SAP Audit Issues

David Terpening,
New York Dept. of Revenue

Walter J. Cochara, CAS

State of California-Board of Equalization

Slide 1
Objective

Provide participants with an overview of the

necessary aspects needed to understand
general SAP concepts, and obtain usable data
extractions from SAP.
 What is SAP?
 In German...
Systeme, Anwendungen, Produkte in der
Datenverarbeitung

 In English...
Systems, Applications & Products in Data
Processing

Slide 3
 SAP and ERP
Enterprise Resource Planning (ERP)
An information system designed to integrate and
automate the business functions of medium and
large companies
Purchasing
Manufacturing
Distribution
Personnel
Financials
Slide 4
ERP Major Players
 SAP
 Oracle / Peoplesoft

 J.D. Edwards

 SSA (BAAN/Marcam)

 JBA

 Lawson / Intentia

 QAD
Learn the Lingo
 DOC Type
 DOC Number
 Goods Issue (GI)
 Goods Receipt GR)
 GRIR Account
 Intermediate Document (Idoc)
 Work Breakdown Structure (WBS)
 Assets Under Construction (AUC)
Learn the Lingo (cont’d)
 Stores Inventory
 Advanced Business Application
Program (ABAP)
 Audit Information System (AIS)
SAP R/3 Overview
 System Architecture
 Business Process Overview
 System Modules
 Standard Tables
 Document Structure
 ABAP Functionality
 Audit Information System (AIS) Overview
 SAP Architecture
Legacy SAP
Separate ledger for A/P All transactions are
transactions included in one ledger
VS
Differentiate transactions Differentiate transactions
by GL Account by document type

One entry contains all Relevant information

relevant information recorded in multiple
documents
SAP Architecture (cont’d)
The basic structure of SAP is fundamentally
different from that of a legacy system.

Legacy SAP
Accounts Accounts Materials
Receivable Payable Mgmt Inventory

Sales
General
Ledger Asset
Mgmt
General Finance
Inventory
Ledger Purchasing
 SAP Advantages
 One central database
 Real time processing
 Allows integration of legacy systems
 Document Balancing
 Manages Work flow

Slide 12
 SAP Disadvantages
 Data integrity must be maintained by all
users
 Numerous tables and Documents
 GRIR must be reconciled
 Audit trails can be disappear in data
extractions

Slide 13
SAP Business Processes
Know that over 1,200 business processes can
be defined by SAP!

 Highly flexible
 Customized to fit Company
 Can Choose implementation of

-Modules
-Business processes
-Import of Legacy/External Data
SAP Business Processes
…Therefore every SAP installation is different!

 Have clear understanding of business

 Processes that are effected by SAP
 Document Types Used
 Data Integrity (Is it SAP created?)
 Data Reconciliation (Tolerances)
 SAP R/3 Modules
 CO – Controlling
-Plants, Chart of Accounts, Customer/Vendor Masters
 FI - Financial Accounting
-Financials, G/L, A/P, A/R
 SD - Sales and Distribution (Orders, Invoicing,EDI
-Orders, Invoicing, EDI
 AM - Asset Management
-AUC account from A/P transactions
 MM - Materials Management
-Procurement for Production and Consumption
 PS - Project System (Construction Contractors)
Slide 16
 SAP Tables-General
 Master Tables
Chart of Accounts
Customers
Vendors
Employee

 Transactional data
Sale Invoices (A/R)
Purchases (A/P)
Inventory Movements (MM)
Assets (AM)

Slide 17
 SAP Tables-Examples
 Sales Tables
Customer Master (KNA1)
Sales Document Header (VBAK)
Sales Document Line Items (VBAK)
Billing Header Data (VBRK)
Billing Line Items (VBRP)

 A/P Tables
Vendor Master (LFB1 and LFA1)
PO Order Info (EKKO and EKPO)
Goods Receipt Line Items (EKBE)
Payables G/L Line Items (BKPF and BSEG)
Slide 21
Audit Challenge
Challenges in SAP that don’t exist in
other systems!
To overcome these challenges
 Understand SAP document types
 Specific Number Ranges apply to each
 Specific G/L Accounts mapped to each Doc Type
AP Doc Types
KA-KZ (vary by company)
KI-Interface (Legacy/P-Cards)
KN and/or RN-Non PO (aka Net
Invoice)
KR and/or RE-PO issued
Audit Challenge (cont’d)
Sales Doc Types
SA-SZ*
S1-S9*
*Will vary by Sales Channel / Revenue Source

Other Document Types (MM, Stores Inventory)

WA-Goods Issue
WE-Goods Receipt
Used for Prepaid Expense Inventory Tracking

Goods receipt document contains link to Vendor

and A/P transaction info!
R/3 Financials
(Financial Accounting -FI Module)
 General Ledger
Central pool of financial data
Real-time update of subledgers and GL

 Special purpose Ledger

User created combinations of entered data
Generate data summaries for planning, allocation,
distribution
Cost center accounting
 R/3 Financials
(Financial Accounting -FI Module)

Accounts Receivable and Payable - Subledgers

Integrates with GL
Sales and Distribution
Materials Management.
Vendor and Customer information
Payment automation (EFT and check processing)
 R/3 Financials
(Financial Accounting -FI Module)

Asset Accounting Subledger - (FI-AA)

Captures asset related transactions

Country-specific depreciation charts
Compliance with local legal requirements

Slide 26
 R/3 Financials
(Financial Accounting -FI Module)
Asset Accounting Subledger - (FI-AA)
Follows asset life cycle
requisition to retirement
integration with Plant Maintenance component to
manage
-machinery and equipment
-leased assets and assets under construction

Provides for interactive reporting

Slide 27
Lessons Learned
 PO Purchases vs. Non PO
 GRIR Transactions
 Assets under Construction
 Multi Location Purchases
 MM Docs (Stores Accounts)
 P-cards
 EDI
 ERS (Evaluated Receipt Settlement)
Purchase Order Invoices

Requisition

Purchase Tax Tax is estimated on the

Order Calculation
Purchase Order
Goods
Receipt Tax is expensed at
(optional)
Goods Receipt
Invoice Tax
Receipt Calculation Tax is paid or accrued at
Invoice Receipt
Payment
to
Vendor
Purchase Order Invoice Example 1
Use Tax Accrued (No tax on vendor invoice)

Goods Receipt
678910 Supplies $10.83
210090 GR/IR Clearing ($10.83)

Invoice Receipt
210090 GR/IR Clearing $10.83
323456 Vendor ABC Company
($10.00)
193010 Use Tax Accrual ($.63)
193010 Use Tax Accrual ($.10)
193010 Use Tax Accrual
($.10)
Purchase Order Invoice Example 2
Tax Paid to Vendor (Amounts include estimated tax)

Goods Receipt
678910 Supplies $10.83
210090 GR/IR Clearing ($10.83)

Invoice Receipt
210090 GR/IR Clearing $10.83
323456 Vendor ABC Company ($10.83)
Purchase Order Invoice Example 3
Price Variance

Goods Receipt
678910 Supplies $10.83
210090 GR/IR Clearing $10.83)

Invoice Receipt
210090 GR/IR Clearing $10.83
323456 Vendor ABC Company ($11.00)
193010 Use Tax Accrual ($.69)
193010 Use Tax Accrual ($.11)
193010 Use Tax Accrual ($.11)
190023 Price Variance $1.08
 Non-Purchase Order Invoice

Invoice Tax
Receipt Calculation Tax is paid or accrued at
Invoice Receipt
Payment
to
Vendor

Tax Paid to Vendor (Amounts include estimated tax)

Invoice
678910 Supplies $10.83
323456 Vendor ABC Company ($10.83)
Non-Purchase Order Invoice Example 2
Use Tax Accrued (No tax on vendor invoice

Invoice
678910 Supplies $10.83
323456 Vendor ABC Company ($10.00)
193010 Use Tax Accrual
($.63)
193010 Use Tax Accrual
($.10)
193010 Use Tax Accrual
($.10)
ABAP/4
 4 GL ABAP  Debugger
 ABAP Repository  Computer Aided test tool
Information system  Performance Monitor
 Data Modeler  Function Library
 ABAP Dictionary  Business Objects
 Screen Painter/Menu Painter  Team Development
 Program Editor  Standardized Interfaces
 Report Builder
 Business Audit
 Balance Sheet
 P&L
 Accounts
 Vouchers
 SD,FI, MM, PP, HR , CO

Slide 36
 Methods for Data Evaluation
 ABAP (standard reports)
 Query (individual inquires)
 All downloadable
Unconverted text
Excel
Word (Rich Text)
HTML
Print Files

Slide 37
 A.I.S.
Audit Information System
 System Audit
System functions
 Business Audit
Accounts
Financial Statements
Assets
Liabilities
P&L

Slide 38
 A.I.S.
Audit Information System

 Focus on GL (FI Module - Business Audit)

Complete record of business transactions
Individual transactions accessible any time
Balance sheet/profit and loss data
International capability
Customizable views of data
Auditor’s Environment
Slide 39
 ACL
SAP CSP
Master Document Query to ACL
(contains 76 fields (record length 577)
BKPF = Header info
BSEG = Detail info
Table_Field Description
BKPF_BUKRS Company code
BKPF_BLART Document type
BKPF_MONAT Fiscal Period
BSEG_SAKNR G/L account number
BSEG_BUXEI Line item number
BSEG_KOSTL Cost center
BSEG_SGTXT Item text
Slide 40
 ACL
SAP CSP

 Complementary Service Partner

 SAP/AIS Conversion Utility
Automatic ACL Document population and
file mapping

Slide 41
 Other AIS Audit Software Tools

External Analysis Balance Sheet Evaluation

Tools
 IDEA  BPA Baetge

Slide 43
 Web Hot Links
www.sapfans.com
www.sap.com
www.mysap.com
www.asug.com*
www.erpfans.com
www.acl.com

*membership fee may be required

Slide 44
 Training
 ACL Services
www.acl.com
 MIS Institute
www.misti.com
 SAP
www.sap.com

Slide 45
 A.I.S Limitations
 Needs to be turned on
 Standard Views/Reports
 Limited Online-Transaction Inquiry
 Can’t access Historical Data
 Potential large volume of transactions
 Developed primarily for financial audit

Slide 46
 Alternatives
 DART (Data Retention Tool)
IRS RevProc 98-25
Historical Data
Processor intensive
Tie back checks to GL for control
Proprietary file
View of DART file for extract

Slide 47
 Bolt-On Products
 Vertex & Taxware

 Sales and Use Tax calculation engines

based on expanded jurisdictional coding

both maintain an audit trail database

Slide 48
 Audit Recommendations
 Know the lingo  EDP Auditor Training
 Suggest who should be -SAP Overview
-AIS
at EDP Conference
-ABAP/4
-Tax Manager
-Taxware
-Key MIS personnel
-Vertex
-ABAP programmer(s)

Slide 49
 Reading Material
The Sap R/3 Handbook
Jose Antonio Hernandez
Format: Paperback, 1st ed., 969pp.
ISBN: 0070331219
Publisher: McGraw-Hill Companies, The
Pub. Date: January 1998 $59.95

10 Minute Guide to SAP R/3

Simon Sharpe Deanna Wright
Format: Paperback, 192pp.
ISBN: 0789708981
Publisher: Que
Pub. Date: March 1997 $14.99

Slide 50
 Reading Material (cont’d)
SAP R/3 Business Blueprint
Thomas Curran Gerhard Keller Andrew Ladd
Format: Paperback, 1st ed., 300pp.
ISBN: 0135211476
Publisher: Prentice Hall
Pub. Date: August 1997 $49.99

Special Edition Using Sap R/3)

Jonathan Blain
Format: Hardcover, 3rd ed., 1164pp.
ISBN: 0789718219
Publisher: Que
Pub. Date: December 1998 $75.00

Slide 51
 Reading Material (cont’d)
Using SAP R/3: Special Edition ASAP World Consultancy
With Gray Elkington Jonathan Blain
Format: Hardcover, 2nd ed., 1264pp.
ISBN: 0789713519 $ 75.00

Administering Sap R/3: The Fi-Financial Accounting

and CO-Controlling Modules
ASAP World Consultancy
With David Sandison Bernard Dodd
Format: Hardcover, 1st ed., 496pp.
ISBN: 0789715481
Publisher: Que
Pub. Date: March 1998
Edition Desc: 1 ED $49.99
Slide 52
 Reading Material (cont’d)
From SAP Press
http://www.sap-press.com/downloads/sap_press_catalog_2007_summer.pdf

Discover SAP
Available 10/2007
Nancy Muir, Ian Kimball
300 pages.
SAP Press: 2007 Catalog , H1989 $ 39.95

Discover ABAP
Available 12/2007
Karl-Heinz Kunhauser
400 pages.
SAP Press: 2007 Catalog , H1993 $ 39.95

Slide 53
 Reading Material (cont’d)
From SAP Press
http://www.sap-press.com/downloads/sap_press_catalog_2007_summer.pdf

SAP Business Explorer (BEx) Tools

Peter Scott
71 pages.
SAP Press: 2007 Catalog , H1989 $ 85.00

US Tax and SAP

Michael Scott
Available 11/2007
320 pages.
SAP Press: 2007 Catalog , H1995 $ 79.95

Slide 54
 Reading Material (cont’d)
From SAP Press
http://www.sap-press.com/downloads/sap_press_catalog_2007_summer.pdf

SAP ERP Financials: Configuration and Design

Naeem Arif
Available 1/2008
500 pages.
SAP Press: 2007 Catalog , H1997 $ 79.95

SAP BW Data Retrieval / Mastering the ETL Process

Norbert Egger, Jean-Marie Fiechter, Ralf-Patrick
Sawicki, Robert Salzmann,
and Thomas Thielen
320 pages.
SAP Press: 2007 Catalog , H990 $ 69.95

Slide 55
 Questions/Discussion

Thank You !

Slide 56