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Process Confirmation

Asset Accounting
Project XYZ Initiative
April 24
th
2008
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Team Presentation Contents
Key Count Summary
Process Summary and Objectives
Leading Practices and Key Features
Process Optimization Opportunities
As-Is and To-Be Significant Process Changes
Identified Gaps
Policy and Board Rule Impacts
Change Impacts
Controls Framework
As-Is and To-Be Major System Changes
To-Be Application Architecture Overview
Potential Key Development Objects
Support Required from the Steering Committee
Implementation Challenges
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Key Count Summary
Item Count
Processes: 1
Tasks: 12
Work steps: 149
Roles: 13
Potential Key Development Objects: 6
SMAs: 10
Review Sessions: 11
Validation Sessions: 1
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Process Summary and Objectives
Summary
SAP Fixed Assets is a comprehensive integrated system that enables parallel asset
valuation for CAFR and GASB 34 by creating a full audit trail from purchase to payment
through the asset sub-ledger. The system improves efficiency by eliminating redundant
accounting entries through automation of journal entries to dual sets of books when the
goods receipt transaction is performed on the asset. The SAP Fixed Assets Best
Practice process is an integrated process with other SAP functions. This process and
system integration help reduce time spent on manual reconciliation, enable a faster
closing and reduce manual effort through automatic bookings through integration to SAP
modules. The benefits extend to increased savings through reduction in potential for
errors and data redundancy. The system is able to pinpoint potential problems with data-
driven analysis through master data and transaction audit trail, exception reports with
drill-down capability

The asset life cycle design for Client X is grouped into following process categories:
asset acquisition/addition, maintenance, disposition, periodic processing, reporting and
physical inventory





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Process Summary and Objectives
Process Summary
(termed as tasks in the Industry Print Process Modeler) : Task:

Asset Acquisition or Addition DC-040-010 to 016

Asset Maintenance DC-040-020

Asset Disposition DC-040-030

Periodic Processing DC-040-040

Asset Reporting DC-040-050

Physical Inventory DC-040-060


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Process Summary and Objectives

Summary - Asset Acquisition or Addition

The methods of acquiring or adding assets are:

Acquisitions through SRM

Acquisition through the General Ledger module for assets such as land

Acquisition through reclassification for an item posted in error to an expense account

Addition through capitalization of construction assets from the WBBI system

Addition through capital leasing

Additions through the SAP Fixed Assets module

Additions through reclassification of items purchased as inventory






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Process Summary and Objectives
Objectives - Asset Acquisition or Addition

1. Central set of records for fixed assets from purchase to payment, capitalization to
disposition

2. Automate asset category determination in the Purchase Requisition through Item
Category to NIGP Code mapping table

3. Automate journal entries to Modified Accrual and Full Accrual sets of books through the
asset sub-ledger account determination (Full automation GASB 34 requirement)

4. Integrate asset master data and transaction postings for all financial master data

5. To identify errors through edit controls at the front end of the fixed asset process

6. To capture capital lease information

7. To create system generated fixed assets numbering

8. To track insurance information related to an asset






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Process Summary and Objectives
Summary - Asset Acquisition or Addition

Asset Class Numbering Convention
Example:
1 3 4 0 0 1 0 Furniture, Fixture and Equipment
1 3 4 0 0 0 General Ledger Control Account for FF&E
7 digit number with first 4 digits from B/S account and last 3 digits for asset class sub-
categories

Asset Numbering convention
Example:
4 0 032 986 FF&E Asset Master Record Number
1 3 4 0 0 0 General Ledger Control Account for FF&E
8 digit system generated number with first digit from 3
rd
number on the B/S account





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Process Summary and Objectives
Summary

(termed as tasks in the Industry Print Process Modeler) : Task:

Asset Acquisition or Addition DC-040-010 to 016

Asset Maintenance DC-040-020

Asset Disposition DC-040-030

Periodic Processing DC-040-040

Asset Reporting DC-040-050

Physical Inventory DC-040-060


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Process Summary and Objectives
Process Summary - Asset Maintenance
Maintenance is a centralized process performed by Property Accounting. The following
processes are identified:

Non-Budget Relevant
1. Transfer of depreciation
2. Split asset into multiple asset master data for tagging purposes
3. Value adjustments (write-ups of cost/depreciation)
4. Location change
5. Update of personnel assignment to vehicle and other non-financial master data
6. Reversal of postings that originated from fixed assets module

Budget Relevant
1. Correction in Asset Class/Cost Center/Fund/Function/Grant
2. Reclassification from an asset to an expense item (vice versa)









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Process Summary and Objectives
Process Summary - Asset Maintenance
Objectives
1. Add assets manually (e.g. donated assets received, reclassification)

2. Post asset values to accounts and cost centers

3. Add additional asset categories

4. Group assets for reporting purposes through a common code (example: a code that
links all the contents in a building for insurance reporting)

5. Integrate or interface with Accounts Payable, General Ledger, Purchasing, Capital
Budgeting using asset

6. Perform mass transfer to reflect organizational changes

7. Transfer or adjust an asset or assets and automatically interface the appropriate entries
to the General Ledger






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Process Summary and Objectives
Process Summary - Asset Maintenance
Objectives
8. Maintain a history of the transfers with From and To locations and dates (with an
appropriate audit trail, effective dating, etc.)

9. Make changes to an asset record (with an appropriate audit trail, date, etc.)

10. Revalue assets for impairment and retention of original values

11. Retain the history of where the transferred asset originate from (i.e., buses, computers)

12. Maintain detailed property records for all fixed assets, including identification codes,
commodity classification, acquisition data, supplier information, make, model, serial
number, insurance information

13. Ability to report on asset balances by account, detailed by additions, retirements,
transfers from CIP, re-classes, transfers, and other adjustments

14. Ability to enter the life of an asset (if different from default)








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Process Summary and Objectives
Summary

(termed as tasks in the Industry Print Process Modeler) : Task:

Asset Acquisition or Addition DC-040-010 to 016

Asset Maintenance DC-040-020

Asset Disposition DC-040-030

Periodic Processing DC-040-040

Asset Reporting DC-040-050

Physical Inventory DC-040-060


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Process Summary and Objectives
Process Summary Asset Disposition
Asset disposition is a centralized process performed by Property Accounting. The
following processes are identified:

1. Sale or auction with Revenue

2. Sale or auction but asset is scrapped

3. Full or partial demolition of structure (e.g. portables, buildings and cafeteria
equipment)

4. Capital lease retirement

5. Reclassification from an asset to an expense item

The disposal of property with a value of $1,000 or more, or any property included in a
bid, auction, or outgoing donation, shall be approved by and recorded in the minutes of
the Board





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Process Summary and Objectives
Summary

(termed as tasks in the Industry Print Process Modeler) : Task:

Asset Acquisition or Addition DC-040-010 to 016

Asset Maintenance DC-040-020

Asset Disposition DC-040-030

Periodic Processing DC-040-040

Asset Reporting DC-040-050

Physical Inventory DC-040-060


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Process Summary and Objectives
Process Summary Periodic Processing
Periodic processing covers month-end and year-end processes

For assets being build during the year or at year-end, CIP(Construction In Process)
and substantially completed construction assets are settled into SAP Fixed Assets
module through manual journal entries
Depreciation is run on a monthly basis as the last activity on the closing schedule
for purchased assets and constructed assets. The depreciation run updates both
depreciation areas
The depreciation run will post to both sets of books





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Process Summary and Objectives
Process Summary Periodic Processing
For year-end processes, a manual journal entry is performed to debit the Construction-In-
Process manual general ledger account in preparation for CAFR and AFR reporting

Year-end closing is performed and balances carried forward

Objectives
1. Temporarily take assets out of service and stop depreciating them

2. Calculate and report monthly depreciation

3. Charge depreciation expenses to specific posting cost centers within the
organization

4. Automatically calculate GAAP depreciation and post to the GL

5. Close the fiscal period and year

6. Calculate depreciation adjustments for assets put in service in previous periods







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Process Summary and Objectives
Summary

(termed as tasks in the Industry Print Process Modeler) : Task:

Asset Acquisition or Addition DC-040-010 to 016

Asset Maintenance DC-040-020

Asset Disposition DC-040-030

Periodic Processing DC-040-040

Asset Reporting DC-040-050

Physical Inventory DC-040-060


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Process Summary and Objectives
Summary - Asset Reporting

Asset reports can be grouped into major categories as follows:
Acquisitions Report
Proof of Origin Report (displays sources of acquisition)
Transfers
Retirement Report
Physical Inventory Report
Asset History Sheet
Depreciation Report

Sort keys can be easily configured for reporting

Custom reports for Comprehensive Annual Financial Report (CAFR) & Annual Financial
Report (AFR)

Non-capital asset expense reporting through the General Ledger Module





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Process Summary and Objectives
Summary - Asset Reporting (Contd)

Objectives
1. Reduce lead time for preparation of Comprehensive Annual Financial Report
(CAFR) and Annual Financial Report (AFR)

2. Enable reporting by NIGP Code in the asset master record

3. Run reports as of a given date (FA lists, additions/disposals)

4. Produce a Fixed Assets roll-forward schedule denoting beginning balances,
additions, deletions and ending balances for both asset cost and accumulated
depreciation

5. Produce reports sorted by tag numbers (bar code numbers)

6. Report on fully depreciated and retired assets









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Process Summary and Objectives
Summary - Asset Reporting
Objectives (contd)

7. Generate report detailing capital expenditures by fund, category or major
component

8. Report capital expenditures sorted by cost

9. Have on-line access to query data, ability for self service and drill down inquiry to
address ad hoc questions and provide standard reports available on-line with drill-
down capabilities

10. Forecast future period depreciation expenses

11. Report the fixed assets for cost center/business areas separately








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Process Summary and Objectives
Summary

(termed as tasks in the Industry Print Process Modeler) : Task:

Asset Acquisition or Addition DC-040-010 to 016

Asset Maintenance DC-040-020

Asset Disposition DC-040-030

Periodic Processing DC-040-040

Asset Reporting DC-040-050

Physical Inventory DC-040-060


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Process Summary and Objectives
Summary Physical Inventory
Physical inventory is performed on a frequent basis to account for physical assets within
the District. An enhancement will be developed to download information from SAP to a
flat file. This file is then uploaded to the scanner for the physical inventory. Another
enhancement will be developed to upload data and perform mass changes

Objectives
1. Integrate current barcode scanner hardware/software (IHS Software) and
processes to SAP

2. Enable timely updates of physical inventory records through mass change
functionality for location, room number, dates and statuses

3. Enable mass retirement of assets confirmed as un-located

4. Enable addition of assets located in the field but not in the system

5. Conduct physical inventories/cycle counts







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Leading Practices and Key Features
Leading Practices and Key Features

Asset master record utilized at the time of purchase requisition for pre-encumbrance
of budget

Asset category is automated in the purchase requisition through Item Category
mapping to NIGP Code

Purchases without Item Category will require a NIGP Code

Posting to asset sub-ledger (asset number) where cost center, fund, grant, functional
area data is embedded in the asset master record

Automated integration with SAP module

Modified and Full Accrual Accounting entries being made with single asset transaction

Audit trail through drill-down report

Audit trail on changes made to the asset master data

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As-Is and To-Be Significant Process Changes
Master Data Definition
Capital Assets


Master data Definition
Capital Assets





As-Is
To-Be
Asset master record created after invoice is
paid
Creation of asset master record shell at the
time of requisition/purchase order
Asset category defaulted based on item
category/NIGP Code
Capital and expensed assets in the same
account
Capitalization policy strictly adhered to
through built in formulas for unit price equal to
or greater than $1,000
Separate systems handling assets from
construction (GASB 34) and non-construction
assets (Property System)
Centralized asset master database in SAP for
substantially completed assets and capital
assets
Manual tracking of Portables and Capital
Leases through Excel Spreadsheet
Centralized asset master database for all
capital assets in SAP
Automatic entries from CIP system (WBBI) into
GASB 34 for substantially completed assets
Journal entries will be prepared into SAP
Fixed Asset module for all substantially
completed assets
Long lead time for preparation of CAFR & AFR
from separate systems
Timely preparation for CAFR & AFR
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As-Is and To-Be Significant Process Changes
As-Is
To-Be
Maintenance Process
Capital Assets
For assets being used by other cost
centers, depreciation is not transferred

Maintenance Process
Capital Assets
Functionality to transfer depreciation to a new
cost center
Decentralized maintenance of asset
master date
Centralized maintenance of asset master data
and transactions
Automated J/E through the asset sub-ledger for
better control
Corrections of objects with financial
impact such as funding may not be
completely carried through from the sub-
ledger to control accounts
Control of budget / non-budget relevant
transactions through transaction types
CIP
Fixed assets record is generated (GASB
34 System from WBBI) after CSI Divisions
are created and mapped to an asset
categories
CIP
Costs prepared in WBBI will be settled to SAP
Fixed Assets
CIP balances are reported through a manual
Journal Entry to a manual CIP General Ledger
B/S Account in SAP
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Identified GAPS
No identified GAPS for creation and maintenance of asset master data
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Policy Impacts
All capital asset purchases should have an asset master record


Each asset requisition line item should only point to 1 asset master record for
depreciation & tagging purposes


Valuation of assets at the time of Goods Receipt


Going forward depreciation transfer to the cost center using the asset


Integrated organization wide period-end closing to be carried out
Timely goods receipt, invoice receipt, transfers, retirements prior to month-end depreciation run

Posting periods to be closed after month-end closing




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Change Impacts
Category
Process changes:

Creation of purchase requisitions with asset master record shell automation

Transactions will be performed in the Fixed Assets module rather than through the
General Ledger. J/Es for gain/loss are automated through system configuration

New process of asset acquisition through Readsoft invoice scan by reclassifying the
expense item to a capital asset

Capital leasing process now spans across various functions (Purchasing, General
Ledger and Fixed Assets)

New process for month-end closing

Manual reporting of CIP Balances due to separate external CIP system

Accountability changes:

Goods receipt will be performed against the PO line item in SAP


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Change Impacts
Benefits of Change

Integrated approach between fixed asset sub-ledger, general ledger, cost center, funds and
grants

A complete sub-ledger system that is in balance with General Ledger control account
balances

Account automation through the asset sub-ledger to enable parallel asset valuation for CAFR
and GASB 34 at the time of purchase

Comprehensive audit trail throughout the life cycle of the asset starting from PR/PO to
capitalization, depreciation, maintenance and disposal

Central asset sub-ledger system

Automatic Adjustments of asset value if discrepancies between the PO and invoice amount
exist

Enable timely internal/external reporting (CAFR/AFR) with shorter lead time




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Change Impacts
Risks Associated with Change

Requisitioner will need to be trained to split quantity by line item

The sequence of events for GR/IR, transfers, disposals have to be adhered to in order to
close the month for depreciation run

Settlement of substantially completed construction assets from an external system to SAP
fixed assets

Change of mind set that requires all asset related transactions to be posted through the
asset sub-ledger for asset acquisitions, maintenance and retirement

Month-end closing cut-off dates need to be conveyed to individuals performing Goods
Receipt


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Change Impacts



Implementation Requirements
Training is needed for the Requisition creation process, the capital leasing process, asset
addition through the fixed assets module as a result of recoveries, lost & found, donations
received, month-end closing activity cut-off deadlines, capitalization of completed or
substantially completed construction costs, land purchases, creation of asset master
record shell for reclassification of from expense and maintenance of Category Item (SRM)
to NIGP Code/Asset Category

End-Users training is mandatory


Impacted Audience

Worksite Employees: Requisition creation process, asset acquisitions through Readsoft
Invoice scan


Property Accountants: Asset creation process in requisitions, other asset addition
processes, capital leasing process, month-end closing, asset valuation

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Change Impacts



Impacted Audience (Contd)

Procurement Department: Category Item mapping

Facilities Management: Land purchase

Account Payable Specialist: Land purchases and Capital leases

Capital Construction Budget Control (CCBC) Specialist: Capitalization of
completed/substantially completed construction asset



Level of Impact
High



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Controls Framework

Key controls include:

1. Segregation of Duties between Maintaining Fixed Asset Master Data and the
Procurement Functions

2. Restricted & centralized access to perform asset transfers, retirement, reverse
asset documents, and perform asset valuation adjustments

3. System functionality automatically adjusts account balance, budget availability and
depreciation postings upon reclassification of an asset to an expense

4. Depreciation keys (depreciation method) and useful life are configured based on
Client X policy and attached to asset class






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As-Is and To-Be Significant System Changes








As-Is
To-Be
Maintenance Process
Capital Assets
Two separate fixed assets systems for
capitalized assets
GASB 34
Property System
Maintenance Process
Capital Assets
Single, standardized asset master data database
SAP Fixed Asset Module
CIP
CIP balances is prepared & automatically
settled from WBBI to GASB 34 for
substantially completed construction item
CIP
Manual process between WBBI and SAP Fixed
Assets for substantial completed construction item
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Key Potential Development Objects
Name Description Implementation
Requirements
Interface: SL_OUT_0006
SAP Outbound to flat file for
physical inventory


Interface: SL_INB_0006
Flat file Inbound to SAP with
updated information
This is a work-around solution as the current bar
code scanner from the district is not SAP
compatible. This program downloads data to a
flat file for physical inventory

After the physical inventory is performed, data is
reloaded back to SAP. When reloading, location
is updated into SAP
Possible translation
table for location
codes
Format for
download and
upload is
predetermined by
existing scanner
software
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Key Potential Development Objects
Name Description Implementation
Requirements
Enhancement: SL_ENH_0002
Fixed Assets User Enhanced Fields
& Search help activation
This is a very simple enhancement to activate
user fields in the asset master record screen for
storing crucial key data from legacy asset
systems so that SAP Fixed Assets becomes the
main source of data for searches by old PO
numbers, old asset numbers, old project
reference numbers
User fields can also be utilized to store warranty
and other statuses.
After activating the
user fields, the
search help field
needs to be
activated also
Enhancement: SL_ENH_0003
Populate NIGP Code from PO to
Asset Master Database
This program is a substitution rule that is non-
standard. It grabs the NIGP code in the PR/PO
and auto-populates them into the asset master
record
Evaluation Group
in the asset
configuration must
be maintained
whenever the NIGP
table is updated
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Roles within Fixed Assets
Role Role Description
Accounts Payable Fiscal
Assistant
Set up/Maintain/Cancel recurring payment for capital lease
All Administration Staff
(restricted by cost center)
Display Standard and Custom Reports in Fixed Assets & General Ledger, Run
Asset Explorer and Display Asset Master Record
Capital Construction Budget
Control (CCBC) Specialist
Prepare WBBI balances and other information, map item to asset category,
upload to Batch Program, monitor upload, reconcile differences, display
settlement report
ERP Support Create New Sort Key and create substitution rule for mass changes
Property Accountant Create/Change/Display/Delete/Block Asset Master Data and perform all asset
transactions; Additions, Transfers, Retire (with revenue and scrap)

Supervisory/Super user role for Capital Lease asset setup, GL JE Postings
related to Fixed Assets Additions and Corrections/Reclassifications, Bar Code
Scanner data load, mass change process

Liaise with Purchasing Process owner for NIGP Code mapping to Asset
Category

Execute Year-End Closing
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Roles within Fixed Assets
Role Role Description
Worksite Employee Creates Purchase Requisition which creates shopping cart for Asset
Purchases
Procurement Specialist Creates Purchase Order pertaining to Capital Leasing Agreement
Store & Distribution /
Transportation /
Maintenance Specialist
Manually Tag Assets
Property Auditor Perform Physical Inventory
ITS Project Managers Create Purchase Requisition for Education Rate Programs ( E-Rate) Items
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To-Be Application Architecture
ECC
- Procurement
- Accounts
Payable
SRM
- Vendor
Management
ECC
- Project Systems
- Funds
Management
SAP
BI
Data
Warehouse
Customized
Reports
WBBI (Asset
Capitalization
system)
ECC
Fixed Assets
Capitalized Assets
(Manual settlement)
Flat
File
Asset Bar-code
Scanner
Asset data
Asset Data
Fixed Assets
1
2
1
2
1 (Yellow): Construction Items
2 (Blue): Non-Construction Assets
Project Systems (WBS for
tracking purpose only)
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Support Required from Steering Committee


Assist in gaining District-wide acceptance for the use of asset sub-ledger from
asset life cycle

Asset master record to be created at the time of purchase requisition with built-in
system business rules to default asset category by Item Category/NIGP/Asset
Category mapping

Valuation of assets at Goods Receipt and capitalization date to default from
Goods Receipt Date

Organization-wide month-end closing process

End-Users training is mandatory


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Implementation Challenges



Change impact allowing various departments within the District in terms of the
process for creation of fixed assets through Purchasing Process

Ensure that relevant personnel retained knowledge gain through training to post to
asset sub-ledger from the time of requisition to asset retirement