Chapter 1

1-1
Accounting in the SAP System
Globalization and diversification today force structural changes in organizations
world-wide, making economic processes more complex. These processes are also
made more dynamic through product and process innovation and use of the
information highway. All of this requires more coordination and control with
increasingly shorter response times. Timely decisions must be based on a
continuous supply of current information.
The SAP R/3 System offers an integrated solution that includes business
applications for all company areas.
The accounting system with its sub-units - Accounting, Controlling and
Treasury - is a critical part of this solution. By interrelating the various
aspects of accounting and integrating them with logistics and human
resources applications, they become a management tool for all company
departments. Interfaces with the logistics chain from procurement to sales
allow the optimization of operational processes. Including strategic alliances
with customers, suppliers, or financial institutions increases the efficiency of
such a solution.
Besides providing accounting data, the accounting system must concentrate
primarily on processing operational data for strategic company decisions.
Planning, controlling, and monitoring operations are added to the docu-
mentation and administration functions.
This process is not limited by the size of a company. Organizations ranging
from a small sales office to an international corporate group can use these
functions, which are designed to meet the needs of different industries and
countries.
Preconfigured systems are available for the various industries, such as
systems with specific charts of accounts.
For international companies, the R/3 System offers flexible software that can be
used in different countries. The system meets the needs of the major industrial
nations of the world with its multilingual approach, flexible currency handling,
and country-specific functions for taxes, reporting, and payment transactions.
The R/3 System provides all requirements for developing a uniform accounting
system that can be consolidated across international borders.
Structural Changes
Management Tool
Decision-Based
International Applications
1 Accounting in the SAP-System
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EIS EIS
Enterprise Enterprise
Management Management
Consolidation Consolidation Budgeting Budgeting
EC EC
TR TR CO CO FI FI
Capital Budgeting Capital Budgeting
U Preparation
IM IM
Profit Centers Profit Centers
U Cash
Management
U Treasury
Management
U Market Risk
Management
U Funds
Management
U General Ledger
U Legal Consolidation
U Accounts Receivable
U Accounts Payable
U Asset Accounting
U Budgeting
U Overhead Cost
Controlling
U Activity-Based
Costing
U Product Costing
U Profitability
Analysis
U Budget
release
U Execution
Fig. 1-1: Accounting Applications
The R/3 Accounting System offers you a complete set of robust applications:
Y Accounting (FI) includes:
Q G/L Accounting
Q Accounts Payable and Accounts Receivable
Q Asset Accounting
Q Legal Consolidation
Q Special Statistical Accounting Units
Y Treasury (TR) includes:
Q Cash Management
Q Treasury Management (cash, stocks, bonds, and derivatives)
Q Funds Management
Y Controlling (CO) includes:
Q Overhead Cost Controlling,
Q Product Cost Controlling
Q Profitability Analysis
These features provide the basis for performing operational transactions and
meet the requirements of decision-based reporting for each application area.
The SAP R/3 System offers additional applications to provide powerful inte-
grated solutions for your business:
Main Features
Accounting in the SAP-System 1
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Investment Management (IM): Allows company-wide planning of capital
investment programs and controlling of individual capital investment
measures.
Business Planning and Control (EC): Includes Management Consolidation
and Profit Center Accounting.
Executive Information System (EIS): Provides broad business perspectives.
This brochure focuses on SAPs Asset Accounting module within the
Accounting (FI) application. Major features and benefits are described to
give you a better understanding of how this application can help you
manage your business.
Financial Accounting
Modern, effective financial accounting must satisfy both internal and
external accounting requirements.
External accounting requirements are directed toward accounting
disclosures and providing information to shareholders, creditors, the work
force, and public. Efficient corporate controlling must also contain
controlling and disposition functions.
Accounting disclosure requirements are defined by the appropriate regula-
tory body, be it public or private. Accounting must adhere to statutory as
well as international requirements. The R/3 System meets US accounting
requirements (GAAP) as well as the legal requirements of over 40 industria-
lized nations. The R/3 FI application guarantees that these regulations are
met, which is an essential requirement for the system's international use.
R/3s integrated systems ensure that accounting disclosure requirements are
automatically updated to the fullest extent possible. Business processes that
occur within logistics, such as goods' receipts and shipments, are automati-
cally posted. The R/3 System takes into account fiscal and corporate law
restrictions.
Increasingly, data exchange with business partners, (such as customers, ven-
dors, banks, insurance companies, or credit agencies), takes place electroni-
cally. Acquiring information is an important part of every business.
Clearly structured reference data and protocols permit automatic processing,
even with incomplete information (for example, processing final payments).
As a result, only exceptions need to be processed manually.
The SAP R/3 Workflow function helps to:
Y Define periodically recurring tasks
Y Assign them to the appropriate corporate department for disposition
Y Assure that your deadlines are met
What is in this Brochure
Propriety
Integration
1 Accounting in the SAP-System
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All business events in the R/3 System are captured according to the receipt
principle. This permits a seamless audit trail from the balance sheet to the
individual receipts themselves. Immediately following posting, you can
evaluate account displays, totals, and account lists. You can also assess
balance sheet and profit and loss statement analyses. Better yet, all of this is
done right at your computer screen.
Complete documentation is also an essential element of comprehensive and
integrated accounting system. Only complete verification of all business
events guarantees ongoing, up-to-date supervision of all operative and
strategic levels of your organization. The FI application ensures that your
controlling departments are simultaneously provided with the relevant
information.
Asset Asset
Accounting Accounting
Purchasing
Invoice
Verification
Accounts Accounts
Payable Payable
General Ledger
Payables Receivables
Special Ledger
Consolidation
Foreign Exchange
Management
Warehouse Production Warehouse
Bank Bank
Sales
Accounts Accounts
Receivable Receivable
Cash
Management
and Forecasting
Credit
Management
Bank Accounts
Finance
Information
System
Financial Asset
Management
Fig. 1-2: SAP Financial Accounting
Financial Accounting consists of several modules:
Y G/L Accounting
Y Consolidation
Y Accounts Payable
Y Accounts Receivable
Receipt Principle
Documentation
Accounting in the SAP-System 1
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Y Asset Accounting
Y Special Ledgers
The G/L accounting function uses a chart of accounts which can be installed
in individual companies or in entire corporate groups. If the system must
meet both international corporation and specific national demands, you can
use different charts of accounts side-by-side. SAP's sample charts of accounts
make it easier for you to decide just how to implement this feature. In
addition, you can customize these charts.
To satisfy specific statutory requirements at a national level, the system
allows you to balance the books of foreign subsidiaries in up to three curren-
cies simultaneously. Every business transaction is recorded at historical
values from local, corporate group, and hard currency perspectives. SAPs
R/3 System makes it easier for your organization comply with European
monetary reform requirements.
The system provides automatic functions that evaluate foreign currency,
reclassify information, and list receivables and obligations according to due
date. This helps you prepare annual and monthly closings.
The R/3 FI application maintains different balance sheets, which are distin-
guished according to type:
Y List of balances
Y Funds flow analysis
You can also maintain balance sheets by purpose:
Y Closing date balance sheet
Y Annual financial statements
The system even permits you to provide various outside parties such as
banks or the press with appropriate information about the economic well-
being of your company. Financial transactions in logistics and human
resources portions of the R/3 System also contribute to complete and up-to-
date records. Postings in logistics are automatically booked in financial
accounting and, if necessary, in cost accounting. This guarantees that the
value for the logistical flow of goods received, goods sold, and other key
values are maintained simultaneously in the accounting department. The
same is also true for personnel settlements, bonuses, and other transactions.
Besides integrating logistics with accounting functions, it is also essential to
link sub-ledgers with the general ledger itself. All movement involving the
sub-ledger Debtors and Creditors accounts, as well as the asset accounts,
are immediately reflected in the assigned general ledger balance sheet. As a
result, sub-ledgers are always reconciled with the general ledger.
Chart of Accounts
Currencies
Balance Sheet
Sub-Ledgers
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Consolidated financial statements are becoming more important compared
to individual financial statements. Being able to choose between two or more
valuation methods enables your organization to pursue distinct balance
sheet policies for each company.
Corporate group consolidated balance sheets are not merely the sum of the
individual balance sheets. Rather, the consolidated balance sheet reflects
reclassifications, reappraisals and the consolidation of equity, receivables,
obligations, profits, and sales revenues.
This feature is graphically portrayed in the SAP R/3 FI Consolidation
module. Through integration of the Financial and Asset Accounting systems,
data is directly transferred from individual financial statements. This sub-
stantially simplifies the consolidation process. It also reduces transfer errors
that frequently arise when different software is used simultaneously.
Along with consolidated financial statements as required by law, the system
lets you to perform more frequent closings and consolidations based on plan
values. Moreover, you can define and represent statements from various
business perspectives.
The FI Accounts Receivable module is responsible for monitoring and
controlling customers accounts within the R/3 System's financial accounting
application.
Account analyses, alarm reports, maturity lists, as well as a flexible dunning
system, make it easier to pursue open items. Associated correspondence can
be adapted to the needs of each firm. This also applies to payment notices,
account confirmations and account excerpts.
Incoming payments can be assigned to uncollected receivables using either
the easy-to-use entry feature or by automatic data transfer. The payment
program automates the debit memo process as well as disbursements.
Interfaces to both Distribution and Cash Management, as well as customer-
specific details in the profit and loss statement, provide further information
on each transaction. Consequently, SAPs Credit Management, Liquidity
Planning, and Contribution Margin Accounting modules are always
provided with current and reconciled information.
The R/3 System's FI Accounts Payable module manages accounting data for
all vendors. It is also an integral component of the acquisition process. It
serves as an important information source for the sales department
regarding delivery, invoicing and payment values.
Payments take full advantage of discounts, either through standard written
forms or electronically (EDIFACT; EDI). The system supports all
international methods of payment. To track open items, the system comes
with account analyses, maturity previews and risk assessments (for foreign
currencies, for example).
Consolidated Financial
Statements
Consolidation
Accounts Receivable
Accounts Payable
Accounting in the SAP-System 1
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Balance audit trails, account lists and journals document the transactions of
Accounts Payable.
New features have been added to the R/3 Systems FI Asset Accounting
module. They reflect the changing demands made on asset management,
which include:
Y Increased production automation
Y Rising demands on Preventative Maintenance
Y More complex facilities and growing legislative requirements
The R/3 Systems FI Asset Accounting module covers legal reporting and
valuation requirements of all major industrialized nations. Acquisitions,
divestitures, transfers, and depreciations are entered, calculated, and
processed. Besides the legal requirements regarding asset valuation, you can
define as many depreciation and valuation methods as desired.
The system provides flexibility when creating individual value areas to
calculate and represent depreciation, imputed interest, insurance values, and
subsidies. This feature also has functions to perform internal analyses of key
figures and ranking lists for significant objects that go beyond obligatory
reporting requirements. User-defined simulations of valuation parameters
assist in optimizing your business planning. The simulation function provi-
des a variable preview of the future, using both realized and planned
investments.
The R/3 Systems FI Special Ledger module provides special calculations for
a particular customer. A ledger is an accounting book that has been
expanded to include various dimensions from the account assignment
feature (cost center, product). It maintains and analyzes figures to meet the
reporting wishes of the individual firm. All firm-specific ledgers come with
validation and derivation of characteristics features. You can perform
planning, allocation, and currency conversion calculations for each ledger.
The ledgers are automatically updated whenever business transactions take
place. Data collected at a more detailed level is stored in compressed form
using a rollup function.
Asset Accounting
Special Ledgers