Introduction:
SAP FI (Financial accounting) is the basic module and very important module in SAP. SAP FI module receives posting from the various other modules such as MM (Materials Management), SD (Sales and Distribution), and HR (Human Resource) through various integration points. All the posting from the aforesaid modules is posted real-time to the FI module. FI module feeds in data to CO modules such as Cost center accounting, profit center accounting, and the Profitability analysis module. SAP FI module is generated for external reporting i.e. legal reporting, tax reporting.
ABC Group of companies (Parent company) is a multinational company with companies across the world based out of Germany. The company has decided to implement SAP for its subsidiary ABC Electronics Inc located in the USA. ABC group of companies have to use the common chart of accounts. The currency in the USA is USD. The Parent company wants the accounts to be prepared based on the Calendar year January to December. The Group financial reporting should be in EURO.
ABC Electronics has a local reporting requirement under USA Corporate Law
For doing the configuration we use the following path on the SAP application screen:-
SAP Easy access Screen-> Tools -> Customizing -> IMG ->SPRO- Edit Project
Note: Configuration for all the modules will be done here. The above path will not be referred to henceforth; we will directly refer to the IMG node.
1. Define Company
A company is an organizational unit in Accounting that represents a business organization according to the requirements of commercial law in a particular country.
In the SAP system, consolidation functions in financial accounting are based on companies. A company can comprise one or more company codes.
2. Define Credit Control Area
Credit Control Area: This is the area where credits offered to the customers are maintained and monitored. One company code cannot share the credit limit from credit control area other than the CCA to which it is assigned.
A company code is an independent organizational unit accounting that contains its own set of books of accounts from which financial statements (BS, P&L statement) can be drawn for legal purposes.
Since most government and tax authorities require the registration of a legal entity for every company, a separate company code is usually created per country.
Certain information is mandatory for creation of company code:
1. Currency
2. Language
3. Company code key ( 4 digit alphanumeric key)
4. Name & Address
Option 1: Use the “Copy, delete, Check company code” option to copy all properties from standard company code and modify Name & Address and other details.
Give Source company code & Target Company code and follow the instructions. Ignore any warning messages.
Option 2: Use the “Edit company code” option to create company code on your own.
Let’s go for Option 2 in this training document.
4. Define Functional Areas
A financial management area is an organizational unit within accounting that structures the business organization from the perspective of Cash Budget Management and Funds Management.
You define the functional characteristics of FM areas separately for both Cash Budget Management and Funds Management in the implementation guide for each of these areas.
To be able to take advantage of the high degree of integration in the SAP system, you must link the FM areas with organization units from other applications. For example: if you assign a Financial Accounting document to a Funds Management object (such as a commitment item or funds center), the system has to determine an FM area, so that it can record the data in Funds Management. For this reason, you must specify how the appropriate FM area is to be determined.
The FM area is taken from the company code when you assign a company code to an FM area. More than one company code can be assigned to an FM area.
If you define your profit centers, you can enter an associated segment in the master record of a profit center. The segment is then derived from the assigned profit center during posting.
Fiscal Year Variant: FYV is nothing but the accounting year/financial year for a company code. In SAP system FYV might be following Calendar year (January-December) or might not be following.
SAP delivered predefined Fiscal year variants like K4, V3, V6, V9 etc., which can be used directly without creating any new FYV. If these FYV are not suitable for your country you can create new FYV.
FYV contains the definition of Posting periods and special periods. Special periods are used for postings that are not assigned to time periods, but to the process of period end closing. In total you can define 16 periods.
14. Open Close Posting Periods
In this activity you specify for each variant which posting periods are open for posting. Two intervals are available for doing this (period 1 and period 2). For every interval, enter a lower period limit, an upper period limit and the fiscal year.
You close periods by selecting the period specifications so that the periods to be closed are no longer contained.
There must be at least one entry for each variant. This entry must have + in column A; the columns "From acct" and "To account" may not be filled. In the columns for the posting periods, you specify the periods which are to be opened for the variant. Via further entries, you determine more specifically which periods are to be opened for which accounts.
15. Define Chart of Accounts
Definition: COA contains the list of GL accounts. All the GL A/c’s are bundled together and kept in general + company code specific data in COA.
For each company code, you need to specify which chart of accounts is to be used. Several company codes can use the same chart of accounts.
There are three type of Chart of accounts :
Operative chart of accounts: A chart of accounts must be assigned to each company code. This chart of accounts is the operative chart of accounts and is used in both financial accounting and cost accounting.
Country-specific charts of accounts: These are structured in accordance with legal requirements of the country in question
Group chart of accounts: This is structured in accordance with requirements pertaining to Consolidation.
16. Assign Company Code to Chart of Accounts
Document type controls:
1. Document header
2. Used to differentiate the business transaction to be posted ( Customer/vendor invoice, customer/vendor receipt, Journal entry, Asset transactions etc)
3. No range of document number
4. The account type allowed for posting
5. Field status of the header field ( Ref doc no & text)
Normally, we would not create any new document types as the standard document types provided by SAP would be sufficient. If at all you want to create a new Document type Click new Entries and give the required details.
Select a document type Say KR and click on Copy change the Document type as KE
Posting Key Controls:
1. On which types of account (A, S, K, D, M) the transaction should be posted.
2. Whether the item is to be posted as Debit or Credit.
3. The status of the fields of additional details ( text/assignment etc)
4. Reversal Posting Key
ABC Company uses standard posting keys provided by SAP. Very rarely there would be a need to create a new posting key. However, the field status would be configured to the business needs of a client. Select the posting key and double-click on it.
28. Create Controlling Area
Controlling area configuration is the starting point of configuration in CO module, which will enable us to configure cost center, internal order, profit center, product costing and then the profitability analysis modules.
We will configure Controlling area 1001 (ABC Group). The management of ABC Group would like to have a single controlling area, so that they can have cross company code controlling. That means all company code of ABC Group worldwide will be assigned to this controlling area in future.
Currently, ABC group has only one company code 1009 ABC Electronics Inc and this company code will assigned to controlling area 1001 ABC Group. A group is located in Germany and currency used for group reporting is EUR (Group currency)
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