SAP Implementation Business Blueprint S2-010 – General Ledger Processing

SAP Implementation

Business Blueprint

S2-010 – General Ledger Processing

© SAP 2008 / Page 2

Table of contents

SAP Global Settings Fiscal Year Variant Posting Period Variant Document Type Posting Key Foreign Currency Conversion Tax Code FI document reversal

General Ledger Processing Master Data Maintenance Posting in Financial Accounting Recurring Entries Document FI Document Reversal Cross-company Financial Transactions

Period-End Closing G/L account foreign currency revaluation G/L account clearing G/L balance carried forward

Appendix

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This document describes the design concepts for each business financial process identified for OTEL group. Each section will show the business process flow, its design concept and an overview for the master data and configuration variables that meet the design. The global system settings are also be highlighted.

Sections:-

Global Settings General Ledger Processing Inter-company Financial Transactions

Introduction

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The fiscal year variant is used to define the fiscal year of each company code.

Special periods are defined as those posting periods, after the 12-month fiscal year posting periods, that will be used for audit and other year end adjustments. There are four maximum special periods (period 13 to 16) in the SAP system.

The following fiscal year variant is to be configured in OTEL system:

Note :

The OTEL Group companies’ year end date is on 31 Dec. (12 periods).

The period 13 to 16 are mainly use for adjustment purpose.

India has the different year end date, need to build one more set of ledger setting. - To Be Confirmed.

Global SettingsFiscal Year Variant

Fiscal Year Variant

Fiscal Year Duration Fiscal Period

Number of Special Period Description of Variant

K4 1 Jan - 31 Dec12 Calendar

Period 4Jan-Dec , 12 posting periods, 4

special periods

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The account posting periods for FI (Financial accounting) are controlled by “Posting Period Variant”. Usually, only the current period is open for posting. Special period can be opened for period-end closing. Period can be closed or opened by specify account type (Asset, Customer, Vendor, Material, General Ledger). Each company code in OTEL has their own posting period control.

Example:

Global SettingsPosting Period Variant

Posting Year Variant

Account Type From Acct To Acct From Period Year To Period Year

HKG1 + 1 2009 12 2009HKG2 + 1 2009 12 2009BJS1 + 1 2009 12 2009

Account Type

+ All Account Type

A- Asset

D- Customer

K- Vendor

M- Material

S- General Ledger

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Accounting documents are the linkage between the business transaction and posting in accounting ledger. Only completed documents can be posted. A document is complete when its debit and credit items balance to zero. The minimum account assignments designated by the system must be entered: For example, document date, posting date, document type, posting key, account number, and amount.

Document types for customer, vendor and general ledger business transactions in Financial Accounting which differentiate business transactions and control document filing. Document types are valid for all clients. A number range should be specified for each document type. Document numbers are chosen from this number range. One number range can be used for several document types.

There are two types of document number assignment: Internal number assignment occurs automatically in the SAP system. External number assignment is performed by the user.

The fiscal year dependent document number ranges will be defined for each company code in OTEL, the document number ranges have to reset yearly.

Global SettingsDocument Type

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Posting key control functions within accounting document line item. It control which type of account the line item can be posted to, and the item is posted as a debit or credit entry. Standard posting key will be adopt in OTEL system. Below is the list of standard posting key in SAP.

Global SettingsPosting Key

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Global SettingsForeign Currency Conversion

Exchange Rate Type

For every combination of two currencies, different exchange rate can be maintained which is distinguished by an exchange rate type. These different exchange rate type can be used for various purposes such as valuation, translation, planning, etc.

Since exchange rate is a client level setting in SAP, system will utilize this rate as a default exchange rate. This default exchange rate can be overwritten manually in document level.

Note:

The M and S rate will be input by OTEL HK. HQ.

The R rate if no special request by the local government or authorities. Will also be input by OTEL HK HQ.

Exchange Rate Type Description Usage

M Average Rate Apply for daily accounting transaction entries in SAPP Budget Rate Apply for budget planningR Month End Rate Specific for foreign currency revaluationS Selling Rate Apply for Freight System CMC currency translation

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Global SettingsForeign Currency Conversion

Exchange Rate Maintenance Work List

In order to apply the authorization control on the maintenance of currency exchange rate, an exchange rate maintenance work list will be created. Authorized users will be assigned to particular work list, so that they can only edit the exchange rate limited to their responsible pair of currency exchange (e.g. HKD to USD, HKD to EUR, etc).

Example: -

Work List Frequency Tolerance Exch. Rate Type From Currency To Currency

HK_M Daily 3% M USD HKD

Daily 3% M EUR HKD

HK_R Monthly 3% R USD HKD

Monthly 3% R USD HKDCN_M Daily 3% M USD CNY

Daily 3% M EUR CNYCN_R Monthly 3% R USD CNY

Monthly 3% R USD CNY

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Tax Calculation Procedure

A calculation procedure is defined for each country, each containing the specifications required to calculate and post tax on sales/purchases. In OTEL, the following procedures will be used.

Notes: as each country have its own tax calculation procedures,

it has more effect on the country which have input and output tax.

Tax codes are used to check the tax on sales/purchases amount in the document and determine the tax account.

Global SettingsTax Code

Calculation Procedure

Country

TAXHK HKTAXCN CNTAXMY MY

Country Tax Code Name Rate%

HK A0 Output Tax 0% 0%V0 Input Tax 0% 0%

CN A0 Output Tax 0% 0%V0 Input Tax 0% 0%

MY A0 Output Tax 0% 0%V0 Input Tax 0% 0%

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The central task of G/L accounting is to provide a comprehensive picture for internal and external financial reporting. In G/L accounting, all business transactions are fully integrated with all the other operational areas such as Cost Center Accounting, Account Payable and Account Receivable, etc. This integration will ensure the accounting information is always complete and accurate.

The G/L process involves automatic and simultaneous posting of all sub-ledger items in the appropriate general ledger accounts (reconciliation accounts). The sub-ledgers include Account Receivable, Account Payable and Fixes Asset. In OTEL, Freight system (CMC) will also be integrated to G/L.

Essentially, the general ledger serves as a complete record of all business transactions. It is the centralized, up-to-date reference for accounts. Actual individual transactions can be checked at any time in real time processing by displaying the original documents, line items and transaction figures at various levels such as account information, journals, totals/transaction figures and balance sheet/profit and loss evaluations.

General Ledger Processing

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General Ledger Master (Both COA and Co Code to be maintained by the HK HQ)

G/L account master records in SAP control the posting of accounting transaction to G/L accounts and the processing of the posting data. G/L account master records are divided into two area levels.

Chart of Account Level (Attached please find the updated COA for your reference)

The chart of account area contains the data such as the account number, description, account group, etc that is valid for all company codes under same chart of account.

Company Code Level

The company code specific area contains data that may vary from one company code to another, such as the country specific alternative account number.

One global operating chart of account “OTEL” will be set up for all company codes in OTEL group. However, company code specific data will be only created to necessary OTEL’s companies, whenever it is appropriate. Meanwhile, only general ledger master data with both chart of account data and company code specific data can be posted into General Ledger in SAP.

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General Ledger Master Maintenance

Chart of Account Maintenance

FinanceDepartment

Start

Check Existing G/L account

Account Exist?Request for

Change?

Request for G/L account Maintenance

Approved?

Maintain G/L COA level data (if any)

No

Yes

No

Yes

SAP

SAP

End

Yes

Maintain G/L with Company code level

data (if any)

SAP

NoPropose another

G/L account

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General Ledger Master

When creating a G/L account, account group must be specified:

The account group determines: the interval in which the account number must be. which fields are required and optional entries when creating and changing master

record. which fields are suppressed when creating and changing master data

No.G/L Account

Group Description Number Range (From) Number Range (To)1 100 Non-current assets 10000000 199999992 200 Current assets 20000000 29999999

3 300 Non-current liabilities 30000000 399999994 400 Current liabilities 40000000 499999995 500 Capital and Reserve 50000000 599999996 600 Revenues 60000000 699999997 800 Expenses 80000000 899999998 900 Taxation and Dividend 90000000 909999999 999 Data Conversion 99000000 99999999

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For the Company Code Specific data, the following major master data information are being highlighted: Field Name Field Description Data

Account Currency When creating a G/L account, account currency must be defined. This defines the following:•The currency used for postings made to this account.•The currency in which transaction figures are updated and the account balance is displayed.

Except those of foreign currency bank account, all other accounts are kept with local currency, i.e. HKD for Hong Kong based company

Balances in local currency only

When creating a G/L account in a company code, you can decide whether the transaction figures should only be kept in the local currency for this account.

Clearing accounts for goods receipt / invoice receipt (GR/IR) and inventory accounts are, for example, set with this indicator.

Tax category In tax accounts, the type of tax on sales/purchases (input or output tax) that can be posted to the account is specified. Automatic tax calculation will be available.

The implementation involves the company only in Hong Kong. Therefore, no tax category is defined at this stage.

Posting without tax allowed

If this indicator is set, no tax code needs to be entered when posting to this account even tax category is defined. If a tax code is entered, it is checked according to the tax category.

This indicator is set to ensure posting can be made even no tax code is entered.

Reconciliation account for account type

This field is used to indicate G/L accounts as being reconciliation accounts. For each sub ledger account, at least one reconciliation account in the general ledger is kept. When you post to an account in the sub ledger, the system automatically posts to the corresponding reconciliation account. The "Receivables from goods and services" account is an example of a reconciliation account for customers. Enter Customer in the Reconciliation account for account type field. Enter a Vendor in this field for a vendor reconciliation account.

• D – Customer (Accounts Receivable)• K – Vendor (Accounts Payable)• A – Asset (Fixed Asset)

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For the Company Code Specific data, the following major master data information are being highlighted: Field Name Field Description Data

Open Item Management

If this indicator is set in the master record for an account, the line items of this account is marked as open or cleared.The balance of an account with open item management is equal to the balance of the open items. General ledger accounts are kept with open item management if you need to check whether there is an offsetting posting for a given business transaction.

All clearing accounts (including GR/IR account, bank clearing account and advance payment account) will be managed by Open Item.

Line Item Display If this indicator is set for an account, all line items that have been posted to this account are displayed if they have not been archived. With line item display, the system lists all the line items for an account.

All accounts in OTEL will be checked with line item display.

Field Status Group This field is to define which fields are displayed when posting accounting transactions to a G/L account. A field may have one of the following statuses:• Hidden (suppressed)• Entry required (required field)• Ready for input (optional field)

Field status group of OTEL would adopt the SAP standard.

Alternative Account number

The account number from country chart of account The alternative account number is issued in the financial statement if you explicitly assign it to the relevant items in the financial statement.

Automatic postings(only)

For example, tax amount, cash discount amount, and gains or losses from foreign currency translations (exchange rate differences) can all be calculated and posted automatically by the system. You can decide that accounts to which these automatic postings are made can only be posted to automatically. This prevents any manual postings to such an account.

In OTEL, inventory account and clearing (GR/IR accounts) would apply with automatic posting option.

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Posting in Financial Accounting

Post Recurring Entries?

Park/Change Voucher

T-code: FV50

Post Recurring Voucher

T-code: F.14

Post Parked VoucherT-code: FBV0

Reverse Recurring Voucher

T-code: FB08

Approved?

Start End

Yes

No

Yes

No (recurring voucher)

No (single voucher)

1st time

Approved before

SAP

SAPSAP

SAP

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Posting in Financial Accounting

Apart from Receipt Voucher, Payment Voucher and posting from CMC Freight interface, a document will be withheld from posting due to the incomplete supplement documents or pending checking on the transaction detail. Once the required information being obtained, the respective document will be posted in to the GL system. A park and post document process will be adopt in OTEL

Prepared By Posted By

Enter the voucher by t-code FV50 (Park G/L account document) with status “Park”

Enter the voucher by t-code FV50 (Park G/L account document) with status “Park”

Save the document with status “Complete”

Save the document with status “Complete”

“Post” the accounting document by t-code: FBV0

“Post” the accounting document by t-code: FBV0

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Recurring Entry

Recurring entries is a function to produce repeated regular accounting transactions, such as rent or insurance. You enter this recurring data in a recurring posting document as a document template. This document template does not update the transaction figures. The recurring posting program uses this document template as a basis for creating accounting documents. Cross-company code transactions cannot be posted with the recurring entry program.

The following data never changes in recurring entries: -

Posting Key

Account

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FI Document Reversal For reversing FI documents, the reversal reason has to be specified. OTEL will

adopt the following reason code for account analysis purpose:

Reason code Text

01 Reversal in current period

02 Reversal in closed period

03 Actual reversal in current period

04 Actual reversal in closed period

05 Accrual

06 Dishonor cheque

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Cross-company code transaction Cross-company code postings occur when sales and purchasing or service

rendered within company. They can also occur when the transactions of payment on behalf, inter-company rental fee or service charge, corporate management fee, etc are made. You define the accounts for the offsetting entries the system makes when posting cross-company code transactions. These offsetting entries represent the receivables and payables between company codes.

Once the cross-company code transaction was posted, system create several accounting documents for individual company. Conversely, all accounting documents will be reversed by using the document reversal function at once.

In OTEL, the inter-company vendor and customer account are assigned as the offsetting account between company codes. An affiliate code “trading partner” must be maintained in each inter-company vendor or customer. So that the trading partner field can be carried automatically into line items.

* Refer to the Excel spreadsheet in appendix for the details of the account assignment on the cross-company code transaction

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Period-End Closing

G/L Account Foreign Currency Revaluation

The revaluation only takes place for GL accounts balance in foreign currencies. During the revaluation process, the system will calculate the GL account balance in foreign currency converted at the latest valid rate of exchange rate type “R” in exchange rate table. System make comparison to the posted amount in local currency and post the different to reflect the current account value for balance sheet reporting purposes.

OTEL will perform the foreign currency revaluation as one of the month end and year end closing procedure.

The relevant exchange gain/loss accounts are as follow: -

G/L Account Description E/R Diff Key in G/L Master

P&L Account number to be posted

Unrealized gain/loss on revaluation/ exchange REVAL 62010006

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Period-End Closing

G/L Account Clearing

Account clearing is a procedure by which the open items belonging to one or more accounts are indicated as cleared. This process is applicable for balance sheet account which is managed in open item basis. By using t-code F-03 (Clear G/L Account), you can manually select and offset the account line items if the total credit amount equals the total debit amount. The status of line items will change to “cleared” after clearing. This can reduce the number of “open” line item of the balance sheet account.

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Period-End Closing

G/L Balance Carried Forward

This process involves carrying forward account balances into the new fiscal year. The balance to be carried forward is shown in the account balance display. To carry forward balances, you can use separate programs for G/L accounts, and for customer and vendor accounts.

The balances on the balance sheet accounts are simply carried forward into the new fiscal year.

Profit and loss accounts are carried forward to retained earnings accounts. The balances of the profit and loss accounts are set to 0.

The Retained Earning Account is 52010000.

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SAP Implementation Business Blueprint S2-010 – General Ledger Processing