FI-MM Integration

Process Flow in MM

Step 1 Generating purchase requisition( PP-MM involved)

Step 2 Making inquiries (MM)

Step 3 Raising purchase order (MM)

Step 4 Release of purchase order ( MM)

Step 5 Goods received from vendor ( MM and FI ) Entry will be Raw Material Inventory a/c Dr. GR/IR clearing a/c Cr.

Step 6 Invoice verification and quality assurance (FI and MM) Entry will be GR/IR clearing a/c Dr Vendor a/c Cr

Step 7 Goods issued for consumption(MM, FI and PP) Entry will be Raw material consumption a/c Dr Raw material inventory account Cr

Step 8 Production receipt( FI, MM & PP) Entry will be Finished goods inventory a/c Dr Change in stock Cr

Step 9 Finished goods delivered to customer(MM, SD & FI) Entry will be Change in stock Dr Finished goods inventory a/c Cr

Step 10 Raising invoice on customers( SD & FI) Customers a/c Dr Sales a/c Cr

Step 11 Receipt of payment from customers( Same as SD-FI integration)

CUSTOMIZATION STEPS

Main screen of FI-MM integration is OBYC Here we have to link the MM movement types to FI G/L accounts

Assign Following G/L accounts to movement type according to valuation class. BSX- Raw material Inventory account GBB- Raw material consumption account WRX- GR/IR clearing account

http://www.bhejacricket.com/sop2.htm

Please refer the period end activities list. Sl. No. Module Closing Activity Transaction 1 FI Open posting period 01 for New Year OB52 2 FI Capitalize AUC (Projects) Assets if needed AIBU 3 FI Upload Payroll Data into SAP ZMXFI03/ 04 4 FI Review Accounts Receivable Open Items S_ALR_87012174 5 FI Review Accounts Payable Open Items S_ALR_87012083 6 FI Post all Pending Invoices FB60/65/70/75 7 FI Clear Open Item for GRIR account F.19 8 FI Reconciliation of Financial Documents and transactional figures F.03 9 FI Perform Manual Adjustment if needed FB01 10 FI Verify balance of the GR/IR account FS10N 11 FI Post Accruals and Deferrals FBS1 12 FI Check the check run numbers FCHI 13 FI Reconcile GL balances with subledger balances AR/MM/AP "S_ALR_87012172 MC.9 S_ALR_87012082" 14 FI Post Balance Sheet Adjustments FB01 15 FI Post Foreign Currency Valuation (foreign exchange) F.05 16 FI Fiscal Yr Balance carryforward AP/AR/AM F.07 17 FI Fiscal Yr balance carryforward FI F.16 18 FI Set Document number ranges - FI - new year FBN1 19 FI Set Document number ranges AP/AR - new year FBN1 20 FI Generate Financial statement Reports F.01 21 FI Close Year Accounts Receivable Posting Period OB52 22 FI Close Year Accounts Payable Posting Period OB52 23 FI Close Year Materials Management Posting Period OB52 24 CO Open new CO Posting Period 25 CO Compare current (cost estimates) with last current price (Moving Avg) 26 CO Update current cost price to material master price field. 27 CO Review Internal Order Postings 28 CO Settle All Orders 29 CO Check Profitability Segment Adjustment 30 CO Check generic cost centers for posting with wrong accounts 31 CO Correct wrong postings on generic cost centers 32 CO Check Validation dates for Cost Centers, Cost Elements, CO area 33 CO Reconcile PA to G/L 34 CO Post Cost Centre Assessments and Distributions 35 CO Run CO-FI Reconciliation to balance 36 CO Maintain CO yr variant

37 CO Fiscal Yr Balance carryforward CO 38 CO Fiscal Yr balance carryforward PCA 39 CO Close CO Posting Period 40 CO Load Balances, Budget Data for Cost centers, sales 41 FI/MM GR/IR account maintenance - if necessary 42 MM Verify In-transist Inventory MB5T 43 MM Posting Goods Receipt and Invoice receipt on hand 44 MM Define Number Assignment for Material and Phys. Inv. Docs OMBT 45 MM Closing the MM Period MMPV 46 MM Maintain number ranges for Invoice documents OMRJ 47 SD Verify All Post Goods Issue have been Invoiced (Billing Due List) 48 SD Review SD Billng Doc from prior mth that have not yet been released to accounting 49 Process Freight charges, Match SD freight to actual 50 Clear all Pending IDOCs 51 Doubtful receiviables

Sales and Distribution Accounting Entries

INVOICE GENERATION Invoices will be generated at the Smelters and stock points. The accounting entries for the sale of goods despatched will flow from the Sales invoice generated in SAP Sales and Distribution module. The following entries shall be passed Customer Account Dr Revenue Cr Excise Duty Payable Cr Sales Tax Payable (local or central) Cr

Note: As mentioned above in the FI document, which is created in the background, the SD invoice number shall be captured. However as per the current accounting procedure the accounting entry passed is as follows :- Customer Account Dr Revenue Cr Excise Duty Billed Cr Sales Tax Payable (local or central) Cr

Excise duty paid a/c Dr Excise duty payable a/c Cr

EXPORT SALES There have been very few export transactions in the past. SAP system will be designed to handle export business. Exports are mainly from the mines and will be handled at the mines, however the documentation part will be taken care at the Head Office. The accounting entry is: Customer Account Dr Revenue (Exports) Cr

The realisation of export sales will be directly credited to the bank. The accounting entries will be as follow:

Bank Dr Customer Cr Exchange Fluctuation Dr/ Cr

The accounting entries will be: Rebates/Discounts Dr Customer Cr DEBIT MEMOS Debit Memos shall be issued in case of price difference, sale tax difference and interest on usance period and overdue payments.

The accounting entries for two possible scenarios are as follows: Price Undercharged: Customer Account Dr. Revenue Cr. Sales tax payable Cr. Sales tax undercharged Customer Account Dr. Sales tax adjustment Cr.

Interest on delayed payments/usance period and other charges Customer Account Dr. Interest Others Cr.

In case of HZL a complete retirement or a partial retirement of asset is done. The system uses the asset retirement date to determine the amount to be charged off for each depreciation area. The existing accounting policy is to provide depreciation for the full quarter in which the asset is sold/discarded, recommended that the depreciation be provided from the date of acquisition on prorata basis .

Accounting entry for sale of Asset to customers: Customer Account Dr Asset Sale Cr Accumulated Depreciation Dr Loss on Sale (if applicable) Dr Asset Sale account Dr Asset account Cr Profit on sale (if applicable) Cr

Note: In case of any Sales Tax /Excise duty applicable for this transaction, SAP will calculate the Sales Tax/Excise Duty based on the Tax Code selected the entry is posted to the GL Account (Sales Tax Payable)

Accounting entry for sale without a customer: Accumulated Depreciation Dr

Loss on Sale (if applicable) Dr Asset Sale account Dr Asset account Cr Profit on sale (if applicable) Cr

Accounting entry for scrap Accumulated Depreciation Dr Loss on Sale of Assets Dr Asset account Cr

SALE OF SCRAP The sale of scrap (non-stock) shall be mapped as a direct manual FI entry. The customer will be created as a FI customer. No Logistics module will be involved in the process.

A FI Invoice will be prepared for the sale of scrap with the following entries: Customer Dr Sale of Scrap Cr Excise Duty Payable Cr

ADVANCES FROM CUSTOMERS Advances are received from the customers against delivery. These advances will be recorded in a special general ledger account. The accounting entry for the same will be: Bank Account Dr Advance Customer Payments Cr

These advances will be later on adjusted against the invoices raised on the customers. Advances can be adjusted against more than one invoice at the time of clearing of the invoices against advances.

Adjustment of Advances Customer Account Cr Advance Customer Payments Dr

A financial document would be created for each Bank Guarantee received and this document number will be referred to in the Sales Order which would then monitor the value and the validity of the of the Bank Guarantee instrument wise while doing the billing.The letter of credit /Bank guarantee given will be recorded as a noted item.

Accounting Entry for Goods receipt Stock/Inventory account Dr GR/IR account Cr Freight clearing account Cr

Accounting Entry on invoice verification of supplier GR/IR Dr Vendor account Cr

Accounting Entry on invoice verification of freight vendor Freight clearing account Dr Freight Vendor account Cr

GOODS RECEIPT Based on the Purchase order and the Quantity actually received Goods Receipts (GR) will be done. Based on the GR done the following accounting entry will be passed in the Financial Accounts RM/PM Stock Account Dr GR/IR Account Cr Freight Clearing Account Cr

EXCISE INVOICE VERIFICATION On receipt of the excise invoice cum gate pass the following entry will be passed RG 23 A / RG 23 C Part 2 Account Dr Cenvat Clearing Account Cr