger
and is used to manage and document in detail fixed asset transactions. In general ledger accounting,
it is possible to update depreciation and changes to asset balance sheet values in asset accounting. It
is also possible also make various account assignments to cost accounting for these transactions.
As a result of the integration in SAP ERP, Asset Accounting (FI-AA) transfers data directly to and from
other SAP ECC components, for example posting from the Material Management (MM) component
directly to FI-AA. When purchasing an asset or produce an asset in-house, directly posting the invoice
receipt or goods receipt is possible, or the withdrawal from the warehouse to assets in the Asset
Accounting component. At the same time, you can pass on depreciation and interest directly to the
Financial Accounting (FI) and Cost Accounting (CO) components. From the Plant Maintenance (PM)
component, maintenance activities that require capitalization to assets are available.

To handle tangible assets, the business functions of the following system components are
accessible:
Component

Functions

Financial Accounting
(FI)

Integration with the general ledger and other


subsidiary ledgers

Asset Accounting (FIAA)

Valuation of fixed assets and settlement of assets


under construction

Cost Accounting (CO)

Posting cost-accounting depreciation

Process Flow

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Acquisition from purchase with vendor

Acquisition with Automatic Offsetting Entry

Retirement with revenue

Asset Sale without customer

Post-Capitalization

Write-Ups

Settlement Assets Under Construction

Down Payment Request for Assets under Construction

Depreciation Posting Run

Posting Acquisition and Production Costs Values

Depreciation Simulation/Primary Cost Planning

Key Points

Entire lifetime of the asset from purchase order or the initial acquisition (possibly
managed as an asset under construction) through its retirement

Calculate values for depreciation and interest

Depreciation forecast

5.5 Gap analysis


Gap analysis is the study of the differences between two different information systems or applications
(ex; existing system or legacy system with Client and new is SAP), often for the purpose of
determining how to get from one state to a new state. A gap is sometimes spoken of as "the space
between where we are and where we want to be." Gap analysis is undertaken as a means of bridging
that space.
Actual gap analysis is time consuming and it plays vital role in blue print stage.
The Gaps can differ from company to company. Most commonly, however, missing functionality is
industry-specific.

Examples
In customer master data the client requirement needs legacy customer number which can be solved
with User exit.
In sales order we need customer Phone number, we can use user exit
If client want new field in customer master like nearest fire station.
GAP analysis is done in Blue Print stage. It aims to understand what can be done with the standard
SAP and how the client actually wants a particular scenario to be processed.
Its an understanding of the GAP between the actual & required scenarios.
The difference between agreed work and completed work is GAP Analysis.
E.g.: To Fill This Gap, We Use the Enhancements, These Enhancements Divided Into Exits, Like User
exits, Field Exits Screen Exits & Menu Exits. These Enhancements are used to update the standard
program in its Respective Business Transactions, Used as a Gateway to Meet the Client Requirements.

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