Design Phase

Financial
Organizational
Structure
 Workshop Objectives

• SAP Organizational Concepts

• Financial Organizational Structures and key Master Data

• Action Items- Next Steps

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 What is SAP?

• Started in 1972 by five former IBM employees in

Mannheim, Germany
• The original name for SAP was German: Systeme,
Anwendungen, Produkte, German for "Systems
Applications and Products."
• The original SAP idea was to provide customers with the
ability to interact with a common corporate database for a
comprehensive range of applications
• Gradually, the applications have been assembled and
today many organizations are using SAP products to run
their own operations

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 The SAP System: Modularity and Integration

MM External
MM
Inventory
Inventory
External
reporting
reporting • SAPs perhaps most
MM
MM
SD GM Avail
Avail
important benefit:
Purchasing Control
Purchasing Control
CO INTEGRATION
Payroll
MM FM CO
Cost
Cost
Centers
Payroll
Centers – Components or solutions
HR CO in SAP are real-time
Travel integrated
Travel CO
Mgmt. CO
Mgmt. Orders
TV
TV
Orders – This increases users
AP GL efficiency significantly,
because data only needs
AR AA to be entered one time,
you can re-use data, you
TR PS have high data validity
Cash
Cash Banking
and so on. . . .
Flow Banking
Flow

Integration - Integrity - Standardization - Accountability

 Main Menu

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 SAP Data structure

Drives the fundamental SAP

data framework within the Client
SAP system Org CONFIGURATION SIDE
Structure
FUNCTIONAL SIDE

SAP’s static informational

and processing data
Master Data

Tasks which
combine to form
integrated
business processes Transactions

 IMG
G/L Account
Transaction

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 SAP Hierarchy - Generic Example

Client

Controlling Controlling
Area Area
Business Business
Area Area
Company Company Company
Code Code Code

Sales Purchase Sales Purchase

Organization Organization Organization Organization

Distribution
Plant Plant
Channel

Division

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 The Client

• Definition
– The highest level in the organization
structure
– All areas of an organization that are to Instance
be integrated into the SAP system
– production system should be included
under one client
Client Client

• Relationships Company Company Company

– A client contains one or more company Code Code Code
codes
– At least one client must exist for each
database instance

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 FINANCIAL ORGANIZATIONAL STRUCTURE

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 Financial Accounting

Client Highest level organizational entity in the SAP system

Chart of accounts contains a listing of all General Ledger

Chart of accounts.
Accounts
Assigned to one or more companies.

Company Smallest legal independent unit responsible for Balance

Code Sheet and Profit & Loss reporting.
Assigned to a Chart of Account.

Business Optional organizational unit designed for internal reporting.

area Does not produce a complete Balance Sheet.
Available to all companies within one client.

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 Financial Organizational Structure FI

Highest organizational structure for financial accounting and control

purposes. A company code is an independent unit that represents a legal
Company entity or balanced set of books.
Code
All structures within a company code have similar financial processes and
use the same chart of accounts. Only use ONE company code.

Represent separate, high-level areas of operation and responsibility within

Business an organization. These are agencies, lines of business, or locations where
area complete (or even partial) financial statements may be required. This
element is under evaluation from Client X

• All transactions relating to a given legal entity are recorded referencing the company code
representing that legal entity
• Company code is a level at which you can produce auditable financial statements (P&L,
balance sheet with complete retained earnings)
• A company code is assigned to one chart of account
•The Chart of accounts represents the Object codes of the current Client X GL account
string.
 IMG
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 Client X Object / GL Account – Preliminary Analysis FI

0100 5390 9181 7760 7760

1112 PETTY CASH

1131 ACCOUNTS RECEIVABLE
1132 ACCTS REC-ACCRUAL
1310 LAND
4190 OTHER FEDERAL DIRECT
5672 LANDSCAPE REPAIR
5673 DISASTER PROF FEES TREE R
5680 REMODELING

• ALL GL accounts must be analyzed

taking into account Financial
Statements and Budget Control Needs.
Integration with HR/Payroll

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 Financial Accounting & Controlling

Client

Chart of Chart of
Accounts Accounts

Controlling Controlling
Area Area

Company Company Company

Code Code Code

Business Business Business Business Business

area area area area area

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 Financial Organizational Structure CO

Controlling area is the umbrella in which expense management activities

Controlling
are performed. Controls boundaries in cost center accounting.
Area The controlling area is an organizational unit delimiting the company's
managerial accounting operations

• Acts as the boundary for the cost centers and hierarchies as the may object for expense
control
•The cost center is the smallest unit of responsibility within a company and is
embedded in the company's overall organizational structure.
•The cost centers are grouped together in decision, control, and responsibility units.
The main cost center group is called Standard Hierarchy
• Additionally, Internal orders or projects (WBS elements) can be used as expense
objects. These are used to monitor the costs of a time restricted job.
• G/L Accounts are defined as Cost Elements in Controlling.
•Cost Elements are organized in Groups for reporting

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 Cost center structure: Example CO

Region

Sewer Police

City
Location Location
Center

Main Region Region Region District District District District District District District
Line 1 2 3 7 8 1 19 24 38 37

Accounting
Projects
Maintenance
Engineering
Citizen Center
Maintenance
Transit

Public Safety

 Cost Ctr Hierarchy

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 Client X Location – Cost Center – Preliminary Analysis
CO

0100 5390 9181 7760 7760

9015 14 BUILDING OPERATIONS
9016 02 MANAGEMENT PROJECTS
9022 12 LABOR RELATIONS
9035 07 BUILDING OPERATIONS II
9126 13 TREASURER
9127 13 OFFICE OF FINANCIAL OPERATION
9128 13 FINANCIAL OPS/BUDGET
9129 13 GENERAL ACCOUNTING
9130 12 BUSINESS OPERATIONS
9131 20 MANAGEMENT & COMPLIANCE AUDIT
9132 20 AUDIT & INVESTIGATIVE AFFAIRS
9135 03 NORTHWEST REGIONAL TRANS CTR
9141 13 ACCOUNTS PAYABLE
9151 13 CONTROLLER

• ALL location codes must be analyzed

for Internal reporting and Budget
Control Needs. Integration with
HR/Payroll is necessary.
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 Financial Organizational Structure - FM FM

The FM area is derived from Financial Accounting organizational unit, the

FM Company Code by assigning the company code relevant for Funds
Area Management in your organization to an FM area.

• The FM area provides a boundary for budgeting processing

• Acts as the boundary for the Funds, Commitment Items and Fund Centers and
corresponding Hierarchies
• The Funds within a FM area represent funds which are limited as to time available or
function, which have been made available to cover specific expenditures..
• Commitment items classify budget transactions and business transactions affecting
liquidity into revenue, expenditure, and cash balance items. Commitment items in
Funds Management are arranged in hierarchies.
• The Fund Center within an FM area represents the structure of an organization
(areas of responsibility, departments, projects) in the form of a hierarchy.
• The Funded Program within an FM area A program within Funds Management with
an operational purpose and a defined time frame. Funded programs enable you to
record budget, control postings, and monitor the performance of internal projects
• The Functional area is an additional dimension in FM used to manage budget
according to the different missions of the organization
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 Master Data Relationship

Controlling
Company Code FM Area
Area
. gr O
. c urt S

Cost Commitmen Sponsor

GL Acct t Item
Element Class
Business Cost Fund Sponsore
Area Center Center d Program
(combination
Funded of Fund
IO/WBS Center,
Program Funded
Program and
Functional
Functional Area
at a Dr et sa M

Area)

Fund
Fund (Internal) (External
)

Grant

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 Master Data Relationship Overview at Client X

GM
FI CO
MSAF FM Grantee
Financial Controlling Funds Management Management
Accounting (managerial/cost
(budgetary accounting) (sponsor’s view/reporting
(external accounting) accounting)
requirements)

Cost Element
Commitment
Object GL Account Primary & Sponsor Class
Item
Secondary

Fund Fund Fund Fund Fund

Location Business Area Cost Center Funds Center

Program & Internal Order Sponsored

Funded Program
Project WBS Element Program

Function Functional Area Functional Area Functional Area

Grant Grant Grant Grant Grant

Budget Validity
Fiscal Year Fiscal Year Fiscal Year
Period

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 Financial Organizational Structures Overview

General Ledger External Accounting Internal Accounting Cost centers

Accounts Payable Cost Elements
Accounts receivables Internal Orders
Asset Accounting FI- Financial WBS elements
CO – Management
Bank Accounting Accounting Bank Accounting
Accounting
User
Interface

Fund .
FM - Funds GM -Grants
Fund center .
Management Management Sponsor Class
Commitment Items . Fund
Functional Areas . Sponsored Program
Budgetary Accounting Grants Accounting Grants

Funded Programs

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 ACTION ITEMS – NEXT STEPS

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 Action Items – Next Steps

• Organize project team / responsibilities

– Allocation of Resources to research & analyze
• Understand the Design project methodology and tools
– Kick off meeting
– Industry print and Thread Manager training
– Deliverables and Time-line
• Plan work sessions with SMA’s
• Develop system design - 90/10 goal
• Prepare for workshop
– Reports
– System Maps
– Interfaces
– Transaction Lists
– Roles
– Master Data: GL accounts, locations, Funds, Grants, Funded Programs, etc.

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 Preparations for GL and Cost Center workshops

• GL Accounts
– Client X Object Code map with Governing Body Red Book
– Analyze current Reports and Budget structure
– Check integration with Payroll (Account assignment / Wage Types)
– Analyze differences and map with SAP functionality
– Define Preliminary Chart of Accounts
• Cost Centers
– Analyze Client X Location Codes
– Check Integration with HR/Payroll: Organizational structure
– Analyze Budget Structure (Budget controlled at department level)
– Map with SAP functionality
– Define Preliminary Cost Center Structure

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