SAP FICO ( EPISODE - 21 )

Nilkamal: - Now, we are going to ‘Configure Fiscal Year Variant’. There are 5 steps to configure the fiscal year variant. The 5 steps are:- 1) Maintain Fiscal Year Variant, 2) Assign Company Code to Fiscal Year Variant, 3) Define Posting Period Variant, 4) Assign Company Code to Posting Period Variant, 5) Open and Close Posting Periods. For a Fiscal Year Variant, we can define how many Posting Periods, a fiscal year has, How many Special Periods, a client needs and how the system is to determine the posting periods, while posting? Posting Periods are the periods within a fiscal year for which transaction figures are updated. Every transaction that is posted is assigned to a particular posting period. The transaction figures are then updated for this period. Now, these Special Periods are used to club the last regular Posting Periods for closing operations. For example, say, the month of January, February and March are three different Posting Periods. But, if you combine these three Posting Periods, that is the months of January, February and March can be used to represent a single Special Period, which will be used during closing in the form of a quarterly result. Therefore, a maximum of 12 Posting Periods and 4 Special Periods make up a Fiscal Year. Posting Periods are used to update the books of accounts and Special Periods are used for closing the books of accounts. The transaction code for this is OB29.

Suhash: - Sir, after selecting the ‘New Entry’ button, we are getting a form, with some unknown columns.

Nilkamal: - I will explain all the columns. This ‘Year Dependant’ indicator indicates the allocation of posting periods to calendar year which must be made individually for each year. This is mandatory, if the end of the period is not linked to a fixed calendar day. The column ‘Calendar Year’ indicates that the posting period is matching the months of calendar year or not. A Calendar year starts from January and ends in December. But, in India, we follow the financial year, which starts from April and ends in March. So, we don’t need to put any value in the ‘Calendar Year’ column. Later, we will assign the values in the ‘Year Shift’ column only. Accha, before going to that stage, we need to configure Periods in the ‘Fiscal Year’ column. Always remember that in case of non-calendar year variants, we need to configure periods. In periods, system recognizes the beginning of the period and the end of the period. Just look at the screen. Select ‘B1’ and then double click on ‘Periods’ on left panel. Now, just select the ‘New Entries’ button to open a new form. What can you see in the new form?

Manoj: - Sir, there are four columns. The columns are ‘Month’, ‘Date’, ‘Period’ and ‘Year Shift’.

Nilkamal: - In the ‘Month’ Column, just write in each cell serially, the values from 1 to 12. This represents 12 months in a calendar year. In the ‘Date’ column, just enter the number of days for each month. For example, the ‘Month’ 2 will have the value of 28 or 29, in the ‘Date’ column, as the February contains either 28 or 29 days. Now, the concept of ‘Year Shift’ arises. The ‘Year Shift’ parameter indicates whether the Fiscal Year of the Posting Period is different from the Calendar Year or not. Enter ‘+1’, if the Fiscal Year > Calendar Year and enter ‘-1’, if the Fiscal Year <> SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings (FAGS) -> Fiscal Year -> Assign Company Code to a Fiscal Year Variant -> Select ‘Position’ key -> Enter ‘Company Code’ -> Select ‘V3’ as the default value instead of ‘B1’. From here, we need to ‘Define Posting Period Variant’. The transaction code is OBB0. In the form, you will get a column ‘Account Assignment’. Just enter ‘+’ there, which means that it is valid for all accounts, otherwise, you need to specify the account type: - Assets (A), Customers (D), Vendors (K), G/L (S) and Contract (V). If you cannot assign the account type, you cannot put any transaction for that account. So, be on safe side, by entering ‘+’ only. After that we will ‘Assign Variants to Company Code’. The transaction code is OBBP. We will end here today.

SAP FICO ( EPISODE - 20 )

Nilkamal: - What do we mean by Country Chart of Accounts? It basically represents Accounts structure prescribed under national regulations.

Ravi: - Sir, is it mandatory to do this setting in every project as you are saying about the national regulations?

Nilkamal: - No, it is optional. It should only be used, if a client is using the Charts of Accounts, which is not under only one national regulation. There are two types of COA. One is Standard COA and second one is the Country Specific COA.

Paul: - We are still confused, Sir. Please explain in details.

Nilkamal: - See, it is all about linking the two types of COA. Suppose, say, you are a client, who wants to use a Standard COA worldwide, but there are certain laws in some countries, which will compel you to use another COA for that local region, in accordance to your respective operative company codes in that country. Now, at the end of the day, you need a linkage between this standard COA and the country specific COA. That kind of link can be created by entering an alternate account Number in SAP FI module. These things come into play, when your project is very big and complex. At this level, you don’t have to think about it in details. Now, we will come to the 7^th setting. What is the 7^th setting?

Suhash: - The 7^th setting is about ‘Defining Accounting Groups’.

Nilkamal:- Ok, the path for ‘Defining Accounting Groups’ is:- SPRO -> SAP Reference IMG -> Financial Accounting -> General Ledger Account -> G/L Accounts -> Master Data -> Preparations -> Define Account Group. The transaction code is OBD4.

Arindam: - Sir, why are we defining accounting groups? I mean to say, what is the essence of defining it?

Nilkamal: - in SAP FICO, while creating a General Ledger account, we must specify accounting groups. The account group determines the intervals in which the account number must be. Liabilities (L), Assets (A), Incomes (I) and Expenses (E) are ranged in the index table. Here we can define which fields are required entry fields and which are optional entries, while creating and changing master records. Also, we can define which fields can be suppressed, while creating and changing master data. Basically, Account Group is that attribute, which determines the creation of master records.

Rinky: - Sir, you said about the determination of intervals. Does it mean that for L, A, I and E, there will be different ranges? If yes, then is it mandatory to do so?

Nilkamal: - It is not a mandate, but if you maintain some standard ranges, then it helps you to understand any error during ledger entry at any point of time. I always maintain a standard range. For Liabilities (L), the range is 100000 -199999, for Assets (A), the range is 200000-299999, for Incomes (I), it is 300000-399999 and for Expenses (E), the range is 400000-499999. The table that maintains all these range values is T077S. What is the next setting?

Manoj: - It is ‘Define Retained Earnings Account’.

Nilkamal: - Ok. The path for ‘Define Retained Earnings Account’ is:- SPRO -> SAP Reference IMG - > Financial Accounting -> General Ledger Accounting -> G/L Accounts -> Master Data -> Preparations -> Define Retained Earnings Account. The transaction id is OB53. Just remember one thing that the system defined retained earnings account or P&L statements account type is denoted by the letter ‘X’. Basically, this ‘X’ represents or deals with all nominal accounts.

Chaitanya: - Sir, here we are assigning a retained earnings account for each P&L account, by specifying a P&L account type in the COA area of each P&L account. What is the need for doing that?

Nilkamal: - It has a long-term advantage because at the end of each fiscal year, the system carries forward the balance of P&L account to the retained earnings account. For example, say, the salaries, wages or rents of the P&L account for 2009-10 will not get carried forward to the Balance Sheet, but will be credited to another P&L account. At a later stage, these amounts will get entry in the liability side of the Balance Sheet. That is, all losses in the 1^st year of operation will be adjusted in the ‘Miscellaneous Expense’ of the Balance Sheet of the next accounting year and all profits of previous year will get adjusted in the ‘Reserves & Surplus’ section of current Balance Sheet. Come back after a short break.

SAP FICO ( EPISODE - 19 )

Chaitanya: - Hey Dulal, do you know the showroom near Banjara Hills, where the ‘Tata Nano’ car models will be displayed. My wife just called me up and requested me to go and have a look at those cars.

Dulal: - Oho! You are married. You have never mentioned about that.

Chaitanya: - Yeah, actually, we were in love since our college days. We just got married 3 months ago. Both of us do jobs in reputed companies. So, we have planned to buy a 4-wheeler car. We were in a mood to buy a Maruti 800 or Estilo, but my wife wants me to check out the Nano cars once.

Dulal: - of course, you can check it out. But, in my personal opinion, Maruti 800 is still the best 4-wheeler for a middle-class family. Tata Nano may be cheaper, but you also have to compromise on many things. By the way, bhabhi kaa naam kya hain?

Chaitanya: - Her name is Neha. Accha, are you free today? Then, both of us can visit that showroom.

Dulal: - Yeah, I am free today. Ok, done. I will meet you in Somajiguda crossing at 5.30 PM. From there, we will go to that showroom. I have also heard that the Nano Cars have a very good silver-colored stylish look.

Chaitanya: - by the way, where do you stay? Are you staying in any PG near Somajiguda?

Dulal: - Yeah, I used to stay in a PG with two of my colleagues. Now, one of them has shifted to another apartment after his marriage. The second one has got a job in Mumbai. So, I left that PG, as the cost of one room became very expensive for me. I took a rented house in the outskirts of Begumpet. Rubina aunty is the owner of that house.

Chaitanya: - What? Your tenant is a Muslim. As a Hindu guy, how are you staying there?

Dulal: - It hardly matters to me. Aunty is very friendly to me. She is a widow and works in a NGO. Her little girl Tuhina Khan is very sweet. Anyway, forget those things. I will meet you at 5.30 PM.

Chaitanya: - Ok, done. Bye for now.

*********************

Rinky: - Yesterday evening, Arindam was there with me at the Birla Temple. He was gossiping with me and my mom. We were just laughing all the way. He was telling some funny stuff to us, he he he…

Sarita: - Do you think that I am a fool to believe in all that? Why do you bluff so much? Yesterday, Arindam went to sea-off one of his old friends.

Rinky: - Really, is it so? I was not aware that Arindam has a twin brother or clone. Anyway, I just wanted to share this information with you. Good bye.

*********************

Manoj: - You told me that you went to meet one of your old friends. Sarita told me that I gave her wrong information about you. You went to meet Rinky. Humko kaahey nahi bola bey…?

Arindam:- Arrey yaar, mera dost train pakarney se pehle, Birla Mandir mein puja dene gaya tha, udhaar Rinky bhi gayi thi, puja karne, apni mommy ke saath. Itni choti se baath hain yeh…Do I need to mention all these little things? Sarita and Rinky are fond of cat fighting with each other. So, don’t worry about them.

SAP FICO ( EPISODE - 18 )

Nilkamal: - Suppose you all are agents of LIC. You have sold insurance policy to your customers and the customers paid the respective premium. Now, who is going to verify that premium amount, whether it is correct or not?

Rinky: - Sir, the Actuarial will verify it.

Nilkamal: - Ok, now after that verification, the premium needs to be debited to the Bank Account. Now, do we need to create any other account to avoid any confusion in the near future?

Chaitanya: - Yes, Sir, a Premium Suspense Account is opened on a temporary basis to maintain the free-flowing order of transactional entries.

Nilkamal: - Exactly! The entries in this case will be ‘Banks ….To Premium Suspense’ and ‘Premium Suspense ….To Premium’. The credit part and debit part of Premium Suspense in both the entries will nullify each other to provide you the final entry ‘Bank …. To Premium’. For performing this final entry, a General Ledger Book is sufficient, but to track the records of all temporary accounts like ‘Premium Suspense’ in this case, you need a separate index, which is popularly known as Charts of Accounts (COA). Now, this index is maintained serially in the systematic form of liabilities, assets, incomes and expenses. Basically, COA is a framework for recording all values which flows in order to get an orderly rendering of financial statements.

Dulal:- Sir, is there any difference between COA of SAP FI module and that of SAP CO module.

Nilkamal: - in SAP FI module, COA consists of expense and revenue accounts for financial accounting. In SAP CO, COA consists of cost and revenue element for controlling.

Sarita: - I am not understanding anything, now.

Nilkamal: - Ha ha ha…ok, let me draw a big square on the whiteboard. Now, divide that big square into small four squares. The first square is Expense (E), the second square just below it is Liabilities (L). The third square just beside the first square is Income (I). The fourth square just below the third square is Assets (A). This big square will display all results. If you do an entry in General Ledger, then you have to take the 1^st and 2^nd square. That is, the Expense (E) and the Liabilities (L) are required to do an entry in a General Ledger. If you want the valuation of your retained earnings, then consider the 2^nd and 4^th square, which are the Liabilities (L) and the Assets (A). Always remember that these retained earnings are the backbone of your financial statements in the form of Balance Sheets or P&L report. Expense (E) and Income (I) is the Profit and Loss index, which is the 1^st row of the big square. The second row of the big square, which is the Liabilities (L) and the Assets (A), is the Balance Sheet Index. The path for editing the Charts of Accounts is:- SPRO -> SAP Reference IMG -> Financial Accounting -> General Ledger Accounting -> G/L Accounts -> Master Data -> Preparation -> Edit Charts of Accounts List. The transaction code is OB13 and the table name is T004.

Suhash: - but, Sir, whenever we are selecting the ‘New Entries’ button, there is a form, whose status is showing as ‘Blocked’.

Nilkamal: - Yes, it has to be there. Whenever someone edits the chart of accounts of a company, the Finance Manager of that company verifies it. The editing of the COA List will only get completed if the Finance Manager grants the permission to do it, after verifying it. Oho! I forgot to tell you one thing that for a Group company like ITC, TATA, Reliance or Birla, Charts of Accounts (COA) are maintained separately for each company under that group, but not entirely for a Group, e.g. Reliance Power & Infrastructure and Reliance Petroleum will have separate COA of their own. Reliance Group cannot have a single COA of that entire group. Now, we need to assign company codes to COA. The path for that is :- SPRO -> SAP Reference IMG -> Financial Accounting -> General Ledger Accounting -> GL Accounts -> Master Data -> Preparation -> Assign Company Code to Chart of Accounts. The transaction code is OB62. In the next class, we will learn about Country Chart of Accounts.