BUSINESS BLUEPRINT FOR SAP ECC 6.

0 IMPLEMENTATION AT

GUJARAT GLASS (P) LTD. JAMBUSAR, KOSAMBA RATMALANA, NATTANDIYA MODULE FI FINANCIAL ACCOUNTING

Document Information
Project Name:

Gujarat glass private limited

SAP ECC 6.0 Implementation

Project Director: Phase: Quality Review Method: Prepared By: Reviewed By:

Parthasarthy De Business Blueprint Preparation Peer Review KR Mahesh Suriyanarayan

Document Version No: Document Version Date:

3.0 27/ 10/2006

Preparation Date: Review Date:

15/ 09/2006 17/10/2006

Distribution List
From Date Phone/Fax

KR Mahesh
To Action*

27/10/2006
Due Date

+91 9867743920
Phone/Fax

Mr A Balaji HP V Rajshekar

Acceptance/Signoff

* Action Types: Approve, Review, Inform, File, Action Required, Attend Meeting, Other (please specify) Version History
Ver. No. Ver. Date Revised By Description Filename

Ver. 1.0 Ver. 2.0 Ver. 3.0

14.09.06 15.09.06 27.10.06

KR Mahesh KR Mahesh KR Mahesh

New Document

Draft Version

GGPL_BBP_FI_Ver1.0.doc GGPL_BBP_FI_Ver2.0.doc GGPL_BBP_FI_Ver3.0.doc

Modified the document to add standard reports and GAPS Modified the documents, explained processes in detail, added flow charts, reports , GAPS added US and UK Blue print

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CONTENTS
1 Executive Summary....................................................................................................................................................... 7 1.1 Background........................................................................................................................................................... 7 1.2 Enterprise Resource Planning (Erp) Project Objectives................................................................................... 8 1.3 Overview Of Blueprint Phase .............................................................................................................................. 8 2 Financial Accounting Module ..................................................................................................................................... 10 2.1 Financial Accounting Purpose ....................................................................................................................... 10 2.2 Sap Finance Organisation Structure For Ggpl ................................................................................................ 11 2.3 Definition Of Sap Organisational Units ............................................................................................................ 12 3 Financial Accounting Basic Settings......................................................................................................................... 14 3.1 Chart Of Accounts.............................................................................................................................................. 14 3.2 Account Group.................................................................................................................................................... 14 3.3 Field Status Group.............................................................................................................................................. 15 3.4 Fiscal Year And Accounting Posting Period.................................................................................................... 16 3.5 Posting Period Variant ....................................................................................................................................... 17 3.6 Posting Key......................................................................................................................................................... 17 3.7 Document Type................................................................................................................................................... 19 3.8 Document Number Ranges................................................................................................................................ 20 3.9 Retained Earnings Account............................................................................................................................... 20 3.10 Exchange Rate Table.......................................................................................................................................... 21 4 General Ledger Overview............................................................................................................................................ 22 4.1 Overview.............................................................................................................................................................. 22 4.2 Scope Of Implementation .................................................................................................................................. 24 4.3 Gl Master Record................................................................................................................................................ 24 4.4 Line Item Display ................................................................................................................................................ 25 4.5 Account Balances............................................................................................................................................... 25 4.6 Gl Account Posting ............................................................................................................................................ 25 4.7 Reconciliation Of Subsidiary Ledger................................................................................................................ 26

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4.8 Open Items .......................................................................................................................................................... 26 5 Gl Master Data.............................................................................................................................................................. 27 5.1 Gl Master Record................................................................................................................................................ 27 5.1.1Process Explanation..................................................................................................................................... 28 6 Gl Business Process ................................................................................................................................................... 31 6.1 Post And Park Documents................................................................................................................................. 31 6.1.1Process Explanation..................................................................................................................................... 32 6.2 Month End Processing....................................................................................................................................... 35 6.2.1Process Explanation..................................................................................................................................... 35 6.3 Year End Processing.......................................................................................................................................... 38 6.3.1Process Explanation..................................................................................................................................... 38 7 Accounts Payable ........................................................................................................................................................ 41 7.1 Overview.............................................................................................................................................................. 41 7.2 Implementation Scope ....................................................................................................................................... 42 7.3 Ap Master Record............................................................................................................................................... 42 7.4 Invoices And Credit Memos............................................................................................................................... 42 7.5 Payments............................................................................................................................................................. 43 7.6 Special Transactions.......................................................................................................................................... 43 8 Vendor Master Data ..................................................................................................................................................... 44 8.1 Ap-Master Record Non Purchasing .................................................................................................................. 44 8.2 Ap-Master Record Purchasing .......................................................................................................................... 45 9 Ap Business Processes .............................................................................................................................................. 46 9.1 Vendor Invoice Processing Non Purchasing ................................................................................................ 46 9.1.1Process Explanation..................................................................................................................................... 47 9.2 Vendor Invoice Processing Purchasing / Services ...................................................................................... 49 9.2.1Process Explanation..................................................................................................................................... 51 9.3 Vendor Credit Memo Processing ...................................................................................................................... 53 9.3.1Process Explanation..................................................................................................................................... 53 9.4 Vendor Down Payment Processing .................................................................................................................. 54 9.4.1Process Explanation..................................................................................................................................... 54 9.5 Manual Outgoing Payment Processing............................................................................................................ 55 9.5.1Process Explanation..................................................................................................................................... 56 9.6 Automatic Outgoing Payment Processing....................................................................................................... 57 9.6.1Process Explanation..................................................................................................................................... 57 9.7 Staff Advance And Claim Processing............................................................................................................... 59 9.7.1Process Explanation..................................................................................................................................... 59 9.8 Period End Processing ...................................................................................................................................... 60 9.8.1Process Explanation..................................................................................................................................... 61 9.9 Year End Processing.......................................................................................................................................... 62 9.9.1Process Explanation..................................................................................................................................... 62

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Accounts Receivable................................................................................................................................................... 64 10.1 Overview.............................................................................................................................................................. 64 10.2 Implementation Scope ....................................................................................................................................... 64 10.3 Ar Master Record................................................................................................................................................ 65 10.4 Invoices And Credit Memos............................................................................................................................... 65 10.5 Special Transactions.......................................................................................................................................... 65 10.6 Document And Account Display ....................................................................................................................... 66 10.7 Customer Credit Management........................................................................................................................... 66

11 12

Ar Master Record ......................................................................................................................................................... 67 11.1 Customer Master Record................................................................................................................................... 67 Ar Business Process ................................................................................................................................................... 68 12.1 Invoice Processing............................................................................................................................................. 68 12.1.1Process Explanation................................................................................................................................... 69 12.2 Credit Memo Processing.................................................................................................................................... 70 12.2.1Process Explanation................................................................................................................................... 70 12.3 Downpayment Processing................................................................................................................................. 70 12.3.1Process Explanation................................................................................................................................... 71 12.4 Incoming Payment Processing ......................................................................................................................... 71 12.4.1Process Explanation................................................................................................................................... 72 12.5 Period End Processing ...................................................................................................................................... 73 12.5.1Process Explanation................................................................................................................................... 74 12.6 Year End Processing.......................................................................................................................................... 75 12.6.1Process Explanation................................................................................................................................... 75

13

Bank Accounting ......................................................................................................................................................... 77 13.1 Implementation Scope ....................................................................................................................................... 77 13.2 Bank Master Data................................................................................................................................................ 77 13.3 Bank Data Accounting Process ........................................................................................................................ 80 13.3.1Process Explanation................................................................................................................................... 81 13.4 Petty Cash Management .................................................................................................................................... 82

14 15 16 17 18 19

Taxes Country India Version ................................................................................................................................... 84 Mapping Of As Is Process In Blue Print Document.................................................................................................. 86 Reports ......................................................................................................................................................................... 90 16.1 Financial Accounting Reports........................................................................................................................... 90 Annexure-A: Summary Of Discussions..................................................................................................................... 99 Gaps ............................................................................................................................................................................ 113 Business Blue Print Financial Accounting Module Us & Uk .............................................................................. 114 19.1 Financial Accounting Purpose ..................................................................................................................... 114 19.2 Sap Finance Organisation Structure For Gg-Us & Ggi & Pir Uk .................................................................. 115 19.3 Definition Of Sap Organisational Units .......................................................................................................... 115

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Financial Accounting Basic Settings Us & Uk ..................................................................................................... 117 20.1 Chart Of Accounts............................................................................................................................................ 117 20.2 Account Group.................................................................................................................................................. 117 20.3 Field Status Group............................................................................................................................................ 117 20.4 Fiscal Year And Accounting Posting Period.................................................................................................. 118 20.5 Posting Period Variant ..................................................................................................................................... 118 20.6 Posting Key....................................................................................................................................................... 118 20.7 Document Type................................................................................................................................................. 118 20.8 Document Number Ranges.............................................................................................................................. 119 20.9 Retained Earnings Account............................................................................................................................. 119 20.10 Exchange Rate Table........................................................................................................................................ 120

21

General Ledger Overview Us & Uk........................................................................................................................ 121 21.1 Overview............................................................................................................................................................ 121 21.2 Gl Master Record.............................................................................................................................................. 122 21.3 Line Item Display .............................................................................................................................................. 123 21.4 Account Balances............................................................................................................................................. 123 21.5 Gl Account Posting .......................................................................................................................................... 124 21.6 Reconciliation Of Subsidiary Ledger.............................................................................................................. 124 21.7 Open Items ........................................................................................................................................................ 124

22 23

Gl Master Data Us & Uk .......................................................................................................................................... 125 22.1 Gl Master Record.............................................................................................................................................. 125 Gl Business Process Us & Uk ............................................................................................................................... 126 23.1 Post And Park Documents............................................................................................................................... 126 23.2 Month End Processing..................................................................................................................................... 127 23.3 Year End Processing........................................................................................................................................ 128

24

Accounts Payable Us & Uk .................................................................................................................................... 129 24.1 Overview............................................................................................................................................................ 129 24.2 Ap Master Record............................................................................................................................................. 130 24.3 Invoices And Credit Memos............................................................................................................................. 130 24.4 Payments........................................................................................................................................................... 130 24.5 Special Transactions........................................................................................................................................ 131

25

Vendor Master Data Us & Uk ................................................................................................................................. 132 25.1 Ap-Master Record Non Purchasing ................................................................................................................ 132 25.2 Ap-Master Record Purchasing ........................................................................................................................ 132

26

Ap Business Processes Us & Uk .......................................................................................................................... 134 26.1 Vendor Invoice Processing Non Purchasing .............................................................................................. 134 26.2 Vendor Invoice Processing Purchasing / Services .................................................................................... 135 26.3 Vendor Credit Memo Processing .................................................................................................................... 135 26.4 Vendor Down Payment Processing ................................................................................................................ 136 26.5 Manual Outgoing Payment Processing.......................................................................................................... 137

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26.6 Automatic Outgoing Payment Processing..................................................................................................... 138 26.7 Period End Processing .................................................................................................................................... 139 26.8 Year End Processing........................................................................................................................................ 139 27 Accounts Receivable Us & Uk ............................................................................................................................... 141 27.1 Overview............................................................................................................................................................ 141 27.2 Ar Master Record.............................................................................................................................................. 142 27.3 Invoices And Credit Memos............................................................................................................................. 142 27.4 Special Transactions........................................................................................................................................ 142 27.5 Document And Account Display ..................................................................................................................... 142 27.6 Customer Credit Management................................................................................. Error! Bookmark not defined. 28 29 Ar Master Record Us & Uk ..................................................................................................................................... 144 28.1 Customer Master Record................................................................................................................................. 144 Ar Business Process Us & Uk ............................................................................................................................... 145 29.1 Invoice Processing........................................................................................................................................... 145 29.2 Credit Memo Processing.................................................................................................................................. 146 29.3 Downpayment Processing............................................................................................................................... 146 29.4 Incoming Payment Processing ....................................................................................................................... 147 29.5 Period End Processing .................................................................................................................................... 148 29.6 Year End Processing........................................................................................................................................ 149 30 Bank Accounting Us & Uk...................................................................................................................................... 150 30.1 Bank Master Data.............................................................................................................................................. 150 30.2 Bank Data Accounting Process ...................................................................................................................... 152 30.3 Petty Cash Management .................................................................................................................................. 154 31 Reports Us & Uk......................................................................................................................................................... 156 31.1 Financial Accounting Reports......................................................................................................................... 156

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1
1.1

EXECUTIVE SUMMARY
BACKGROUND

Gujarat Glass (P) L imited [GGP ] is a leading manufacturer of glass based products for pharmaceutical and L cosmetic industries. The manufacturing facilities are spread out in different parts of the world like India, Srilanka, USA & UK.

The scope of implementation is in India & Srilanka. The specific solution in the scope of this document comprises of Implementation of SAP ECC 6.0 covering J ambusar, Kosamba (in India) & R atmalana (in Srilanka) plants. N athandiya plant was not part of the scope originally. GGPL has requested to include the same in scope. We have included N athandiya plant in blueprint document with express understanding that addition efforts required will be suitably addressed via change management.

The GGPL product profile covers Pharmaceuticals Cosmetics/Toiletries Stationery Liquors Sand Polythene sheets

The production capacities at Kosamba Plant are 5 Furnaces and 18 lines The production capacities at Jambusar Plant are 1 Furnaces and 6 lines The production capacities at Ceylon glass Plant are 1 Furnaces and 3 lines The production capacities at Nathandiya Plant are Two sand processing units & one Polythene sheet machine.

J ambusar plant is the world's largest pharma amber bottles manufacturing plant at a single location. In all, the 7 furnaces of the company with 27 automatic production lines, many of which are electronically controlled state-ofthe-art machines, produces 7 million glass bottles and vials every day throughout the year for quality conscious customers in the healthcare and cosmetics industry.

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Major expansion plans for capacity increase are already on anvil. After successful commissioning of those projects, GGPL will further consolidate its position as market leader in Glass Industry.

GGPL has decided to implement an integrated ER solution and have selected SAP R 3. GGPL is implementing P / SAP R/3 ECC 6.0. HP is the Implementation Partner for SAP R/3 implementation.

The R/3 Modules, which are being implemented in Phase 1, are FI/CO SD PP MM QM WM HR Financial Accounting and Controlling Sales and Distribution Production Planning & Control Materials Management Quality Management Warehouse management Human resources

1.2

ENTERPRISE RESOURCE PLANNING (ERP) PROJECT OBJECTIVES

Objectives for the implementation project are: Implement SAP R/3 standard business processes Adhere to business basic's and use SAP as a model for best business practices

1.3

OVERVIEW OF BLUEPRINT PHASE

This document summarizes the findings of the Hewlett-Packard (HP) consulting team, which conducted requirement analysis of GGPL for the SAP R 3 system. The information was gathered through interviews / conducted at the GGPL plant with the managers, key users and personnel from Information Systems, as well as through reviews of business processes, business procedures, documentation and relevant reports using Q & A db from Value SAP methodology. The immediate purpose of the analysis is to prepare to move forward rapidly with the implementation of GGPL 's R 3 system. At the conclusion of the blueprint, the HP consultants will determine the SAP functionality required to / run the GGPL business.

The Blueprint and its associated appendices present a summarized perspective of all functional business processes that will be implemented. Blueprint document will serve - from this point forward the dual role of both official project scope as well as system acceptance criteria.

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The body of this document describes the organizational structure, enterprise area, and R 3 functional process / flows to be implemented at GGPL Generally, requirements that can be met using standard R 3 functionality . / through routine configuration tasks are not explicitly documented. However, certain key requirements are explicitly identified and summarized to highlight their importance to GGPL and to document the approach proposed to meet the requirement.

One section of the report summarizes identified gaps. The project team should discuss this list with agreement on the approach going forward. Acceptable approaches may require: Additional programming or technical effort R ecognition and acceptance of procedural changes ("W orkarounds") using standard R 3 Additional / resource commitment The deferral of a feature to a later phase Simply the recognition and acceptance of a limitation.

The Blueprint reiterates the R 3 organizational structures that have been identified and will serve as the basis for / the initial configuration activities. The HP team believes that R 3 can accurately model GGP 's organizational / L requirements.

N o significant configuration 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 R ealization phase. However, it is critical that both the HP and GGPL 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.

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2
2.1

FINANCIAL ACCOUNTING MODULE
FINANCIAL ACCOUNTING PURPOSE

The Financial Accounting (FI) application component fulfills all the international requirements that must be met by the financial accounting department of an organization. It provides the following features: Management and representation of all accounting data All business transactions are recorded according to the document principle, which provides an unbroken audit trail from the financial statements to the individual documents. Open and integrated data flow Data flow between Financial Accounting and the other components of the SAP System is ensured by automatic updates. Data is available in real time within Financial Accounting. P ostings made in the sub ledgers always generate a corresponding posting in the general ledger. Integration: Integration of Financial accounting with other components All accounting-relevant transactions made in L ogistics (L O) or Human R esources (HR ) components are posted real-time to Financial Accounting by means of automatic account determination. This data can also be passed on to Controlling (CO). This ensures that logistical goods movements (such as goods receipts and goods issues) are exactly reflected in the value-based updates in accounting. Integration within Financial Accounting Every posting that is made in the sub ledgers generates a corresponding posting to the assigned G/ L accounts. This ensures that the sub ledgers are always reconciled with the general ledger. Following are the sub components of Financial accounting applications which are considered for Phase I implementation in FI. General Ledger (FI-GL) Accounts Payable (FI-AP) Accounts Receivable (FI-AR) Bank Accounting (FI-BL)

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2.2

SAP FINANCE ORGANISATION STRUCTURE FOR GGPL
To cater for external and internal accounting requirements, SAP database is designed with organization structure objects, which are configurable according to user s requirements. Overall, these organization objects, such as company code, are hierarchically integrated to ensure that any business data are properly stored and linked within the organization. Considering the modules to be implemented for GGPL the following Financials organizational , structure object is relevant for external accounting purposes:

The following diagram will explain the proposed structure for GGPL.

Organizational Units with GGPL
Company Client: 400

US & UK

Company Code

GGPL

CGCL

PIR UK

GG US

GGI

HO

KOS

JAM

BADI

RURK

RTH

NTH

HO

FTR

WTN

MLD

Business Area / Plant

All of the Company Codes within a company will have the same Chart of Accounts and Fiscal Year Variant.
27-Oct-06 Confidential - For Internal Use Only 3

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2.3

DEFINITION OF SAP ORGANISATIONAL UNITS
Definition: COMPANY: An organizational unit in accounting which represents a business organization in a particular country An organizational unit for which individual financial statements can be drawn up according to the relevant commercial law A Company can consist of one or more Company codes GGPL is considered as Company in SAP . Currency of the Company GGPL will be INR

COMPANY CODE: A company code is the smallest organizational unit for which complete, independent accounting can be carried out. This includes the entry of all transactions subject to posting and the creation of all items for legal individual financial statements, such as the balance sheet and the profit and loss statement.

Company code application in GGPL
A company code needs to be created for each of the companies and all the posting from various modules will be updated to the individual company code for reporting purposes. The legal reporting of the respective country will be in respective company code currency.

Naming convention
In SAP system, a four-character field is used to denote the company code. As for GGPL scope of implementation, Following are the proposed naming convention for GGPL.
Company Name GGPL CGCL India Srilanka Company Code Currency INR LKR Company Code GGPL CGCL

BUSINESS AREA: Organizational unit of external accounting that corresponds to a specific business segment or area of responsibility in a company. Movements in value entered in Financial Accounting are assigned to business areas.

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Financial statements can be created for business areas for internal purposes. Business areas are used in external segment reporting (over and above company codes), based on the significant areas of operation of a company (for example, product lines, branches)You define business areas if you wish to create a balance sheet and a profit and loss statement for internal areas, in addition to company codes. Using Business Area Financial reports can be generated for respective plants where as SBU wise reporting for plant is addressed in CO module.

Business Area application in GGPL
Considering the legal reporting requirement and to have uniformity across the companies, we have treated Business Area as location and we need to identify the naming convention for each of the business area after discussion and finalization. In SAP system four character fields is used to denote business Area.
Business Areas Location GGPL-Head Office GGPL-Kosamba GGPL-Jambusar CFA- Roorki CFA-Baddi CGCL-Head Office CGCL-Rathmalana CGCL-Nattandiya Company Code GGPL GGPL GGPL GGPL GGPL CGCL CGCL CGCL

1000
1100 1200 1300 1400 4000 4100 4200

PLANT: A plant is a place where either material is produced or goods and services provided and Material Valuation takes place. Considering the requirement we are treating manufacturing location as plant for all the company codes. For GGPL Plant is created for following locations, they are GGPL India GGPL India GGPL India Head Office Kosamba Jambusar Rathmalana Nattandiya Head office

CGCL- Srilanka CGCL- Srilanka CGCL- Srilanka

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3

FINANCIAL ACCOUNTING BASIC SETTINGS

3.1

CHART OF ACCOUNTS
Definition Chart of account is a list of all G/ L accounts used by one or several company codes. It is shared by Financial Accounting as well as Controlling. For each G/ L account, the chart of accounts contains the account number, account name, and the information that control how an account functions and how a G/L account is created in a particular company code

Chart of account will be created for GGPL (GGPL & CGCL Chart of Accounts list is prepared ). keeping in view of financials reporting for GGPL. Chart of accounts are grouped together to identify Balance Sheet and P&L items. GGP Chart of accounts consists of 7 digits. GGPL will be using L common Operating Chart of accounts for all the Company Codes. This will facilitate in standardizing GL accounts list across company codes. Only company code account data with respect to currency will be different across GGPL company codes. The Operating Chart of Accounts is named as GGPL (name of GGPL chart of account). The Grouping of GL accounts are shown in point 3.2 for Account Group.

3.2

ACCOUNT GROUP
Definition Account group is used to classify certain G/ L accounts of same features in the chart of accounts, for example assets and liabilities. On the other hand, proper number range can be assigned such that accounts of same nature will appear next to each other in the chart of accounts. Recommendation To have a better control over the account codes, an Account Group is created for each different grouping of accounts as listed under Chart of Account. The groupings are normally made with reference to Balance Sheet and P&L reporting layout.

Following is List of Account Group for GGPL Chart of Accounts.

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3.3

FIELD STATUS GROUP
Definition SAP provides for definition of control parameters called Field Status Groups, which control maintenance of various fields in the transaction screens during input. In R 3 system, it is possible to / specify the field status via field status group, which is specified for each G/ L account. In order to minimize definition of field status group, R 3 allows referencing to a same set of field groups via / field status variant. Field status group determines the status of each field, which user can enter the value during posting. The status can be either: Optional Mandatory

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Suppressed A particular field status group may be assigned to a particular G/L code. Field Status Variant 0001 will be created for GGP and below mentioned groups are assigned to L this variant. Following are the list of Field status group to be used for GGPL Incase any additional Group is . required to be added during configuration time , same will be added and attached to variant 0001. Field Status Group
G001 G002 G003 G004 G005 G006 G007 G008 G009 G010 G011 G012 G013 G014 G015 G016 G017 G018 G019

Description
General (with text, allocation) Material consumption accounts Bank accounts Material accounts Clearing accounts Receivables/payables clearing General (obligatory text) MM adjustment accounts Freight/customs provisions/clearing (MM) Accounts for down payments made Change in stock accounts Accounts for down payments received R evenue accts (with profit centre) Tax office clearing accounts Goods/invoice received clearing accounts Amortization accounts Inventory accounting material stock acct Investment support accounts Reconciliation accounts

3.4

FISCAL YEAR AND ACCOUNTING POSTING PERIOD
Definition A fiscal year is generally a period of 12 months for which the company produces financial statements and takes inventory. It may or may not correspond to the calendar year.

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A fiscal year variant specifies the number of periods and special periods in a fiscal year and how the system is to determine the assigned posting periods.

GGPL fiscal year is April March which is non calendar Fiscal Year. The end of a period is the last day of the month, and the end of the year is 31 st March. SAP fiscal year variant V3, with 12 Accounting periods for the 12 months and 4 special periods (13-16) recommended to be used. GGPL is having common financial year closing for India and Srilanka Fiscal Year Variant V3 Description Non Calendar Year, 4 special periods

V3 is assigned to both the company code of India and Srilanka. This will also help in taking consolidated financial reporting for GGPL Group Company.

3.5

POSTING PERIOD VARIANT
Definition Once a fiscal year is defined, it is possible to specify whether a period is allowed for posting or not. In order to standardize maintenance of accounting period especially across the group, SAP R 3 / system allows the specification of open or close status to be maintained via a posting period variant.

It is proposed that one posting period variant will be used for one company code. As Period opening and closing can be done at respective companies. Following posting period variants will be created for GGPL.

Posting Period Variant 1000 2000

Name Gujarat Glass pvt ltd -India
CGCL- Srilanka

Company code GGPI CGCL

3.6

POSTING KEY
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SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Definition A posting key is a two-character numerical key that controls the entry of line items. It is defined at client level and therefore applies to all company codes in SAP system. It is differentiated by the account types. It also controls the posting at the line item level.

Standard SAP posting key will be used. Attached is the list of standard posting keys which can be used.

Posting Key 01 02 03 04 05 06 07 08 09 11 12 13 14 15 16 17 18 19 21 22 24 25 26 27
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Description Invoice Reverse credit memo Bank charges Other receivables Outgoing payment Payment difference Other clearing Payment clearing Special G/L debit Credit memo Reverse invoice Reverse charges Other payables Incoming payment Payment difference Other clearing Payment clearing Special G/L credit Credit memo Reverse invoice Other receivables Outgoing payment Payment difference Clearing

Debit/Credit Debit Debit Debit Debit Debit Debit Debit Debit Debit Credit Credit Credit Credit Credit Credit Credit Credit Credit Debit Debit Debit Debit Debit Debit
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Account Type Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Customer Vendor Vendor Vendor Vendor Vendor Vendor
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Posting Key 28 29 31 32 34 35 36 37 38 39 40 50 80 81 83 84 85 86 89 90 91 93 94 95 96 99

Description Payment clearing Special G/L debit Invoice Reverse credit memo Other payables Incoming payment Payment difference Other clearing Payment clearing Special G/L credit Debit entry Credit entry Stock initial entry Costs Price difference Consumption Change in stock GR/IR debit Stock inward movement Stock initial entry Costs Price difference Consumption Change in stock GR/IR credit Stock outward movement

Debit/Credit Debit Debit Credit Credit Credit Credit Credit Credit Credit Credit Debit Credit Debit Debit Debit Debit Debit Debit Debit Credit Credit Credit Credit Credit Credit Credit

Account Type Vendor Vendor Vendor Vendor Vendor Vendor Vendor Vendor Vendor Vendor G/L account G/L account G/L account G/L account G/L account G/L account G/L account G/L account Material G/L account G/L account G/L account G/L account G/L account G/L account Material

3.7

DOCUMENT TYPE

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Definition A document type is a key that is used to classify accounting documents and distinguish between business transactions to be posted. The document type is entered in the document header and applies to the whole document. The SAP standard document types will be maintained. However, it is possible to add additional document types to further differentiate specific posting for analysis purposes and same will be added if required.

3.8

DOCUMENT NUMBER RANGES
Definition A document number range is linked to the document type via a unique key. It identifies the document number for each document type posted in the SAP. The document number ranges are specific for each document type. The naming convention on the document number ranges can be as follow: XX YYYYYYYY Where: XX = refer to fiscal year YYYYYYYY = document running number The number ranges will be set for each company code based on the above coding structure and will be assigned to Company Codes of GGPL.

3.9

RETAINED EARNINGS ACCOUNT
Definition Before creating income statement accounts in the chart of accounts, it is required to specify the retained earnings account to which profits or losses are carried forward. There is a special program designed to carry forward these amounts to this account, which is part of procedures to open of a new fiscal year in the system.

In SAP system, every income statement account is assigned to a retained earnings account via income statement account type. Hence it is actually possible to have more than one retained earnings account by creating more than one income statement account type. However, most companies have only one retained earnings account. As such, only one income statement account type is recommended for GGPL.
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3.10

EXCHANGE RATE TABLE
Definition Depending on the relevancy, exchange rates must be defined in the system. The rate is required for the following: To translate foreign currency amounts when posting or clearing, or to check the manually entered rate To calculate gains or losses from exchange rate differences To valuate open items in foreign currency and foreign currency balance sheet accounts

Frequency of maintaining the exchange rate is according to company specific requirements or at different intervals according to exchange rate movements. As such, the Accounts Department will be responsible to maintain the table as and when required.

Recommendation Standard SAP exchange rate table will be used. GGP will be using average rate for the month, i.e. L on end of the month, the average rate for that month is maintained for the purpose of valuation of foreign currency balance sheet items, vendors and customers. The end of month rate will be the next month beginning rate and all transactions related to profit and loss accounts for next month are based on this rate.

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4
4.1

GENERAL LEDGER OVERVIEW
OVERVIEW
This section outlines the master data structures, business processes and related configuration parameters required for the General Ledger module for GGPL.

However, General L edger module is also heavily involved in other business process designs from other modules and how they post into the General L edger. These issues are covered in the relevant sections in Asset Accounting, Account R eceivable, Account Payable, Purchasing, Inventory Management and Logistic Invoice Verification. The central task of G/L accounting is to provide a comprehensive picture for external accounting and accounts. R ecording all business transactions 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. Key improvements to be realized from this implementation include: R eduction in data redundancy: The shared master data concept in SAP will inevitably reduce

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duplication of data stored and used in the business processing Greatly reduced administration: through the elimination of re-keying, reconciliation and manual collation of data. This gives the finance staff the time to analyze the figures rather than spending the majority of their time performing administration tasks Better control of data: through the validation of the data at point of entry. Seamless Integration: a complete integrated system will provide better control and reduce data entry and errors and also provides a complete audit trail for the organization The processes and its integration can be summarized in a diagram as follows:-

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4.2

SCOPE OF IMPLEMENTATION
The functions identified to be implemented in this phase of implementation from General L edger module in SAP R/3 system are as follows:-

Area General Ledger

To be Process GL Account Maintenance Open Item Clearing Foreign Currency Valuation Standing/Recurring Journal Entry Accrual/Reversal Processing

Related R/3 Functions GL Master Record Account Clearing Period end processing GL Document posting GL Document processing posting and

Balance Sheet and P rofit & L oss GL Information System Statements

4.3

GL MASTER RECORD
Each account used for posting is defined in the general ledger and contains information that reflects or describes its function. This information is stored in the master record of an account. It controls how business transactions are entered and posted to the account as well as how posting data is processed.

G/L account master data is divided into two areas:

Chart of accounts area: This area contains information that applies to the complete master record (G/ L account number, account name, P&L account, or balance sheet account). In addition, you use it to store data that controls the creation of a master record in the company code (account group and screen layout).

Company code-specific area: This area contains data that controls the entry of business transactions for the related account and account management in the respective company code (currency; open item management).

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4.4

LINE ITEM DISPLAY
A line item display provides an overview of the open, cleared, and parked items from an account. You determine which information about the individual line items is to be displayed on the screen. However, you can also change the view dynamically after the list of items has been processed. Various sort options (by assignment, document number, or clearing data) allow you to interactively select, vary, total and the required documents on the screen. Search and summarization functions are available on the initial screen as well, so it is not necessary to display all items. L item display ine functions are available for:

An account in a company code You can switch from the line item list to the document display at any time.

A line item list can also be exported and processed further using a spreadsheet. You can file it as a PC file or you can store it directly in Microsoft Excel format and then process it in Excel.

4.5

ACCOUNT BALANCES
W henever documents are posted to an account, the system automatically updates the account balance. For GL accounts with line item display, it also indicates which items from a document are posted to the account. You can display the account balance and depending on the account attributes the line items for each account.

4.6

GL ACCOUNT POSTING
Each transaction relevant to posting must be entered in the originating area of the company in compliance with all applicable posting rules. The precise, reliable, and complete recording and entering of all required data is only possible at the point of data origin. This data priority means that both the originating and responsible areas of all company entities are monitored. General ledger postings may be the result of:

Operational transactions (for example, issue of goods causes material issue posting) if the SAP Materials Management (MM) system is active and integrated Transactions originally assigned to the general ledger, if the General L edger (FI-GL system is ) active

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At the same time, interrelationships with Controlling and its components can be taken into account. The extent and type of the integrated systems used determine how entries, account assignments, and updates are processed for business transactions. The important factor is that the posting documents, together with the original data and account assignments from the operative transactions, are simultaneously reflected in the general ledger through subsidiary ledgers.

4.7

RECONCILIATION OF SUBSIDIARY LEDGER
The chart of accounts, with its primary asset and balance sheet accounts provides the central posting link between the general ledger and the related subsidiary ledgers. The general principle of posting via reconciliation accounts is that each business transaction is simultaneously reflected in the subsidiary ledger as a line item and as a totals item in the general ledger via the assigned balance sheet account. As a result, updating is timely and automatic. Moreover, it ensures that:

General ledger and subsidiary ledgers are always reconciled Integrated report displays can be generated from the financial statement using the subsidiary ledgers down to single document level The effects of each posting procedure on assets and profit and loss are used immediately by the financial information system

4.8

OPEN ITEMS
Open item management can be activated for each G/ L account. It allows you to clear debit and credit postings by document (groups). Accounts with open item management can be updated when business transactions are processed

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5
5.1

GL MASTER DATA
GL MASTER RECORD
Definition General L edger (G/ L account master records contain the data that is always needed by the general ) ledger to determine the account s function. The G/ L account master records control the posting of accounting transactions to G/L accounts and the processing of the posting data.

General ledger accounting is divided into two portions in SAP. One is the creation of G/L accounts at the Chart of Accounts (COA) level and the other is the creation of the G/ L account in the company code level.

Among the fields to be maintained during the creation of G/L account in the COA level are: Account group Whether the account is a balance sheet or profit & loss account Long text and short text of the description

Among the fields to be maintained during the creation of G/ L account in the company code level are: Account currency Reconciliation account type Open line item management Line item display Field status group Sort key

To control and standardize the G/ L accounts, it is highly recommended that the creation of G/ L accounts to be centralized for GGPL This recommendation entails the need to devise necessary . approval and communication mechanism to govern the process.

It is important that all requirements are carefully considered before deciding to create a new G/ L account or suggesting an alternative G/L account. Among others, key issues to be looked into are: business and accounting needs integration to other modules e.g. automatic posting impact on current financial or management reporting similarity to other existing G/L account

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5.1.1

PROCESS EXPLANATION
Presently GL accounts are created separately for different company codes and GL accounts are identified by the HO and created at all locations. W ith the following recommended process, GL accounts creation will become standardized and Controls can be centralized. The following processes recommended to be used for GL master data creation Step 1 Procedures W hen the need arise, the Accounts might need to create GL account.

2

Before GL account can be created, an input form needs to be manually completed and submitted for approval.

3

For creation only, check SAP to ensure that the GL account does not exist in the system.

4

Approver to decide whether the GL account needs to be created in SAP. Approve the maintenance form.

5

Create GL account at COA level in SAP. For P&L account creation only, the cost element is automatically created in CCA.

Generally, COA level consists of: Account group W hether the account is a balance sheet or profit & loss account Long text and short text of the description

6

Display GL account at COA level in SAP.

7

Complete the GL account creation at company code level. Generally, company code level consists of:

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Account currency Reconciliation account type Previous account no. Open line item management Line item display Sort key etc. Field status group

8

Display the master record at COA and company code level.

9

Edit the automatically created primary cost element if the account is P+L type.

By clicking at the edit cost element button, you have to specify / edit the following: Valid from Name Description Cost element category

10

Complete, sign and date GL maintenance form. File the maintenance input form.

11

File GL master data maintenance form for future reference.

Attached below flow chart for creating GL master record

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Start Change, Block Identify need to Create, Change or Block GL account Create Complete the master data maintenance form

Possible duplication No

Yes

Inform the user and end process No

Approve form

Yes Maintain GL account at COA level

Display account at COA level Maintain GL account at Co code level

Display account at Co code level No Is it OK Complete and file master data form

Yes

End

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6

GL BUSINESS PROCESS
Requirements and Expectations Accounting of business transaction on daily basis and reporting of the financials as per the requirement. To do reconciliation of accounts on time and preparing of schedule on time. Need to have proper audit trial for the documents and have integrated system to reduce manual errors in accounting. The Organizational need of financial accounting is to report for external purposes to meet legal reporting purpose.

6.1

POST AND PARK DOCUMENTS
Business Mapping to R/3 In a manual process, ledger books are maintained to store accounting entries. In contrast, SAP uses document principle whereby accounting entries are kept in document database and can be referred to via document number. On data integrity side, SAP allows only balanced transactions to be posted. Additionally, changes are allowed for permitted fields such as text information. It is possible to post G/L documents via: G/L document posting Recurring entry Account assignment model Reference document

In principle, this process is equivalent to manual bookkeeping entry. However SAP automates it with additional functionality especially for integration of G/ L with other modules. Minimum data normally required to post a G/L document are: Document header information e.g. posting date, posting period, document date etc. G/L account number Cost object assignment (for profit and loss elements) Amount

Since sometimes not all the required data are immediately available, SAP also provides an option to temporarily keep the posting as statistical entry. Upon completion of all required data, the entries can be posted. This functionality is termed as Parking Document.

It is recommended for GGPL to use the Park document functionality to ensure that the document posting process will be monitored and postings are done after checking have been done.

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6.1.1

PROCESS EXPLANATION
Presently GGP is using Account code, Sub account code concept to post the General ledger L transactions. In Addition to that they are also doing the other activities like, Accruals , J ournal entries , Payroll accounting, Inventory accounting , revenue recognition , inter unit transactions and inter company transactions , Bank Transactions , Cash transactions through GL accounts. The SAP GL Process is not using the Sub account code concept instead; transactions are accounted through GL accounts to a cost center and profit center or to a business area combination. SAP GL Process also takes care of Existing GL process of GGPL and in addition, it has integration with MM, SD, CO and HR modules. Purchases, Sales, Inventory postings, P ayroll postings are tightly integrated with GL and other modules and entries are reconciled always. All Tax related accounts, revenue, inventory accounts, Payroll accounts are having account determination and GL accounts are defaulted during posting of these transactions. Presently GGPL is using Inter Unit transactions, they transfer funds to respective bank accounts of plants through swap transfer, they make payment to vendor but bills are booked in respective plants, they make payment on behalf of employees travel expenses and make transfer entries to respective plants, they transfer the material from one plant to other plant. In SAP this is address using business area clearing accounts concept and will overcome the existing tedious process of monthly reconciliation of inter unit transactions by HO and Plants. GL accounts needs to be created for location clearing accounts and entries are knocked off using account clear option when the intimation and bills are received from HO. Since the requirement is to have financial statement at plant level, business area wise accounting is required for each of the location. Presently GGPL India is transferring the finished goods stock to their subsidiaries basically CGCL , GG-US and GGI. For the purpose of GGPL India local reporting purpose these transactions are shown as the sales made to respective countries and accordingly Customer and Vendor accounts are created at respective locations. Since GGPL is a group company in India and is having majority stake in subsidiaries, it has to show group company financials along with the stand alone financials of GGP India. Presently in SAP we are treating stock transfer from India to any other subsidiary L outside India as sales in GGPL India books and customer and vendors are created for them separately, this will meet the requirement of GGPL India legal reporting of financials. In SAP group company consolidation is addressed through SEM Consolidation, SEM- Consolidation is used for business consolidation of group company , which will take into consideration, Inter Company Sales Elimination, Inter Company P urchases elimination , Currency Valuation at group level , it also allows to pass manual adjustment entries at group level for consolidated units. In SAP for GGPL we have using group currency concept which is in INR, to ensure that all transaction data are converted into group currency at the time of transactions. Based on group currency, financial statement Versions of respective company code, consolidated units can be grouped and consolidation configuration can be done. How ever, SEM-consolidation is part of Phase II and detailed process of consolidation is explained and addressed.

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Presently GGPL is selling its product to Domestic and Overseas Customers. R evenue is recognized when shipment happens from respective GGPL plants and domestic and export revenue is identified separately. In SAP revenue recognition happens when billing document is generated at respective plant. Accounting entries are automatically posted to R evenue account and Debtors account at the time of generation of billing document from SD Module. Domestic and Export Revenue are booked to respective GL accounts based on nature of sales through account determination maintained in SD Pricing Procedure/Condition type. Presently GGPL is procuring R aw material for manufacturing activity, Inventory valuation for R aw material is at weighted average and finished goods and semi finished goods at cost or net realizable value which ever is less. In SAP for GGPL R , aw material purchased from domestic and overseas vendor is valuated at weighted average and finished and semi finished goods are valuated at standard price. Accounting entries for reduction of R inventory and consumption for issues to M production is accounted through MM and FI integration while finished goods and semi finished goods valuation entries are triggered from FI and Product costing integration. GGPL is also importing the caps and brushes as traded items and selling it along with the finished goods. In SAP traded materials are valued at moving average and accounted as trading purchases. Trading materials sold to customer are treated as revenue. In addition to R aw material and traded items, GGPL is also purchasing stores and spares , packing materials, furnace oil which are treated as consumables and account assignment are maintained at Material level for these items in SAP, so that system will trigger automatically GL account while doing GR/IR. GGPL is also purchasing moulds and manufacturing moulds. For moulds which are purchased are valuated at moving average and for the in house manufacturing of moulds it is at standard rate. Presently Payroll postings are generated through payroll system and posted to GL accounts after verification. In SAP Payroll postings will be done through payroll module. GL accounts for Basic salary, HR Benefits etc will be assigned to each of the wage type in payroll system through A, symbolic account assignment and system will automatically identify the GL accounts when month end payroll postings happen. There will be always reconciliation between payroll data and GL account data. All details regarding the payroll data will be available in payroll and HR system. All Employee related loans schedule are maintained in HR/Payroll system and is available any point of time. Presently Foreign currency valuation entries are not done automatically for GGPL In SAP foreign . currency valuation for foreign currency GL balances, foreign currency open items of vendor and customer are done automatically, realized and unrealized loss or gains are calculated and posted to GL accounts through account determination maintained in customization. GGPL will be using foreign currency valuation with reversal option for monthly valuation. Presently Interest on Bank OD balances are calculated manually and posted if required. In SAP interest calculation is done automatically by system for Bank OD balances and entries can be posted to GL accounts through account determination, how ever GGPL requirement is limited to calculate the interest only and not to post. Postings to GL account triggers through integration of various models as explained above. Detailed process is explained in other related module for cross functional postings like MM, SD, HR and CO.
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The following function shall be used to handle any GL document processing in SAP for GGPL , among other: Reclassification posting Accrual posting Adjustment posting Monthly provision (e.g. bonus provision)

The following processes are proposed for GL document posting: Step 1 Procedures Assign appropriate account codes and other required information on the journal voucher.

2

Determine the nature of transaction and the relevant document type.

3

Create park journals based on the journal voucher.

4

Record document number generated by the system.

5

At the end of every working day, perform daily checking of parked journals (Generate Parked Document Report).

6

Edit/Verify parked documents.

7

Post parked documents if there is no error found.

8

File the journal voucher or the supporting document.

Description of Improvement Park and Post option is one of the best options, as this has the facility to store the document with document details for any number of documents and also got flexibility to take reports on the parked documents. Users need not waste efforts on re entering the document. Inter unit transaction are simplified as business area clearing will be used for each inter unit transfers

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R ecurring Documents, Account Assignment Model, R eference posting documents are very help full option in SAP, which will reduce time of processing and help in doing value addition.

Special configuration consideration N o special configuration required. N ormal SAP configuration with N umber ranges and Document Types are used.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

6.2

MONTH END PROCESSING
Business Mapping to R/3 Month-end closing comprises all activities involved in closing a posting period. Accounting period is a division of a company s fiscal year. Each posting into the system must be associated with an accounting period. This is to ensure that each transaction can be reported in the corresponding period. In the same token, periods must be controlled to ensure validity of the reports. Explained below month end closing process for GGPL

6.2.1

PROCESS EXPLANATION
For GGPL April to March is identified as financial year with 12 accounting period and 4 special periods and closing activity will happen every month. Presently monthly closing is happening in decentralized manner at respective locations and data is sent to Head office for upload. Head office uploads the data and closed the period for that month. In SAP period closing activity is centralized and there is no need to upload the data from different locations. Data is updated real time and period control can be at Head office level. This will reduce the closing time monthly and gives time for data analysis further. Attached flow chart diagram for month end processing and process explanation document

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The below proposed month-end processing shall be used as a guideline for this blueprint as the activities may not be finalized until Realization phase Step 1 Procedures Run payroll postings to update FI.

2

Execute the recurring entry program and post the entries

3

Complete all the outstanding journal entries related to month end closing.

4

To prepare and post accrual journals.

5

To execute accrual reversal entries.

6

Execute depreciation run to depreciation.

compute and

post

7

Execute GR IR clearing entries to clear the matched / GR/IR clearing transactions.

8 9

Run foreign currency valuation transactions Close posting period to ensure no transaction can take place and open new posting period.

10

Generate monthly reports: Trial Balance Profit & Loss statement Balance sheet etc.

Description of Improvement Since SAP is an integrated system, Data flow happens in real time to finance from all the modules, and system is updated always. This helps in closing monthly, accounts on time with greater

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accuracy. This also helps in giving the required reports on time and there are many standard reports which will meet the requirement. Closing schedule preparations will become simpler and valuation procedures will get standardized and there will be uniformity in procedure. R eporting data can be drilled down up to the document level by just clicking the buttons. R eports can be directly down loaded to system or can be converted to several formats provided by SAP. Document control principle always ensures postings are matched and posted. Data is available in system GL account wise with the complete audit trial. It is possible to view Monthly Trial Balance, P&L and Balance Sheet reports for Plants also.

Special configuration consideration N o special configuration required. N ormal SAP configuration with N umber ranges and Document Types are used. Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

6.3

YEAR END PROCESSING
Business Mapping to R/3 The SAP System offers a range of reports with which you can carry forward balances into the new fiscal year. During this process the profit and loss accounts are carried forward to retained earnings accounts. The balances on the balance sheet accounts are simply carried forward into the new fiscal year. You do not have to create special opening financial statements. Any postings you make in the old fiscal year automatically adjust the relevant carry-forward balance. You do not have to close the old fiscal year and make the closing postings before opening the new fiscal year.

6.3.1

PROCESS EXPLANATION
The Present Year end process of GGPL is similar to the Month end process explained in earlier point 6.2.1. In SAP Year end process is again similar to the month end process. But additional activity of Balance carry forward program is used to carry forward the balances and any entries posted there after to the previous year will automatically updates the next year opening balance. Presently GGP L is not having the option of automatic carry forward and adjustment of balances on subsequent postings. The below proposed year end processing shall be used as a guideline for this blueprint as the activities may not be finalized until Realization phase

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Step 1

Procedures Execute year end closing program on the 1st day working day after year end. After Plants completing all the entries and confirming of the same. And HO Competing all the entries and related process.

2

To post year end provisions e.g. provision for customer doubtful debt.

3

Post additional posting in special period.

4

After confirmation of completed all the additional postings. HO Close the posting period / fiscal year

5

Generate year end reports: Trial Balance Profit & Loss statement Balance sheet etc.

Description of Improvement Since SAP is an integrated system, Data flow happens in real time to finance from all the modules, and system is updated always. This helps in closing monthly, quarterly and Yearly accounts on time with greater accuracy. This also helps in giving the required reports on time and there are many standard reports which will meet the requirement. Closing schedule preparations will become simpler and valuation procedures will get standardized and there will be uniformity in procedure. R eporting data can be drilled down up to the document level by just clicking the buttons. R eports can be directly down loaded to system or can be converted to several formats provided by SAP. Balances are automatically carried to next year by just selecting the balance carry forward program. R etained earnings are calculated automatically and transferred to next year as Balance sheet item. Even after the balance carry forward program, entries can be posted to previous year, which will automatically updates the opening balance. Closing and opening period will be simpler and also special periods are provided to post audit related entries that are part of adjustment entries pertaining to previous year. It is possible to obtain yearly Trial Balance, P&L and Balance Sheet reports for Plants also.

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Special configuration consideration No special configuration required. Normal SAP configuration with Number posting period variant & Retained earnings account will be used. Description of Functional Deficit No deficits Approaches to covering Functional Deficit Not Applicable

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7
7.1

ACCOUNTS PAYABLE
OVERVIEW
This section outlines the master data structures, business processes and related configuration parameters required for the Accounts Payable module for GGPL. SAP R 3 Accounts Payable Accounting maintains and manages accounting data for all vendors. / Moreover, it is an integral component of the purchasing system. Orders, deliveries and invoices are maintained by vendor and aid in vendor assessment. SAP R 3 automatically makes postings based / on operational transactions. The figure below illustrates the relationships between the accounts payables and the other parts of the FI module and other SAP R/3 modules:

Accounts Payable Accounting is integrated with the general ledger in real time. All postings to vendor accounts will also be updated to the general ledger at the same time. Depending on the transaction, the system updates various general ledger accounts (such as payables and down payments). Flexible account analysis features and due date forecasts provide you with an overview of individual vendor accounts status
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7.2

IMPLEMENTATION SCOPE
The functions identified to be implemented in this phase of implementation from Accounts Payable module in SAP R/3 system are as follows:-

Area Accounts Payable

To be Process Vendor Master Maintenance Down Payment Processing Non PO Invoice Processing Credit/Debit memo Processing Automatic Payment Processing Manual Payment Processing Open Item Clearing GR/IR Clearing

Related R/3 Functions Vendor Master Record Down payment AP Invoice Processing AP Credit/Debit Memo Processing Payment Processing Payment Processing Account Clearing Account Clearing

7.3

AP MASTER RECORD
The vendor master record contains all the information a company needs for its business relationships with vendors. This data controls the posting transaction as well as the processing of posting data. Both the accounting and purchasing departments use the master record for this purpose. Vendor master records are centrally stored in the system. This ensures that data is always consistent, up-todate and without duplication

7.4

INVOICES AND CREDIT MEMOS
A special feature is available for SAP R 3 systems that have integrated purchasing and financial / accounting modules. W ith the Material Management invoice verification feature, you can enter incoming invoices. This feature references order and delivery data. Credit memos are automatically set off through the payment program as soon as they are posted to the system. The payment program automatically offsets invoice-related credit memos against the respective invoice.

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7.5

PAYMENTS
Automatic payment transaction management clearly represents the greatest advantage to Sap s R 3 / Accounts P ayable Accounting system. The system also supports manual or ad-hoc payment processing. The payment program initially creates a payment proposal list. The list is based on data in the documents, the vendor master record, special tables, and your selection criteria. The payment proposal can be edited. Payments can also be triggered directly. W ith large payment runs, several people in accounting can work on the payment proposal simultaneously. The payment program creates payments using the corresponding posting documents based on the (revised) proposal. Payables are cleared and linked to the payment. Forms are printed and the system logs the payment run so that you can review and monitor transactions at any time.

7.6

SPECIAL TRANSACTIONS
The posting of accounting transactions (invoices, credit memos, payments to the vendor account) also results in simultaneous changes to the associated general ledger account for accounts payable. This general ledger account is labeled as a reconciliation account and entered in the vendor's master record. For a number of particular accounting transactions, the system updates an alternative general ledger account. This is the case for: Down payments made Staff advance Vendor for Raw Material Vendor for Capital goods Vendor for Services

These special transactions are noted in the R 3 System using a special general ledger indicator. A / number of special general ledger transactions can be entered into the system.

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8
8.1

VENDOR MASTER DATA
AP-MASTER RECORD NON PURCHASING
Definition: Business transactions are posted to accounts and managed using those accounts. A master record must be created for each account that is required. In SAP R 3, the master record controls how data / is entered and processed for the vendor concerned. Business transactions are posted to accounts and managed using those accounts. You must create a master record for each account that you require. The master record controls how business transactions are recorded and processed by the system. Among the specifications you make in master records are used: As default values when you post items to the account. For example, the terms of payment you specify in the master record are defaulted for document entry. For processing business transactions For instance, bank details and the payment methods (check or bank transfer, for example) are required for automatic payments. For working with master records. You can prevent certain users from accessing an account by setting up authorization groups. In addition, line item display and open item management are defined automatically for each vendor account.

Presently GGPL is making direct payment to vendors by creating vendors in FI. In SAP FI will create vendors for non purchase related activities such as electricity bill payment, water payment and any other payment not related to purchase. FI will have to create the vendor by filling up payment terms, reconciliation account, and payment method. Before creating the vendor master, they need to obtain the form requesting for creating of vendor and same needs to be approved by the concerned. Once the request form is approved, FI will create the vendor with above mentioned details. They will also check whether it is one time vendor or regular vendor. After verifying the details, FI will create the vendor and file the vendor request form along with vendor number. Once this process is done next process is to book the bills and make payment to the vendor.

Following data is required for creating vendor for non purchasing Vendor create request form for direct payment Whether it is one time vendor or regular vendor Payment terms of the vendor Mode of payment i.e. by cheque or bank transfer Reconciliation account for the vendor Tax code to be maintained for deducting TDS on bill or payment of advance if any

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8.2

AP-MASTER RECORD PURCHASING
Definition: Business transactions are posted to accounts and managed using those accounts. A master record must be created for each account that is required. In SAP R 3, the master record controls how data / is entered and processed for the vendor concerned. Business transactions are posted to accounts and managed using those accounts. You must create a master record for each account that you require. The master record controls how business transactions are recorded and processed by the system. Specifications you make in master records are used: As default values when you post items to the account. For example, the terms of payment you specify in the master record are defaulted for document entry. For processing business transactions For instance, bank details and the payment methods (check or bank transfer, for example) are required for automatic payments. For working with master records. You can prevent certain users from accessing an account by setting up authorization groups. In addition, line item display and open item management are defined automatically for each vendor account.

Presently GGPL has got Import Vendors, Domestic Vendors, One time Vendors. GGP P L rocures R aw materials, Consumables like Spares, tools, Capital goods from various vendors and also there are service vendors. It has categorized vendor group for each type of purchases. In SAP Purchases are categorized using reconciliation accounts for each type of vendor i.e. Raw material vendor , vendors for capital goods, services vendors etc, One time Vendor group is identified separately to simplify payments for one time activity without creating vendor accounts separately. To Maintain Common vendors groups across company codes, single vendor group is created for purchases which will be having internal number allocation and one time vendor group is created for making one time payments which will also have internal number allocation. The number ranges and vendor grouping is explained in MM blue print documentation. Presently there is no concept of employee vendor in GGPL In SAP each employee is treated as . vendor and is grouped under Employee vendor group. This vendor group is basically to identify and process transactions related to employee vendors. The employee numbers are identified by HR and are part of HR blue print documentation.

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9

AP BUSINESS PROCESSES
Requirements and Expectations Accounts payable will have to be record and manage the accounting data relating to all vendors. It will also need to be closely integrated with the procurement and inventory management system. Any transaction in procurement, which has a financial implication, would have to automatically be reflected in accounts payable as well as the general ledger. Also, different GL accounts should be affected based on the nature of the transaction, for example, advance payments and security deposits given.

Business Mapping to R/3 The Accounts payable Application Component R ecords and Manages Accounting data related to vendors. The AP module contains master records that control how business transactions are recorded and posted to the account. These master records are also used to process posting data. The vendor master record also contains all the data you require to do business with your vendors. The master record is used not only in Accounting but also in Materials Management. By storing vendor master data centrally and sharing it throughout your organization, you only need to enter it once. The Process of AP will start from Invoice Verification, Advance Payment, Services payments, Direct Payment and will end once the payment is made. Presently GGP is procuring R L aw materials, Trading materials, consumables, Moulds and tools, capital items, and also making payment to service vendors towards transportation, Annual maintenance contracts and sub contracting vendors. Payments are released based on purchase order, agreement etc. In addition GGPL is also making direct payment towards electricity charges, water charges etc. In SAP all purchase related transactions are routed through Materials Management and are integrated with FI Model and invoice is booked by Finance through logistic Invoice verification for GGP . All other direct payments are booked directly in Vendor bill booking L transaction and payment will be released after making necessary statutory deductions for which tax codes are maintained in vendor master.

9.1

VENDOR INVOICE PROCESSING
Business Mapping to R/3

NON PURCHASING

Upon receiving invoice from the non-trade vendor (e.g. GSCB for the electricity charges), you can park the bill before you post them. This is useful for example, if the data you want to enter is incomplete, or the parking and posting functions are carried out by different accounting clerks (dual control principle). The following processes will be used for the for vendor invoice processing non purchasing

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9.1.1

PROCESS EXPLANATION
Presently GGP books bill directly in FI system for W ater, Telephone, electricity and any other L transactions which are not routed through purchase department. In SAP direct bill booking for non purchase related transactions are done using vendor bill booking options and payment are released to these vendors. The following procedure is followed in SAP for booking of non purchase related bills. Flow chart explaining vendor direct bills booking.

Start

Bills recd from vendor

Approved

No

Send for approval

Yes
Park the document

Verify and post the document

Down payment exists

System checks for duplicate invoice and throws error saying duplicate

Yes
Clear down payment

File the document

Release payment on due date

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Process explanation for vendor direct bill booking 1. N on purchasing related bill / invoice will be passed to Finance dept. e.g. water, telephone & electricity bills, any other bills not related to purchasing.

2.

After received the bill / invoice, the Accounts will send the invoices to the respective department for verification and approvals.

3.

Once approved, Accounts parks the entries into SAP.

4.

Accounts Executive will verify and post the parked document.

5.

If the down payment exists, it can be cleared against the invoice.

6.

File the invoice / document (pending for payment).

Description of Improvement Sub ledger and GL integration will definitely help in solving reconciliation issues of matching vendor balances to creditors in GL SAP system post data in Sub ledger and updates the transaction in GL . real time, there by ensuring that data between sub ledger and GL are always reconciled. Statutory deduction for vendors is maintained in vendor master and there by ensuring taxes are recovered for services and remitted to government on time. Vendor standard reports are very useful and are available for ageing, open items, balances with many selection options and can be down loaded to excel directly.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

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Approaches to covering Functional Deficit Not Applicable

9.2

VENDOR INVOICE PROCESSING
Requirements and Expectations

PURCHASING / SERVICES

In the existing system the general service department and the procurement department place the order with the vendor. The finance department makes the advance if any, in accordance with the purchase order. After the goods are received and are verified by the procurement department the payment is processed by the finance department in terms of the purchase order. Materials related to Inventories are currently posted to consumption at the time of issue from stores to production using weighted average rate.

Business Mapping to R/3 Upon delivery of goods or completion of services, vendors shall send invoices which normally describe name of the goods or services, the quantity sent and the amount due. In the case of goods received, there is a facility in SAP R 3 to perform 3 ways matching of Purchase Order, Goods / R eceipt and Invoice. You can park the invoice before you post them. This is useful for example; if the data you want to enter is incomplete, or the parking and posting functions are carried out by different accounting clerks (dual control principle).Service related payments and Material procurement related payments are routed through Materials Management Module. Finance will be doing the IV (Invoice verification activity only). All GGPL purchases such as R aw Materials, Furnace Oil, Moulds, Stores and Spares, Packing Materials, Services, Sub contracting charges, Annual Maintenance charges, and Transporters bills payment are routed through Purchase department. In SAP all purchase related transactions are routed through Material Management and GR will be done for all such transactions other than IR service related like AMC, service entry sheets are used for monthly service related transaction like AMC. Explanation about valuation class and other movement types is covered in Materials Management. One of the examples of Inventory accounting is shown below and the procedure is same for other materials accounting, different GL accounts are assigned to valuation class for different type of materials. Explained below how accounting takes place in FI and how the accounts are determined in Material Management, this process is basically followed for all purchases related materials.

Valuation Classes Valuation Class is the field, which is used to link the materials to the GL accounts. Valuation classes are created according to GGPL requirement. Detailed explanation is given in Material Management Module about Valuation Class, Movement Type, and Material Master.

Goods Receipt
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The Stores department will prepare the Goods receipt against PO using the movement type 101. Material document created at the time of Goods R eceipt in transaction code MIGO will pass the following accounting entry:

Accounting entry for Goods Receipt pertaining to RM or PM Debit Credit RM/PM Stock Account GRIR Clearing Account

Invoice Verification Invoice is a Document received from an invoicing party containing the payments to be made based on business transactions performed in Purchasing (Fixed assets, consumables & services, Inventory). Invoices received from Vendors is to be entered in the system and the data will be verified with respect to Purchase orders and Goods Receipt Invoice processing begins with entering invoice with invoice amount into the system for goods receipt, purchase order, delivery note or service entry sheet. Invoices can be posted with reference to Purchase orders and Payment can be made to alternate payee The invoice can be posted and blocked for payment, subject to later invoice release/billing processing or be released for payment

Accounting entry for Invoice Verification of supplier Debit Credit GRIR Clearing Account Vendor account

Description of Improvement Sub ledger and GL integration will definitely help in solving reconciliation issues of matching vendor balances to creditors in GL. SAP system post data in Sub ledger and updates the transaction in GL real time, there by ensuring that data between sub ledger and GL are always reconciled. Statutory deduction for vendors is maintained in vendor master and there by ensuring tax is recovered for services while booking the bill or making the down payment. Same is remitted to government on time. Vendor standard reports are very useful and are available for ageing, open items, balances with many selection options and can be down loaded to excel directly.

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Valuation of R aw material takes place on movement of material to production automatically and accounting entries are posted automatically at various stages of completion. However this process has to be discussed in details to get further benefits.

Special configuration consideration No special configuration required.

Description of Functional Deficit Freight Module for freight Outward accounting is not part of Standard SAP functionality. Each and every freight outward payment should be linked to L number of transporter and cost is distributed to R respective cost center. System automatically books the bills from freight module to accounting system.

Approaches to covering Functional Deficit In SAP freight outward accounting is possible through Materials Management where in each and every bill can be accounted. Since the requirement is to link the L number and customer Invoice, a R program has to be developed which will have link with SD module and posting to FI can be done using direct vendor bill booking process through Z development. However, direct bill booking process can process each and every freight outward payment directly without linking to SD module which is a standard functionality in SAP.

9.2.1

PROCESS EXPLANATION
Given below flow chart showing accounting through MM and Logistic invoice verification

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Vendor Bill Booking Purchase Inventory related
Start of process

Receipt Of Goods

GR by purchase

Reference to PO
Posting to Stock account & GRIR account

Invoice verified Subject to tolerance By Finance

no Invoice back To purchase

yes Invoice accounted GRIR account is Reversed Stock and Vendor account updated

File the document
27-Oct-06

End of Process
HP GDIC SAP Practice 16

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9.3

VENDOR CREDIT MEMO PROCESSING
Business Mapping to R3 In normal business transactions, there are instances whereby vendors will send credit memos in order to reduce invoices. Such cases might arise due to incorrect invoiced amount or rejection of goods. A credit memo is then required to substantiate the adjustment. Being an adjustment entry, credit memo shall affect Financials module only unless the adjustment is related to MM such as good return etc. The processes are similar to invoice processing. Only the accounting treatment will be different

9.3.1

PROCESS EXPLANATION
The processes are similar to invoice processing. Only the accounting treatment will be different. Presently GGPL is following this process, where in vendor has over charged or goods is rejected. In SAP for only value related adjustment credit notes, FI can pass direct adjust entry with reference to the particular invoice document. W hen the goods are rejected, the process of credit note related to quantity and value is routed through Materials Management and this process is similar to vendor bill booking process through logistics invoice verification. Only difference is that accounting entries which will be reverse of invoice booking.

Description of Improvement NA Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

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9.4

VENDOR DOWN PAYMENT PROCESSING
Business Mapping to R3 N ormal payment to vendor is carried out against claim for goods delivered or services rendered i.e. payables. However sometimes vendors might request payment before delivery of goods or services. This type of payment is known as down payment and is shown on the asset side in the balance sheet. In the normal business flow, down payment should be cleared with the closing invoice upon delivery of goods or services. SAP has Special transaction to post supplier advances.

Presently GGPL has got vendor down payment process, where in they will be making advance payments to various vendors like advance towards capital purchases, advance towards Stores and Spares P urchases, advance towards packing material. In SAP down payment request and down payment process is used to make down payments to vendors. Depending on the nature of down payment, by creating special GL indicator down payment made to various activities such as Advance towards capital purchases, towards spares and packing material purchase can be handled for GGPL. Also at the time of booking the bill, system will show the advance paid against the vendor and same can be cleared against the bill to ensure balance payment is released to vendor. The Special GL indicator currently required for down payment for GGPL is Advance for capital purchases Advance for any other purchases Earnest Money deposit payment

9.4.1

PROCESS EXPLANATION
Vendor down payment processing process explanation

Step 1.

Procedures W hen a vendor request for a down payment, approval from the Finance is required.

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2.

The vendor account is then determined by the Accounts via SAP.

3.

The Accounts then post down payment and subsequently print the cheque.

4. 5.

The cheque is ready for signing and disbursement File the documents for reference purpose.

Description of Improvement All Down payments can be tracked and adjusted while making the bill payment. System keeps track of the down payments and it is treated specially in GL so that it is easy to identify down payment details.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

9.5

MANUAL OUTGOING PAYMENT PROCESSING
Business Mapping to R3 SAP R 3 uses document principle to store transaction entries. In the case of vendor, transaction of / invoices will be stored as open items. Open items are in fact outstanding transactions. The open items of an account can only be cleared when an identical offsetting amount to the account is posted. The balance resulting from the items allocated to each other must therefore be zero. Correspondingly, the offsetting entry here represents outgoing payment to vendor (bank). In SAP, manual outgoing payment is generally performed for a small number of payments on ad-hoc basis.

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Payment made to vendors may not always be straight forward; therefore the system is configured to handle various scenarios as follows:

Partial Payment, where the original open item and the partial payment remain as open documents on the account. W hen user posts the remaining amount for the invoice, both the partial payment and the invoice are cleared. R esidual item - only the new residual item is left on the account, clearing the original document and the payment. A new document number is created referencing the original document. Contra of vendor and customer balance is handled automatically by the system. In order to activate contra balance, vendor and customer have to be linked in the vendor and customer master record. Clearing of Open Item while making payment and tracking of cleared item separately .

9.5.1

PROCESS EXPLANATION
Presently GGP is using manual payment process for making payment to vendors and in SAP manual L payment process is used to meet the similar requirement.

Step 1.

Procedures The Accounts will determine vendor account and invoices to be paid.

2.

If payment is automatic, run payment program. R efer to automatic outgoing payment.

3. 4.

Approver approves the payment. Post the outgoing payment into the system and note down the document number. Print cheque and payment voucher.

5.

File the payment voucher together with the supporting document.

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Description of Improvement System can make partial payment, residual payment and also can adjust against the customer while making vendor payment. Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

9.6

AUTOMATIC OUTGOING PAYMENT PROCESSING
Business Mapping to R3 SAP R 3 uses document principle to store transaction entries. In the case of vendor, transaction of / invoices will be stored as open items. Open items are in fact outstanding transactions. The open items of an account can only be cleared when an identical offsetting amount to the account is posted. The balance resulting from the items allocated to each other must therefore be zero. Correspondingly, the offsetting entry here represents outgoing payment to vendor (bank). W hen the volume of payments is large and the frequency depends more on the due dates, it is recommended then to utilize SAP R 3 s automatic outgoing payment function. In this manner, / offsetting entries i.e. outgoing payments (bank) are automatically posted. Subsequently, open items are automatically cleared. To create automatic payment program, several configuration steps to be maintained, which will have details of house bank, account id, ranking orders, maximum payment limit, payment for special gl transactions this will be configured during realization stage.

9.6.1

PROCESS EXPLANATION
Presently GGP is not having automatic payment processing options for bulk vendors whose payment L are due on date. Instead they are using batch process for making vendor payment. In SAP automatic payment program generates payment for all vendors whose payment is due on date. In addition it has got the feature of blocking the vendor payment for any valid reason and makes other payment related to the vendor. It has also got the advantage of printing cheque for multiple vendors at a time.

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Step 1.

Procedures To make payments to vendor using the automatic payment program, the Accounts executes the payment proposal via SAP system.

2. 3.

A payment proposal list is generated. Edits the proposal if necessary by blocking or unblocking invoices for payment.

4.

The edited proposal list is then given to the Finance Manager for approval.

5.

After approval, the payment run is executed.

6. 7.

A confirmed payment list is generated. Print cheque and payment voucher.

8.

File the payment proposal & payment list.

Description of Improvement System can make partial payment, residual payment and also can adjust against the customer while making vendor payment. You can select multiple vendors together to make payment and cheque can be printed for multiple vendors using automatic payment program. This is one of the features which will reduce when multiple vendor payment has to be made.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

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9.7

STAFF ADVANCE AND CLAIM PROCESSING

.Requirement and Expectation N eed to track staff advances and settle their claims on regular basis. N eed to identify the difference in claim for the purpose of making payment to staff or recovering the balance from staff.

Business Mapping to R3 This process involved the preparation and submission of staff advance and follow by the claim processing. The claim will be matched with the advance to determine the next step of action.

9.7.1

PROCESS EXPLANATION
Staff advance is tracked employee wise and claims can be adjusted against the advance while making payment, employee wise claim transactions are available which will reconcile real time with GL accounts. Presently GGPL is handling staff advances and other claims. In SAP staff advances related to L oan, vehicles and claims like medical , vehicle allowance which are part of CTC are handled through payroll and HR system. Accounts are configured using symbolic accounts and wage type in payroll system and entries are populated directly while processing the payroll data, postings to respective GL accounts are triggered automatically. Presently Employee also under takes travel to various locations. This travel can be a domestic travel or Foreign Travel for which they take advance which is tracked manually. In SAP travel advance and claims are handled through Travel Management module which is in phase II. However, till the implementation of Travel Management following process is suggested. Travel advance of employees is tracked in FI by creating separate GL accounts for domestic travel advance and foreign travel advance. A report can be generated employee wise advance outstanding using GL accounts, for which employee code has to be maintained during advance booking. W hen the employee submits the claim, same is accounted by FI and the balance due from employee or due to employee is posted to employee vendor account. If the employee has not paid the due on time, then intimation to be sent to HR for recovering the same from Payroll. If the payment is due to employee, then release the payment to employee. Other employee claims like conveyance which is not part of payroll are directly handled in FI and payments can be released to employees after the approval formalities for claiming is completed. To Track employee loan like housing loan, vehicle loan special GL indicators needs to be created for GGPL, Following special GL indicators are created for tracking employee loans in FI.

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Special GL indicator for Employee housing loan advance Special GL indicator for other employee advances

Description of Improvement Employee wise advance can be tracked in the system

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

9.8

PERIOD END PROCESSING
Business Mapping to R3 Once all parked documents are completely posted and payments for the month are completed, the posting period for vendors can be closed. This is to prevent the occurrence of back posting invoices to the previous period after reports are generated. Before posting period can be closed, other month end processing activities such as executing the recurring program need to be performed if applicable. Opening the new period and closing the previous period are two parts of the closing procedure.

Presently GGPL is following the process of closing of month end period at respective plants. In SAP closing of activity is centralized and vendor posting can be blocked for all the location after completing the vendor related transactions for that month. This will avoid delay in closing the month end and results in streamlining of closing activity.

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9.8.1

PROCESS EXPLANATION
Step 1. 2. 3. Procedures Accounts posts / deletes the outstanding parked documents through parked document program. Execute recurring program, if applicable. After completed all the additional postings. R un Currency Valuation for valuating open items in foreign currency. Post the valuation differences. Close AP posting period and open the new period. Generate month end reports: AP Ageing Vendor Balances Open Items, etc

4.

Description of Improvement Since sub ledger and GL are matched real time, period end closing will be faster and accurate. Obtaining of reports like Vendor Ageing, Vendor Balances and Open items is possible at any point of time for a transaction or list of transactions. Report can be viewed for respective currencies in which transactions are updated.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

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9.9

YEAR END PROCESSING
Business Mapping to R3 At the end of the fiscal year, carry forward program is required to be executed to carry forward the vendor and vendor account balances to the new fiscal year. After running the carry forward programs, when a transaction is posted to the previous year, the account balances in the current year are immediately updated automatically. Balance carry forward program is done after entries are completed. Presently year end closing is happening at respective locations and data is sent to Head Office for uploading plant TB for consolidation of accounts. In SAP year end closing is similar to the month end process with additional activity of carry forward of balances to next year. The advantage of this is even after balances are carry forwarded to next year, any entries to previous year will automatically update the opening balance of next year, this functionality was not available in existing system and this is the added feature of SAP.

9.9.1

PROCESS EXPLANATION
This process is in addition to month end closing activities mentioned in previous point.

Step 1.

Procedures Execute AP balance carry forward program to carry forward vendor balances to the new fiscal year.

2.

Post additional applicable.

posting

in

special

period,

if

3.

After completed all the additional postings. Close the posting period / fiscal year and open the new period / fiscal year. System allow for the current year even though previous account is not closed yet.

4.

Generate year end reports, e.g.: AP Ageing Vendor balances Open items, etc

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Description of Improvement Since sub ledger and GL are matched real time, year end closing will be faster and accurate. Automatic carry forward of balances to next year and also update the next year balances automatically if any entries are posted to previous year.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

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10
10.1

ACCOUNTS RECEIVABLE
OVERVIEW
This section outlines the master data structures, business processes required for the Accounts Receivable module for GGPL. Accounts receivable accounting in SAP R 3 maintains and manages a customer accounting data. It / is also an integral component of sales management. Sales and accounting have the same information requirements. If the customer order results in delivery and subsequent invoicing, then these transactions are posted automatically in the accounting system. The various stages of this process are updated in real time the system. The figure below illustrates the relationships between the accounts receivable and the other parts of the FI module and SD module.

10.2

IMPLEMENTATION SCOPE

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The functions identified to be implemented in this phase of implementation from Accounts R eceivable module in SAP R/3 system are as follows:-

Area Accounts Receivable

To be Process Customer Maintenance Down Processing Master Payment

Related R/3 Functions Customer Master Data Down Payment Processing AR Invoice Processing AR Credit/Debit Memo Processing Account Clearing

N on Sales order Invoice Processing Credit/ Debit Processing memo

Open Item Clearing

10.3

AR MASTER RECORD
A customer master record contains all the information that a company needs for its business relations with a customer. This data controls the posting procedure and subsequent processing, such as payments and dunning. Customer master records also provide information on customers for the accounting and sales departments. Customer data records are centrally stored in the system. This means that the data record is always consistent, up-to-date, and free of redundancy

10.4

INVOICES AND CREDIT MEMOS
W ith the integrated use of SAP R 3 s sales and financial accounting systems, the billing system / prepares and posts outgoing invoices. There is an option to account for credit momos.

10.5

SPECIAL TRANSACTIONS
There are certain business transactions that should be posted to the customer but not updated in the line item of receivables from goods and services in the general ledger. An example of this is down payments. These are identified separately in the balance sheet. Using a special G/ L indicator, the system is told that a posting should not be actualized in the reconciliation account from the customer master record. Instead, it is done in a G/L account specially set up for that purpose

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10.6

DOCUMENT AND ACCOUNT DISPLAY
W hen business transactions are posted to an account, the system automatically updates the account balance. It also notes which items of a document have been posted to the account. Thus, the account balance and line items for any account can be viewed. The account balance offers an overview of the transaction figures per period, separated into debits and credits. Similarly, sales per period and special G/ L transactions such as down payments for the fiscal year can be discerned at a glance. From here, you can go directly to the display of items. A line item display provides an overview of an account s open and cleared items. You can specify which information on individual items appears on the screen. For example, one user could be interested in the terms of payment, while another could be more interested in the dunning data for the line items.

10.7

CUSTOMER CREDIT MANAGEMENT
Customer credit management offers the option of making order acceptance dependent on an assessment of a customer s creditworthiness. This is done through a credit limit. The limit is checked in financial accounting and sales upon posting. If the limit is exceeded, the system issues a warning or an error message, depending on setup. The document can be posted. Other actions can follow. An example would be an examination of the customer or a block on the master record. The credit limit can be assigned on various levels. Credit limits are assigned and monitored using credit control areas." A credit control area consists of one or more company codes. If a credit control area has been set up and a preset value has been indicated for a customer, then the credit master record is automatically set up when a customer master record is set up.

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11
11.1

AR MASTER RECORD
CUSTOMER MASTER RECORD
Definition: All non trade customers are maintained by Finance Department without any involvement with Sales Department. Therefore the customer master will not have information maintain in the sales area view

The structures of master records for purely finance use are:

General Data This is data that is equally relevant to every company code and every sales organization within a company. General data includes the address, telecommunications data (telephone, telex, and fax), general information on the customer (plant number, industry, group allocation) and bank details.

Data for Company Codes This is data that reflects the company-specific agreements with the customer. Company code data includes the terms of payment. In addition, the reconciliation account for G/ L accounting is indicated at the company level. Transaction figures for this general ledger account are automatically updated to the customer account upon posting.

N ote that if the customer is also a vendor, such as inter-company customer, the vendor number can be recorded in the general part of the customer master as a means of reference. Presently in GGPL Customer master data is maintained for Domestic and Export Customer as they are selling products to domestic and international customers. In SAP two customer groups will be created for GGPL, they are Domestic customer and Export Customer. These customer groups will be having different reconciliation accounts to identify export customer and domestic customer separately. Accordingly following reconciliation accounts will be created Reconciliation account for Domestic Customer Reconciliation account for Export Customer Reconciliation account for Inter company customer

It is also required to maintain payment terms for each and every customer in master data to track accounts receivable due date wise. Payment terms needs to be maintained for each and every customer and same is assigned to customer while doing master data upload for customers.
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12
12.1

AR BUSINESS PROCESS
INVOICE PROCESSING
Business Mapping to R/3 This scenario is when sales order is not necessary to be created for the purpose of invoicing a customer. Hence, all these invoices will be created as AR invoice. Examples of AR invoices are: 1 2 Sales of assets, which have been fully depreciated. Non-trade customer

All AR invoices created directly can be differentiated through the Document Type field. For example, AR invoices are created with document type DR (Customer invoice), and the accounting entries are: Dr. Customer Cr. Revenue SAP R/3 provides automatic error checking by barring user from posting a transaction in the event of that the debits and credits are not equal. In addition, prior to actual posting, users are allowed to simulate posting entries and check for possible posting errors. Users can also choose to park the documents for verification before posting. Invoice process for one-time customer will use one common master record and relevant customer information such as name and addresses will be entered directly in the invoice. The accounting entries generated are: Dr. One-time customer Cr. Revenue Presently GGPL is billing to export and domestic customer. In SAP customer billing pertaining to Sales Order is routed through Sales and Distribution Model (SD). The GL accounts for export customer and domestic customer is maintained in SD module using pricing condition. W hen ever billing happens from SD, R evenue accounts and customer accounts are determined automatically and posted to FI. Postings to GL will happen in the currency in which transaction is executed. System will track transaction currency, local currency and group currency for each posting. This will help in taking FI report on receivables on either of the currencies. GGPL also selling the products through CFA located at R oorki and Baddi. The stock is transferred from plant to CFA locations and Sales is recognized when CFA sells the product. W hen the material is transferred from Plant to CFA, Finished goods stock is reduced and Stock in transit is created. W hen CFA received the material, finished goods stock is updated and stock in transit is adjusted. W hen CFA sells the material, revenue is recognized and debtors are created. Sales data pertaining to CFA is available and details of sales made by CFA can be tracked. More explanation is given in SD business blue print about sales order related billing and same can be referred in SD.

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Below process explains the non sales order related billing which is also part of standard SAP functionality. Presently GGPL is taking letter of credits (LC) from customer and tracking LC dues manually. In SAP LC dues from customer can be tracked by using Bills of Exchange functionality. Special GL indicator has to be defined for Bills R eceivable and Accounting entry to be passed for moving AR from general receivable account to Bills R eceivable account. W hile moving to Bills R eceivable account L number C and due date can be entered in system. Any point of time report on L due can be generated and C system will show L due dates from customer. On receipt of payment from customer, Bills receivable C accounts can be cleared.

12.1.1 PROCESS EXPLANATION
Step 1. Procedures R eceived memo from user department to issue an invoice to a customer

2.

Review and/or approve the memo

3.

Once approved, Accounts parks the entries into SAP.

4.

Accounts will verify and post the parked document.

5.

If the down payment exists, it can be cleared against the invoice.

6.

File the invoice / document (pending for payment from customer).

Description of Improvement

Special configuration consideration No Special configuration required.

Description of Functional Deficit
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No deficits

12.2

CREDIT MEMO PROCESSING
Business Mapping to R/3 Credit memo will be created when a customer is over-billed. It adjusts previous entries that were overstated. Therefore, posting a credit memo always leads to a credit posting on the customer account. A credit memo will only be prepared if the corresponding invoice was created and sent out to the customer. A credit memo will not be created if the invoice has not been sent to the customer, as user is able to cancel the original invoice, reversing the relevant G/ L entries and create a new invoice. For credit memo with reference to AR invoice, the credit memo must be created with reference to the original invoice in order to correctly reflect customer outstanding balance. This is done by updating "Invoice Reference" field during the creation of the credit memo.

12.2.1 PROCESS EXPLANATION
The processes are similar to invoice processing. Only the accounting treatment will be different.

Description of Improvement

Special configuration consideration No Special configuration required.

Description of Functional Deficit No deficits

12.3

DOWNPAYMENT PROCESSING
Business Mapping to R/3 All down payment received are to be reflected as a liability. The down payment is to be subsequently cleared against the actual invoice when it is issued to the customers. All down payments will reduce invoice amount accordingly.

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Presently GGPL receives advance payment from customer and is tracked in customer separately. In SAP down payment made by customer can be tracked separately by creating the special GL indicator for Down Payment from Customer. This will track the advance received from customer. Special GL indicator will be created for Advance Received from Customer for GGPL.

12.3.1 PROCESS EXPLANATION
Step 1 Procedures Accounts will receive an advance or down payment from customer

2

The customer account is then determined by the Accounts via SAP.

3

Accounts will then post down payment in SAP system with special G/L indicator.

4

Receipt will be printed to be issued to the customer.

Description of Improvement

Special configuration consideration No Special configuration required.

Description of Functional Deficit No deficits

12.4

INCOMING PAYMENT PROCESSING
Business Mapping to R/3

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The system is able to handle customer payments in different modes such as cheque, cash payment, etc. The incoming payment process can be done using a one step or two step methods:

Posting without Clearing - The receipts will be posted in using the normal document entry functions i.e. there will be no selection of open items available. At frequent intervals, or adhoc basis, the customer account will be cleared whereby the payments document will be matched against the invoice document. A clearing document will be created with zero.

This method is only useful when at the point of entry, the user is uncertain for which open item the customer is paying for. Otherwise, it is advisable that user adopt the second option.

Posting with Clearing - Open items are cleared at the point of posting incoming payments. This results in the selected line items being cleared . All cleared items will not be available to knock of other open items. In other word, the incoming payment document is the clearing document of the customer invoice.

Payment received from customer may not always be straight forward; therefore the system is configured to handle various scenarios as follow:

Partial Payment, - where the original open item and the partial payment remain as open documents on the account. W hen user posts the remaining amount for the invoice, both the partial payment and the invoice are cleared. R esidual item - only the new residual item is left on the account, clearing the original document and the payment. A new document number is created referencing the original document. Contra of customer and vendor balance is handled automatically by the system. In order to activate contra balance, customer and vendor have to be linked in the customer and vendor master record.

12.4.1 PROCESS EXPLANATION
Presently Incoming payment from customer is accounted against Customer by GGPL. In SAP Incoming payment process not only meets the requirement of adjusting the payment against the customer but also has got additional feature of accounting for P artial payments, residual payment to show balance amount after adjusting the partial payments. This also has the additional activity of clearing the customer outstanding against advance separately. Below process explains the accounting for incoming transactions for customer payments

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Step 1

Procedures The Accounts will determine the customer account number for the payment received.

2

If the invoices can be identified for the payment received, Accounts will post the incoming payment in SAP and cleared the invoices.

3

If the invoices cannot be identified during payment received, the Account will post the payment without clearing any outstanding invoices.

4

Send the receipt to the customer

5

Once the invoices for the payment can be identified, the Accounts will manually match the payment with the invoices in SAP system.

6.

File the documents for future reference.

Description of Improvement

Special configuration consideration No Special configuration required.

Description of Functional Deficit No deficits

12.5

PERIOD END PROCESSING
Business Mapping to R/3 Each SAP R 3 module has its own period-end and year-end closing procedures. Opening the new / period and closing the previous period are two parts of the closing procedure.

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Open and closing FI period is usually given to the G/L users who will ensure that the previous period for each account types (A assets, D customers, K vendors, S G/ L accounts) are closed first before generating the financial statements for the previous period. For transactions entered in Accounts R eceivables, the system will check that the posting period entered for a customer transaction is opened for posting as specified in the From period and To period fields for account type D (such as debit a customer) and account type S (such as credit a revenue account). Otherwise, the system will prompt an error message that the period is not opened for posting. This process is similar to AP closing process and has got similar benefits that of AP

12.5.1 PROCESS EXPLANATION
Once all invoices are completely generated, the posting period for customers can be closed. This is to prevent the occurrence of back posting invoices to the previous period. Once the period is closed, customer invoices will be generated in the new period. Step 1. Procedures Accounts, executes and posts / deletes the outstanding parked documents through parked document program.

2 3.

Executes recurring program, if applicable. After completed all the additional postings, close AR posting period and open the new period.

Description of Improvement Since sub ledger and GL are matched real time, month end closing will be faster and accurate. R eports can viewed for Customer Ageing, Customer Balances and Open Items at any point of time for posted transactions.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit

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Not Applicable

12.6

YEAR END PROCESSING
Business Mapping to R/3 At the end of the fiscal year, carry forward program is required to be executed to carry forward the customer and vendor account balances to the new fiscal year. For customer account, the program copies the year end balances to the beginning of the following year. W hen running any carry forward programs, it is necessary to make sure that nobody is posting entries to accounts. After running the carry forward programs, when a transaction is posted to the previous year, the account balances in the current year are immediately updated automatically. This process is similar to AP year end process and has got the similar benefits of AP year end process.

12.6.1 PROCESS EXPLANATION
Step 1 Procedures Execute AR balance carry forward program to carry forward customer balances to the new fiscal year.

2

Post additional applicable.

posting

in

special

period,

if

3

After completed all the additional postings. Close the posting period / fiscal year and open the new period / fiscal year. System allow for the current year even though previous account is not closed yet.

4

Generate year end reports, e.g.: AR Ageing Customer balances Open items, etc

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Description of Improvement Since sub ledger and GL are matched real time, year end closing will be faster and accurate. Automatic carry forward of balances to next year and also update the next year balances automatically if any entries are posted to previous year. R eports can viewed for Customer Ageing, Customer Balances and Open Items at any point of time for posted transactions.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

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13

BANK ACCOUNTING
It includes the management of bank master data; cash balance management, and the creation and processing of incoming and outgoing payments. Bank Accounting is part of FI but master data related to bank are taken from Cash Management. The Cash Management deals with Cash Position, L iquidity Forecast and Bank R econciliation aspect. Currently we are considering Bank Master Data and Bank Reconciliation for the scope,

13.1
Area

IMPLEMENTATION SCOPE
To be Process Bank Master Data Bank reconciliation Related R/3 Functions Bank Master Data Bank Reconciliation

Bank Accounting

13.2

BANK MASTER DATA
In the SAP system, bank master data is stored centrally in the bank directory. In addition to defining bank master data, you also define your own bank details (house banks) and those for your business partner (entered in the business partner's master record). The following are the components of bank master data.

Bank Directories

The bank directory contains the bank master data. This includes the bank address data and control data, such as the SW IFT Code and Bank Groups. Details for post office banks should be identified specially. The bank directory must contain the master data for all the banks that you require for payment transactions with your business partners Bank Details

To be able to run the payment program, the system requires details on your own bank, and these details must be entered in the customer and vendor master records. In the company code-specific data of a vendor master record, you could for example enter the house bank from which payment is to be made to this vendor. If you do not enter a bank in the master record, you must specify the rules
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by which the payment program determines the bank. The data that you enter is the same in both cases - an ID code for your bank.

House Bank

A list of house bank represents the bank in which the company uses for its outgoing and incoming payments. SAP will then refer to this list maintain in table BNKA for its automatic payment program as well as to forecast bank balances with SAP treasury function.

These lists are maintained at the company code level and each house banks are given a user defined bank ID that can be alphanumeric. For this implementation, bank list will be maintained in all company codes, List of bank of various company codes has to be obtained and customized.

The house banks will be created for every main and branch bank. The naming conventions for the bank ID are base on these logics:

Use the first letter of the bank name and the first letter for bank as acronyms which described the house bank. The graph below illustrates acronyms for Citibank. The last two digit of the house bank will use 00 to denote first bank listed in the system. Therefore for Citibank, it can have up to 100 branches entered in the system using the CB convention. It is recommended to use 00 to identify the main bank of the company.

Example: CB000 CB001 CB002

Citibank Main Branch Citibank Bangalore Citibank Mumbai

Bank accounts are maintained for every house banks using a unique bank ID. This bank ID is used to enter specification for bank payment and general ledger master records.

Bank account such as current account and saving account are created for every house banks. It is proposed to follow the following naming conventions of the account ID:

The letter CA is use for Current Account. The letter SA is use for Saving Account The last 3-digits will be running number

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Bank Account ID Each bank ID is unique within a company code. For each bank, enter the bank country, and either the bank number or an appropriate country-specific key. The system uses this information to identify the correct bank master data.

GL Account A G/ L master record is created for each bank account. One bank account will have a corresponding two bank clearing accounts, i.e. outgoing and incoming payment.

The benefit of having two bank clearing accounts is that it helps to simplify processing of electronic bank statements

House Bank and Bank Account Creation There are two key master data types in Cash Management, namely the house banks and the bank accounts. The critical information required to set up these master data include bank name, bank key, bank branch and bank address.

The use of the bank account G/L structure can be seen through the following example.

W hen the company executes the payment program and makes payments for open payables, the following postings take place:

Dr Cr

Vendor AP account Outgoing clearing account (G/L Account XXXXXX02)

This amount will remain in the outgoing clearing account until it clears the bank. Once the outgoing payments clear the bank, the following postings take place:

Dr Cr

Outgoing clearing account (G/L Account XXXXXX02) Main bank G/L account (G/L Account XXXXXX00

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13.3

BANK DATA ACCOUNTING PROCESS
Requirement and Expectation There is need for accounting of all bank related transactions like, vendor payment, customer receipt and any other payments and receipts through bank. On regular basis bank account is reconciled with bank statement and reconciliation differences are shown to match both the balances

Business Mapping to R3 SAP bank accounting application helps in posting transaction for funds transfer between the banks, and for doing bank reconciliation. And also Bank Account will impact based on the R eceipt from customer or payment to vendor.

Presently GGPL is having banks accounts at Head Office, Plants and in addition to that they have bank with current account balances. In SAP House bank and account ID is created for each of the banks and bank clearing accounts will be used for posting transactions related to payment and receipts. Bank Account will be created for each of the bank and bank clearing accounts are configured to the respective bank accounts. Presently GGPL is having following Banks in various locations for which master data will be created and uploaded to SAP. HDFC Main Bank at HO are accounted in HO HDFC Branch Mumbai where in all payments of HO and collections from Customer

Kosamba location where in all payments are released pertaining to Kosamba Where in all payments are released pertaining to Jambusar

HDFC - Branch - Jambusar location Bank of Baroda using this bank Citi bank . Kosamba

All small payments and petty cash related transactions are handled

Srilanka

where in all payment and collections are handled through this bank

Bank Master and Account ID and bank account is created for each bank and will be mapped to automatic payment program , Cheque lots will be maintained for manual check payment and automatic check payment. Bank master data has to be uploaded at the time of realization

Cheque Management Process This function is used to enter checks you receive. After the input is complete, you can access the additional functions to further process the entered checks (see Entering Incoming Checks). Normal bank payment transactions are happening through Accounts Payable Model.

Manual Bank Reconciliation

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There are basically two steps in this method:

First, in the transfer-posting screen under G/ L the users retrieve the open items under incoming bank , clearing account and select them if they appear on the deposit column of the statement. The open items can be sorted by date to ease matching. Upon completion, post them against the main bank account. The system will generate the accounting entries like the followings: Dr Main bank Cr bank incoming clearing

Second, in the transfer-posting screen under G/ L the users retrieve the open items under outgoing , bank clearing account and select them if they appear on the withdrawal column of the statement. The open items can be sorted by date to ease matching. Upon completion, post them against the main bank account. The system will generate the accounting entries like the following:

Dr bank outgoing clearing Cr main bank

13.3.1 PROCESS EXPLANATION

Step 1.

Procedures Received hardcopy of bank statement

2.

Identify bank statement items that can be matched with the line items in the GL bank account

3.

Manually post items that exists in bank statement but not yet captured in the system

4

Manually post and clear the matched items

5.

Manually prepare the reconciliation statement.

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Description of Improvement

R econciliation can be done as often as you get the bank statement and will ensure that data is captured on time. This will also automatically match the bank statement and bank account It is very obvious that the balance in the bank clearing account is the not reconciled.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

13.4

PETTY CASH MANAGEMENT
Requirement and Expectation There is a need to keep cash and make petty cash transaction at various locations to meet petty cash activity.

Cash Journal

Business Mapping to R3 Cash J ournal is a feature in SAP, which permits separate tracking of cash transactions. Each cash journal should be assigned to one G/ L account, which represents the cash journal in the general ledger. It is however possible, to connect multiple cash journals with one G/ L account. Cash transactions are saved separately in the cash journal and are transferred periodically (for example, daily) to the general ledger. The Cash Journal also permits generation of daily balance statements for tallying physical cash with the books of account. Cash journal will not support for making special GL indicator postings. All postings need to be done to vendor or customer and adjustment entries to be routed separately to special GL indicator.

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A separate cash journal and GL account would be maintained for each location handling cash. Separate cash journals and corresponding GL accounts would also be maintained. Following Cash Journals will be created for GGPL CJ1 for Head office- GGPL India

Cj2- for kosmba Cj3- for Jambusar Cj4- for Head office - CGCL srilanka Cj5- for Ramayana Srilanka

Cj6- for natandia Srilanka

Description of Improvement Cash J ournal is very effective in SAP, which can track petty cash transaction for each of the locations separately and also will be tracking balances on daily basis.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

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14

TAXES COUNTRY INDIA VERSION
Requirement and Expectation There is a need to meet legal requirement related to Excise Duty (ED), Sales Tax (ST), Tax deducted at Source (TDS). Taxes are calculated, deducted and remitted according to the requirement. Cenvat Credits are availed and Returns are filed. Required forms are generated.

Business Mapping to R3 The Country Version India is an add-on component for SAP ECC 6.0.

Country Specific functions Most of the country-specific functions for India relate to Financials and Logistics. The main areas are as follows: · · · · Excise duty and the central value-added tax system (CENVAT) Withholding tax (also known as tax deducted at source) Sales tax Maintenance and printing of statutory excise registers Country Version India uses the standard functions for calculating and collecting withholding taxes. However, both Classic W ithholding Tax and Extended W ithholding Tax come with additional functions for tax remittance, journal vouchers, creating withholding tax certificates, and preparing annual returns. If you want to handle excise duties, you must post the excisable transactions using the Materials Management (MM) and Sales and Distribution (SD) components. The system calculates the excise duty in these components and creates the appropriate line items in Financial Accounting (FI) The configuration part of it involves MM, SD and FI integration Presently GGPL India is taking Cenvat credits, Vat input credit and service Tax input credits as per the act and filing returns monthly by reconciling the excise register and accounts books through utilization. In SAP through CIN module Cenvat credit, Vat and Service Tax credits are addressed. GL accounts are maintained for each, in the pricing schema in Material Management and when the transaction takes place system will automatically post the taxes to RG23A II for non capital items and RG23CII for capital items. It also takes care of 50% credit for capital items and balance 50% will be posted as advance available for taking next year credit. System will also update R G23A I for quantity updates. These activities are carried out by Excise person.

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Similarly GL accounts Vat input credit and Service Tax input credit are identified using Tax Codes. GL accounts are assigned to tax codes and system will automatically pick up the tax rate and GL accounts while posting the transaction. The additional requirement of taking vat input credit and service tax credit on payment to vendor is to be tracked and credit to be taken on confirmation of payment to vendor. The process is different for Jambusar as they are having tax exemption, VAT input credit is not availed ,instead they accumulate the same in books of accounts till the returns are filed and on completion of assessment entries will be passed to P&L by offsetting these accounts. Excise related reports are available in Standard SAP while Service Tax and Vat reports have to be generated for GGPL. Month end utilization has to be done for reconciliation of excise records and FI records, system will automatically post the accounting entries to respective GL accounts and balances will be reconciled. GL accounts are assigned in the CIN configuration for automatic generation of GL accounts. C form tracking for customer is possible; it will help in filing sales tax returns. System will post sales tax entries automatically to the respective GL accounts while billing to customer. These GL accounts are mapped to pricing condition in SD and calculation is done based on the rates maintained in pricing condition. Detailed CIN activities are addressed in MM and SD document which will help in understanding the process from all the levels. Withholding tax recovery from Vendor is addressed in SAP for all types of recoveries. They are TDS on Contact and Sub Contracts TDS on Professional & Consultancy Charges TDS on Rent Tax Codes are created for each of the activity and are linked in vendor master data. GL accounts are created for each of the activity and linked to tax code to enable system to pick up GL accounts while doing the transactions. TDS can be deducted while making advance payment or while booking the bill which ever is earlier. TDS certificates can be generated for each vendor and data for filing annual returns can be obtained from SAP. GGPL has got certain vendors who claim tax exemption as per TDS act, same is addressed and exemption rate can be maintained in Vendor master for each tax code. Srilanka is paying debit tax for all payment realized in banks and stamp duty on collection received from customer. In SAP Srilanka taxes is not standard functionality however , Debit tax and Stamp duty taxes can be calculated based on the standard reports provided by SAP. Stamp duty recovery from employee for salary payment is addressed in Payroll module and same is explained by HR and Payroll documents. Srilanka taxes are not having Excise duty, Service Tax requirement. They have vat for purchases and sales, same can be addressed in SAP by creating tax codes for vat related purchases and sales using pricing schema and pricing condition in MM and SD so that GL accounts are automatically determined and postings can happen to FI.

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15
Sr.No.

MAPPING OF AS IS PROCESS IN BLUE PRINT DOCUMENT
AS-IS Business Process Coverage in Business Blue Print document Cover ed (Y/N)

1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15

India Operations

AP Process Section 9.1.1 & 9.2 refer Description of Improvement Section 9.2 refer Business mapping to R/3 Section 9.2 Section 9.2 Section 9.2 Section 9.1 Section 9.1 Section 9.1 Section 9.1 Section 9.3 Section 9.4 Section 9.5 or 9.6 Section 9.5 or 9.6 Section 9.5 or 9.6 Section 9.5 or 9.6 Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y

Creditor Reconciliation PO Validation Bill Booking GR IR Based Bill Booking - Freight Outward Bill Booking - Trading items Bill Booking - Others-Foreign Consultancy Bill Booking - Others-Sales Promotion Bill Booking - Others-selling agent Bill Booking Others

Debit Note / Credit Note / Party JV Advance to Supplier Payment - GRIR Based ( Ageing) Payment - Bill Booking Payment Direct

Advance Adjustment

2.00 2.01 2.02 2.03 2.04 2.05

AR Process Sales CFA Sales Reconciliation Account Receivable - Customer Account Receivable Others Section 12.1 , & SD Module Section 12.1 Section 12.4 Section 12.4 Section 12.2 Y Y Y Y Y

Debit Note / Credit Note / Party JV

3.00 3.01

Bank Accounting Bank Reconciliation
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Y
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Sr.No.

AS-IS Business Process

Coverage in Business Blue Print document Section 13.4

Cover ed (Y/N) Y

3.02

Petty Cash

4.00 4.01 4.02 4.03 4.04 4.05 4.06

General Ledger Process Inventory Valuation including CFA Consumption Accounting Exchange Rate General Ledger IUT Payroll Accounting, Process Integration with HR Refer 6.11 and also MM & CO document Refer 6.11 and also MM document Section 3.10 Section 4 Section 6.1.1 Section 6.1.1 Y Y Y Y Y Y

5.00 5.01 5.02

Accounts Closing Forex Management-Currency Valuation Closing of Accounts Section 3.10 & 6.2 Section 6.2,6.3,9.8 Y Y

6.00 6.01 6.02 6.03 6.04 6.05 6.06 6.07

Taxes Statutory Payments- With Holding Tax VAT - Input & Output tax Excise - C & F Service Tax Statutory Compliance S TAX - Collection & Issue of Forms S TAX -Sales Tax Assessment Section 14 Section 14 Section 14 Section 14 Section 14 Section 14 Section 14 Y Y Y Y Y Y Y

7.00 7.01 7.02 7.03 7.04

Srilanka Operations AP Process Bill Booking GR IR Based Debit Note / Credit Note / Party JV Advance to Supplier Payment - Bill Booking Section 9.2 Section 9.3 Section 9.3 Section 9.5 or 9.6 Y Y Y Y

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Sr.No.

AS-IS Business Process

Coverage in Business Blue Print document Section 9.5 or 9.6 Section 9.5 or 9.6

Cover ed (Y/N) Y Y

7.05 7.06

Payment

Direct

Advance Adjustment

8.00 8.01 8.02 8.03

AR Process Account Receivable - Customer Account Receivable Others Section 12.4 Section 12.4 Section 12.2 Y Y Y

Debit Note / Credit Note / Party JV

9.00 9.01 9.02

Bank Accounting Bank Reconciliation Petty Cash Section 13.3 Section 13.4 Y Y

10.00 10.01 10.02 10.03 10.04

General Ledger Process Inventory Valuation including CFA Exchange Rate General Ledger Payroll Accounting, Process Integration with HR Refer 6.11 and also MM & CO document Section 3.10 Section 4 Section 6.2 Y Y Y Y

11.00 11.01 11.02

Taxes Statutory Payments- Stamp Duty Vat Section 14 Section 14 Y Y

12.00 12.01

Accounts Closing Closing of Accounts Section 6.2,6.3,9.8 Y

13.00 13.01 13.03

Following points discussed identified as report requirement and or /part of phase II implementation Working Capital Project Financing Report Requirement Phase II Y Y

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Sr.No.

AS-IS Business Process

Coverage in Business Blue Print document Section 6.1.1 Report Requirement Phase II , Phase II, Section 6.1.1 & Phase II Report Requirement Report Requirement Reporting Requirement Section 14 and Report requirement Report requirement

Cover ed (Y/N) Y Y Y Y Y Y Y Y Y Y

13.04 13.05 13.06 13.07 13.08 13.09 13.10 13.11 13.12 13.13

Inter Company Transaction stock transfer Insurance Fixed Assets Depreciation Consolidation- part of SEM Income Tax Assessment Tax Audit FBT Stamp Duty & Debit Tax Cash flow statement

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16
16.1
Sl No

REPORTS
FINANCIAL ACCOUNTING REPORTS
Functional sub unit Frequency of Generation Daily Standard SAP Key functional process This report gives a summary of the collections made by each ME (in lacs) date wise for the period specified. This report gives customer wise, Invoice wise aging as on date. (aging based on Inv Date) (Parameters - customer type (expo, local, , & GL Account code) This report gives customer wise, Invoice wise back dated aging. (aging based on Inv Date) (Parameters - customer type (expo, local, Byp), salesperson & GL Account code) other tan ME This report gives customer wise, Commercial Invoice wise aging in IN R and foreign currency as on date. (for export customers) (Parameters - customer type (expo, local, Byp), salesperson & GL Account code) This report gives customer wise, Invoice wise collections done for a particular period along with the no of days taken for the Invoice to be realized from the Inv date along with the aging. ME wise This report gives a summary of the amounts getting due week wise in the coming month for each customer. (This can be generated salesperson wise or customer wise) , standard other than ME This report gives the listing of the sum total of all the transactions that have taken place with a particular party during a particular period and for export parties it should give the transactions in foreign currency.

List of reports discussed and identified as standard or z development.

1

Mkting Exec. Summary

Collection

Z Development

2

AR Aging by Invoice Date

as & when

standard

3

AR Aging as of Effective Date

as & when

Standard

4

Class wise AR Aging by Due Date

as & when

Z Development

5

Mktg/Cust Collection Analysis

as & when

Z Development

6

Class wise Collection Due

as & when

Standard

7

Debtor Ledger

as & when

standard

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Sl No

Functional sub unit

Frequency Generation

of

Standard SAP

Key functional process

8

Debtors Trial Balance

Annually

standard

This report gives a list of balances lying in the accounts of various parties as well as summary of the transactions entered into with the party during the given period. This report helps in checking whether a particular cheque has been received by us, if yes, then to what customer account it has been credited to and against which Invoices it has been adjusted. This check can be done using invoice number This report helps in checking in which party the particular invoice has been generated and whether the said Invoice has realized, if yes, against which cheque N o. the same has been realized. This report gives you a list of amounts and their respective cheque No.'s which had not been adjusted against any invoices when the same had been received but the same had been adjusted at a later date and it also gives the Invoices against which they have been adjusted and on which date. This report gives salesperson wise, customer wise comparison of outstanding on two different dates. Further it also gives SBU wise debtors status as on a particular date. Multiple reports to be used This report gives a list of total customers along with their codes, group codes, respective MEs, credit limits, cr terms, Type, R egion, currency, city, state, country & AR Acct.

9

Payment Inquiry

as & when

standard

10

DR/CR Memo Inquiry

as & when

standard

11

Payment Application Register

as & when

standard

12

Sales Person Comparison

wise

O/ S

Daily

Standard

13

Customer Master in Excel

as & when

Standard

14

List Of Bounced Cheques.

as & when

Z Development

This report would give a list of Bounced cheques for a particular period along with ME's name

15

Export Ar Aging in foreign currency with effective date. (Back dated aging)

as & when

standard

This report would give the aging of export parties in their respective currency with the provision to generate back dated aging.

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 91 of 157

Sl No

Functional sub unit

Frequency Generation

of

Standard SAP

Key functional process

16

Ar overdue aging report with effective date. (Back dated aging).

as & when

standard

This report would give the overdue aging of domestic as well as export parties in IN R with the provision to generate back dated aging. It would also show the not due and overdue amounts separately. This report would give a list of credit notes passed in a particular period. This report would re-evaluate the export debtors in foreign currency as on a particular date at the existing exchange rate and throw up the Exchange Gain/ L oss in the process. This report would give the collections "for the day" and "MTD" with SBU wise bifurcation and L ocal / Export wise bifurcation. Pay in slip is the document indicating the various cheques sent to the bank every day with bifurcations such as L ocal, High value, outstation & transfer cheques. Bank receipt voucher is the document indicating the amount received from various parties and sent to a bank on a particular day. It also gives details as to the party code, cheque N o, Amount, Invoices against which the amount has been adjusted, the bank code and Date. This document gives details of credit given to a particular party on account of rejection, short receipt, rate diff etc. It also gives details of the party code, Party name, Amount, GL Code, Inv reference & Reason. This report gives customer wise, Invoice wise aging as on date. (aging based on Inv Date) (Parameters - customer type (expo, local, Byp), salesperson & GL Account code)

17

Credit Note Register

as & when

standard

18

R eport revaluating debtors as on a particular date.

as & when

standard

19

Collections & Debtors status as on a particular date

Daily

Standard

20

Pay-In-Slip Printing

Daily

Z development

21

Bank Receipt Voucher

Daily

standard

22

Credit Note Printing

as & when

standard

23

Customized InvDate

AR Aging

by

as & when

Z Development

24

Class wise Collection Due

as & when

Z Development

This report gives a summary of the amounts getting due week wise in the coming month for each customer. (This can be generated salesperson wise or customer wise)

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 92 of 157

Functional sub unit

Sl No

Frequency Generation

of

Standard SAP

Key functional process

25

R epairs and Maintenance Department wise (Excel)

Monthly & YTD

Standard

Preparation of department wise repairs and maintenance incurred

26

Travel Expenses (statement in excel)

Annual

Standard

Department wise & Employee wise Domestic, Foreign, Hotel Stay, Conveyance, and L unch on duty expenses. Department wise report can be generated

27

Debit N ote/ Credit Register

N ote

Once

Zdevelopment

Debit Note/Credit Note Register

28

Aging Report

As & when

Standard

Debtors outstanding Status

29 30 31 32 33 34 35 36 37 38 39

Debtors Ledger Receipt Settlement Collection Register AR/VS GL Debtors Ledger Debtors Trial Balance LC Register Bank Book Printing ( Bank ) Bank Book Printing ( Company ) Manual Matching Bank Manual Matching -Company>Bank

As & when Daily Daily As & when As & when As & when As & when Monthly / As & when Monthly / As & when Daily Daily

Standard Standard Standard Standard Standard Standard GAP Standard Standard Standard Standard

Customers Account Advance Application Collection Register Reconciliation Sales & collection transactions Abstracts of Accounts Due date wise LC Records printing of Bank statement from system printing of Bank book from system Bank Reconciliation Bank Reconciliation

40

Manual Matching -Bank

Daily

Standard

Bank Reconciliation

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

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Sl No

Functional sub unit

Frequency Generation

of

Standard SAP

Key functional process

41

Manual Matching Bank Reco

Daily

Standard

Bank Reconciliation

42

Bank Pass Book Printing -

Monthly

Standard

Bank Reconciliation

43

Dr. by bank but not accounted

Monthly

Standard

Bank Reconciliation

44

Cr. by bank but not accounted

Monthly

Standard

Bank Reconciliation

45

cq. Issued but not presented

Monthly

Standard

Bank Reconciliation

46

cq. deposited but not credited Standard

Monthly

Standard

Bank Reconciliation

47

Bank Reconciliation Statement -

Monthly

Standard

Bank Reconciliation

48

Bank Reconciliation Statement

Monthly

Standard

Bank Reconciliation with various annexure

49

Cash book/Bank Book -

Monthly

Standard

Book generation

50

Sales Register

Monthly

Standard

Invoice wise customer wise sales register

51

General Ledger -

Monthly

Standard

Individual GL printing

52

JV Journal -

Monthly

Standard

Journal Printing

53

Accounts Balance Summary

As & When

Standard

Individual GL printing

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

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Functional sub unit

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Standard SAP

Key functional process

54

Accounts Balance Details Transaction Activity for Given Account Voucher V/S Grir Matching

As & When

Standard

Individual GL printing

55

Quarterly

Standard

Stores Reconciliation support report

56

Quarterly

Standard

PO Receipt reconciliation

57

Debit Balance

Quarterly

Standard

Party wise transaction wise debit balances

58

Grir recpt.-Tax code wise

wise

/ a/ c

Quarterly

Open

Clarity awaited from GGPL

59

Grir recpt.-Tax acct. vou.wise

Quarterly

Open

Clarity awaited from GGPL

60

Creditors Trial Balance Debit N ote / Credit N ote Register - Customer

Monthly

Standard Product W ise Party wise Debit note / credit Note register with details ED & Sales Tax

61

Quarterly

Standard

62

Trial Balance Summary

Monthly/Otly/ Yrly

Standard

Financial GL Account Abstracts

63

Trial Balance Detail

As & When Monthly/Otly/ Yrly Monthly/Otly/ Yrly Monthly/Otly/ Yrly Monthly/Otly/ Yrly Monthly/Otly/ Yrly

Standard

Financial GL Account Abstracts

64

Balance Sheet

Standard

Financial GL Account Abstracts

65

Income Statement

Standard

Income & Expenses data

66

Balance Sheet comparative

Standard

Financial GL Account Abstracts

67

Income Statement comparativeDown L oad Balance Details -Accounts

Standard

Income & Expenses data

68

Standard

Consolidated Financial Report

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 95 of 157

Sl No

Functional sub unit

Frequency Generation

of

Standard SAP

Key functional process

69

GL Calendar Report -

As & when

Standard

Selection on calendar year

70

Format Position Report

As & when

Standard

Financial statement format report

71

Account Code Report 2

As & when

Standard

GL accounts report

72

Combine GL, B/Sheet & P&L

Monthly

Standard

Consolidation of P&L and B/ sheet for Jambusar, Kosamba & Corporate R econciliation of inter unit transaction for payment, material, debtor & Fund Transfer A statement of prepaid Insurance with other details to monitor insurance accounting To ensure timely process of getting quotes for insurance Available once FA is implemented Item wise voucher capitalization wise details for

73

IUT Reconciliation

Monthly

Standard

74

Prepaid Insurance

Regular

Standard

75

Policy History Records

Regular

Standard

76

Fixed Asset for Fire Insurance

As & when

GAP- FA related

77

Capitalization

Monthly

GAP- FA related

78

Project Control Sheet

As & When

GAP

FA related

Project Code wise sanctioned, utilization & Balance Accounting & MIS Computation

79

Depreciation

Monthly

GAP- FA related

80

Freight Liability posting-

fortnightly

GAP

Liability of transport

81

Export Freight Liability postingExport Freight paid report Cheque Status Supplier Advance Register list unpaid

As & when

GAP

Liability of transport

82 83 84

As & when As & when As & when

GAP Standard Standard

Z Development

Supplier Pending Advance status

85

Creditors Aging Report

As & when

Standard

Suppliers Status due for payment

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

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Functional sub unit

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Standard SAP

Key functional process

86

Creditors Ledger

Monthly

Standard

Individual Creditor Ledger printing

87

Voucher Mail Register -

As & when

Standard

List of cheque prepared on particular date

88

Voucher Mail Register -

As & when

Standard

List of cheque prepared on particular date

89

Tax Certificate Register

As & When

GAP

Details of certificate received from party for reduced rate / No TDS details for contractor

90

ETDS Certificate details

Quarterly

Standard , professional , rent & employee

91

Fringe Benefit Statement

Quarterly

GAP

To Calculate to FBT Liability

92

Control Register

As & When

Standard

TDS deduction & Investment Register

93 94 95

Withholding Tax Withholding Certificate Withholding Register Manual

Monthly Monthly Monthly

Standard Standard GAP

Statutory Statutory R egister for taking acknowledgement from supplier Statutory

96

Withholding Tax Return

Monthly

Standard

97

Stamp Duty

Monthly

GAP

Statutory

98

Stamp Duty Return Purchase R egister - Tax, Party & Invoice Debit N ote/ Credit summary for VAT VAT Return Sales Tax Exemption Register note

Quarterly

GAP

Statutory Tax Code wise, Party wise & Invoice wise to issue form VAT Output and Input Tax Vat Returns format To work out refund applicable for tax paid on Gujarat purchases

99 100 101 102

Quarterly Monthly Monthly Monthly

Standard Standard GAP GAP

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

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Functional sub unit

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Standard SAP

Key functional process

103

Incentive Return

Monthly

GAP

W orking to total incentive utilized by refund / remission and Balance available on the month end. Details of Branch Transfer & work out reversal of tax credit Statutory

104

Branch Transfer Register

Monthly Quarterly/Yearl y

GAP

105

Income tax & Return

GAP

106

Cash Flow -/ Manual

Daily

Standard

To have head wise details of receipts & payments

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 98 of 157

17
Sr. No.

ANNEXURE-A: SUMMARY OF DISCUSSIONS
Discussion Point on Blue Print Page N o. 37 Section 10 N o mention of Cenvat against Service Tax -procedure indicated in SD-HP. Not mentioned in BBP. HP Response Remarks Status Close Service Tax input credit is Zreport for addressed in standard CIN encashment along with z report for Details of cheque encashment of vendors for the purpose of submitting it to tax authorities on payment base. Nattandiya process is discussed separately and is considered part of current scope One sand processing plant is in N attandiya & one in Keenakalya

1

Page:4, Section:1.1 Scope of Nattandiya not included 2

Close

3

Page:4, Section:1.1 Only One sand processing unit instead of two at CGC-NAT

Close

4

Page:5, Section:1.3 There was Interview in this context means only AS-IS process presentation discussion not the interview as mentioned in the report Page:6, Section:1.3 To know whether key requirements are Checklist or something else Key requirements are major functions in business process

Close

Close

5

6

7

Page:6, Section:1.3 As is General comment process need to be discussed in detail Page: 6, Section: 1.3 W hat is Major development involving meant by 'no significant SAP access key. configuration choice has been identified'??? Page:8, Section:2.2 W e need to discuss and confirm Organization Structure with Management in light of re-alignment of business at CGC Page:10, Section:2.3 How segment reporting(Pharma & CN P) requirement is address looking to business area N ew Company code requirement is withdrawn by GGPL

Close

Close

Close

8

Close through report painter PCA and geography wise report separately ,COP A.business area report will be at plant level and not sbu level

9

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 99 of 157

Sr. No.

Discussion Point on Blue Print Segment reporting annual account geographical and others

HP Response R eporting is available for p&l , for B/ s items can be linked to profit center and reports can be generated , assuming FA is implemented in fist phase Account group is created at COA level, during master data preparation, this will be filled up with co code level and additional gl accounts R eport through

Remarks

Status Close

10

11

Page:11, Section:3.1 Account group and COA was submitted before release of this blue print as per our point of view

Close

12

Page:12, Section:3.4 How Addressed, Quarterly closing issue is FSV. addressed in SAP Page:13, Section:3.6 Posting Key need to see in detail Page:13, Section:3.7 Document type need to understand in detail Page:13, Section:3.9 How profit appropriation entries will be taken care for retained earning net balance to be carried to Balance Sheet - Specifically for Auto Posted Page:14, Section:3.10 Exchange rate should be spot rate on the date of transaction instead of pre defined rate for a particular period

Close

13 14

Key is defined for Dr or Cr for GL or Vender or Customer. KR for Vendors, RV for Sales Appropriation A/ c to created and marked as P&L A/ c linked with R etained Earnings A/ c. A J v to be passed. / R eporting for Financial Statements needs to be checked. For sd billing, system will pickup system rate, and agreed. For imports, Differential rate (system rate & bill rate) is updated to inventory at the time of IV, if the stock is available it will hit inventory otherwise p&l as price difference

Close Close Close

15

Close

16

Page: 14, Section: 3.10 1. Exchange revaluation at qtrly closing 17

informed to use with reversal and just to check 12 month reversal posting

Close

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 100 of 157

Sr. No.

Discussion Point on Blue Print

HP Response

Remarks

Status Close

18

19

20

21

22

Page: 14, Section: 3.10 2. Subsequent gain / loss for those items should be compared with previous qtrly closing v/ s issue addressed, to have separate revaluation account transaction exchange rate and gain or loss account Page:17, Section:4.2 R eversal process should not happen at the end of Fiscal Year.( N EED TO accrual reversal and normal UNDERSTAND IN DETAIL) reversal explained Page:19, Section:4.8 Open Item need more clarity through live examples OI explained Page:21, Section:5.1.1 W hile System checks for the Account creating new account number code and control at duplicate system should prompt for any account number level. duplicate account narration/ similar type of narration being entered Page:23, Section:6.1 Parking of Parking of document is not documents generated via part of Recurring document recurring document Page:23, Section:6.1 account assignment model and reference document need to be explained N ew functionality is SAP explained and is additional feature. Template creation for posting and reference documents copying for posting N ew functionality is SAP explained and is additional feature. Adjustment posting , accrual postings , rectification postings

Close

Close

Close

Close

Close

23

24

Page:24, Section:6.1.1 R eclassification posting and other points need to be explained in detail( all these 4 posting methods refer to which as-is process and at which point of time and also for IUT Transaction ) Page:24, Section:6.1.1 Detail discussion on IUT is required

Close

25

IUT accounting explained and flow to be shown during scenario testing

Close

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 101 of 157

Sr. No.

Discussion Point on Blue Print

HP Response

Remarks

Status

26

Page: 26, Section: 6.2.1 W hat is manual reconciliation and for what activity.

transaction wise details of documents can be generated using transaction codes , useful if auditor asks for control check on documents closing process is possible, but need to follow process of verifying pending parked document to be followed every month before closing Balance carry forward program needs to be run end of the year, and closing activities needs to be followed. Material can be booked for full value and debit note can be raised separately for rejected item which will have GR reference. The R eturn GR will be sent to accounts for debiting the vendor. Printing of the return Gr in vat format. To check with MM for Z development or standard Print out as per vat format

Close

27

Page:26, Section:6.2.1 W hether closing process will continue even if parked documents are still there

Close

28

Page:27, Section:6.3 R ecommended procedure for year end closing and balance carry forward process need to understand in detail Page: 30, Section: 7.2 Vendor invoice to be booked fully. In case of any discrepancies Debit note / Credit should be booked automatically and alert should be raised. DN/CN Should not effect inventory valuation.

Close

Close

29

30

Page: 30, Section: 7.2 Except J umbo Bag credit treatment, freight difference retrospective. % age deduction in case of sand should not effect inventory Page: 30, Section: 7.2 Part of freight is being paid to driver while balance is being paid to vendor. ( how to handle the same in SAP)

J umbo bag treatment can be addressed by creating separate line item in Purchase Order. Realization time to be checked Payment can be made separately to both the parties

Close

Close

31

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 102 of 157

Sr. No.

Discussion Point on Blue Print

HP Response

Remarks

Status

32

Page:31, Section:7.5 W ill AP Bill Booking give alert for any advance given against a particular Purchase Order/ Debit balance against that vendor Page: 31, Section: 7.5 N O Vendor settlements against the PO without adjusting advance against that po.

Vendor open item will show debit balance and credit balances for the vendor. R eport can be generated on any particular date. W hile Advance payment P.O. No. has to be assigned. W hile making payment advance can be adjusted against the Purchase order during AP run or can be P manually adjusted during open item selections. L OI number can be edited with Purchase Order number in the Assignment field Down payment request is raised by requesting department, submits request document along with request number to finance. Finance will release payment by selecting the down payment request and release down payment Advance against L can be OI paid but PO number has to be assigned in assignment column subsequently Service confirmation is addressed , with service master and service entry sheet approvals Several authorization are available including additional authorization in free selection options Discussed about employee loans and other various account handling with employee wise account wise details
Hewlett-Packard - confidential -

close

close

33

Page:31, Section:7.5 Installment payments in PO like 10% adv , 20% against rcpt etc ----- How is handled in SAP 34

Close

35

Page:31, Section:7.5 How to give advance against L OI and handle the same subsequently Page: 31, Section: 7.5 Services provided under AMC, how accounts will know whether service is provided or not. Page:31, Section:7.5 W hat type of authorizations are there for automatic payment proposal

Close

Close

36

Close

37

38

Page: 31, Section: 7.5 Special General L edger Indicatory need to see with practical examples.

Close

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Page 103 of 157

Sr. No.

Discussion Point on Blue Print

HP Response

Remarks

Status

39

Page: 33, Section: 8.2 Page 33 Section is not explained. ( Part info is missing Page:35, Section:9 How security deposit given to vendors / customers reflecting in aging report account to track various without / Party

Page to be deleted

Close

40

Provision of special GL Indicator in aging report option. These deposits will be bypassed in case of normal aging report. GR need to be prepared at IR HO also and accordingly payment can be released. This will help to maintain asset register also. Discussed with Prakash Birla W ith Tax code structure it can be possible.

Close

41

Page: 35, Section: 9 For purchases at HO, we are raising PO for various items but GR is N not prepared. In such cases how Bill booking is handled.

Close

42

Page:35, Section:9.1.1 In case statutory deductions are maintained in vendor master then how different tax rates will be handled in the system

Close

43

Page: 35, Section: 9.1.1 Through One time Vendor W ithholding tax to one time creation, this is possible vendors without going through AP module - i.e. direct payment. How this process is handled in the SAP and we need to issue TDS Certificate also Page:35, Section:9.1.1 Vendors with concessional withhold tax certificate - how to maintain the same Page:36, Section:9.2 Inventory posting to consumption and inventory valuation misunderstood There is Field in Master for giving Exemption rate. For each tax code exemption rate can be maintained Correction to be done in Blue Print.

Close

Close

44

Close

45

46

Page: 36, Section: 9.2 Some Addressed in sub contract Service orders where material is third party scenario. Scenario also being supplied by vendor in unit testing (on site / outside site). How material accounting will be done

Close

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 104 of 157

Sr. No.

Discussion Point on Blue Print

HP Response

Remarks

Status

47

Page:36, Section:9.2 Purchase Order where GR N is not prepared we want to know how much payment is made against that PO Page: 36, Section: 9.2 For Engineering spares where R ate Contract is issued, how GR will IR be prepared on receipt of spares at various point of time. Page: 36, Section: 9.2 In Goods R eceipt what about VAT, CEN VAT account etc. These need to be linked with Excise module Page: 36, Section: 9.2 Credit of VAT and Cenvat taken in excise module for each GR N is required. Purpose of this to have internal check whether credit is taken or not and duplicate copy of transporter bill received or not Page:36, Section:9.2 Import GR need actual working for N customs , CVD and other charges for each item and payment need to be linked PO wise Page:36, Section:9.2 Import Deposit to port authority need to be tracked order wise

48

Purchase order to be put in assignment block during document. It is only text field and for reference only. N o Control or check will be there. PO for different rate contract , will be addressed through delivery schedule

Close

Close

49

Vat and Cenvat are part of standard SAP CIN functionality and are linked to excise module Excise document number will have reference of GR document

Close

Close

50

51

This can be addressed through partner function and planned and unplanned delivery cost. During IV actual freight cost can be put. Assignment during Payment. Special reconciliation account can be defined for making deposit payment to various authorities like Port authority, container deposit etc. N EED TO check actual transaction for import GRIR In Standard available, TDS to main vendor and payment to the driver through alternate payee

Close

Close

52

53

Page: 37, Section: 9.2 Provision for alternate payee should have proper checks and control (i.e. For each payment authorization is required)

Close

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 105 of 157

Sr. No.

Discussion Point on Blue Print

HP Response

Remarks

Status

Page:37, Section:9.2 Outward freight payment should create simultaneous service tax as liability

54

Creation of liability is possible through price schema through MM. ZProgram relating to cheque encashment dates. Through Service Order and Service entry sheet, freight outward can be booked and service tax liability can be created. Freight P rovision at the time of delivery to be considered

To be considered in WM

Close

55

Page:37, Section:9.2 Inward services should have cenvat as well as liability for service tax link with excise system on payment basis Page: 37, Section: 9.2 In case of capital goods receipt GR N would affect directly CW IP account and there should not be any further financial entries in the system (i.e. at the time of issue of goods). But quantity accounting need to be maintained Page:37, Section:9.2 How CEN VAT accounting is taken care in case of goods are purchased through Trader

part of standard functionality in CIN , report to know encashment by vendor for service tax related transactions to be provided On R eceipt, transfer to CW IP is possible but later part of quantitative records and value, needs to discussed with MM. further clarification

Close

Open

56

57

It is part of standard sap functionality. Condition type manual

Close

58

Page: 37, Section: 9.2 In case It is part of standard sap of furnace Oil price is mentioned functionality. Condition type as inclusive of taxes and cenvet is manual charged based on the accessible valued being fixed by the vendor at the time of dispatch. Page:37, Section:9.2 Discount in IOCL procurement need to discuss with MM for inventory valuation Quantity discount addressed in SAP

Close

Close

59

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 106 of 157

Sr. No.

Discussion Point on Blue Print

HP Response

Remarks

Status

60

Page:37, Section:9.2 W hat if GR is prepared and material is N consumed also then PO need to be amended for pricing etc Page:39, Section:9.3 For every Goods inward GR should be N prepared and in case of rejection R eturn to supplier document need to be prepared to track all the GR N as well as vendor evaluation purpose Page: 39, Section: 9.3 In case of Project P there is a provision O of retention money (say 10% ). How to track the same to ensure that payment is not released for that outstanding amount Page:41, Section:9.5 R esidual Items to be explained Page:45, Section:9.8.1 Aging report as on a particular date need to be generated ( for example today we want to generate a report for 31/ 03/ 06 on 15/09/06) Page:45, Section:9.3 Employee entitlements need to be tracked through HR Module and in case of direct payment an entitlement pop-up should be available at the time of making payment

part of standard SAP functionality, difference will go to price differences account This is addressed in SAP MM standard functionality

Close

Close

61

62

R etention money of 10% can be moved to retention money spl gl indicator and tracked separately. Payment control is addressed on spl gl indicator

Close

63

Explained Aging report as on a particular date can be generated ( for example today we want to generate a report for 31/ 03/ 06 on 15/09/06) L oan tracking is possible through system (Via P ayroll or Special L edger Indicator). Forex travel advance procedure explained and Zprograme is required to take travel advance outstanding report. Policy related payments will be routed through payroll other than travel expenses This is standard functionality Z report for travel advance report

Close Close

64

Close

65

66

Page:45, Section:9.3 Payment receipt from vendor should be allowed in AP module and similarly Payment to customer

Close

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 107 of 157

Sr. No.

Discussion Point on Blue Print

HP Response

Remarks

Status Close

67

Page:49, Section:10 How Vendor will be created by HR Employees will be treated as through a program run. vendors Page:49, Section:10 Flexibility should be there to define credit limit at individual customer level as well as customer group level Customer group level and customer level credit limit is possible function,

Close

68

69

Page:49, Section:10 W hile Standard SAP checking for credit check system confirmed with SD should verify for timely payments also Page:49, Section:10 Shipment should be restricted in case customers has not given C-Form for previous qtr

Close

Z reports for tracking C forms Considered due to Vendor and Customer in report list

Z-Development

70

71

Page:49, Section:10 How L Cs L is a payment guarantee C will be handled while checking and based on this the credit for Credit limit and collection block of the default customer will be removed using a transaction. The authorization to the transaction is restricted. Page:49, Section:10 L Tracking C is required To tracking of L is available, C but to work around looking to Foreign trade module or Bills of Exchange procedure , suggested to use bills of exchange procedure for lc tracking Standard report gives Total report for Bill to party only but for Bill to party whatever is the currency, ageing can be received currency wise like USD, Euro, and GBP as well as in the reporting currency. To understand with SD for group reporting.

Close

Close

72

73

Page:49, Section:10 Outstanding report is required sold-to wise in their respective currency with an option to generate report in our company code currency

Close

SAP ECC 6.0 Business Blueprint for GGPL Financial Accounting

Hewlett-Packard - confidential -

Page 108 of 157

Sr. No.

Discussion Point on Blue Print

HP Response

Remarks

Status

74

75

Page:52, Section:12 How to redefine one time vendors/ customer into regular type of customer/ vendor or vice versa Page:52, Section:10 How trading sales where an invoice is prepared in Toto ( i.e. Bottles , caps and brushes) will be captured

Is not possible requirement is removed

and

Close

76

Page:52, Section:10 Accessories sales directly at port and additional recovery in commercial invoice should be covered Page: 55, Section: 10 Credit notes can be raised even after getting full payment against an invoice. Page: 52, Section: 10 C&F Sales need to be accounted plant wise. Employees incentive is linked with it

If it is one line item, then it is not possible to separate Trading sales from Export Sales, but if it is separate line item then only it is possible. Trading revenue gl to be created It is addressed in SAP and confirmed with MM for 3rd party purchases Credit note is part of standard sap functionality

Close

Close

Close

77

78

A report can come through Profit centre accounting. & to check with HR for incentive calculations. HR is discussing this point with CO & PP Part of standard functionality in CIN , R G23D register is updated. Additional excise entries can be posted BR is part of standard S functionality. To provide paying slip reference at the time of reconciliation. R eversal at old price is possible. Checked by FI with SD Z development to track stamp duty payable

P oint to be removed

Close

79

Page:52, Section:10 How differential duty for C&F sales will be calculated and accounted in the system Page:52, Section:10 How collection at different location will be accounted in lieu of CMS facility Page:52, Section:10 Any reversal of export sales should be done at old rates ( i.e. Invoice rate) Page:52, Section:10 Stamp duty charges need to be calculated on collection of Payments from Customers - CGC Requirement

Close

Close

80

Close

81

Considered in report list

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82

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Sr. No.

Discussion Point on Blue Print Page:60, Section:13 Bank Statement upload facility to be provided

HP Response

Remarks

Status Z Development

83

84

If bank statement is the required format of SAP, through Z programme it is possible. Page:61, Section:13.2 Bank BR is part of standard S code setting should be done for functionality. To provide CMS purpose also paying slip reference at the time of reconciliation. Page:61, Section:13 L oans from Cash flow statement is part of various institutes / Banks - how to standard sap functionality, handle with respect to cash flow information will be available. Page:61, Section:13 Date of check clearance need to be tracked and linked with Service tax/cenvat availment Considered in report list

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86

W ith Z programme for Considered cheque encashment it is in report list possible. Considered in report list

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87

Page:61, Section:13 Calculation Z program for debit tax of Debit tax should be done from calculation is required the system - CGC Requirement Page:64, Section:13.4 Interest verification in case of OD account

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Available without Posting. Interest Calculation is possible for Bank Accounts, Customers, Vendors and any other GL which is balance managed account. Display is possible through test simulation Page:64, Section:13.4 In case Cash Sales collection is auto of petty cash there should be postings. And from this provision of restricting overdrawn separate account only fund transfer to be allowed for money deposit in bank account. It can be addressed in SAP. Page: 66, Section: 14 Srilankan Srilankan tax will be Taxes has not been considered. addressed using India tax version and withholding tax also addressed Page: 66, Section: 14 FBT N o Standard available, to be Considered calculations not considered into part of z development in report list Blue Print.

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Sr. No.

Discussion Point on Blue Print

HP Response

Remarks

Status

92

Page: 66, Section: 14 Service Tax Charge, Cenvat, L iability not considered. Page, Section: 14 VAT Input credit is on the basis of Bill booking and not GRIR. Page, Section: VAT Input Credit is not available in case of Branch Transfer. It's a charge to P and &L system to give value of such charge

Service tax credit capturing and utilization are standard functionality in SAP. Service tax register is Z development Standard SAP functions, at the time of bill booking. Through clearing account Input credits to be reversed for bottles manufactured and transferred to depot. Manual entries to be passed for reversal. Multiple reports from MM, PP and transfer to depot required Is available in standard.

Realization

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93

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Page, Section: On certain Materials VAT input credit is not allowed, its charge to P&L account. Page:, Section: On receipt of Gas, if it is used for CPP Vat credit is not allowed and for other use total credit is restricted after deducting 4%

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Procurement needs to be addressed through pipeline processing. Adjustment of Vat for the gas consumed at CPP needs to be adjusted in Finance by passing JV To check UR treatment in D MFGPR and to address at O the time of realization

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Page, Section: To create liability for purchases from UR dealers. D And on payment, credit can be taken.

Realization

98

Page, Section: J ambusar - VAT Vat output tax payable and treatment is altogether different. Vat input tax R eceivable to have separate GL account. Same will be set off on account of assessment. Also need to track exemption limit on sales to of 80 crores within Gujarat (vat) through report

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Sr. No.

Discussion Point on Blue Print Page:, Section: Service distribution from H.O. tax

HP Response R eport for service tax input credit from HO, bifurcation of credit for different location on manual basis. J Vs to be passed through clearing account Discussed with CO & PP is part of CO discussion Commission payable to selling agents based on sales, collection.

Remarks

Status Close

99

100

Energy Utilization Quantity cost centre wise for FI entry CC account wise. Commission to Agents for Sales

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Z Development

101 Outward Domestic Freight on L ocal Sales as well as Export Sales Outward Sea Freight for Export Sales Blue print is prepared without considering reports and wish list head Office / mentioned CFA name not

102

To be considered in WM To be considered in WM R eports and wish discussed and finalized list

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104 105

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Discussion taken place on Head office process, CFA Sales Plant wise report is possible at COPA L evel. (Either Batch wise or Separate storage location) To check with HR for Incentive P oint to be calculation for CFA Sales. HR removed is discussing with CO & PP Inventory Valuation at CFA for both plants discussed with CO and to address during realization Considered in CO

CFA Sales Plant wise report 106

Incentive calculation - CFA sales 107 Inventory Valuation at CFA for both plants 108

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Realization

109

Form "C" for Interstate Purchases Separate screen for capturing on quarterly basis. C form against Invoice booked as Z developemnt. Z report will be developed based on the this info for outstanding C forms

Considered in report list

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18

GAPS

Freight outward bill booking for Domestic and Export Freight (up to Mumbai Port) is currently captured in Freight Module S/W maintained by GGPL. This is not part of Standard SAP Module. SAP FI application support only accounting of Freight Outward charges based on the bills provided by the freight vendor. This requires a development to identify L wise, Invoice wise freight charges to respective SBU. Postings R can be made to FI using normal bill booking process via z program, if above data is generated. Electronic Bank Statements are downloaded to MFGPR accounting System for the purpose of Bank O R econciliation at Kosamba and Jambusar. This has got an interface with Bank and MFGPR Standard O. SAP system will not address the interface with external Software, it requires a development. Commission to Agents is currently paid based on sales made by each agent and timely payment received from customer. This is not the Standard SAP functionality as it requires a development to identify the sales made by each commission agent, also should check for various payment parameters like, timely payment, full payment and not partial payment. Postings can be made to FI using normal bill booking process via z program, if above data is generated. FBT calculation is required from system for GGPL. Same is not part of standard SAP functionality and program needs to be developed for calculation of FBT separately. How ever information is available in GL accounts and FBT calculation can be done manually based on available information. C form tracking and endorsement of C form received in system. System should show balance C form to be collected from customer at any point of time from customer. Similarly to track C forms to be issued to vendors for purchases made has to be tracked. C form details to be collected is standard SAP report functionality where as endorsement of C form and identifying the balance C form is not part of SAP functionality. Z program has to be developed for endorsement of C forms. .

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19

BUSINESS BLUE PRINT FINANCIAL ACCOUNTING MODULE US & UK
FINANCIAL ACCOUNTING PURPOSE

19.1

The Financial Accounting (FI) application component fulfills all the international requirements that must be met by the financial accounting department of an organization. It provides the following features: Management and representation of all accounting data All business transactions are recorded according to the document principle, which provides an unbroken audit trail from the financial statements to the individual documents. Open and integrated data flow Data flow between Financial Accounting and the other components of the SAP System is ensured by automatic updates. Data is available in real time within Financial Accounting. P ostings made in the sub ledgers always generate a corresponding posting in the general ledger. Integration: Integration of Financial accounting with other components All accounting-relevant transactions made in L ogistics (L O) or Human R esources (HR ) components are posted real-time to Financial Accounting by means of automatic account determination. This data can also be passed on to Controlling (CO). This ensures that logistical goods movements (such as goods receipts and goods issues) are exactly reflected in the value-based updates in accounting. Integration within Financial Accounting Every posting that is made in the sub ledgers generates a corresponding posting to the assigned G/ L accounts. This ensures that the sub ledgers are always reconciled with the general ledger. Following are the sub components of Financial accounting applications which are considered for Phase I implementation in FI. General Ledger (FI-GL) Accounts Payable (FI-AP) Accounts Receivable (FI-AR) Bank Accounting (FI-BL)
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19.2

SAP FINANCE ORGANISATION STRUCTURE FOR GG-US & GGI & PIR UK
To cater for external and internal accounting requirements, SAP database is designed with organization structure objects, which are configurable according to user s requirements. Overall, these organization objects, such as company code, are hierarchically integrated to ensure that any business data are properly stored and linked within the organization. Considering the modules to be implemented for US, and the following Financials organizational structure object is relevant for external accounting purposes: As per the understanding, it is assumed that GGPL has got two subsidiary companies in US. GGUSA is involved in Trading Operation while GGI is involved in Glass Operation, Plastic Operation, and Parma-tech Operations and also in UK. Accordingly we are suggesting one Company Code for GG-US to manage Trading activity and one Company Code for GGI to manage Manufacturing Activity and one company code for UK. These Company codes will be using the year independent fiscal year April to March in SAP. The Fiscal year is considered as April to Mar to ensure common Fiscal year across GGP subsidiaries. Since GGPL Group Company is located in India and its legal L reporting period is April - March and it has to submit its group company financials, hence the common fiscal year variance across subsidiaries.

19.3

DEFINITION OF SAP ORGANISATIONAL UNITS
Definition: COMPANY: An organizational unit in accounting which represents a business organization in a particular country An organizational unit for which individual financial statements can be drawn up according to the relevant commercial law A Company can consist of one or more Company codes GGPL is considered as Company in SAP, but naming convention has to be finalized. Currency of the Company GGPL will be INR

COMPANY CODE: A company code is the smallest organizational unit for which complete, independent accounting can be carried out. This includes the entry of all transactions subject to posting and the creation of all

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items for legal individual financial statements, such as the balance sheet and the profit and loss statement.

Company code application for GG- USA and GGI & PIR UK
A company code needs to be created for both the companies and all the posting from various modules will be updated to the individual company code for reporting purposes. The company Code Currency will be USD for US and GBP for UK.

BUSINESS AREA: Organizational unit of external accounting that corresponds to a specific business segment or area of responsibility in a company. Movements in value entered in Financial Accounting are assigned to business areas. Financial statements can be created for business areas for internal purposes. Business areas are used in external segment reporting (over and above company codes), based on the significant areas of operation of a company (for example, product lines, branches)You define business areas if you wish to create a balance sheet and a profit and loss statement for internal areas, in addition to company codes.

Business Area application for GG-USA & GGI & PIR UK
W e have assumed GGI has got three locations and each of the locations is treated as business area. W e have assumed that the requirement is similar to the requirement of GGPL -India for business areas.

PLANT: A plant is a place where either material is produced or goods and services provided and Material Valuation takes place. Considering the requirement we are treating manufacturing location as plant.

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20

FINANCIAL ACCOUNTING BASIC SETTINGS

US & UK

20.1

CHART OF ACCOUNTS
Definition Chart of account is a list of all G/ L accounts used by one or several company codes. It is shared by Financial Accounting as well as Controlling. For each G/ L account, the chart of accounts contains the account number, account name, and the information that control how an account functions and how a G/L account is created in a particular company code.GGI, PIRUK and GG-USA will be using the Common Operating Chart of accounts.

20.2

ACCOUNT GROUP
Definition Account group is used to classify certain G/ L accounts of same features in the chart of accounts, for example assets and liabilities. On the other hand, proper number range can be assigned such that accounts of same nature will appear next to each other in the chart of accounts.

W e have assumed that, GGI is currently using only one account group for all the chart of accounts list. Considering the GGPL group company reporting requirement, even GGI and GG-USA & P UK IR should follow the same account group structure, as the Operating chart of accounts are common across the group and also should help in reporting financial statement.

20.3

FIELD STATUS GROUP
Definition SAP provides for definition of control parameters called Field Status Groups, which control maintenance of various fields in the transaction screens during input. In R 3 system, it is possible to / specify the field status via field status group, which is specified for each G/ L account. In order to minimize definition of field status group, R 3 allows referencing to a same set of field groups via / field status variant.

Field status group determines the status of each field, which user can enter the value during posting. The status can be either: Optional Mandatory
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Suppressed A particular field status group may be assigned to a particular G/L code

20.4

FISCAL YEAR AND ACCOUNTING POSTING PERIOD
Definition A fiscal year is generally a period of 12 months for which the company produces financial statements and takes inventory. It may or may not correspond to the calendar year. A fiscal year variant specifies the number of periods and special periods in a fiscal year and how the system is to determine the assigned posting periods. GGI and GG US & P UK Fiscal year will be in line with GGPL parent company fiscal year that is IR April to March.

20.5

POSTING PERIOD VARIANT
Definition Once a fiscal year is defined, it is possible to specify whether a period is allowed for posting or not. In order to standardize maintenance of accounting period especially across the group, SAP R 3 / system allows the specification of open or close status to be maintained via a posting period variant.

20.6

POSTING KEY
Definition A posting key is a two-character numerical key that controls the entry of line items. It is defined at client level and therefore applies to all company codes in SAP system. It is differentiated by the account types. It also controls the posting at the line item level.

Standard SAP posting key will be used.

20.7

DOCUMENT TYPE
Definition

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A document type is a key that is used to classify accounting documents and distinguish between business transactions to be posted. The document type is entered in the document header and applies to the whole document.

The SAP standard document types will be maintained. However, it is possible to add additional document types to further differentiate specific posting for analysis purposes.

20.8

DOCUMENT NUMBER RANGES
Definition A document number range is linked to the document type via a unique key. It identifies the document number for each document type posted in the SAP.

The document number ranges are specific for each document type. The naming convention on the document number ranges can be as follow: XX YYYYYYYY

Where: XX = refer to fiscal year YYYYYYYY = document running number

The number ranges will be set for each company code based on the above coding structure.

20.9

RETAINED EARNINGS ACCOUNT
Definition Before creating income statement accounts in the chart of accounts, it is required to specify the retained earnings account to which profits or losses are carried forward. There is a special program designed to carry forward these amounts to this account, which is part of procedures to open of a new fiscal year in the system. In SAP system, every income statement account is assigned to a retained earnings account via income statement account type. Hence it is actually possible to have more than one retained earnings account by creating more than one income statement account type. However, most companies have only one retained earnings account. As such, only one income statement account type is recommended for each Company Code.

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20.10 EXCHANGE RATE TABLE
Definition Depending on the relevancy, exchange rates must be defined in the system. The rate is required for the following: To translate foreign currency amounts when posting or clearing, or to check the manually entered rate To calculate gains or losses from exchange rate differences To valuate open items in foreign currency and foreign currency balance sheet accounts

Frequency of maintaining the exchange rate is according to company specific requirements or at different intervals according to exchange rate movements. As such, the Accounts Department will be responsible to maintain the table as and when required.

Recommendation Standard SAP exchange rate table will be used.

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21
21.1

GENERAL LEDGER OVERVIEW
OVERVIEW

US & UK

This section outlines the master data structures, business processes and related configuration parameters required for the General Ledger module for GGPL.

However, General L edger module is also heavily involved in other business process designs from other modules and how they post into the General L edger. These issues are covered in the relevant sections in Asset Accounting, Account R eceivable, Account Payable, Purchasing, Inventory Management and Logistic Invoice Verification. The central task of G/L accounting is to provide a comprehensive picture for external accounting and accounts. R ecording all business transactions 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. Key improvements to be realized from this implementation include: R eduction in data redundancy: The shared master data concept in SAP will inevitably reduce

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duplication of data stored and used in the business processing Greatly reduced administration: through the elimination of re-keying, reconciliation and manual collation of data. This gives the finance staff the time to analyze the figures rather than spending the majority of their time performing administration tasks Better control of data: through the validation of the data at point of entry. Seamless Integration: a complete integrated system will provide better control and reduce data entry and errors and also provides a complete audit trail for the organization The processes and its integration can be summarized in a diagram as follows:-

21.2

GL MASTER RECORD
Each account used for posting is defined in the general ledger and contains information that reflects or describes its function. This information is stored in the master record of an account. It controls how business transactions are entered and posted to the account as well as how posting data is processed.

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G/L account master data is divided into two areas:

Chart of accounts area: This area contains information that applies to the complete master record (G/ L account number, account name, P&L account, or balance sheet account). In addition, you use it to store data that controls the creation of a master record in the company code (account group and screen layout).

Company code-specific area: This area contains data that controls the entry of business transactions for the related account and account management in the respective company code (currency; open item management).

21.3

LINE ITEM DISPLAY
A line item display provides an overview of the open, cleared, and parked items from an account. You determine which information about the individual line items is to be displayed on the screen. However, you can also change the view dynamically after the list of items has been processed. Various sort options (by assignment, document number, or clearing data) allow you to interactively select, vary, total and the required documents on the screen. Search and summarization functions are available on the initial screen as well, so it is not necessary to display all items. L item display ine functions are available for:

An account in a company code You can switch from the line item list to the document display at any time.

A line item list can also be exported and processed further using a spreadsheet. You can file it as a PC file or you can store it directly in Microsoft Excel format and then process it in Excel.

21.4

ACCOUNT BALANCES
W henever documents are posted to an account, the system automatically updates the account balance. For GL accounts with line item display, it also indicates which items from a document are posted to the account. You can display the account balance and depending on the account attributes the line items for each account.

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21.5

GL ACCOUNT POSTING
Each transaction relevant to posting must be entered in the originating area of the company in compliance with all applicable posting rules. The precise, reliable, and complete recording and entering of all required data is only possible at the point of data origin. This data priority means that both the originating and responsible areas of all company entities are monitored. General ledger postings may be the result of:

Operational transactions (for example, issue of goods causes material issue posting) if the SAP Materials Management (MM) system is active and integrated Transactions originally assigned to the general ledger, if the General L edger (FI-GL system is ) active

At the same time, interrelationships with Controlling and its components can be taken into account. The extent and type of the integrated systems used determine how entries, account assignments, and updates are processed for business transactions. The important factor is that the posting documents, together with the original data and account assignments from the operative transactions, are simultaneously reflected in the general ledger through subsidiary ledgers.

21.6

RECONCILIATION OF SUBSIDIARY LEDGER
The chart of accounts, with its primary asset and balance sheet accounts provides the central posting link between the general ledger and the related subsidiary ledgers. The general principle of posting via reconciliation accounts is that each business transaction is simultaneously reflected in the subsidiary ledger as a line item and as a totals item in the general ledger via the assigned balance sheet account. As a result, updating is timely and automatic. Moreover, it ensures that:

General ledger and subsidiary ledgers are always reconciled Integrated report displays can be generated from the financial statement using the subsidiary ledgers down to single document level The effects of each posting procedure on assets and profit and loss are used immediately by the financial information system

21.7

OPEN ITEMS
Open item management can be activated for each G/ L account. It allows you to clear debit and credit postings by document (groups). Accounts with open item management can be updated when business transactions are processed

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22
22.1

GL MASTER DATA
GL MASTER RECORD
Definition

US & UK

General L edger (G/ L account master records contain the data that is always needed by the general ) ledger to determine the account s function. The G/ L account master records control the posting of accounting transactions to G/L accounts and the processing of the posting data.

General ledger accounting is divided into two portions in SAP. One is the creation of G/ L accounts at the Chart of Accounts (COA) level and the other is the creation of the G/ L account in the company code level.

Among the fields to be maintained during the creation of G/L account in the COA level are: Account group Whether the account is a balance sheet or profit & loss account Long text and short text of the description

Among the fields to be maintained during the creation of G/ L account in the company code level are: Account currency Reconciliation account type Open line item management Line item display Field status group Sort key

To control and standardize the G/ L accounts, it is highly recommended that the creation of G/ L accounts to be centralized. This recommendation entails the need to devise necessary approval and communication mechanism to govern the process.

It is important that all requirements are carefully considered before deciding to create a new G/ L account or suggesting an alternative G/L account. Among others, key issues to be looked into are: business and accounting needs integration to other modules e.g. automatic posting impact on current financial or management reporting similarity to other existing G/L account

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23

GL BUSINESS PROCESS

US & UK

Requirement is to create blue print document for GG-US and GGI & PIR UK. W here as per our assumption below mentioned process will apply for GG-US & GGI & PIR UK. GGI is already using the SAP 4.6 C version and as per the available document study, it is assumed that, they are already using SAP standard functionality.

23.1

POST AND PARK DOCUMENTS
Business Mapping to R/3 In a manual process, ledger books are maintained to store accounting entries. In contrast, SAP uses document principle whereby accounting entries are kept in document database and can be referred to via document number. On data integrity side, SAP allows only balanced transactions to be posted. Additionally, changes are allowed for permitted fields such as text information. It is possible to post G/L documents via: G/L document posting Recurring entry Account assignment model Reference document

In principle, this process is equivalent to manual bookkeeping entry. However SAP automates it with additional functionality especially for integration of G/ L with other modules. Minimum data normally required to post a G/L document are: Document header information e.g. posting date, posting period, document date etc. G/L account number Cost object assignment (for profit and loss elements) Amount

Since sometimes not all the required data are immediately available, SAP also provides an option to temporarily keep the posting as statistical entry. Upon completion of all required data, the entries can be posted. This functionality is termed as Parking Document.

It is recommended for GGPL to use the Park document functionality to ensure that the document posting process will be monitored and postings are done after checking have been done.

Description of Improvement Park and Post option is one of the best options, as this has the facility to store the document with document details for any number of documents and also got flexibility to take reports on the parked documents. Users need not waste efforts on re entering the document.
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Inter unit transaction are simplified as business area clearing will be used for each inter unit transfers R ecurring Documents, Account Assignment Model, R eference posting documents are very help full option in SAP, which will reduce time of processing and help in doing value addition.

Special configuration consideration N o special configuration required. N ormal SAP configuration with N umber ranges and Document Types are used.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

23.2

MONTH END PROCESSING
Business Mapping to R/3 Month-end closing comprises all activities involved in closing a posting period. Accounting period is a division of a company s fiscal year. The number of periods and definition of period are to be determined during configuration.

Each posting into the system must be associated with an accounting period. This is to ensure that each transaction can be reported in the corresponding period. In the same token, periods must be controlled to ensure validity of the reports. Description of Improvement Since SAP is an integrated system, Data flow happens in real time to finance from all the modules, and system is updated always. This helps in closing monthly, accounts on time with greater accuracy. This also helps in giving the required reports on time and there are many standard reports which will meet the requirement. Closing schedule preparations will become simpler and valuation procedures will get standardized and there will be uniformity in procedure. R eporting data can be drilled down up to the document level by just clicking the buttons. R eports can be directly down loaded to system or can be converted to several formats provided by SAP. Document control principle always ensures postings are matched and posted. Data is available in system GL account wise with the complete audit trial. It is possible to view Monthly Trial Balance, P&L and Balance Sheet reports for Plants also.

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23.3

YEAR END PROCESSING
Business Mapping to R/3 The SAP System offers a range of reports with which you can carry forward balances into the new fiscal year. During this process the profit and loss accounts are carried forward to retained earnings accounts. The balances on the balance sheet accounts are simply carried forward into the new fiscal year. You do not have to create special opening financial statements. Any postings you make in the old fiscal year automatically adjust the relevant carry-forward balance. You do not have to close the old fiscal year and make the closing postings before opening the new fiscal year. Description of Improvement Since SAP is an integrated system, Data flow happens in real time to finance from all the modules, and system is updated always. This helps in closing monthly, quarterly and Yearly accounts on time with greater accuracy. This also helps in giving the required reports on time and there are many standard reports which will meet the requirement. Closing schedule preparations will become simpler and valuation procedures will get standardized and there will be uniformity in procedure. R eporting data can be drilled down up to the document level by just clicking the buttons. R eports can be directly down loaded to system or can be converted to several formats provided by SAP. Balances are automatically carried to next year by just selecting the balance carry forward program. R etained earnings are calculated automatically and transferred to next year as Balance sheet item. Even after the balance carry forward program, entries can be posted to previous year, which will automatically updates the opening balance. Closing and opening period will be simpler and also special periods are provided to post audit related entries that are part of adjustment entries pertaining to previous year. It is possible to obtain yearly Trial Balance, P&L and Balance Sheet reports for Plants also.

Special configuration consideration No special configuration required. Normal SAP configuration with Number posting period variant & Retained earnings account will be used. Description of Functional Deficit No deficits Approaches to covering Functional Deficit Not Applicable

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24
24.1

ACCOUNTS PAYABLE
OVERVIEW

US & UK

This section outlines the master data structures, business processes and related configuration parameters required for the Accounts Payable module for GGPL. SAP R 3 Accounts Payable Accounting maintains and manages accounting data for all vendors. / Moreover, it is an integral component of the purchasing system. Orders, deliveries and invoices are maintained by vendor and aid in vendor assessment. SAP R 3 automatically makes postings based / on operational transactions. The figure below illustrates the relationships between the accounts payables and the other parts of the FI module and other SAP R/3 modules:

Accounts Payable Accounting is integrated with the general ledger in real time. All postings to vendor accounts will also be updated to the general ledger at the same time. Depending on the transaction, the system updates various general ledger accounts (such as payables and down payments). Flexible account analysis features and due date forecasts provide you with an overview of individual vendor accounts status
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Area Accounts Payable

To be Process Vendor Master Maintenance Down Payment Processing Non PO Invoice Processing Credit/Debit memo Processing Automatic Payment Processing Manual Payment Processing Open Item Clearing GR/IR Clearing

Related R/3 Functions Vendor Master Record Down payment AP Invoice Processing AP Credit/Debit Memo Processing Payment Processing Payment Processing Account Clearing Account Clearing

24.2

AP MASTER RECORD
The vendor master record contains all the information a company needs for its business relationships with vendors. This data controls the posting transaction as well as the processing of posting data. Both the accounting and purchasing departments use the master record for this purpose. Vendor master records are centrally stored in the system. This ensures that data is always consistent, up-todate and without duplication

24.3

INVOICES AND CREDIT MEMOS
A special feature is available for SAP R 3 systems that have integrated purchasing and financial / accounting modules. W ith the Material Management invoice verification feature, you can enter incoming invoices. This feature references order and delivery data. Credit memos are automatically set off through the payment program as soon as they are posted to the system. The payment program automatically offsets invoice-related credit memos against the respective invoice.

24.4

PAYMENTS
Automatic payment transaction management clearly represents the greatest advantage to Sap s R 3 / Accounts P ayable Accounting system. The system also supports manual or ad-hoc payment processing. The payment program initially creates a payment proposal list. The list is based on data in the documents, the vendor master record, special tables, and your selection criteria. The payment

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proposal can be edited. Payments can also be triggered directly. W ith large payment runs, several people in accounting can work on the payment proposal simultaneously. The payment program creates payments using the corresponding posting documents based on the (revised) proposal. Payables are cleared and linked to the payment. Forms are printed and the system logs the payment run so that you can review and monitor transactions at any time.

24.5

SPECIAL TRANSACTIONS
The posting of accounting transactions (invoices, credit memos, payments to the vendor account) also results in simultaneous changes to the associated general ledger account for accounts payable. This general ledger account is labeled as a reconciliation account and entered in the vendor's master record. For a number of particular accounting transactions, the system updates an alternative general ledger account. This is the case for: Down payments made

These special transactions are noted in the R 3 System using a special general ledger indicator. A / number of special general ledger transactions can be entered into the system.

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25
25.1

VENDOR MASTER DATA

US & UK

AP-MASTER RECORD NON PURCHASING
Definition: Business transactions are posted to accounts and managed using those accounts. A master record must be created for each account that is required. In SAP R 3, the master record controls how data / is entered and processed for the vendor concerned. Business transactions are posted to accounts and managed using those accounts. You must create a master record for each account that you require. The master record controls how business transactions are recorded and processed by the system. Among the specifications you make in master records are used: As default values when you post items to the account. For example, the terms of payment you specify in the master record are defaulted for document entry. For processing business transactions For instance, bank details and the payment methods (check or bank transfer, for example) are required for automatic payments. For working with master records. You can prevent certain users from accessing an account by setting up authorization groups. In addition, line item display and open item management are defined automatically for each vendor account.

25.2

AP-MASTER RECORD PURCHASING
Definition: Business transactions are posted to accounts and managed using those accounts. A master record must be created for each account that is required. In SAP R 3, the master record controls how data / is entered and processed for the vendor concerned. Business transactions are posted to accounts and managed using those accounts. You must create a master record for each account that you require. The master record controls how business transactions are recorded and processed by the system. Specifications you make in master records are used: As default values when you post items to the account. For example, the terms of payment you specify in the master record are defaulted for document entry. For processing business transactions For instance, bank details and the payment methods (check or bank transfer, for example) are required for automatic payments. For working with master records. You can prevent certain users from accessing an account by setting up authorization groups. In addition, line item display and open item management are defined automatically for each vendor account.

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This section explains the concept of vendor master data and describes how to create, display, change, block, and delete vendor master data related to Purchasing.

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26

AP BUSINESS PROCESSES US & UK
Requirement is to create blue print document for GG-US and GGI. W here as per our assumption below mentioned process will apply for GG-US & GGI. GGI is already using the SAP 4.6 C version and as per the available document study, it is assumed that, they are already using SAP standard functionality.

26.1

VENDOR INVOICE PROCESSING
Business Mapping to R/3

NON PURCHASING

Upon receiving invoice from the non-trade vendor (e.g. GSCB for the electricity charges), you can park the bill before you post them. This is useful for example, if the data you want to enter is incomplete, or the parking and posting functions are carried out by different accounting clerks (dual control principle).

Description of Improvement Sub ledger and GL integration will definitely help in solving reconciliation issues of matching vendor balances to creditors in GL SAP system post data in Sub ledger and updates the transaction in GL . real time, there by ensuring that data between sub ledger and GL are always reconciled. Statutory deduction for vendors is maintained in vendor master and there by ensuring taxes are recovered for services and remitted to government on time. Vendor standard reports are very useful and are available for ageing, open items, balances with many selection options and can be down loaded to excel directly.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

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26.2

VENDOR INVOICE PROCESSING
Business Mapping to R/3

PURCHASING / SERVICES

Upon delivery of goods or completion of services, vendors shall send invoices which normally describe name of the goods or services, the quantity sent and the amount due. In the case of goods received, there is a facility in SAP R/3 to perform 3 ways matching of Purchase Order, Goods Receipt and Invoice. You can park the invoice before you post them. This is useful for example; if the data you want to enter is incomplete, or the parking and posting functions are carried out by different accounting clerks (dual control principle).Service related payments and Material procurement related payments are routed through Materials Management Module. Finance will be doing the IV (Invoice verification activity only).

Description of Improvement Sub ledger and GL integration will definitely help in solving reconciliation issues of matching vendor balances to creditors in GL. SAP system post data in Sub ledger and updates the transaction in GL real time, there by ensuring that data between sub ledger and GL are always reconciled. Statutory deduction for vendors is maintained in vendor master and there by ensuring tax is recovered for services while booking the bill or making the down payment. Same is remitted to government on time. Vendor standard reports are very useful and are available for ageing, open items, balances with many selection options and can be down loaded to excel directly. Valuation of R aw material takes place on movement of material to production automatically and accounting entries are posted automatically at various stages of completion. However this process has to be discussed in details to get further benefits.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

26.3

VENDOR CREDIT MEMO PROCESSING

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Business Mapping to R3 In normal business transactions, there are instances whereby vendors will send credit memos in order to reduce invoices. Such cases might arise due to incorrect invoiced amount or rejection of goods. A credit memo is then required to substantiate the adjustment. Being an adjustment entry, credit memo shall affect Financials module only unless the adjustment is related to MM such as good return etc. The processes are similar to invoice processing. Only the accounting treatment will be different

Description of Improvement NA Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

26.4

VENDOR DOWN PAYMENT PROCESSING
Business Mapping to R3 N ormal payment to vendor is carried out against claim for goods delivered or services rendered i.e. payables. However sometimes vendors might request payment before delivery of goods or services. This type of payment is known as down payment and is shown on the asset side in the balance sheet. In the normal business flow, down payment should be cleared with the closing invoice upon delivery of goods or services. SAP has Special transaction to post supplier advances. Description of Improvement All Down payments can be tracked and adjusted while making the bill payment. System keeps track of the down payments and it is treated specially in GL so that it is easy to identify down payment details.

Special configuration consideration
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No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

26.5

MANUAL OUTGOING PAYMENT PROCESSING
Business Mapping to R3 SAP R 3 uses document principle to store transaction entries. In the case of vendor, transaction of / invoices will be stored as open items. Open items are in fact outstanding transactions. The open items of an account can only be cleared when an identical offsetting amount to the account is posted. The balance resulting from the items allocated to each other must therefore be zero. Correspondingly, the offsetting entry here represents outgoing payment to vendor (bank). In SAP, manual outgoing payment is generally performed for a small number of payments on ad-hoc basis. Payment made to vendors may not always be straight forward; therefore the system is configured to handle various scenarios as follows:

Partial Payment, where the original open item and the partial payment remain as open documents on the account. W hen user posts the remaining amount for the invoice, both the partial payment and the invoice are cleared. R esidual item - only the new residual item is left on the account, clearing the original document and the payment. A new document number is created referencing the original document. Contra of vendor and customer balance is handled automatically by the system. In order to activate contra balance, vendor and customer have to be linked in the vendor and customer master record. Clearing of Open Item while making payment and tracking of cleared item separately

Description of Improvement System can make partial payment, residual payment and also can adjust against the customer while making vendor payment. Special configuration consideration
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No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

26.6

AUTOMATIC OUTGOING PAYMENT PROCESSING
Business Mapping to R3 SAP R 3 uses document principle to store transaction entries. In the case of vendor, transaction of / invoices will be stored as open items. Open items are in fact outstanding transactions. The open items of an account can only be cleared when an identical offsetting amount to the account is posted. The balance resulting from the items allocated to each other must therefore be zero. Correspondingly, the offsetting entry here represents outgoing payment to vendor (bank). W hen the volume of payments is large and the frequency depends more on the due dates, it is recommended then to utilize SAP R 3 s automatic outgoing payment function. In this manner, / offsetting entries i.e. outgoing payments (bank) are automatically posted. Subsequently, open items are automatically cleared.

Description of Improvement System can make partial payment, residual payment and also can adjust against the customer while making vendor payment. You can select multiple vendors together to make payment and cheque can be printed for multiple vendors using automatic payment program. This is one of the features which will reduce when multiple vendor payment has to be made.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable
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26.7

PERIOD END PROCESSING
Business Mapping to R3 Once all parked documents are completely posted and payments for the month are completed, the posting period for vendors can be closed. This is to prevent the occurrence of back posting invoices to the previous period after reports are generated. Before posting period can be closed, other month end processing activities such as executing the recurring program need to be performed if applicable. Opening the new period and closing the previous period are two parts of the closing procedure.

Description of Improvement Since sub ledger and GL are matched real time, period end closing will be faster and accurate. Obtaining of reports like Vendor Ageing, Vendor Balances and Open items is possible at any point of time for a transaction or list of transactions. Report can be viewed for respective currencies in which transactions are updated.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

26.8

YEAR END PROCESSING

Business Mapping to R3 At the end of the fiscal year, carry forward program is required to be executed to carry forward the vendor and vendor account balances to the new fiscal year. After running the carry forward

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programs, when a transaction is posted to the previous year, the account balances in the current year are immediately updated automatically. Balance carry forward program is done after entries are completed Description of Improvement Since sub ledger and GL are matched real time, year end closing will be faster and accurate. Automatic carry forward of balances to next year and also update the next year balances automatically if any entries are posted to previous year.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

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27.1

ACCOUNTS RECEIVABLE
OVERVIEW

US & UK

This section outlines the master data structures, business processes required for the Accounts Receivable module for GGPL. Accounts receivable accounting in SAP R 3 maintains and manages a customer accounting data. It / is also an integral component of sales management. Sales and accounting have the same information requirements. If the customer order results in delivery and subsequent invoicing, then these transactions are posted automatically in the accounting system. The various stages of this process are updated in real time the system. The figure below illustrates the relationships between the accounts receivable and the other parts of the FI module and SD module.

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Area Accounts Receivable

To be Process Customer Maintenance Down Processing Master Payment

Related R/3 Functions Customer Master Data Down Payment Processing AR Invoice Processing AR Credit/Debit Memo Processing Account Clearing

N on Sales order Invoice Processing Credit/ Debit Processing memo

Open Item Clearing

27.2

AR MASTER RECORD
A customer master record contains all the information that a company needs for its business relations with a customer. This data controls the posting procedure and subsequent processing, such as payments and dunning. Customer master records also provide information on customers for the accounting and sales departments. Customer data records are centrally stored in the system. This means that the data record is always consistent, up-to-date, and free of redundancy

27.3

INVOICES AND CREDIT MEMOS
W ith the integrated use of SAP R 3 s sales and financial accounting systems, the billing system / prepares and posts outgoing invoices. There is an option to account for credit momos.

27.4

SPECIAL TRANSACTIONS
There are certain business transactions that should be posted to the customer but not updated in the line item of receivables from goods and services in the general ledger. An example of this is down payments. These are identified separately in the balance sheet. Using a special G/ L indicator, the system is told that a posting should not be actualized in the reconciliation account from the customer master record. Instead, it is done in a G/L account specially set up for that purpose

27.5

DOCUMENT AND ACCOUNT DISPLAY
W hen business transactions are posted to an account, the system automatically updates the account balance. It also notes which items of a document have been posted to the account. Thus, the account balance and line items for any account can be viewed. The account balance offers an

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overview of the transaction figures per period, separated into debits and credits. Similarly, sales per period and special G/ L transactions such as down payments for the fiscal year can be discerned at a glance. From here, you can go directly to the display of items. A line item display provides an overview of an account s open and cleared items. You can specify which information on individual items appears on the screen. For example, one user could be interested in the terms of payment, while another could be more interested in the dunning data for the line items.

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28
28.1

AR MASTER RECORD

US & UK

CUSTOMER MASTER RECORD
Definition: All non trade customers are maintained by Finance Department without any involvement with Sales Department. Therefore the customer master will not have information maintain in the sales area view

The structures of master records for purely finance use are:

General Data This is data that is equally relevant to every company code and every sales organization within a company. General data includes the address, telecommunications data (telephone, telex, and fax), general information on the customer (plant number, industry, group allocation) and bank details.

Data for Company Codes This is data that reflects the company-specific agreements with the customer. Company code data includes the terms of payment. In addition, the reconciliation account for G/ L accounting is indicated at the company level. Transaction figures for this general ledger account are automatically updated to the customer account upon posting.

N ote that if the customer is also a vendor, such as inter-company customer, the vendor number can be recorded in the general part of the customer master as a means of reference.

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29

AR BUSINESS PROCESS

US & UK

Requirement is to create blue print document for GG-US and GGI & PIR UK. W here as per our assumption below mentioned process will apply for GG-US & GGI & PIR UK. GGI is already using the SAP 4.6 C version and as per the available document study, it is assumed that, they are already using SAP standard functionality.

29.1

INVOICE PROCESSING
Business Mapping to R/3 This scenario is when sales order is not necessary to be created for the purpose of invoicing a customer. Hence, all these invoices will be created as AR invoice. Examples of AR invoices are: Sales of assets, which have been fully depreciated. Non-trade customer

All AR invoices created directly can be differentiated through the Document Type field. For example, AR invoices are created with document type DR (Customer invoice), and the accounting entries are: Dr. Customer Cr. Revenue SAP R/3 provides automatic error checking by barring user from posting a transaction in the event of that the debits and credits are not equal. In addition, prior to actual posting, users are allowed to simulate posting entries and check for possible posting errors. Users can also choose to park the documents for verification before posting. Invoice process for one-time customer will use one common master record and relevant customer information such as name and addresses will be entered directly in the invoice. The accounting entries generated are: Dr. One-time customer Cr. Revenue

Description of Improvement

Special configuration consideration No Special configuration required.

Description of Functional Deficit
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No deficits

29.2

CREDIT MEMO PROCESSING
Business Mapping to R/3 Credit memo will be created when a customer is over-billed. It adjusts previous entries that were overstated. Therefore, posting a credit memo always leads to a credit posting on the customer account. A credit memo will only be prepared if the corresponding invoice was created and sent out to the customer. A credit memo will not be created if the invoice has not been sent to the customer, as user is able to cancel the original invoice, reversing the relevant G/ L entries and create a new invoice.

For credit memo with reference to AR invoice, the credit memo must be created with reference to the original invoice in order to correctly reflect customer outstanding balance. This is done by updating "Invoice Reference" field during the creation of the credit memo.

Description of Improvement NA Special configuration consideration No Special configuration required.

Description of Functional Deficit No deficits

29.3

DOWNPAYMENT PROCESSING
Business Mapping to R/3 All down payment received are to be reflected as a liability. The down payment is to be subsequently cleared against the actual invoice when it is issued to the customers. All down payments will reduce invoice amount accordingly. Description of Improvement NA

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Special configuration consideration No Special configuration required.

Description of Functional Deficit No deficits

29.4

INCOMING PAYMENT PROCESSING

Business Mapping to R/3

The system is able to handle customer payments in different modes such as cheque, cash payment, etc. The incoming payment process can be done using a one step or two step methods:

Posting without Clearing - The receipts will be posted in using the normal document entry functions i.e. there will be no selection of open items available. At frequent intervals, or adhoc basis, the customer account will be cleared whereby the payments document will be matched against the invoice document. A clearing document will be created with zero.

This method is only useful when at the point of entry, the user is uncertain for which open item the customer is paying for. Otherwise, it is advisable that user adopt the second option.

Posting with Clearing - Open items are cleared at the point of posting incoming payments. This results in the selected line items being cleared . All cleared items will not be available to knock of other open items. In other word, the incoming payment document is the clearing document of the customer invoice.

Payment received from customer may not always be straight forward; therefore the system is configured to handle various scenarios as follow:

Partial Payment, - where the original open item and the partial payment remain as open documents on the account. W hen user posts the remaining amount for the invoice, both the partial payment and the invoice are cleared. R esidual item - only the new residual item is left on the account, clearing the original document and the payment. A new document number is created referencing the original document.

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Contra of customer and vendor balance is handled automatically by the system. In order to activate contra balance, customer and vendor have to be linked in the customer and vendor master record.

Description of Improvement

Special configuration consideration No Special configuration required.

Description of Functional Deficit No deficits

29.5

PERIOD END PROCESSING
Business Mapping to R/3 Each SAP R 3 module has its own period-end and year-end closing procedures. Opening the new / period and closing the previous period are two parts of the closing procedure.

Open and closing FI period is usually given to the G/L users who will ensure that the previous period for each account types (A assets, D customers, K vendors, S G/ L accounts) are closed first before generating the financial statements for the previous period. For transactions entered in Accounts R eceivables, the system will check that the posting period entered for a customer transaction is opened for posting as specified in the From period and To period fields for account type D (such as debit a customer) and account type S (such as credit a revenue account). Otherwise, the system will prompt an error message that the period is not opened for posting.

Description of Improvement Since sub ledger and GL are matched real time, month end closing will be faster and accurate. R eports can viewed for Customer Ageing, Customer Balances and Open Items at any point of time for posted transactions.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits
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Approaches to covering Functional Deficit Not Applicable

29.6

YEAR END PROCESSING
Business Mapping to R/3 At the end of the fiscal year, carry forward program is required to be executed to carry forward the customer and vendor account balances to the new fiscal year. For customer account, the program copies the year end balances to the beginning of the following year. W hen running any carry forward programs, it is necessary to make sure that nobody is posting entries to accounts. After running the carry forward programs, when a transaction is posted to the previous year, the account balances in the current year are immediately updated automatically.

Description of Improvement Since sub ledger and GL are matched real time, year end closing will be faster and accurate. Automatic carry forward of balances to next year and also update the next year balances automatically if any entries are posted to previous year. R eports can viewed for Customer Ageing, Customer Balances and Open Items at any point of time for posted transactions.

Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

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30

BANK ACCOUNTING

US & UK

It includes the management of bank master data; cash balance management, and the creation and processing of incoming and outgoing payments. Bank Accounting is part of FI but master data related to bank are taken from Cash Management. The Cash Management deals with Cash Position, L iquidity Forecast and Bank R econciliation aspect. Currently we are considering Bank Master Data and Bank Reconciliation for the scope,

Area Bank Accounting

To be Process Bank Master Data Bank reconciliation

Related R/3 Functions Bank Master Data Bank Reconciliation

30.1

BANK MASTER DATA
In the SAP system, bank master data is stored centrally in the bank directory. In addition to defining bank master data, you also define your own bank details (house banks) and those for your business partner (entered in the business partner's master record). The following are the components of bank master data.

Bank Directories

The bank directory contains the bank master data. This includes the bank address data and control data, such as the SW IFT Code and Bank Groups. Details for post office banks should be identified specially. The bank directory must contain the master data for all the banks that you require for payment transactions with your business partners Bank Details

To be able to run the payment program, the system requires details on your own bank, and these details must be entered in the customer and vendor master records. In the company code-specific data of a vendor master record, you could for example enter the house bank from which payment is to be made to this vendor. If you do not enter a bank in the master record, you must specify the rules by which the payment program determines the bank. The data that you enter is the same in both cases - an ID code for your bank.

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House Bank

A list of house bank represents the bank in which the company uses for its outgoing and incoming payments. SAP will then refer to this list maintain in table BNKA for its automatic payment program as well as to forecast bank balances with SAP treasury function.

These lists are maintained at the company code level and each house banks are given a user defined bank ID that can be alphanumeric. For this implementation, bank list will be maintained in all company codes, List of bank of various company codes has to be obtained and customized.

The house banks will be created for every main and branch bank. The naming conventions for the bank ID are base on these logics:

Use the first letter of the bank name and the first letter for bank as acronyms which described the house bank. The graph below illustrates acronyms for Citibank. The last two digit of the house bank will use 00 to denote first bank listed in the system. Therefore for Citibank, it can have up to 100 branches entered in the system using the CB convention. It is recommended to use 00 to identify the main bank of the company.

Example: CB000 CB001 CB002

Citibank Main Branch Citibank Bangalore Citibank Mumbai

Bank accounts are maintained for every house banks using a unique bank ID. This bank ID is used to enter specification for bank payment and general ledger master records.

Bank account such as current account and saving account are created for every house banks. It is proposed to follow the following naming conventions of the account ID:

The letter CA is use for Current Account. The letter SA is use for Saving Account The last 3-digits will be running number

Bank Account ID Each bank ID is unique within a company code. For each bank, enter the bank country, and either the bank number or an appropriate country-specific key. The system uses this information to identify the correct bank master data.

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GL Account A G/ L master record is created for each bank account. One bank account will have a corresponding two bank clearing accounts, i.e. outgoing and incoming payment.

The benefit of having two bank clearing accounts is that it helps to simplify processing of electronic bank statements

House Bank and Bank Account Creation There are two key master data types in Cash Management, namely the house banks and the bank accounts. The critical information required to set up these master data include bank name, bank key, bank branch and bank address.

The use of the bank account G/L structure can be seen through the following example.

W hen the company executes the payment program and makes payments for open payables, the following postings take place:

Dr Cr

Vendor AP account Outgoing clearing account (G/L Account XXXXXX02)

This amount will remain in the outgoing clearing account until it clears the bank. Once the outgoing payments clear the bank, the following postings take place:

Dr Cr

Outgoing clearing account (G/L Account XXXXXX02) Main bank G/L account (G/L Account XXXXXX00

30.2

BANK DATA ACCOUNTING PROCESS
Requirement and Expectation There is need for accounting of all bank related transactions like, vendor payment, customer receipt and any other payments and receipts through bank. On regular basis bank account is reconciled with bank statement and reconciliation differences are shown to match both the balances

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Business Mapping to R3 SAP bank accounting application helps in posting transaction for funds transfer between the banks, and for doing bank reconciliation And also Bank Account will impact based on the Receipt from customer or payment to vendor.

Cheque Management Process This function is used to enter checks you receive. After the input is complete, you can access the additional functions to further process the entered checks (see Entering Incoming Checks). Normal bank payment transactions are happening through Accounts Payable Model.

Manual Bank Reconciliation There are basically two steps in this method:

First, in the transfer-posting screen under G/ L the users retrieve the open items under incoming bank , clearing account and select them if they appear on the deposit column of the statement. The open items can be sorted by date to ease matching. Upon completion, post them against the main bank account. The system will generate the accounting entries like the followings: Dr Main bank Cr bank incoming clearing

Second, in the transfer-posting screen under G/ L the users retrieve the open items under outgoing , bank clearing account and select them if they appear on the withdrawal column of the statement. The open items can be sorted by date to ease matching. Upon completion, post them against the main bank account. The system will generate the accounting entries like the following:

Dr bank outgoing clearing Cr main bank

Description of Improvement R econciliation can be done as often as you get the bank statement and will ensure that data is captured on time. This will also automatically match the bank statement and bank account It is very obvious that the balance in the bank clearing account is the not reconciled.

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Special configuration consideration No special configuration required.

Description of Functional Deficit No deficits

Approaches to covering Functional Deficit Not Applicable

30.3

PETTY CASH MANAGEMENT
Requirement and Expectation There is a need to keep cash and make petty cash transaction at various locations to meet petty cash activity.

Cash Journal Business Mapping to R3 Cash J ournal is a feature in SAP, which permits separate tracking of cash transactions. Each cash journal should be assigned to one G/ L account, which represents the cash journal in the general ledger. It is however possible, to connect multiple cash journals with one G/ L account. Cash transactions are saved separately in the cash journal and are transferred periodically (for example, daily) to the general ledger. The Cash Journal also permits generation of daily balance statements for tallying physical cash with the books of account

A separate cash journal and GL account would be maintained for each location handling cash. Separate cash journals and corresponding GL accounts would also be maintained

Description of Improvement Cash J ournal is very effective in SAP, which can track petty cash transaction for each of the locations separately and also will be tracking balances on daily basis.

Special configuration consideration No special configuration required.

Description of Functional Deficit

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No deficits

Approaches to covering Functional Deficit Not Applicable

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31
31.1

REPORTS US & UK
FINANCIAL ACCOUNTING REPORTS
Frequency P&L SAP Yes Yes Remarks Balance Sheet and P&L report Compare current year actual and previous year actual for the quarter Compare current year actual and previous year actual for the Half Year Compare current year actual and previous year actual for the Half Year GL Balances report GL-Line Item report Business Area wise Balances report Customer Balances in Local Currency Customer Due days open item report Customer Line Item report Customer Open item Vendor Open Item due date analysis Vendor Line item list Vendor Balances in Local Currency Vendor payment history with Open Item shown separately

Some of the Standard Report attached, however detailed reporting requirement needs to be discussed. Sl No. Reports 1 2 B/ S and Statement-report

Actual/Actual Comparison -Quarterly Actual/Actual Comparison Yearly Half

3

Yes

4 5 6 7 8 9 10 11 12 13 14 15

Actual/Actual Comparison Yearly GL Account Balances GL Line Item Balance GL Business Balance Area

Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

Customer Balance in Local currency Customer Due Date Analysis for open item Customer Line item Customer Open Item Due Date Analysis for Open Item L ist of Items Vendor L ine in

Vendor Balance Local Currency

Vendor Payment history with OI sorted out

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