SAP ERP Financials

Naeem Arif is an experienced SAP Consultant, having started his SAP career in 1995 on version 3.0h. He has been involved in more than 12 successful projects across the full ERP Financials module, working for some of the largest SAP Consultancies in the world. During this time he has worked on projects spanning many different industry sectors across Europe and the North America. Most recently he delivered an ECC 6.0, New General Ledger Solution for a major international corporation. Sheikh Tauseef is an experienced SAP consultant, having delivered many projects in ERP Financials across North America, Europe and Pakistan. His experience has been across the full-project life cycle and he recently completed successful delivery of his 10th project. Tauseef has also delivered two full FICO Academies, with a combined passing percentage of 80%. During his career, Tauseef (who is also a Chartered Accountant) has worked for global consultancies and brings an International perspective to the book.

Acknowledgments 19
Overview 21
Introduction 21
Approach 22
Versioning 22
Learning Outcomes 23
Brief History of SAP 23
Different Types of Projects 24
Fresh Implementation Projects 24
Upgrade Projects 25
Request-Based Support Projects 25
Production-Support Projects 26
Rollout Projects 26
Points to Consider for a Successful SAP Implementation 27
The Project Team 28
SAP Implementation: More Than an IT Project 28
The Right Resources 28
The Gap Analysis 29
Project Testing 29
Cutover Plans 30
User Training 30
The Change Management Program 30
SAP Navigation Basics 30
Logging on to the SAP System 31
Screen Structure in the SAP System 32
Creating Your Favorites List 34
Calling Functions in SAP System 34
Accessing the Customization Area 35
Summary 36
SAP Enterprise Structure 37
Building an Enterprise Structure 38
Building a Project s Straw Man 39
Company Code 40
Cost Center 41
Profit Center 41
Chart of Accounts 42
Controlling Area 42
Business Area 42
Chart of Depreciation 43
Designing the Straw Man 43
Configuring the Enterprise Structure 44
Countries 44
Currencies 51
Define Company 59
Define Fiscal Year Variant 60
Define Posting Period Variant 62
Define Chart of Accounts 64
Structure of the Chart of Accounts 66
Define Credit Control Area 67
Define Company Code 69
Assign Company Code to a Fiscal Year Variant 71
Define Controlling Area 72
Define Cost Center Group 75
Activate Controlling Area Submodules 76
Functional Area 78
Operating Concern 79
Create a Default Profit Center 80
Check Company Code Global Parameters 82
Summary 84
Global Settings for Financial Accounting in SAP ERP Financials 85
What Is a Document in SAP ERP? 86
Document Header 86
Line Items 88
Master Data 88
Configuration of Global Settings 89
Define the Retained Earnings Account 89
Field Status Groups 91
GL Account Groups 98
Document Types 105
Document Number Ranges 111
Purpose of Subledger Reconciliation Accounts 114
Document Posting Keys 115
Updating Layout for the Document Entry Screen 118
GL Document Display and Layouts (Default Settings) 119
Document Change Rules 121
Cross-Company Code Settings 123
Employee Tolerances 124
Change Message Control for Posting to GL Accounts 126
Financial Statement Versions 128
Sales and Purchase Tax 131
Basic Settings 134
Posting 138
Changing Tax Laws in the United Kingdom and Europe 142
Summary 143
New General Ledger 145
Overview of the GL 146
The New GL 146
New Functionality 148
New Tables 149
Document Splitting 149
Parallel Accounting 151
Ongoing Use of Classic GL 151
Building Your New GL Blueprint 152
New GL or Classic GL? 152
What Object to Split 152
Which Account Assignment Objects to Incorporate into Your Model 152
How Document Splitting Fits in with Other Add-Ons 153
Configuration Steps to Activate the New GL 153
Activation of New GL Accounting 154
Define Ledgers for GL Accounting 154
Segment 160
Integrating the GL with Subcomponents 164
Document Splitting 174
Parallel Accounting 186
Setting Up Additional Ledgers 188
CO Transfer Postings 190
Planning in the New GL 190
Integration with Asset Accounting 191
IFRS Compliance 192
IFRS 5 Noncurrent Assets Held for Sale or Discontinued Operations 192
IFRS 8 Operating Segments 193
IAS 7 Cash Flow Statements 193
IAS 10 Events after the Balance Sheet Date 193
IAS 16 Property, Plant, and Equipment 194
IAS 19 Employee Benefits 194
IAS 36 Impairment of Assets 194
Summary 195
Accounts Payable 197
Overview of the P2P cycle 198
Purchase Order 199
Goods Receipt 199
Invoice Verification 200
AP Invoice 200
Outgoing Payment 201
Building an AP Business Model 201
Design of Vendor Master Records 201
Invoice Processing Control 202
The Payment Process 202
Master Data 202
Vendor Master Records 203
Vendor Account Groups 205
General Data View 208
Company Code View 210
Purchasing Data View 211
Vendor Account Group Variations 212
Vendor Number Ranges 213
Business Decisions 214
Create Vendor Number Ranges 215
Transporting Number Ranges 216
Assign a Number Range to an Account Group 216
Extending Vendors to Additional Company Codes 217
Accounting Clerks 219
Define Sensitive Fields for Dual Control 220
House Banks 222
Configuring the House Bank 223
Bank Master Records 225
Define Number Ranges for Checks 227
Invoice Processing 228
Nonstock Invoices 228
Invoice Verification (Processing Stock Invoices) 229
Duplication Invoice Check 230
Document Parking 231
Configuring Special General Ledger Indicators for AR/AP Down Payment Postings 233
Posting and Clearing Down Payments 235
Posting Down Payments 235
Clearing Down Payments 238
Outgoing Payments Processing 239
Processing a Manual (Outgoing) Payment 239
Vendor Tolerances 241
Automatic Posting of Payment Differences 242
Cross-Company Code Manual Payments 244
Payment Block Reasons 244
Automatic Payment Program 248
Running the Automatic Payment Program 254
Cash Journal 257
Configuring Cash Journals 257
Cash Journal Postings 264
Electronic Bank Statements 266
Configuring Electronic Bank Statements 267
Importing Electronic Bank Statements into SAP 276
Summary 279
Accounts Receivable 281
Overview of the Order-to-Cash Process 281
Sales Order 282
Delivery Note 283
Billing Document 283
AR Invoice 283
Building an Accounts Receivable Business Model 284
Master Data 285
Customer Master Records 285
The Nature of the Customer Database 286
Manual or Automatic Creation of Customer Master Records 287
Searching for Existing Customers (Matchcodes) 288
Define Account Groups 290
Company Code or Activity Account Groups 296
Extending Your Customers to Additional Company Codes 298
Customer Number Ranges 299
Accounting Clerks 302
Finance Documents Global Settings 303
Document Types and Number Ranges 303
Document Posting Keys 303
Payment Terms 303
Customer Invoice Processing 304
Configuring Special General Ledger Indicators for AR/AP Down Payment Postings 305
Posting and Clearing Down Payments 308
Customer Payments 311
Defining Customer Tolerances 313
Write-off Amounts within Tolerance 316
Reason Codes 317
Debtor Management 319
Credit Limit Business Process 320
Automatic Credit Control 325
Dunning 328
Configuring Interest Calculations 335
Calculating Interest 345
Head Office Functionality 347
Summary 347
Asset Accounting 349
Overview of Asset Accounting 350
Implementation Considerations 350
Integration 351
Building Blocks of Asset Accounting 351
Chart of Depreciation 352
Asset Assignment to Organizational Units 353
Integration with the GL 354
Structuring Your Fixed Assets Design 355
Building an Asset Accounting Business Model 355
Asset Accounting Configuration 357
Copy Reference Chart of Depreciation 357
Assign Chart of Depreciation to a Company Code 359
Specify a Number Assignment across Company Codes 360
Specify Account Determination 361
Create Screen Layout Rules 362
Define Asset Number Range Intervals 364
Define Asset Classes 365
Define Depreciation Areas 366
Specify Transfer of Acquisition and Production Costs Values 368
Specify Transfer of Depreciation Terms 369
Determine Depreciation Areas in the Asset Classes 370
Deactivate Asset Classes for Chart of Depreciation 371
Define how Depreciation Areas Post to the GL 372
Maintain Depreciation Key 373
Define Base Method 374
Define Declining Balance Method 377
Define Multilevel Methods 377
Maintain Period Control Methods 379
Activate Account Assignment Objects 380
Specify Account Assignment Types for Account Assignment Objects 382
Assign GL Accounts 383
Parallel Ledgers in SAP New General Ledger and Integration with Asset Accounting 386
Specify the Document Type for Posting Depreciation 389
Transaction Types 391
Configuring the Asset History Sheet 396
Defining Validations for Asset Master Data 399
Substitutions for Asset Master Data 402
Asset Transaction Processing 404
Create a New Asset Master Record 404
Post Values to an Asset Using External Acquisition 408
Working with Asset Explorer 411
Post Transfers to Other Assets 415
Post Retirements with Scrapping 418
Post Depreciation Run 420
Current Asset Valuation 422
Inventory Valuation 422
Accounts Receivables Valuation 425
Summary 429
Controlling in SAP ERP Financials 431
Overview and Diagram 432
Subcomponents of the Controlling Component 433
Cost Element Accounting 433
Cost Center Accounting 433
Internal Orders 433
Profit Center Accounting 434
Building a Controlling Model 434
Concept of Real and Statistical Postings 436
Configuration Settings in Controlling 437
Basic Controlling Area Settings 437
Cost Element Accounting 443
Cost Center Accounting (CCA) 449
Internal Order Accounting Configuration 456
Profit Center Accounting Configuration 463
Concepts of Periodic Reposting, Distribution, and Assessment 469
Periodic Reposting 470
Distribution 471
Assessment 473
Real-Time Integration of Controlling with Financial Accounting 476
Configuration Settings 477
Cost Center Planning 480
Versions in Controlling 480
Planning Layouts and Planner Profiles 480
Summary 485
SAP ERP Financials Integration 487
Automatic Account Determination 490
Inventory Movement Account Determination 491
Billing: Revenue Account Determination 501
Payment Processing Account Determination 508
Master Data 510
Account Assignment Objects 511
Document Types and Number Ranges 513
Payment Terms 514
Journal Entry Screen Layouts 518
Integrating SAP Payroll with SAP ERP Financials 519
Employee Master Records 520
Payroll Process 523
Wage Types 524
Symbolic Accounts 525
Automatic Account Determination 526
Finance Posting Variant 530
Interfaces 531
Purpose of the Interface 532
Interface Design 533
Interface Testing 536
The Value of Integration Testing 536
Summary 537
Data Migration 539
Key Principles of Data Migration 540
The Six-Step Migration Model 541
Source/Data Cleansing 542
Field Mapping 543
Define Programs 543
Records Mapping 544
Trial Loads 545
Cutover 545
Inventory Transfer 546
Open Items Transfer 547
Upgrade to SAP ERP 6.0 547
Asset Accounting Legacy Data Transfer 549
Define Asset Transfer Date 549
Create Legacy Assets 551
Transfer Balances 554
Create Your Own LSMWs to Assist in Data Migration 555
Benefits of LSMW 555
Define the LSMW Name 557
Maintain Object Attributes 558
Maintain Source Structure 561
Maintain Source Fields 561
Maintain Structure Relations 563
Maintain Field Mapping and Conversion Rules 563
Maintain Fixed Values, Translations, and User-Defined Routines 564
Specify Files 564
Assign Files 566
Create Load File 566
Upload Load File Data 567
Create Batch Input Session 569
Run Batch Session 570
Cross Application of LSMW 572
Summary 572
Period-End Closing 573
Fast Close with the New GL 574
Key Elements of a Period-End Timetable 575
Dependent Activities Already Completed 575
Analysis of Period-End Activities 575
Foreign Currency Valuation 582
Configuring Foreign Currency Valuations 582
Foreign Currency Valuation Processing 587
Classic GL versus the New GL 595
Summary 596
SAP ERP Financials Reporting 597
Building Your Reporting Suite 597
Reporting Tools 599
Common Reporting Requirements 600
Accounts Payable (AP) 602
Accounts Receivable (AR) 604
Asset Accounting (AA) 605
General Ledger 606
Creating Basic Management Accounting Reports with Report Painter 607
Decide on the Report Type 608
Define a Row 611
Define a Column 613
Define Formula Rows and Columns 615
Define your General Data Selection 616
Report Layout 618
Other Report Layout Formatting 621
Assign Report Group 624
Change Report Group 625
International Financial Reporting Standards (IFRS) 627
Parallel Accounting Approaches 628
Accounts Approach 629
Special Ledgers Approach 629
Multiple Ledger Approach in the New GL 630
Summary 631
Implementing and Supporting SAP ERP Financials 633
Implementing SAP 633
Preparation 634
Design Phase 636
Build 641
Final Preparation 645
Supporting Your SAP ERP Solution 646
Go-Live Support (Stabilization) 646
Long-Term Support 647
Summary 650
The Authors 651
Index 653