Controlling area

Controlling area
Controlling area is an organizational unit from the Accounting component in the R/3 System, used to represent a closed system for cost accounting purposes.
In the standard R/3 System, the controlling area constitutes the framework for planning, allocation and monitoring of costs.
One controlling area

When we have one controlling area:

v  The same operative chart of accounts is used.

v  Each enterprise entity in the controlling area only uses the specific accounts it requires. We can use a country chart of accounts to record country-specific requirements.

v  Posting periods are always the same. Special periods are, however, an exception.

v  We must agree on controlling master data, for example for cost elements, activity types, cost centers. Uniform procedures should exist for maintaining master data.

v  Work on period-end closing must be coordinated (planned and actual work). We must agree on a time schedule for work on period-end closing. We must define how costs are allocated and prices are calculated for services per cost center / cost center group

v  We have a choice of three currencies. Controlling area currency, object currency and transaction currency. For cost accounting for several company codes and several countries, the object currency corresponds to the transaction currency.

v  We have unlimited use of the project management function. We can work with one project definition, one project structure plan and one network. We have unlimited use of project management and reporting functions.

v  We have unlimited use of the cost distribution functions (cost center assessment and internal activity allocation.

Several controlling areas
We can define several controlling areas if we do not want to merge enterprise units in cost accounting. Ensure that the organizational structure provides for harmonized procedures and structures for cost accounting
When we have more than on controlling area:

v  We can define a separate operative chart of accounts for each controlling area. We can use the group chart of accounts for consolidation.

v  We can work with different posting periods. Controlling areas that are assigned to the same operating concern use the same posting periods.

v  Work on period-end closing do not need to be coordinated (planned and actual work).

v  We define controlling master data such as cost elements, activity types, cost centers for each specific controlling area.

v  We must ensure that the organizational structure caters for comprehensive project management. We can work with one project definition, one project structure plan and one network for each controlling area. We have unlimited use of project management and reporting functions within each controlling area. We may use the Executive Information System (EIS) if we would like project reporting to cover all controlling areas (cost elements, cost centers, orders).

v  We can use the Special Purpose Ledger (FI-SL) or Consolidation (EC-CS) components to draw up reports for all controlling areas. Ensure that we consolidate the appropriate elements from different controlling areas.

Chart of Depreciation

Depreciation:

A reduction in the value of an asset with the period of time, due in particular to wear and tear.

 Types of Depreciation:

v Straight line method without basis reduction: 

v Straight line method with basis reduction: 

v Diminishing balance method

Chart of  Depreciation:

Charts of depreciation are used in order to manage various legal requirements for the depreciation and valuation of assets. These charts of depreciation are usually country-specific and are defined independently of the other organizational units. A chart of depreciation, for example, can be used for all the company codes in a given country 

Country-Specific Charts of Depreciation

In the simplest scenario, all of wer company codes are in the same country and are subject to the same legal requirements for asset valuation, meaning that we only need one chart of depreciation.

Integration

Chart of Depreciation integration we can do at two levels.

v Company code level

v Chart of account level

Company Code/Chart of Depreciation

We have to assign each company code defined in Asset Accounting to exactly one chart of depreciation. In the interests of keeping asset values uniform in our company, we should restrict the number of charts of depreciation used to as few as possible. Company codes in countries with the same valuation rules or company codes of a certain industry sector generally use the same chart of depreciation.

Chart of Accounts/Chart of Depreciation

The assignment of a company code to a chart of accounts is independent from its assignment to a chart of depreciation. This means that several company codes can use the same chart of accounts, although they have different charts of depreciation (and vice versa).

Types of Errors

Different types of  errors in SAP

Master data error

Configuration error

Transaction error           

System error

MARA Table

MARA : General Material Data (Transparent Table)

MARA is a standard SAP Table available within R/3 SAP systems depending on your version and release level. Below is the standard documentation available for this table and a few details of the fields which make up this table. You can view this information and more if you enter the Table name MARA into the relevant SAP transaction such asSE11 or SE80. You can also view the data contained in this database table via these transactions or alternatively use transaction SE16

Delivery Class = A - Application table containing master and transaction data

Important Fields in MARA Table

MANDT       Client

MATNR       Material Number

ERSDA        Creation Date

ERNAM       Name of person who created.

MTART        Material Type.

MATKL        Material Group.

MEINS         Base Unit of Measure.

ZEINR          Document Number.

ZEIAR          Document Type.

WRKST       Basic Material.

NTGEW       Net Weight.

VOLUM       Volume.

VOLEH        Volume Unit.

SPART         Division.

KZKFG       Configuration Material.

VHART       Shipping Material Type.

MAGRV      Material Group Shipping Material.

DATAB       Valid from Date.

ATTYP        Material Category.

PMATA       Pricing reference material. 

Testing in SAP

TYPES OF TESTING IN SAP FINANCIAL

Unit Testing 
When you test every single document is called unit testing.

String Testing 
One transaction full activity is called string testing . For example Vendor invoice, goods received and vendor payment.

Integration Testing 
It is purely with other modules and we have to check whether the FI testing is working with other related modules or not.

Regression Testing 
Testing for whole database. Bring all the data into another server and do the testing is called regression.

Abbreviations in SAP

ABAP	Advanced Business Application Programming
APJ	Asia Pacific Japan
BCM	Bank communication management
BAI	Banking And Administrative institute
CO-PA	Controling Production Accounting
CO-CCA	Controlling Cost Centre Accounting
CO-PCA	COntrolling Profit Center Accounting
WBS	Work Breakdown Structure on the Project system.
CRM	Customer relationship management
EC-PCA	Enterprise Controlling Profit Centre Accounting
EMEA	Europe middle east Africa
FAGLGLEXTG	Financial Accounting General Ledger Flexible Table.
SOP	Sales Operation Planning
SPRO	System Project Reportery Object
SME	Subject Matter Experts
POS	Point of sale
SDN	SAP Developer Network
SCN	SAP Community Network
PLM	Product lifecycle management
POA	Performance optimization applications
SCM	Supply chain management
SAP	Systems, Applications, Products in Data Processing (German: Systeme, Anwendungen, Produkte)
LIV	Logistic Invoice Variances
SBU	Strategic Business Units

Master Data

What is Master Data?

Master data is any information that is considered to play a key role in the core operation of a business. It may include data about vendors, materials, customers, banks, general ledger accounts, inventory, suppliers, analytics and more. Master data is shared by all AOI groups across an organization and is stored on one system. 

Dunning

Dunning is a reminder to the customer or vendor to make payment on outstanding invoices. It typically consists of a letter that summarizes the invoices that are past due and politely requests payment to be made. When you customize dunning you have to create dunning area like at what level you want to use the dunning, like business area level or company code level. After that you have to make settings for dunning procedure, in that you have to define no of due dates and no of dunning levels. there are maximum 9 levels are there.

Dunning Business Processes
Dunning is actually the process by which you “bill” or “invoice” a customer for past due items.
With regards bad Checks for example dunning procedure could follow these steps:
Step 1: Phone call to customer on receipt of bad check – at this stage, perform the journal posting outlined in section on Returned Checks
Step 2: Letter to customer (+10 days)
Step 3: Letter to CO (+7 days)
Step 4: Legal letter to customer (? DD139) (+13 days)
Step 5: Issue DD139 (+10 days)
Step 6: Follow-up on DD139 (dispersing officer) (+45 days)
Step 7: Write-off (after 6 months)
Steps 2-6 above will be handled by dunning levels in SAP.

Configuration before dunning can be carried out-Defining Dunning Area
-Define Dunning Keys
-Define Dunning Block Reasons
-Dunning Procedure
-Define Dunning Procedure (T. Code – FBMP), To set up a Dunning Procedure, the following must be specified: number of Dunning Levels (1-9) Dunning Texts, Standard Text can also be included in the Dunning Texts. Dunning Procedure major parameters: Dunning Interval, Number of Dunning Levels, Grace Period
Assign Dunning Procedure to Customer / Vendors Accounts (T. Code – XD02)
Define Correspondence Types (T. Code – OB77)
-Assign Company Codes to Correspondence company Codes
-Assign Programs for Correspondence Types (OB78)
-Dunning Run: Transaction Code: F150

Menu Path: accounting > financial accounting > accounts receivable > periodic processing > dunning.

Note: Whenever you schedule more than one dunning run a day, the “Identification” number must change. You may run several dunning runs on the same date but the “Identification” name must be different as well as certain parameters such as the “Dunning Date” and “Documents Posted up to” date.

Chart of Accounts

CHART OF ACCOUNTS

Transaction Code :-OBY7

A Chart of Accounts is a detailed listing of all the accounts the company uses for recording transaction that represent both Balance Sheet and Profit & Loss accounts

    v Contains list of  G/L accounts in an ordered form

     v Each general ledger is set up according to a COA

     v Many company codes may use the same COA

     v All a group  Organizational units use the same Chart of Accounts

TYPES OF  COA:-

1. Operating Chart of Accounts
2. Group Chart of Accounts
3. Country specific Chart of Accounts

Charts of accounts can have three different functions in the system:

1.     Operating chart of accounts

The operating chart of accounts contains the G/L accounts that you use for posting in your company code during daily activities. Financial Accounting and Controlling both use this chart of accounts. You have to assign an operating chart of accounts to a company code.

Operating COA- Used for recording day to day business transactions

2.     Group chart of accounts

The group chart of accounts contains the G/L accounts that are used by the entire corporate group. This allows the company to provide reports for the entire corporate group. The assigning of an corporate group chart of accounts to a company code is optional.

Group COA- used for consolidation purpose in case you have more than one operating chart of account

3.     Country-specific chart of accounts

The country-specific chart of accounts contains the G/L accounts needed to meet the country's legal requirements. This allows you to provide statements for the country's legal requirements. The assigning of an country-specific chart of accounts to a company code is optional.

                       

country specific COA- if you have two company codes , one is US and one in europe and you have chosen to use one chart of account for the two company codes, then to record country specific transactions , like tax, etc you can use country specific chart of account

Required information to create a chart of account:

Chart of Accounts = Key in four-character alphanumeric identifier

Description = Chart of Account for <your company name>

Maint Language = English

Length of G/L Account Number = 6 (the valid range is 4 to 10)

Controlling Integration = Manual creation of Cost Elements

ERP Introduction

What is ERP?

ERP stands for Enterprise Resource planning, it is integrated all functions in one system. Organization will have no of departments in organization. ERP integrate all the functions into one system. It will facilitate free flow of data among the departments.

SAP Introduction

SAP stands for System Application and Products in data Processing

Five former IBM employees start a company they call SAP Systemanalyse 
und Programmentwicklung ("System Analysis and Program Development").

        v SAP was released in 1972 – Head quarters is in Germany  by      

             Wellenreuther, Hopp, Hector, Plattner and Tschira.

        v Renamed in 1977

History of SAP

v 1972 - SAP R/1 – Real time data processing

v 1980 -SAP – R/2 Included no. of countries and no. of currencies

v 1990 – SAP R/3- R/3 stands for Data Structure

                    1.Application Server

                    2.Data based server

                    3.Presentation

      v 1999 – My SAP.com – Web based

      v 2004 – Net weaver – Integrates information, people and process.

Enterprise Structure

What is a Company Code and what are the basic organizational assignments to a company code?

Company Code is a unique four alphanumeric characters that represents an independent and legal accounting entity.

Company Code is a legal entity for financial statements like Profit and Loss and Balance Sheets are generated. Plants are assigned to the company code, Purchasing organization is assigned to the company code, and Sales organization is assigned to the company code.

What is the relation between a Controlling Area and a Company code?

A Controlling area can have the following 2 type of relationship with a Company code

a. Single Company code relation

b. Cross Company code relation

Controlling Area is the umbrella under which all controlling activities of Cost Center Accounting, Product Costing, Profit Center and Profitability Analysis are stored.

In a similar way Company Codes is the umbrella for Finance activities.

How many Chart of Accounts can a Company code have?

The COA is a variant that contain the structure and the basic information about general ledger accounts.  COA is used by one or several company codes. Only one COA can be assigned to CCODE.

But Country Specific and Group COA are optional. When we use parallel COA like Country specific, we need to choose which one should consider for B/Sheet and P&L account.

What are the options in SAP when it comes to Fiscal years?

Fiscal year is nothing but the way financial data is stored in the system. SAP provides you with the combination of 12 normal periods and also four special periods. These periods are stored in what is called the fiscal year variant.

There are two types of Fiscal Year Variant

• v Calendar Year
• v Year Dependent Fiscal Year

SAP allows maximum of 16 posting periods each fiscal years. The 16 periods normally comprise 12  regular posting period and 4 special positing period which can be used for such things as posting audit or tax adjustments to a closed fiscal year.

• v K4 = JAN-DEC
• v V3= APR-MAR
• v V6= JUL- JUN
• v V9= OCT-SEP
• v R1= SHORTERNED FISCAL YEAR

What is a year dependent fiscal year variant ?

In a year dependent fiscal year variant the number of days in a month

are not as per the calendar month.

  

How does posting happen in MM (Materials Management) during special periods?

There is no posting which happens from MM in special periods. Special periods are only applicable for the FI module. They are required for making any additional posting such as closing entries, provisions. which happen during quarter end or year end.

How many currencies can be configured for a company code?

A company code can have 3 currencies in total. They are local currency ie company code currency) and 2 parallel currencies. This gives the company the flexibility to report in the different currencies.

Do you require to configure additional ledger for parallel currencies?

Where only 2 currencies are configured (Company code currency and a parallel currency) there is no need for an additional ledger. In case the third parallel currency is also configured and if it is different than the second currency type, you would then need to configure additional ledger.

If there are two company codes with different chart of accounts how can you consolidate their activities?

In this case you either need to write an ABAP program or you need to implement the Special Consolidation Module of SAP. If both the company codes use the same chart of accounts then standard SAP reports give you the consolidated figure.