Finance and Purchasing Overview

1. Finance and Purchasing Overview

2. COURSE OVERVIEW Finance & Purchasing Overview SAP Overview Tarrant County Implementation Finance & Controlling Modules Materials Management Module Getting Help Accessing Training Materials

3. COURSE OBJECTIVES The Finance & Purchasing Overview course has two purposes: • Introduce SAP and the finance and purchasing modules • Prepare you for role-specific training courses Objectives of the course: • Review SAP system and integration • Understand Tarrant County implementation • Become familiar with terms • Provide a high level understanding of: • General Ledger Functionality • Accounts Receivable Functionality • Accounts Payable Functionality • Asset Accounting Functionality • Controlling Functionality • Grants Management Functionality • Funds Management Functionality • Materials Management Functionality • How to get Help • How to access training materials

4. SAP stands for Systems, Applications, and Products The SAP system is a fully-integrated system where activities in one area generate activities in another area The system provides online, real-time information and one place for input of data Lesson 1: SAP Overview

5. Modules in SAP • SAP is made up of various functional modules • Each module covers a different business function • Tarrant County is using the following modules: CO ControllingFI Financial Accounting HR Human Resources/Payroll MM Materials Management GM Grants Management FM Funds Management TC is also using ESS (Employee Self Service) for employees to enter time and maintain personal information.

6. ASSETS ACCOUNTS RECEIVABLE FUNDS MANAGEMENT GRANTS MANAGEMENT ACCOUNTS PAYABLE How They Work Together HR/Materials Management Modules Other Financial Modules FI Module PAYROLL CONTROLLING PURCHASING INVENTORY MANAGEMENT

7. System Integration When a transaction is executed in any module, SAP automatically updates data in all application modules that are affected Benefits of Integration Enables simplified business processes, standard data definition, and a common business language Simplified business processes enhance productivity to allow focus on value-added activities Data has to be entered only once and all related information is updated automatically Integration eliminates need for redundant analysis and reconciliation Integration in SAP

8. Business Flow Integration Requisitioner Procurement Officer Receiver $$$$$ Asset Manager Budget Officer Accounts Payable Officer GL Accountant Tarrant County Vendor

9. Hitting the G/L Goods Receipt MM Goods Issue MM Direct Posting G/L Invoice Verification AP Customer Payments AR General Ledger Charges MM Vendor Payments AP Charges AP Depreciation AA Vendor Invoices AP

10. SAP contains two types of information Master Data A collection of information about an object or person It is referenced whenever that object or person is used in an entry field This data does not normally change Examples are address and payment information for a vendor or customer Transactional Data Information associated with a specific business activity You enter this information in SAP Changes from day to day Examples are: Invoices Purchase requisition Data

11. Master Data vs. Transactional Data Master Records G/L Accounts Customer Master Records Vendor Master Records Grants Master Records Asset Masters Material Master Records Records that remain in the system for an extended period of time. Transaction Records Journal Entries Invoices Payment Requisitions Records a specific event

12. Examples of Master Data Tarrant CountyPurchase Order Vendor Master Data P.O. # 56789Date: July 2, 2004 To: ABC Company, Vendor #1001 12345 Any street Any town, USA 54321 Qty $$ Widgets (material #15005),box of 10 10 bx 10.00 Material Master Data Total 100.00

13. Examples of Transactional Data Tarrant CountyPurchase Order P.O. # 56789Date: July 2, 2004 To: ABC Company, Vendor #1001 12345 Any street Any town, USA 54321 Transactional Data Cost Center 987 Qty $$ Widgets (material #15005), box of 10 10 bx 10.00 Total 100.00

14. A Document generally consists of a document header and line items. Document header – contains data that identifies a document and applies to the entire document. Date Document type Document number Line items – generally include Amount Account assignment Additional details specific to the transaction Document Types are located on the header portion of every document Distinguish between different business transactions Control document number assignment Help manage accounting documents Documents & Document Types

15. Illustration The Accounting Document Document Structure Document No: SAxxxxxx Date: 05/06/2004 Company Code: TC01 Currency: USD Header Revenue A/C DR CR Bank 10000 Line Items Citibank DR CR Sale 10000 Debits = Credits

16. Illustration Document Types A document type is a key that is used to classify accounting documents and distinguish between business transactions to be posted

17. Purchase Requisition Purchase Order Contract RFQ Purchasing Document Types Approval Master Data

18. Tarrant County Document Types Document TypeDescription AA Asset posting AB Accounting document DA Customer document DG Customer credit memo DR Customer invoice DZ Customer payment KA Vendor document KG Vendor credit memo KR Vendor invoice KZ Vendor payment SA G/L account document SB G/L account posting WA Goods issue WE Goods receipt

19. Terms Standard SAP terms: • Application – computer program • Client – unit in SAP system where data is input, changed, and managed • Data – pieces of information; numbers or text • ERP – Enterprise Resource Planning; designed to integrate and run all aspects of an organization • Information – data that has been collected • Integrated – transactions that are completed in one module or process trigger transactions in other modules • Menu Path – sequence of menu selections that should be followed to get to a function or screen • Module – portion of SAP system that carries out a specific business function • Real-time – describes how data that has been entered into the system is available immediately after the transaction has been saved. Everyone has access to the same data. • Session – instance of SAP; allows multi-tasking within system • Transaction – screen or series of screens to create, display, or change data • Transaction code – (t-code) unique identifier for each transaction that allows you to get to a transaction without going through the menu • User role – assigned to each employee; set of activities used by the employee • Variants – a saved set of personal selection criteria which can be used for lists and reports

20. Tarrant County is implementing the following modules in SAP: Human Resources (HR) Takes care of payroll, time recording, applicant administration, and organization data. Supports the planning and control of personnel activities. In use since October 2003 Financial Accounting (FI) Designed for automated management and reporting of General Ledger (GL) Accounts Receivable (AR) Accounts Payable (AP) Asset Accounting (AA) External reporting, such as income statement and balance sheet Controlling (CO) Represents cost and revenue flows throughout the organization Aids in organizational decision making Supports internal reporting such as cost center reports Lesson 2: Tarrant County Implementation

21. Tarrant County is implementing the following modules in SAP: Materials Management (MM) Supports the complete cycle of material flow, from the requisition to purchase to the warehousing and distribution Grants Management (GM) Manages the application, award, budget tracking, and closing of a grant Funds Management (FM) Supports the management of budgets Budget can be adapted to changesin conditions by entering releases, supplements, returns, and transfers Tracks expenses to budget Tarrant County is also using Employee Self-Service for employee entry and management of time, personal data, training & events, appraisals, and benefits enrollment. Tarrant County Implementation (cont’d)

22. Materials Management (MM) Financials (FI) Controlling (CO) Funds Management (FM) Grants Management (GM) Tarrant County Finance & Purchasing Modules Purchasing General Ledger Asset Accounting Inventory Accounts Payable Accounts Receivable

23. Organizational Elements • The following organizational elements and codes are used in Tarrant County: • Company Code – TC01 • Organization unit where individual financial statements are created • Self-contained Chart of Accounts • Controlling Area – TC01 • Self-contained organization unit where management of costs and revenues is performed • Purchasing Organization – TC01 • Organizational unit that procures materials or services • Chart of Accounts – TC01 • List of all General Ledger (GL) accounts used • Plants • Organizational unit for Admin and Stockrooms • Tarrant County Admin (all non-stock purchases) – TC01 • Sheriff (Stockroom) – TC04 • Justice Center (Stockroom) – TCJC • Central Supply (Stockroom) - TCCS

24. Purchasing Organization – TC01 Chart of Accounts – TC01 Controlling Area – TC01 Plant - TCCS Plant – TC04 Plant - TCJC Plant – TC01 Company Code – TC01 FI/MM MM CO FI MM Tarrant County Organization Structure • For all (AP, AR, GL, AA) process settings • For management reporting module settings • For all Purchasing settings • Basic entity in SAP for a legal entity • For all Logistics settings

25. Tarrant County Implementation Tarrant County terms: • GASB – Governmental Accounting Standards Board • Go-Live – date when SAP module is scheduled to run live in production system • Phase I – 10/01/03 HR/Payroll • Phase II – 07/06/04 Financial/Purchasing • Phase III – 04/01/05 Budget Prep • Legacy System – existing County system that either interfaces with SAP or provides data for start up of SAP • Production System – live SAP system used for normal operations • SME – subject matter expert; County employee who has experience or expertise in a specific functional area • TITAN – Titan Integrated Task Access Network; County implementation of SAP system

26. Tarrant County Implementation Why Change?? • Systems with duplicate data • Have to use different systems to enter and get information • Have to wait for processing to get data What Does Business Change Involve? • Changing the way we work • Changing our roles • Changing the ‘tool’

27. Tarrant County Implementation How Will Change Affect Us? • Major changes such as Tarrant County is implementing will have an initial effect on peoples’ performance • Over time, the benefits achieved will far outweigh the initial impacts Productivity Time Maximum Benefits Achieved Continuous Initial Change Improvement

28. Lesson 3: Finance & Controlling Modules

29. General Ledger Manages all financial accounts FI FI CO FI FI Accounts Payable Manages vendor invoices Manages customer billing Accounts Receivable Asset Accounting Manages fixed assets and depreciation Manages responsibility accounting Controlling What is FI and CO? Financial Accounting (FI) and Controlling (CO) are independent components in the SAP system. The two components are tightly integrated and the data flow between them takes place on a regular basis.

30. Reporting Overview Auditors EXTERNAL AGENCIES Journalists Media Tax Authorities Insurers FI Financial Accounting ExternalFinancial Analysts Financial Statements External Managerial Reports Internal CO Controlling Internal Tarrant County Management Tarrant County Employees

31. Financial Accounting (FI) The FI module is designed for automated management and external reporting of general ledger, accounts receivable, accounts payable, asset accounting, and other sub-ledger accounts within the chart of accounts This is the key component structure of financial accounting Master Records General Ledger Accounts Payable Accounts Receivable Fixed Assets Periodic Processing

32. Financials (FI)General Ledger (GL) Financials (FI) General Ledger • Used for external reporting • Document entry • Account Management Asset Accounting Accounts Payable • Contains • General Ledger Accounts • Chart of accounts Accounts Receivable General Ledger

33. General Ledger (GL)Roles & Responsibilities Financials (FI) General Ledger Asset Accounting • Departments • Display general ledger accounts, documents, and line items • Auditor • Maintain G/L accounts • Approve and post documents Accounts Payable Accounts Receivable

34. Financials (FI)Accounts Receivable (AR) Financials (FI) • Processes cash receipt transactions for either accounts receivable or revenue transactions • Invoices or bills customer for amount due General Ledger • Contains • Customers • Billing logic • Dunning Asset Accounting Accounts Payable Accounts Receivable

35. Accounts Receivable (AR)Roles & Responsibilities Financials (FI) • Departments • Record cash receipts into Cash Journal • Enter customer invoices / credit memos to create receivables • Auditor • Check entries and posts cash journals • Perform new customer setup General Ledger Asset Accounting Accounts Payable Accounts Receivable

36. Financials (FI)Accounts Payable (AP) Financials (FI) • Process invoices • Generate warrants/checks by due date or discount date • Produce 1099 Reports General Ledger • Contains • Vendors • Warrants • Checks Asset Accounting Accounts Payable Accounts Receivable

37. Accounts Payable (AP)Roles & Responsibilities Financials (FI) General Ledger • Department • Enter Invoice Documents • Park documents when invoice verification fails • Auditor • Maintains Vendor Master • Reviews entered documents (except parked documents) and releases invoices for payment • Reviews parked documents to resolve problems; may contact the vendor, requisitioner or buyer. • Issues checks for invoices with a free for payment status Asset Accounting Accounts Payable Accounts Receivable

38. Financials (FI)Asset Accounting (AA) Financials (FI) • Provides management of capitalized or tracked assets • Generates depreciation transactions for the general ledger General Ledger • Contains • Tag numbers • Asset Classes • Depreciation profiles • Capitalized assets • Tracked assets Asset Accounting Accounts Payable Accounts Receivable

39. Asset Accounting (AA)Roles & Responsibilities Financials (FI) General Ledger Asset Accounting • Department • Create the asset shell at the requisition stage Auditor • Maintain asset master records • Issue asset tags for Capital and non-computer low value assets • Update the records for additional information such as serial numbers • Update Capital Asset record master data Accounts Payable Accounts Receivable

40. Controlling (CO) The CO module represents the County’s flow of costs and revenue. It is also a management instrument for organizational decisions. A key tasks is the analysis of FI data. Variances can be determined by comparing actual data with plan data. This is the key component structure of Controlling: Cost Element Accounting Cost Center Accounting Internal Orders

41. Controlling (CO) Controlling (CO) • Used for managerial reporting or activity reporting • Used to collect and allocate costs • Contains • Cost Centers • Projects • Internal Orders

42. Controlling (CO)Roles & Responsibilities Controlling (CO) • Department • Display: • CO reports • Cost center/cost center group data • Internal order/internal order group data • Budget information for internal orders • Auditor • Display CO reports • Create, change, and display: • Cost centers/cost center groups • Internal orders/internal order groups • Internal order budget information

43. FI/CO, GM & FM Integration & Terms

44. Grants Management (GM) Grants Management (GM) • Plan, budget, identify, obtain, and record all funding related to awarded grants • Differentiate between eligible and ineligible costs • Bill and record sponsor amounts • Record and report all related costs, revenues, and required information • Contains: • Grant lifecycles • Grant details • Grant reports

45. Grants Management (GM) Grants Management (GM)Roles & Responsibilities • Department • Display • Grants • Grant budgets • Grant reports • County Administrator’s Office • Display • Grants • Grant budgets • Grant reports • Create grants Auditor • All above • Maintain grant master data • Manage grant cycles • Monitor grant postings

46. $$$$$ Budget Officer Funds Management (FM) Funds Management (FM) • Maintains budgetary control for all expense activity • Contains • Funds • Fund Centers • Commitment Items

47. Funds ManagementRoles & Responsibilities Funds Management (FM) • Department • ‘Pre-post’ budget transfers for adjustment within their own level of departmental control • Post transfers within budget control categories of commitment items • Budget Office • ‘Pre-post’ budget transfers between departments • Generate report listing pre-posted transfers needing Commissioner’s Court approval • Post transfers after approved by Commissioners Court • Create supplement, return, and entry budgetdocuments • Auditor • Create and change funds block • Create and change funds reservation • Create and change funds commitment

48. Lesson 4: Materials Management Module (MM)

49. Materials Management (MM) The MM application component supports the procurement and inventory functions occurring in day-to-day business operations such as: materials planning and control, purchasing, goods receiving, and inventory management. Invoice verification is an MM function but is executed by Accounts Payable. This is the key component structure of Materials Management: Master Records Purchasing Inventory Management Invoice Verification – (Done by AP)

50. Materials Management (MM) • Purchasing is responsible for: • External procurement of materials and services • Determination of sources of supply (vendors) • Monitoring deliveries from vendors • Inventory Management is responsible for: • Management of stocks • Planning, entry, and documentation of all goods movements • Key Terms • A purchasing organization is an organizational unit that procures materials or services. It negotiates purchasing conditions for plants assigned to it. • A plant is an operating unit that makes goods available for distribution.