Fico Theory

8/9/2019 Fico Theory

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Finance

Client: In commercial, organizational and technical terms, a self-contained unit in an R/3 System

with separate master records and its own set of tables.

Company Code: The smallest organizational unit of Financial Accounting for which a complete self-

contained set of accounts can be drawn up for purposes of external reporting.

T Code : OX02

Business Area:An organizational unit of financial accounting that represents a separate area of

operations or responsibilities within an organization and to which value changes recorded in

Financial Accounting can be allocated. T Code : OX03

Enterprise structure: A portrayal of an enterprise's hierarchy. Logical enterprise structure, including

the organizational units required to manage the SAP System such as plant or cost center.

Social enterprise structure, description of the way in which an enterprise is organized, in divisions or

user departments.The HR application component portrays the social structure of an enterprise

fiscal year variant: A variant defining the relationship between the calendar and fiscal year. The

fiscal year variant specifies the number of periods and special periods in a fiscal year and how the

SAP System is to determine the assigned posting periods.

T Code : OB29

Fiscal Year:A period of usually 12 months, for which the company produces financial statements

and takes inventory.

Annual displacement/Year shift: For the individual posting periods various entries may be

necessary. For example, in the first six periods the fiscal year and calendar year may coincide,

whereas for the remaining periods there may be a displacement of +1.

Chart of Accounts:Systematically organized list of all the G/L account master records that are

required in a company codes. The COA contains the account number, the account name and control

information for G/L account master record. T Code : OB13

Financial statement version:A hierarchical positioning of G/L accounts. This positioning can bebased on specific legal requirements for creating financial statements. It can also be a self-defined

order.

Account group:An object that attributes that determine the creation of master records. The account

group determines: The data that is relevant for the master record A number range from which

numbers are selected for the master records.

and Number Range : T Code : OBD4

Field status group:Field status groups control the additional account assignments and other fields

that can be posted at the line item level for a G/L account.

Posting Key:A two-digit numerical key that determines the way line items are posted. This key

determines several factors including the: Account type, Type of posting (debit or credit),Layout ofentry screens . T Code : OB41

Open item management:A stipulation that the items in an account must be used to clear other line

items in the same account. Items must balance out to zero before they can be cleared. The account

balance is therefore always equal to the sum of the open items.

Clearing: A procedure by which the open items belonging to one or more accounts are indicated as

cleared (paid).


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Reconciliation account: A G/L account, to which transactions in the subsidiary ledgers (such as in

the customer, vendor or assets areas) are updated automatically.

Special G/L indicator: An indicator that identifies a special G/L transaction. Special G/L

transactions include down payments and bills of exchange.

Special G/L transaction: The special transactions in accounts receivable and accounts payable that

are shown separately in the general ledger and sub-ledger.

They include:

" Bills of exchange

" Down payments

" Guarantees

House Bank: A business partner that represents a bank through which you can process your own

internal transactions.

Document type: A key that distinguishes the business transactions to be posted. The document

type determines where the document is stored as well as the account types to be posted. T Code :

OBA7

Account type:A key that specifies the accounting area to which an account belongs.

Examples of account types are:

" Asset accounts

" Customer accounts

" Vendor accounts

" G/L accounts

Dunning procedure: A pre-defined procedure specifying how customers or vendors are dunned. T

Code : OB61

For each procedure, the user defines

" Number of dunning levels

" Dunning frequency" Amount limits

" Texts for the dunning notices

Dunning level:A numeral indicating how often an item or an account has been dunned.

Dunning key: A tool that identifies items to be dunned separately, such as items you are not sure

about or items for which payment information exists.

Year-end closing: An annual balance sheet and profit and loss statement, both of which must be

created in accordance with the legal requirements of the country in question.

Standard accounting principles require that the following be listed:

" All assets

" All debts, accruals, and deferrals" All revenue and expenses

Month-end closing: The work that is performed at the end of a posting period.

Functional area:An organizational unit in Accounting that classifies the expenses of an organization

by functions such as:

" Administration

" Sales and distribution


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" Marketing

" Production

" Research and development

Classification takes place to meet the needs of cost-of-sales accounting. T Code : SPRO

Noted item:A special item that does not affect any account balance. When you post a noted item, a

document is generated. The item can be displayed using the line item display. Certain noted items

are processed by the payment program or dunning program - for example, down payment requests.

Accrual and deferral: The assignment of an organization's receipts and expenditure to particular

periods, for purposes of calculating the net income for a specific period.

A distinction is made between:

" Accruals-

An accrual is any expenditure before the closing key date that represents an expense for any period

after this date.

"Deferral-

Deferred income is any receipts before the closing key date that represent revenue for any period

after this date.Statistical posting:The posting of a special G/L transaction where the offsetting entry is made to a

specified clearing account automatically (for example, received guarantees of payment).

Statistical postings create statistical line items only.

Valuation area:An organizational unit in Logistics subdividing an enterprise for the purpose of

uniform and complete valuation of material stocks.

Chart of depreciation: An object that contains the defined depreciation areas.It also contains the

rules for the evaluation of assets that are valid in a specific country or economic area. Each company

code is allocated to one chart of depreciation. Several company codes can work with the same chart

of depreciation.The chart of depreciation and the chart of accounts are completely independent of

one another. T Code : EC08Asset class:The main criterion for classifying fixed assets according to legal and management

requirements.

For each asset class, control parameters and default values can be defined for depreciation

calculation and other master data.

Each asset master record must be assigned to one asset class.

Special asset classes are, for example:

" Assets under construction

" Low-value assets

" Leased assets

" Financial assets" Technical assets T Code : OAOA

Depreciation area: An area showing the valuation of a fixed asset for a particular purpose (for

example, for individual financial statements, balance sheets for tax purposes, or management

accounting values). T Code : OADB

Depreciation key:A key for calculating depreciation amounts.

The depreciation key controls the following for each asset and for each depreciation area:


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" Automatic calculation of planned depreciation

" Automatic calculation of interest

" Maximum percentages for manual depreciation

The depreciation key is defined by specifying:

" Calculation methods for ordinary and special depreciation, for interest and for the cutoff value

" Various control parameters

Maintain Depreciation Key , T Code : AFAMA

Period control method:A system object that controls what assumptions the system makes when

revaluating asset transactions that are posted partway through a period.

Using the period control method, for example, you can instruct the system only to start revaluating

asset acquisitions in the first full month after their acquisition.

The period control method allows different sets of rules for different types of asset transactions, for

example, acquisitions and transfers.

Depreciation base: The base value for calculating periodic depreciation.

The following base values are possible, for example:

" Acquisition and production costs" Net book value

" Replacement value

Controlling

Controlling Area:An organizational unit within a company, used to represent a closed system for

cost accounting purposes. A controlling area may include single or multiple company codes that may

use different currencies. These company codes must use the same operative chart of accounts.

Cost center std Hierarchy: Indicated hierarchy of cost center groups in which all cost centers in a

controlling area are gathered together.

Cost element :A cost element classifies the organization's valuated consumption of production

factors within a controlling area. A cost element corresponds to a cost-relevant item in the chart ofaccounts.

Primary cost element: A cost element whose costs originate outside of CO and accrual costs that

are used only for controlling purposes

Secondary cost element:A cost element that is used to allocate costs for internal activities.

Secondary cost elements do not correspond to any G/L account in Financial Accounting. They are

used only in Controlling and consequently cannot be defined in FI as an account.

Cost element category:The classification of cost elements according to their usage or origin.

Examples of cost element categories are:

" Material cost elements

" Settlement cost elements for ordersCost elements for allocating internal activities

Reconciliation ledger:A ledger used for summarized display of values that appear in more detailed

form in the transaction data.

The reconciliation ledger has the following functions:

o Reconciles Controlling with Financial Accounting: The reconciliation ledger provides reports for

monitoring the reconciliation of Controlling with Financial Accounting by account.


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o It can identify and display value flows in Controlling across company code, functional area, or

business area boundaries

o Provides an overview of all costs incurred : Reconciliation ledger reports provide an overview of

the costs and are therefore a useful starting point for cost analysis. For example, an item in the profit

and loss statement from the Financial Information System (FIS) can be examined in the

reconciliation ledger reports with respect to the relevant costs. For more detailed analysis, reports

from other components within Controlling can be accessed from the reconciliation ledger reports.

Cost Center: An organizational unit within a controlling area that represents a defined location of

cost incurrence.

The definition can be based on:

" Functional requirements

" Allocation criteria

" Physical location

" Responsibility for costs

Cost center category: An attribute that determines the type of cost center.

Example" F - Production cost center

" H - Service cost center

Controlling area:An organizational unit within a company, used to represent a closed system for

cost accounting purposes.

A controlling area may include single or multiple company codes that may use different currencies.

These company codes must use the same operative chart of accounts.

All internal allocations refer exclusively to objects in the same controlling area.

Statistical key figure: The statistical values describing:

" Cost centers

" Orders" Business processes

" Profit centers

There are the following types of statistical key figures:

" Fixed value - Fixed values are carried forward from the current posting period to all subsequent

periods.

" Total value -

Totals values are posted in the current posting period only

Activity type: A unit in a controlling area that classifies the activities performed in a cost center.

Example

Activity types in production cost centers are machine hours or finished units.Allocation cost element: A cost element used to illustrate activity allocation in terms of values. The

allocation cost element is a secondary cost element , under which the activity type or business

process is allocated.

The allocation cost element is the central characteristic used in all CO postings. It is therefore also

an important criterion for reporting - for example, many reports are structured according to the

posted cost elements.


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Assessment cost element:A secondary cost element for costs that are assessed between

Controlling objects.

Reposting: A posting aid in which primary costs are posted to a receiver object under the original

cost element (the cost element of the sender object).

Repostings are used to rectify incorrect postings. The following methods are available:

" Transaction-based reposting -

Each posting is made in real time during the current period.

" Periodic reposting -

Produces the same results as transaction-based reposting. The costs being transferred are collected

on a clearing cost center and then transferred at the end of the period according to allocation bases

defined by the user.

Distribution:A business transaction that allocates primary costs.

" The original cost element is retained in the receiver cost center.

" Information about the sender and the receiver is documented in the Controlling document.

Assessment: A method of internal cost allocation by which you allocate the costs of a sender cost

center to receiver CO objects (such as orders and other cost centers) using an assessment costelement.

The SAP System supports the following:

" Hierarchical method (where the user determines the assessment sequence)

" Iterative method (where the SAP System determines the sequence of assessment using iteration).

Example:

The costs from the cafeteria cost center could be assessed based on the statistical key figure

"employee", which was set up on the receiver cost center.

Receiver cost center I has 10 employees, receiver cost center II has 90. The costs of the cafeteria

cost center would be transferred (assessed) to receiver cost center I (10%) and receiver cost center

II (90%). The credit on the cafeteria cost center and the debit of the two receiver cost centers areposted using an assessment cost element. Depending on the system setting, the total costs or some

of the costs for the cafeteria cost center would be

Internal order: An instrument used to monitor costs and, in some instances, the revenues of an

organization.

Internal orders can be used for the following purposes:

" Monitoring the costs of short-term jobs

" Monitoring the costs and revenues of a specific service

" Ongoing cost control

Internal orders are divided into the following categories:

" Overhead orders - For short-term monitoring of the indirect costs arising from jobs. They can alsobe used for continuous monitoring of subareas of indirect costs. Overhead orders can collect plan

and actual costs independently of organizational cost center structures and business processes,

enabling continous cost control in the enterprise.

" Investment orders - Monitor investment costs that can be capitalized and settled to fixed assets.

" Accrual orders - Monitor period-based accrual between expenses posted in Financial Accounting

and accrual costs in Controlling.


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" Orders with revenues - Monitor the costs and revenues arising from activities for partners outside

the organization, or from activities not belonging to the core business of the organization.

Order type:A tool that categorizes orders according to purpose.

The order type contains information which is necessary for managing orders. Order types are client-

specific. The same order type can be used in all controlling areas in one client.

Example

" Production orders

" Maintenance orders

" Capital investment orders

" Marketing orders

Cost of sales accounting: A type of profit and loss statement that matches the sales revenues to

the costs or expenses involved in making the revenue (cost of sales).

The expenses are listed in functional areas such as:

" Manufacturing

" Management" Sales and distribution

" Research and development

Cost of sales accounting displays how the costs were incurred. It represents the economic outflow of

resources.

ASAP Roadmap

Use

The ASAP Roadmap provides the methodology for implementing and continuously optimizing

your SAP software. It divides the implementation process into five phases and offers detailed

Project Plans to assist you (in Microsoft Project format). The documentation stored at each levelof the Roadmap tree structure contains recommendations on implementing your SAP software

and links to helpful tools and accelerators.

Purpose

When you install the Implementation Assistant you can choose from several Roadmap types and

flavors. You can select one of the following flavors:

o R/3 - Implementation and Continuous Improvement

o APO - Advanced Planner & Optimizer

o BW - Business Information Warehouse

o B2B - Business to Business

o CRM - Customer Relationship ManagementFeatures

Implementation of SAP software covers the following phases:

1. Project Preparation

In this phase you plan your project and lay the foundations for successful implementation. It

is at this stage that you make the strategic decisions crucial to your project:

? Define your project goals and objectives

? Clarify the scope of your implementation


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? Define your project schedule, budget plan, and implementation sequence

? Establish the project organization and relevant committees and assign resources

2. Business Blueprint

In this phase you create a blueprint, which documents your enterprise's requirements and

establishes how your business processes and organizational structure are to be represented

in SAP software. You also refine the original project goals and objectives and revise the

overall project schedule in this phase.

3. Realization

In this phase, you configure the requirements contained in the Business Blueprint. Baseline

configuration (major scope) is followed by final configuration (remaining scope), which can

consist of up to four cycles. Other key focal areas of this phase are conducting integration

tests and drawing up end user documentation.

4. Final Preparation

In this phase you complete your preparations, including testing, end user training, system

management, and cutover activities. You also need to resolve all open issues in this phase.

At this stage you need to ensure that all the prerequisites for your system to go live havebeen fulfilled. SAP AG AcceleratedSAP

ASAP Roadmap

December 1999 9

5. Go Live & Support

In this phase you move from a pre-production environment to the live system. The most

important elements include setting up production support, monitoring system transactions,

and optimizing overall system performance.

After your system has gone live, you can use a separate Roadmap with six work

packages, in order to optimize your R/3 System continuously.

These phases are the main milestones for implementing SAP software. Each phase has:o Work packages, which consist of activities, for which project teams are responsible.

o Activities, which consist of tasks, which are processed by one or more team members.

o Tasks, which are carried out by a project team member. You can also access the How-to

sections and accelerators at this level.

ASAP Methodology for Implementation

Purpose

The ASAP methodology for implementation is a phased, deliverable-oriented methodology that

streamlines implementation projects, minimizes risk, and reduces total cost of implementation. ASAPtakes a disciplined approach to project management, organizational change management, solution

management, and other disciplines applied in the implementation of SAP solutions. The

methodology supports project teams with templates, tools, questionnaires, and checklists, including

guidebooks and accelerators. ASAP empowers companies to exploit the power of the accelerated

features and tools already built into SAP solutions.

Benefits of ASAP include:

" Faster implementations with streamlined and focused methodology


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" More reliable projects, thanks to proven tools, accelerators, and best practices

" Lower risk

" More efficient use of resources

" Reduced costs

" Effective project management based on Project Management Institute standards

Phases

The ASAP methodology delivers the following phases:

1. Project preparation In the project preparation phase, the project team defines project goals, a

high-level scope, and a project plan. Executive sponsorship is secured, and the project standards

and organization are set up. The implementation strategy is defined and approved. At the same time,

the project procedures, standards, organization, and staffing are finalized. Roles and responsibilities

of the entire project team are agreed upon and documented. The objectives of the project arevalidated, and all initiation activities are documented in the project charter.

2. Business blueprint During this business blueprint phase, solution and technical designs are

documented in the business blueprint. Lead by solution and industry experts from the SAP

Consulting organization, a series of structured process workshops are planned and executed to

arrive at the "to-be delivered" SAP enterprise solution. All available documentation for standard,

delivered support for SAP business scenarios and all relevant preconfigured support for best

practices are reviewed and discussed with SAP experts. All functional and technical requirements,

coupled with project issues and gaps, are documented in the SAP Solution Manager application

management solution.

3. Realization In the realization phase, the SAP software system is configured and tested

in a number of cycles. Initially, the baseline configuration, which represents the core business

process settings, is performed, tested, and confirmed. This is followed with a series of configuration

and development cycles, to implement the entire end-to-end solution. The solution is tested in a

number of cycle tests and in a focused end-to-end integration test. Configuration is documented in

SAP Solution Manager. All development such as enterprise services, interfaces, data conversion

programs, reports, and any required enhancements are built and documented in SAP Solution

Manager. Legacy data conversion programs are created and tested. The production system is

installed during realization.

4. Final preparation Within the final preparation phase, all systems are known to function

correctly following the approved integration test. Technically, all integration issues should now be

resolved. Detailed transition and cutover plans are created. The customer support organization is put

in place. The production system is set up with transports and customer data. At the end of this

phase, the production system is switched on and business operations start in the new environment.


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5. Go-live support The purpose of the go-live support phase is to move from a preproduction

environment to live production operation. An easily accessible production support organization must

be in place to support the end-user community, not just for the first critical days of production

operations, but also for long-term support.

6. Run The primary goal of the run phase is to ensure the operability of the

solution. Operability is the ability to maintain IT solutions in a functioning and operating condition,

guaranteeing systems availability and required performance levels to support the execution of the

enterprise's business operations. The recommended starting point of the phase is an assessment of

solution operation after the go-live support phase to identify the relevant SAP standards for solution

operations to be established or improved in the phase. The central operation platform is SAP

Solution Manager, with the documented solution based on the transferred project documentation.

Work Streams

The ASAP methodology is structured around the key project work streams that are outlined in thepicture below. For each work stream, the methodology lists the number of deliverables that are to be

produced in each phase of the project.

The deliverables in later phases leverage or build upon deliverables completed in earlier stages. The

roadmap is structured as a work breakdown structure (WBS) that represents a complete list of

deliverables that need to be completed by the project team.

The ASAP methodology for implementation projects represents a standardized work breakdown

structure that provides the foundation for defining implementation project work in a deliverable-oriented, hierarchical manner and managing the project work to completion.

ASAP methodology contains a standard set of templates, samples, accelerators, guidelines, and

checklists for use by project teams in effectively managing and completing SAP solution

implementation projects.

Landscape: is like a server system or like a layout of the servers or some may even call it the

architecture of the servers viz. SAP is divided into three different lanscape DEV, QAS and PROD.- DEV would have multiple clients for ex: 190- Sandbox, 100- Golden, 180- Unit Test.

- QAS may again have mutiple clients for ex: 300- Integration Test, 700 to 710 Training.

- PROD may have something like a 200 Production.

These names and numbers are the implementer's discreet on how they want it or they have been

using in their previous implementations or how is the client's business scenario.

Now whatever you do in the Sandbox doesn't affect the other servers or clients. Whenever you think

you are satisfied with your configuration and you think you can use it moving forward, you RE-DO it


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in the golden client (remember, this is a very neat and clean client and you cannot use it for rough

usage). As you re-do everything that you had thought was important and usable, you get a transport

request pop up upon saving everytime. You save it under a transport request and give your

description to it. Thus the configuration is transported to the Unit Test client (180 in this example).

You don't run any transaction or even use the SAP Easy Access screen on the 100 (golden) client.

This is a configuration only client. Now upon a successful tranport by the Basis guy, you have all the

configuration in the Testing client, just as it is in the Golden client. The configuration remains in sync

between these two clients.

But in the Testing client you can not even access SPRO (Display IMG) screen. It's a transaction only

client where you perform the unit test. Upon a satisfactory unit test, you move the good configuration

to the next SERVER (DEV). The incorrect or unsatisfactory configuration is corrected in Golden (may

again as well be practised in the sandbox prior to Golden) and accordingly transported back to 180

(Unit Test) until the unit test affected by that particular config is satisfactory.

The Golden client remains the 'database' (if you wanna call it that) or you may rather call it the

'ultimate' reference client for all the good, complete and final configuration that is being used in the

implementation.

In summary:

Landscape : is the arrangement for the servers

IDES : is purely for education purpose and is NOT INCLUDED in the landscape.

DEVELOPMENT ---> QUALITY ----> PRODUCTION

DEVELOPMENT : is where the the consultants do the customization as per the company's

requirement.

QUALITY : is where the core team members and other members test the customization.

PRODUCTION : is where the live data of the company is recorded.A request will flow from Dev->Qual->Prod and not backwards.

1. Sandbox server: In the initial stages of any implementation project, You are given a sandbox

server where you do all the configuration/customization as per the companies business process.

2. Development Server: - Once the BBP gets signed off, the configuration is done is development

server and saved in workbench requests, to be transported to Production server.

3. Production Server: This is the last/ most refined client where the user will work after project GO

LIVE. Any changes/ new develpoment is done is development client and the request is transported

to production.

These three are landscape of any Company. They organised their office in these three way.

Developer develop their program in Development server and then transport it to test server. In testingserver tester check/test the program and then transport it to Production Server. Later it will deploy to

client from production server.

Presentaion Server- Where SAP GUI have.

Application Server - Where SAP Installed.

Database Server - Where Database installed.

What is the meaning of "R" in R/3 systems?

R/3 stands for realtime three tier architecture. This is the kind of architrecture SAP R/3 system has.


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R/3 means three layers are installed in Different system/server and they are connected with each

other.

1) Presentation

2) Application

3) Database

Why do we call client 000 as golden client?

Golden client contains all the configuration data and master data so some extent. All the

configuration settings are done in golden clients and then moved to other clients. Hence this client

acts as a master record for all transaction settings, hence the name "Golden Client".

Fico Theory

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