SAP FICO

SAP FICO Module

Configuration -Primary configuration considerations:

Once a business has decided to use the SAP FI(Financial Accounting) Module, there are several Configurations prerequisite steps that must be completed.Determining the organizational structure is one of the first steps in setting up the business functions in SAP as well as your reporting requirements.

The Organizational structure is created by defining the organizational units consisting of the following:
Client
Company
Company Code
Business Area

Client is the highest unit within an SAP system and contains Master records and Tables. Data entered at this level are valid for all company code data and organizational structures allowing for data consistency. User access and authorizations are assigned to each client created. Users must specify which client they are working in at the point of logon to the SAP system.

Company is the unit to which your financial statements are created and can have one to many company codes assigned to it. A company is equivalent to your legal business organization. Consolidated financial statements are based on the company’s financial statements. Companies are defined in configuration and assigned to company codes. Each company code must use the same COA( Chart of Accounts) and Fiscal Year. Also note that local currency for the company can be different.

Company Codes are the smallest unit within your organizational structure and is used for internal and external reporting purposes. Company Codes are not optional within SAP and are required to be defined. Financial transactions are viewed at the company code level. Company Codes can be created for any business organization whether national or international. It is recommended that once a Company Code has been defined in Configuration with all the required settings then other company codes later created should be copied from the existing company code. You can then make changes as needed. This reduces repetitive input of information that does not change from company code to company code as well as eliminate the possibility of missed data input.

When defining company codes, the following key areas must be updated:
Company Code Key- identifies the company code and consists of four alpha-numeric characters. Master data and business transactions are created by this key.
Company Code Name- identifies the name of the business organization within your organizational structure.
Address- identifies the street address, city, state, zip code for the company code created. This information is also used on correspondence and reports.
Country- identifies the country to which your business is based. Country codes within SAP are based on ISO Standards.
Country currency- identifies the local currency for the company code that you have defined.
Language- identifies the language to be used for you company code and is also used for text in your documents. SAP unlike other applications, offers over thirty languages including EN( English) , ES (Spanish), FR (French), DE (German), EL (Greek), IT(Italian), AR( Arabic), ZH (Chinese) , SV (Swedish) , and JA (Japanese) to name a few.

More FI configuration considerations:

Business Area, COA, GL, Fiscal year and Currencies

Business Area is optional and is equivalent to a specific area of responsibility within your company or business segment. BA (Business Area) also allows for internal and external reporting.

Another configuration requirement for set-up in SAP are the Basic settings consisting of the following:
Chart of Accounts(COA)
Fiscal Year Variants.
Currencies

The COA(Chart of Accounts) lists all General Ledger accounts that are used by the organization. It is assigned in configuration to each company code and allows for daily General Ledger postings.

The General Ledger accounts are made up of such data as account number, company code, a description of the account , classification of whether the account is a P & L Statement Account or a Balance Sheet Account.

Control data of the GL Account is where currency is specified, Tax category (posting without tax allowed) , marking the account as a reconciliation account ( e.g. Customer, Asset, Vendors, Accounts Receivable) or not.
Marking the G/L Account as a “reconciliation” account allows for postings to an Asset Account ( for example) as well as automatic update to the G/L Account.

Configuration prevents direct postings to reconciliation accounts thereby assisting in maintaining integrity of the data.
This allows reconciliation between the sub-ledger and general ledger to always be guaranteed.
Within the General Ledger control data , you can also designate whether line item display is possible in the account. The system then stores an entry per line in an index table which links back to the account. (Display of line item details are then available for reporting purposes ,etc.)

Open Item Indicators can be set on the G/L Account allowing for better management of open items. Examples include: Bank Clearing Accounts, GR/IR Clearing Accounts, Payroll, etc.
Fiscal Year configuration is a must and can be defined to meet your company’s reporting periods whether Fiscal (any period combination that is not calendar) or Calendar( Jan-Dec).
Posting Periods are defined and assigned to the Fiscal Year.Within the periods you specify start dates and finished dates.
SAP allows for 12 posting periods along with specially defined periods that can be used for year-end financial closing.
Currencies are another basic configuration setting requirement which defines your company’s legal means of payment by country.
It is recommended that all Currency set-ups in SAP follow the ISO Standards.
The ISO Standards ensure Global conformity across businesses worldwide utilizing SAP.
Contents taken from SAP In Fico.

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