Enterprise Wide Information Systems Financial Modules Instructor: Richard W. Vawter

1. Enterprise Wide Information SystemsFinancial Modules Instructor: Richard W. Vawter

2. Objectives • After this week, you should be able to: • Define the SAP R/3 organizational elements for Financials. • Discuss the financial and management reporting capabilities in the system. • Identify financial integration points with the logistics chain. • Execute financial and management reports in the SAP R/3 System.

3. Topics • Organizational Elements • Reporting and Analysis

4. Financial Modules The primary SAP R/3 application modules that support Accounting are: • Financial Accounting • Core financial accounting • General Ledger as well as subledger information • Controlling • Management accounting for tracking overhead and production costs

5. EC Enterprise Controlling TR FI CO Cash Mgmt General Ledger Overhead Treasury Mgmt Production Subledgers Funds Mgmt Profitability Capital Investment and Financing IM The Financial Applications

6. FI CO Financial Accounting Controlling Chart of accounts Group company Company code Business area Controlling area Cost center Profit Center Contains all account numbers Consolidation of company codes Independent balancing unit used for legal reports Used to create internal balance sheets Organizational unit for cost accounting Organizational unit for cost control Organizational unit for internal profit analysis Used enterprise wide Cost accumulator Cost and revenue centers Accounting Organizational Units

7. West East Organizational Elements in FI The SAP R/3 Financial Accounting and Reporting business processes use the following R/3 organizational elements: • Charts of Accounts • Company Codes • Group Company • Business Areas Company acme xyz 34500 34600 34700 34800 34900 35000 35100 35200 35300 35400 35500 35600 ACME US, ACME GERMANY, ACME PERU, ACME JAPAN ACME AMERICAS ACME EUROPE ACME ASIA

8. FI Organizational Units in Controlling (CO) Chart of Accounts Controlling Area Operating Concern Profit Centers Cost Accumulation Categories Cost Center Project Order Cost element Statistical key Figures Activity type

9. Company Code Company Code Company Code Company Code Summary of Accounting Organizational Elements OPERATING CONCERN OPERATING CONCERN Profit or cost centers Controlling area 1 Controlling area 2 Business area Profit Centers Business area Cost centers Co’s in area1 must be on same fiscal year Fiscal year of area 2 may be different than area 1 Business area Business areas across company codes

10. Topics • Organizational Elements • Reporting and Analysis

11. Executive Officers Administrative Senior Staff Management Controllers Operations Staff FI CO Auditors Insurers Tax Authorities Shareholders Journalists Bankers Legal Authorities Financial Analysts Internal and External Accounting Internal External

12. Reporting: Standards vs. Flexibility

13. Reporting: Views of the Enterprise FI CO CO TR

14. University of Southern California Reporting: The Audit Trail Document Reports Balances Line Items Transactions Original Document

15. University of Southern California General Ledger and its Subledgers

16. Procurement Inventory Production Sales Financial Integration in Logistics Some of the relevant financial activities resulting from business events at the different stages in the supply chain include: • Commitment bookkeeping • Liquidity • Exchange rate hedging • Invoice verification • Cost management • Payments • Inventory • Valuation strategies • Product costing • Material usage • Work-in-progress • Credit checking • Discounting • Billing • Payment clearing • Dunning analysis • Profitability analysis • Marketing budget

17. FI Revenue Ledger Expense Ledger Special Ledgers Balance Sheet AL P & L Revenue Expen. Monitoring of postings to dimensions / data combinations • Region • Customer Group • Product • Process • Activity Based Costing Monitoring plus control through modern profit / cost controlling methods Controlling Features

18. General Controlling Goals • Support of strategic and tactical management leadership • Optimizing the individual organizational areas • Directing towards the goals • Profit orientation • Market and customer orientation • Orientation to the target group • Current / summarized data • Decision-relevant data • Meaningful, easily understandable display • Rounded Controlling model • How the system rounds numbers • The limits for rounding errors

19. Overview: Transaction-Based Postings Human Resources Asset Mgmt. Financial Accounting Materials Mgmt. Controlling • Invoices • Repostings • Activity • allocation • Statistical • key figures • Funds • reservation • Material • withdrawals • Orders • Purchase • requisitions

20. In Summary: • Organizational elements are definable structures that represent the legal and /or organizational views of your enterprise. • The SAP R/3 System offers standard and flexible financial and management reporting capabilities to satisfy external and internal accounting requirements. • FI/CO integration with the Logistics modules occurs throughout the value chain with the posting of transactions in the system.