Financial Terms in SAP 1. Business Area 2. Chart of Accounts 3. Client 4. Commitment Item 5. Company Code 6. Controlling Area 7. Cost Center 8. Cost Center Group 9. Cost Element 10. Cost Object 11. Cost Sharing 12. Cost Sharing (Committed) 13. Cost Sharing (Non-reportable/Voluntary) 14. Cost Sharing (Reportable/Mandatory) 15. Customer Aging 16. Customer (A/R and S/D) 17. Derivation Rule 18. Dunning (A/R) 19. Financial Management Area 20. Functional Area 21. Fund 22. Funds Center 23. Funds Center Group 24. General Ledger Account 25. Grant 26. House Bank 27. Internal Order 28. Land Grant 29. Letter of Credit 30. Master Data 31. Revenue Element 32. Special Purpose Ledger 33. Sponsor 34. Sponsored Class 35. Sponsored Program 36. Statistical Internal Order 37. Work Breakdown Structure (WBS) Element 38. Workflow

1 Current Terminology: Corporation/Reporting Entity SAP Terminology: Business Area SAP Definition: An organizational unit that requires audited financial

statements for external use. Often this corresponds to a separate operational or responsibility area in the organization at the highest level.

Module(s): All Example(s): Housing and Dining, Hospital, UKRF

2 Current Terminology: Chart of Accounts - SL Object (Sub) Code and GL Account

Controls SAP Terminology: Chart of Accounts SAP Definition: A chart of accounts provides a framework for the recording

of values to ensure an orderly rendering of accounting data. The chart of accounts is the operative chart of accounts and is used in both financial accounting and cost accounting.

Module(s): FI, CO, FM SAP Example(s): Cash – 110000, Accounts Payable – 210000, Salaries - 711010 FRS Example(s): Cash – 1100 Accounts Payable – 2100, Salaries - 7110

3 Current Terminology: Training/Development/Production Systems SAP Terminology: Client SAP Definition: In commercial, organizational and technical terms, a self-

contained unit in an R/3 System with separate master records and its own set of tables.

Module(s): All

4 Current Terminology: Subsidiary Ledger - Revenue and Expense Object (Sub)

Codes SAP Terminology: Commitment Item SAP Definition: Commitment Items represent budget classifications of

revenues and expenditures in the Funds Management Module. Commitment items are linked to the GL account in FI and the revenue and cost elements in CO. With this linkage, transactions posted to the GL account or revenue or cost elements are automatically posted to FM. Commitment items can also be arranged in a multi-level hierarchy where the top nodes are defined for reporting and/or controlling levels.

Module(s): FM SAP Example(s): Miscellaneous Income – 636500, Current Expenses - 730500 FRS Example(s): Miscellaneous Income – 0365, Current Expenses - 3050

5 Current Terminology: Not Applicable SAP Terminology: Company Code SAP Definition: The highest organizational unit of financial accounting for

which a complete self-contained set of accounts can be drawn up for purposes of external reporting. The University will utilize a single company code (UK00).

Module(s): All

6 Current Terminology: Not Applicable SAP Terminology: Controlling Area SAP Definition: An organizational unit within a company, used to represent

a closed system for cost accounting purposes. The University will utilize one controlling area (UK00) that will include a single company code (UK00).

Module(s): CO

7 Current Terminology: Subsidiary Ledger Account SAP Terminology: Cost Center SAP Definition: An organizational unit within a controlling area that

represents a clearly delimited location where revenue and costs occur. Organizational divisions can be based on functional requirements, allocation criteria, physical location and/or responsibility for costs. Cost centers will be used for certain current SL accounts. They will replace FRS ledgers 1, 2, 3 (except 3-5XXXX, 3-6XXXX), 5, 8 and 9.

Module(s): CO SAP Example(s): Financial Systems – 20130800, Haggin - 31708500 FRS Example(s): Financial Systems – 201308, Haggin - 317085

8

Current Terminology: Responsibility Roll-Up Reporting SAP Terminology: Cost Center Group SAP Definition: A hierarchical group of cost centers defined and organized

according to selected criteria. (also see Funds Center Group). It can be any group of cost centers used for reporting aggregated data.

Module(s): CO Example(s): Animal Science State Research

9 Current Terminology: Subsidiary Ledger Revenue and Expense Object (Sub)

Codes SAP Terminology: Cost Element SAP Definition: A cost element classifies the organization's expenses within a

cost object (Examples: cost center, internal order, WBS). A cost element corresponds to a commitment item in FM and the GL account in FI.

Module(s): CO SAP Example(s): Miscellaneous Income – 636500, Travel in State - 730110 FRS Example(s): Miscellaneous Income – 0365, Travel in State - 3011

10

Current Terminology: Account Number SAP Terminology: Cost Object SAP Definition: A generic term referring to both cost centers and internal

orders. Module(s): All SAP Example(s): 2-0051500, 4-6545000 FRS Example(s): 2-00515, 4-65450

11 Current Terminology: Cost Sharing SAP Terminology: Cost Sharing SAP Definition: An agreement by the University to support the costs of

certain sponsored projects through University funds, third party sponsors or volunteer time. Cost sharing is normally broken into three categories:

1) Reportable/Mandatory 2) Committed, and 3) Non-Reportable/Voluntary. SAP will allow cost sharing to be budgeted and recorded along with the grant in Grants Management (GM) by identifying the funding sources in the grant master data.

Module(s): GM

12 Current Terminology: Cost Sharing (Committed) SAP Terminology: Cost Sharing (Committed) SAP Definition: Cost sharing that was included in the proposal document

that resulted in an award to the institution. This cost sharing was not required by the sponsor, but was offered and therefore becomes a commitment of the award.

Module(s): GM SAP Example(s): 20840500 - Bucks for Brains Summer Student Research FRS Example(s): 205405 - Bucks for Brains Summer Student Research

13

Current Terminology: Cost Sharing (Non-reportable/Voluntary) SAP Terminology: Cost Sharing (Non-reportable/Voluntary) SAP Definition: Cost sharing that was neither required by the sponsor, nor

included in the proposal. These are costs that were unanticipated by either party. For example, an investigator may have recorded that the planned effort would be 10 percent of the academic year effort. In reality, the investigator spent 12 percent of the academic year effort working on the grant. The extra 2 percent would be considered non-reportable/voluntary cost sharing. Currently, this type of cost sharing is only reflected in FES.

Module(s): GM

14 Current Terminology: Cost Sharing (Reportable/Mandatory) SAP Terminology: Cost Sharing (Reportable/Mandatory) SAP Definition: Costs required to be reported to the sponsor as detailed in

the request for proposal, sponsor guidelines or award document.

Module(s): GM SAP Example(s): 36010000 - Cost Share Community Outreach Partnership

Center Program FRS Example(s): 36010 - Cost Share Community Outreach Partnership

Center Program

15 Current Terminology: Not Applicable SAP Terminology: Customer Aging SAP Definition: An aging schedule of accounts receivable invoices is used

to review customer accounts for delayed payments. (Also see Dunning)

Module(s): FI

16 Current Terminology: Customer (A/R and S/D) SAP Terminology: Customer (A/R and S/D) SAP Definition: A business partner from whom receivables are due for,

among other things, goods delivered, services performed and rights transferred, and/or a business relationship exists, involving the issue of goods or services. Used for grant sponsors, employees for direct benefit billing and county appropriations.

Module(s): FI

17 Current Terminology: Not Applicable SAP Terminology: Derivation Rule SAP Definition: A rule defined by IF-THEN logic which controls how certain

target characteristic values are derived automatically from source characteristic values. This rule will be used to minimize entry of the account string to only those elements that vary or for which entry is required.

Module(s): All SAP Example(s): The functional area will be derived from the cost center.

18 Current Terminology: Dunning (A/R) SAP Terminology: Dunning (A/R) SAP Definition: Provides the ability to evaluate accounts receivable and

send notifications of invoices that are past due. Dunning incorporates many parameters, but normally the length of time an invoice is overdue is key to determining which notices to send. (also see Customer Aging)

Module(s): FI, CM

19 Current Terminology: Not Applicable SAP Terminology: Financial Management Area SAP Definition: SAP defines a financial management area in R/3 as the

organizational unit within an institution used to represent budgeted and actual revenues and expenses.

Module(s): FM

20 Current Terminology: PCS Code SAP Terminology: Functional AreaSAP Definition: SAP defines the functional area as a master data element

that is maintained within the Funds Management (FM) Module. It is used in FI to classify revenues and expenditures of an organization by function. Functional area is often referred to as mission. The functional area will be derived from the cost center.

Module(s): FI, FM Example(s): Instruction, Academic Support, Research

21 Current Terminology: General Ledger Account (Map Code Account) SAP Terminology: Fund SAP Definition: A separate and distinct fiscal/accounting object containing

a self-balancing set of accounts used to budget and control costs and to identify source and use of funding. Financial data will be separated by Funds so that certain activities can be performed or objectives achieved in accordance with special regulations, restrictions, or limitations. Fund is not hierarchical. The Fund is the lowest level at which a balance sheet can be created.

Module(s): FI, FM SAP Example(s): 01000100 - President’s Office - University General Fund FRS Example(s): 010001 - President’s Office - University General Fund

22 Current Terminology: Not Applicable SAP Terminology: Funds Center SAP Definition: An organizational unit within the Funds Management (FM)

Module. It represents the lowest level area of responsibility for budgetary monitoring and controlling costs by area of responsibility. Fund centers are arranged in a multilevel hierarchy where a parent-child relationship is defined for reporting and/or controlling levels. For the University of Kentucky, Fund Centers will have a one-to-many relationship with cost centers.

Module(s): FM SAP Example(s): 2-5300600 Animal Science Research State Funds (funds

center) • 2-5301600 Beef Cattle Nutrition Research (cost center) • 2-5302600 Swine Nutrition Research (cost center) • 2-5300600 Animal Science Research State Funds (cost

center) FRS Example(s): 2-53006 Animal Science Research State Funds (parent)

• 2-53016 Beef Cattle Nutrition Research (child) • 2-53026 Swine Nutrition Research (child)

23 Current Terminology: Department, College, Area Roll-Ups for budget monitoring SAP Terminology: Funds Center GroupSAP Definition: Funds Centers can be grouped together to form funds

center groups (not necessarily hierarchical). Funds Center groups will be used to provide the organizational structure for reporting information from the SAP system. Budgeting will be done at the Funds Center level.

Module(s): FM

24 Current Terminology: Account Controls/Object (Sub) Codes SAP Terminology: General Ledger (GL) Account SAP Definition: A structure that records values and represents assets,

liabilities, revenues, expenses and fund balances. A G/L account has transaction figures that record changes to the

account during a posting period. These figures are used for financial reporting.

Module(s): FI SAP Example(s): Cash – 110000, Accounts Payable – 210000, Salaries - 711010 FRS Example(s): Cash – 1100, Accounts Payable – 2100, Salaries - 7110

25 Current Terminology: Grant, Contract, Cooperative Agreement SAP Terminology: Grant SAP Definition: Contains financial conditions and legal rules agreed upon

by the sponsor and the University which may require financial reporting. It can cover project costs partially or in total. It has a limited life cycle, split into phases, indicated by a system status in GM as follows:

Proposal: The proposal is a complete formal document, including budget.

Award: If the sponsor approves the grant, an award is received. This is the operative phase of the grant. The budget is released in whole or in part in this phase.

Conclusion: If an award is expired, but not closed, then it is in the conclusion phase. There are posting restrictions on the grant in this phase.

Final Conclusion: The grant has expired and been closed. It can be archived, but no other actions are allowed.

Terminated: The grant was terminated, either for internal reasons or because the sponsor rejected the application.

Module(s): GM

26 Current Terminology: Disbursement Bank SAP Terminology: House Bank SAP Definition: A business partner that represents a bank through which the

University can process its own internal transactions. The University has four checking accounts with National City Bank. The vendor account – Bank 01 in FRS, maintains a specific account, which is the major disbursement account the University utilizes to pay its vendors. Other accounts are established for a specific disbursement purpose or for a restricted disbursement purpose.

Module(s): FI

27 Current Terminology: Job Order (6-XXXXX Accounts) SAP Terminology: Internal Order SAP Definition: Similar to a cost center, an internal order is used to record

and monitor costs and, in some cases, revenues. A guiding principle is that internal orders should be set up for programs that are short-term or finite in nature.

Module(s): CO

28

Current Terminology: Agriculture Federal Formula Funds/Appropriations

SAP Terminology: Land Grant SAP Definition: Agricultural Research and Cooperative Extension programs

in which funds are distributed by the U.S. Department of Agriculture on an annual basis according to a statutory administrative formula (non-competitive funding). Eligibility is limited to cooperating land grant institutions. Awarded on a federal fiscal year basis (October 1 – September 30).

Module(s): GM, FM

Example(s): Hatch, Multi-State Research, Smith-Lever Extension, McIntire-Stennis, Expanded Foods and Nutrition Education Program (EFNEP)

29

C urrent Terminology: Letter of Credit

SAP Terminology: Letter of Credit SAP Definition: An agreement between a sponsor and the University to

provide payment via Federal Reserve ACH when the University requests reimbursement for grant expenses. These sponsors have a secured system through which the University requests payment.

Module(s): GM

Example(s): Department of Health and Human Services, National Science Foundation

30

Current Terminology: Attributes/Data Elements SAP Terminology: Master Data SAP Definition: Master data form a pool of information stored on a long-

term basis in the SAP system and can be incorporated into

individual transactions. Master data are entered once and can be modified as needed.

Module(s): All SAP Example(s): The master data of a cost center contain the name of the

cost center, the person responsible for the cost center, and the corresponding hierarchy area. The master data of a vendor contains the name, address, and bank information for the vendor.

31

Current Terminology: Revenue Subcodes SAP Terminology: Revenue ElementSAP Definition: A revenue element classifies the organization's revenue

within a fund center. A revenue element corresponds to a cost element in CO and the GL account in FI.

Module(s): CO

32

Current Terminology: Not Applicable SAP Terminology: Special Purpose Ledger (SPL) SAP Definition: A special purpose ledger provides the ability to produce

balance sheets based on fund accounting. Most of the financial activities updating general ledger accounts will be posted to the special purpose ledger simultaneously as transactions are processed. It uses the split processor functionality to create entries to balance transactions among funds. The SPL shares the same GL accounts as FI. The difference between the two is that the SPL will break the transaction down even further to allow the correct split by fund and business area.

Module(s): FI SAP Example(s): 210000 – Account Payable

33

Current Terminology: Sponsor SAP Terminology: Sponsor SAP Definition: An organization or other source that finances a project

conducted by University personnel. The sponsor may agree to fund the project in total or in part based upon an application or proposal provided in response to a request for proposal. The sponsor may be a government agency, company, foundation, or individual interested in furthering study or interest in a particular area and is entitled to receive some consideration or benefits. The agreement from the sponsor represents a contractual obligation for performance of the specific activity by the University.

Module(s): GM

34

Current Terminology: Sponsored Class SAP Terminology: Sponsored Class SAP Definition: The sponsored class represents the sponsor's expense and

revenue classification. The sponsored class is used to group expenses and revenues in order to satisfy the sponsor's view and reporting needs. It is also used to specify in detail which expenses are relevant for billing and for indirect cost calculation.

Module(s): GM Example(s): Salaries, Materials and Supplies, Equipment

35

Current Terminology: PCS Code SAP Terminology: Sponsored Program SAP Definition: This master data element is maintained within the Grants

Management (GM) Module. It is used to classify revenues and expenditures of a grant by mission. Sponsored Program is equivalent to functional area in FM.

Module(s): GM

36

Current Terminology: User Code

SAP Terminology: Statistical Internal Order SAP Definition: An internal order created and maintained by a department

user to accumulate costs and revenues for internal reporting purposes. These orders are created using master data functionality and may be short- or long-term in nature. The user may enter the statistical internal order number on a posting transaction to make a real posting to a cost center and simultaneously make a statistical posting to the internal order to track department specific activity.

Module(s): CO SAP Example(s): A department may want to accumulate costs and revenues

associated with a conference. A statistical internal order may be created to track these costs for a fiscal year or across fiscal years as needed. Each transaction for the conference will contain an entry in the cost center and the internal order field when posted. Once entries are posted, the statistical internal order may be used for reporting as needed.

37 Current Terminology: Not Applicable SAP Terminology: Work Breakdown Structure (WBS) Element SAP Definition: A cost object, similar to an internal order, used to

represent grants, land grants and capital projects in the Controlling Module of SAP. When used for grants, the WBS element represents a grant in the Controlling Module and is used to post transactions to the grant in the Grants Module (GM). When used for capital projects, the WBS element represents a Project in the Controlling Module (CO) and is used to post transactions to the capital project in Project Systems (PS).

Module(s): PS Example(s): Milestone invoicing

38 Current Terminology: Not Applicable SAP Terminology: Workflow SAP Definition: The sequence and evaluation of conditions needed to

complete a business process. This is an electronic function monitored by the workflow manager within SAP.

Module(s): All Example(s): A possible workflow could be the electronic approval of

requisitions based upon material group, dollar amount and cost center. Based on the evaluation of these conditions, the requisition would be forwarded from the originator to the next appropriate user for approval. As the approvals occur, workflow will automatically route to the next level of required approval, and ultimately to the Purchasing Department.