SAP Finance/Controlling Overview

Financial Accounting

GL
AM AR
FI
CON AP
Special
Ledger

AppLabs confidential and restricted circulation 2

FI Introduction

The SAP FI Module has the capability of meeting all the accounting and
financial needs of an organization. It is within this module that Financial
Managers as well as other Managers within your business can review the
financial position of the company in real time as compared to legacy systems
which often requires overnight updates before financial statements can be
generated and run for management review.

AppLabs confidential and restricted circulation 3

 FI Introduction,. cont..
The real-time functionality of 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 PS (Project Systems).

The FI Module also integrates with HR(Human Resources) which

includes PM (Personnel Management), Time Management, Travel
Management and Payroll. Document transactions occurring within the
specific modules generate account postings via account determination
tables.

AppLabs confidential and restricted circulation 4

 Financial Applications

TR FI CO

Cash Management General Ledger Controlling

AppLabs confidential and restricted circulation 5

 Financial Accounting Components
The FI Module comprises several sub-modules as follows:

• General Ledger

•Accounts Receivables

•Accounts Payable

•Asset Accounting

•Bank Accounting

AppLabs confidential and restricted circulation 6

 Financial Accounting

G/L Reporting
Legal or external reporting
• Balance sheet
• Income Statement
• Statement of Financial Position

AppLabs confidential and restricted circulation 7

 Financial Accounting

External Accounting
Financial Position Bankers, Lenders
Profit &
Stockholders
Loss
Balance Sheet

External Auditors
IRS, Taxing
SEC
Authority
AppLabs confidential and restricted circulation 8
FI and CO comparison

FI CO
Legal or external Internal management
reporting reporting
Reports by accounts Reports by cost centers and
Balance Sheet cost elements
Income Statement Cost Center Reports

AppLabs confidential and restricted circulation 9

FI/CO Organizational Structures

• Client
• Company
• Chart of Accounts
• Company Code
• Business Area
• Credit Control Area
• Controlling Area

AppLabs confidential and restricted circulation 10

 Company Code
A BALANCED SET OF BOOKS

•A required structure
•A legally independent entity
•The smallest organizational unit for which accounting can be carried out
• The level where business transactions are processed
• The level where accounts are managed
• The level where legal individual financial statements, such as the
balance sheet and the profit and loss statement are created

AppLabs confidential and restricted circulation 11

 Chart Of Accounts

Operating COA

Company Code Company Code Company Code

1000 2000 3000

AppLabs confidential and restricted circulation 12

 Credit Control Area

•An organizational unit or area of responsibility created to control

customer credit limits

•A company code is assigned to one and only one credit control area

•Multiple company codes can be assigned to one credit control area

AppLabs confidential and restricted circulation 13

 Controlling Area

• An organizational unit defining the company's cost/ managerial

accounting operations

• A company code is assigned to one and only one controlling area

• A controlling area can have multiple company codes assigned to it

- This allows cross company cost allocations and reporting

AppLabs confidential and restricted circulation 14

 Fiscal Year

AppLabs confidential and restricted circulation 15

 General Ledger

General Ledger is fully integrated with the other SAP Modules. It is

within the General Ledger that all accounting postings are recorded.
These postings are displayed in real-time providing up-to-date visibility
of the financial accounts.

AppLabs confidential and restricted circulation 16

 Account Groups GL

In Order to
organize and
maintain large
number of GL
accounts better,
they are arranged
in accounts
groups

AppLabs confidential and restricted circulation 17

 Account Groups GL

• Fixed Assets Account 999999

• Liquid Fund Account 999999

• General G/L Account 999999

• Materials Management accounts 999999

• Profit and Loss accounts 999999

• Reconciliation accounts 999999

AppLabs confidential and restricted circulation 18

 Account Receivables

Accounts Receivables records all account postings generated as a result

of Customer sales activity.

These postings are automatically updated in the General Ledger . It is

within the Accounts Receivables Module that you can monitor aging of
the receivables and generate customer analysis. The Accounts
Receivable Module also integrates with the General ledger, Sales and
Distribution, and Cash Management Modules

AppLabs confidential and restricted circulation 19

 Customer Master – Account Group
Customer accounts can be combined in various account groups so that they
can be organized and managed more easily

Accounts in all groups will have similar characteristics.

• Trade Debtors
• Affiliated companies
• Other Debtors
• One time customers (ext. number assignment)

AppLabs confidential and restricted circulation 20

 Customer Master – Account Group

AppLabs confidential and restricted circulation 21

 Accounts Payables

Accounts Payable records account postings generated as a result of

Vendor purchasing activity. Automatic postings are generated in the
General Ledger as well. Payment programs within SAP enables the
payment of payable documents by check, EDI, or transfers.

AppLabs confidential and restricted circulation 22

 Vendor Master – Account Groups

Vendor accounts can be combined in various account groups so that they

can be organized and managed easily

Accounts in all groups will have similar characteristics.

• Trade Vendors
• Affiliated companies
• Other Creditors
• One-time Vendors (int. number assignment)

AppLabs confidential and restricted circulation 23

 Vendor Master – Account Groups

AppLabs confidential and restricted circulation 24

 Bank Accounting

Bank Accounting allows for management of bank transactions in

the system including cash management.

AppLabs confidential and restricted circulation 25

 Bank Master Data

The banks used by the company, are known as House banks.

Each Bank account is represented by a combination of

House Bank ID and Account ID.

House Bank used …example CITI bank

AppLabs confidential and restricted circulation 26

 Bank Master Data

AppLabs confidential and restricted circulation 27

 Asset Accounting
Asset Accounting is utilized for managing your company’s Fixed Assets.
SAP allows you to categorize assets and to set values for depreciation
calculations in each asset class.

AppLabs confidential and restricted circulation 28

 Asset Master – Asset Classes

AppLabs confidential and restricted circulation 29

 Standard Assets

• Land
• Buildings
• Vehicles
• Office Equipment
• Computer Equipment
• Software
• Communication Equip.
• Furniture & Fittings
• Asset Under Construction

AppLabs confidential and restricted circulation 30

 Depreciation Areas and Methods
Depreciation Areas
•Book Depreciation in Company Code Currency
•Book Depreciation in Group Currency

Straight Line Method Depreciation

No Depreciation in Acquisition year

Full Depreciation in Retirement year

AppLabs confidential and restricted circulation 31

 Controlling Introduction
The SAP CO (Controlling) Module provides supporting information to
Management for the purpose of planning, reporting, as well as monitoring
the operations of their business. Management decision-making can be
achieved with the level of information provided by this module. Some of the
components of the CO(Controlling) Module are as follows

• Cost Element Accounting

• Cost Center Accounting
• Internal Orders
• Product Cost Controlling
• Profitability Analysis
• Profit Center Accounting

AppLabs confidential and restricted circulation 32

 Controlling
Profit Center Accounting
All departments need to be defined as profit center. Apart from department
wise profit centers, the company needs to define one corporate profit center
where common costs like Admin, marketing etc. will be captured.

Cost Center Accounting

A cost center can be defined as a cost capturing unit under each profit center.
Common costs will be collected under a cost center that will be allocated to
respective department at the period end

Cost Element Accounting

Component provides information which includes the costs and revenue for
an organization. These postings are automatically updated from FI (Financial
Accounting) to CO (Controlling).

AppLabs confidential and restricted circulation 33

 Controlling

Internal Orders

Provide a mean of tracking costs of a specific job , service, or task.

Internal Orders are used as a method to collect those costs and business
transactions related to the task. This level of monitoring can be very
detailed but allows management the ability to review Internal Order
activity for better-decision making purposes.

AppLabs confidential and restricted circulation 34

 Controlling
Product Cost Controlling

Allows management the ability to analyze their product costs and to make
decisions on the optimal price(s) to market their products. Sub-components
of the module are:

• Product Cost Planning which includes Material Costing( Cost estimates

with Quantity structure, Cost estimates without quantity structure, Master
data for Mixed Cost Estimates, Production lot Cost Estimates)
• Cost Object Controlling includes Product Cost by Period, Product Cost by
Order, Product Costs by Sales Orders, Intangible Goods and Services, and
CRM Service Processes.
• Actual Costing/Material Ledger includes Periodic Material valuation, Actual
Costing and Price Changes.

AppLabs confidential and restricted circulation 35

CO/EC Overview
COMPONENT VIEW ROLE

Cost Center Acctg - CO-CCA Costs Cost Tracking

Internal Orders CO-OPA Costs Small Projects

Projects - PS Costs Large Projects

Product Costing - CO-PC Costs Product Costing

Activity Based Costing Costs Cost Management

Profitability Analysis-CO-PA Profits Margin by multi-cuts

Profit Center Acctg-EC-PCA Profits Profit & Loss Responses

Executive Info. System-EC-EIS Any data Cross-module reports

AppLabs confidential and restricted circulation 36

 Controlling
CO Reporting

Internal management reporting

Reports by cost centers or other cost
“objects” and cost elements

• Cost centers
• Orders and Projects
• Budget/plan
• Actual vs. plan

AppLabs confidential and restricted circulation 37

 Business Process Integration
Purchase Purchase
Check Requisition Order
Availability Run
MRP Goods
Receipt
Sales Order
Entry Procurement
Pick Process Invoice
Sales Order
Materials Receipt
Process

Receipt of
Payment

Payment to
Post Goods
Invoice Vendor
Issue
Customer

AppLabs confidential and restricted circulation 38

 Sales Process – Order to Cash
Check Availability

Sales Order
Entry
Pick
Materials

Receipt of
Customer Payment Pack
Materials

Invoice Post Goods

Customer Issue

AppLabs confidential and restricted circulation 39

Procurement process – Procure to Pay

Purchase Purchase
Requisition Order

Notify
Vendor

Payment
to Vendor Vendor
Shipment

Invoice Goods
Receipt Receipt

AppLabs confidential and restricted circulation 40