Business processes to be covered in SAP FICO implementation

Financial Accounting (FI) Management Accounting (CO) Financial supply chain Management (FSCM)  module will cover the following business processes:

  • Master Data Maintenance in Accounting.
  • General Ledger Accounting.
  • Accounts Payable.
  • Accounts Receivable / Collection Management /Credit management.
  • Bank Accounting /Cash Management.
  • Asset Accounting.
  • Closing Procedures.
  • Financial Information System in FI.
  • Cost Center Accounting.
  • Profit Center Accounting.
  • Internal Order.
  • Profitability accounting.

Sections in a SAP FICO Business Blueprint

GMC-SAP Implementation
1 Business Scenarios
1.1 FICO Scenarios
1.1.1 Business Processes
1.1.1.1 New general Ledger and Profit Center Accounting
1.1.1.2 Accounts Payable
1.1.1.3 Accounts Receivable
1.1.1.4 Collections Management
1.1.1.5 Bank Accounting
1.1.1.6 Fixed Asset Accounting
1.1.1.7 Financial Closing
1.1.1.8 Controlling
1.1.1.9 Cost Center Acounting
1.1.1.10 Profit Center Accounting
1.1.1.11 Profitability analysis

Product Cost Controlling

•          Product Cost Controlling is concerned with all aspects of planning the cost of producing products or services, as well as tracking and analyzing the actual costs that are incurred in the production process.
•          Product Cost Controlling consists of the following components:
–        Product Cost Planning (PCP) refers to the creation of cost estimates for the production of goods and services. 
–        Cost Object Controlling (OBJ) focuses on the costs incurred in the production of a product or service, which are collected on a cost object (such as a production order.)  Which cost object is used depends on your controlling requirements.  It may be a sales order, a production order, a process order or a production cost collector.  Cost Object Controlling is used to calculate work in process, scrap costs and variances at period close.  These values can be transferred to other modules like CO-PA, EC-PCA and FI.

–        Actual Costing (ACT) is used to calculate the actual product costs at period close.  Actual costing uses the Material Ledger to store material prices in up to three currencies and according to three valuation strategies (group, legal and profit center).  Each material movement is recorded in the Material Ledger with a standard price during the period.  Material settlement is used to transfer the results to the material master as a weighted average price for the period.

Overhead Cost Controlling

•          Overhead costs are costs which cannot be assigned directly to the production of goods or services. You assign all overhead costs to the locations where they occur or to the actions leading to their creation. You have to plan, record and analyze the costs on appropriate objects.
•          Cost elements are used to record, distribute, and allocate the operational expense of an enterprise on a costing basis.
•          Cost Element Accounting (CO-OM-CEL) indicates which costs and revenues have occurred and is used for reconciliation of cost controlling with the Financial Accounting (FI) module.
•          The cost center represents a separate location of cost occurrence within a controlling area. The definition can be based on functional requirements, allocation criteria, activities or services provided, physical location, and/or area of responsibility.
•          The activity type defines the various activities produced or supplied by a cost center. Activity inputs from one cost center to other cost centers, orders, or business processes represent utilization of the cost center’s resources. Valuation of the activity quantity takes place with a price calculated on the basis of business or managerial aspects.
•          The business process gathers together sequences of activities within an organization across cost center boundaries. It can be used to structure organizational processes according
to function.
•          Overhead orders are used to plan, collect, and analyze costs of an organizational
action (measure).
•          The different CO objects support multiple methods developed by SAP for allocation of values and quantities, each according to the managerial accounting function of the object in question.

Purpose of Controlling Components

•          Controlling includes all functions required to internal managerial accounting and covers different areas for control.
•          CO-OM Overhead Cost Controlling: Overhead costs are costs that are not directly related to a product, and thus cannot be assigned directly to the cost of goods.  They are divided into direct and indirect costs.  The purpose of CO-OM is planning, allocating, controlling and monitoring overhead costs. 
•          CO-PC Product Costing Controlling:Product costing is a tool for planning costs and establishing prices for materials.  It is used to calculate the costs of goods sold for each product unit.
•          CO-PA Profitability Analysis: Lets you evaluate segments of your business operations, which can be defined according to products, customers, orders and any combination of  these or other organizational structures (such as sales organizations or business areas). The goal is to determine the contributions of those segments to your company’s profits (margin reporting).

•          CO/EC*-PCA Profit Center Accounting:Provides profitability-oriented performance information for internal organizational units (profit center) and assign respon

sibility to their performance. It can be used to generate financial statements for the corresponding organizational units. (* SAP classifies PCA into the Enterprise Controlling (EC) component.)

Components of the CO module

•          The various CO components can be classified into different groups.  The classification indicates the general purpose of a given component.
•          Management of an enterprise requires the use of different tools for different situations.  If you want to analyze profit, for example, then you need a tool appropriate to the view you wish to take (e.g., by product or by responsibility center).  The Profitability Accounting component group has two tools (components) that are available for addressing this business need.
•          Similarly, the Overhead Cost Controlling and Product Cost Controlling component groups offer tools appropriate to other types of business requirements.
•          Overhead Cost Controlling:
–        Cost and Revenue Element Accounting
–        Cost Center Accounting
–        Overhead Order Accounting
–        Activity-Based Costing
•          Product Cost Controlling:
–        Product Cost Planning
–        Cost Object Controlling
–        Actual Costing/Material Ledger

•          Profitability Analysis
Profit Center Accounting

External vs. Internal Accounting

Standards Versus Flexibility
•          The SAP application component Controlling (CO) contains all accounting functions necessary for effective controlling. If an organization divides accounting into internal and external viewpoints, CO represents internal accounting because it provides information for managers – that is, to those who are inside an organization and who are charged with directing and controlling its operations. CO includes cost and revenue accounting and, together with the Enterprise Controlling (EC) application components Profit Center Accounting (EC-PCA) and Executive Information System (EC-EIS), covers all aspects of American-style managerial accounting. It offers all controlling opportunities without being limited to legal requirements.
•          With the SAP application component FI you will create your financial statements, like the balance sheet and the P&L-statement.  These procedures have to be according to standards or accepted accounting principles like US-GAAP or IAS.
•          External accounting is referred to as financial accounting.  It produces the financial statement view of the organization.
•          Internal accounting is referred to as managerial accounting or controlling.  It focuses on internal performance of the organization.
Major Differences
•          Primary Users
•           Freedom of Choice
•           Behavioral Concerns
•           Time Focus
•           Time Span

•           Reporting

The basic CONFIGURATION steps in New GL

1. Define Ledger for General Ledger Accounting
2. Define Currencies for Leading Ledger
3. Assigning Scenarios to Ledger
4. Defining Segment
5. Activate Document Splitting
6. Classify G/L Accts for Document Splitting
7. Classify Document Types For Document Splitting
8. DEFINE DOCUMENT SPLITTING CHARACTERISTICS FOR GENERAL LEDGER
ACCOUNTING
9. DEFINE DOCUMENT SPLITTING CHARACTERISTICS FOR CONTROLLING
10. Financial Accounting (New)>FAGS (New) Docs >Define Doc types for General
Ledger View
11. Activating Non Leading Ledger

SAP New GL Configuration – An introduction

The intention behind SAP New GL Configuration is to Combine the features of GL, Profit Center Accounting, Reconciliation Ledger, Special Purpose Ledger, Business Area, Cost of Sale Accounting.

Benefits: 
Benefits like Segment Reporting, Cost of Sale Accounting, Management Reporting, Parallel Accounting, Balanced Books are possible with New GL.

Activating General Ledger Accounting 

To make the settings and use the functions in General Ledger Accounting, you have to
activate it. To do this, in Customizing choose

Financial Accounting → Financial Accounting Global Settings → Activate New General Ledger Accounting. (or T Code FAGL_ACTIVATION)

Activating General Ledger Accounting has the following effects:
● The Customizing settings for General Ledger Accounting appear in the SAP Reference IMG. You access the settings under 
Financial Accounting (New) → Financial Accounting Global Settings (New) and General Ledger Accounting (New).
● The General Ledger Accounting functions appear in the SAP Easy Access menu under 
Accounting → Financial Accounting → General Ledger. 


● The tables for new General Ledger Accounting are activated and updated.
FAGLFLEXT – Totals Data Table
FAGLFFLEXP – Plan Line data Table
FAGLFEXA – Actual Line data table

FAGL_SPLINFO_FAGL_SPLINFO_VAL – Splitting data table

Existing and new GL differences
In the standard system, the tables from classic General Ledger Accounting (GLT0)
are updated as well as the tables in new General Ledger Accounting during the
activation. This enables you to perform a ledger comparison during the implementation
of new General Ledger Accounting to ensure that your new General Ledger Accounting
has the correct settings and is working correctly. To compare ledgers, in Customizing
choose Financial Accounting Global Settings (New) → Tools → Compare Ledgers.

Deactivating the updatation of tables for classic General Ledger Accounting Financial
Accounting Global Settings (New) → Tools → Deactivate Update of Classic General
Ledger.