Gap Analysis

Consolidated Observation

Finance & Controlling

1.1 Master Data Management Process

Finance & ControllingS. No. Process/

sub process

Process highlights Opportunities Identified / concerns of

business owners

Why is this an opportunity or

concerns?

Solution

1 Master Data requirements are generated by various custodians ( FI Users) on a master data form which is then approved by therelated authority ( CFO) and isreturned back to the master data (FI Controller) to create themaster data. The repercussions of any data element missed/ wrong master data created while creating the master data are not envisaged, resulting in concerns in various dependent applications.

Possible in Standard SAP through User Discipline

2 G/ l Accounts

Different G/ l Accounts for consumption purpose have been created. Finance needsconsumption patterns and cost for different major raw materials such as Cement, Fly-ash, Fiber, Pulp Etc.

Managing many G/L accounts created for each raw material consumption is an issue

Since CO is not activated the cost reports are being derived using FI Module

Possible in Standard SAP


sub process


business owners


concerns?

Solution

3 Source of balances in the balance sheet accounts need to be back- tracked. The same forms the part of schedules in the final accounts.

Some liability accounts are not open Item managed. This is awrong master created at the end of custodian of master data.

Error while creating the master data.

Possible with Standard SAP through User Discipline

4 Cost Element Groups

Meaningful analysis based on Cost Element groups is tried to be drilled down in SBU 1 & SBU2.

Cost center reports are not being used but are manually prepared

Due to lack of training in co module and non- existence of related master data


5 Assets Fixed Assets Register needs to be prepared as per the statuaryrequirements.

Balances of Various asset classes are grouped together for reporting purposes.

Asset classes are created based on the details required and the depreciation charged on them.

Possible in Standard SAP, need more details of the issue

6 Details related to LandRegistration, ownership details etc. need to be captured in the system.

St andard fields are not available in Asset Master to enter these details.

The requirement of maintaining such data is addressed by RE modulemaster data ( RE Objects)



sub process


business owners


concerns?

Solution

7 Account Assignment Model

Similar nature of entries with the same account assignments need to be posted repeatedly by variousfinance users to carry out smooth business activities

Default account assignments for such repetitive documents is not proposed by the system.

Account Assignment model is not being used/ configured.


8 Profit Centre

Balances/ financials need to be analyzed by the business for a group of profit centers together.

Profit center Hierarchy is not representing the organization structure.

A plant profit center Hierarchy has been designed. Moreover there has been a structural change wherein the business has moved to SBU reporting and thus the hierarchy needs to be changed accordingly.

Possible in standard SAP

9 Vendor Master

Classification of vendorsaccording to the services offered by them needs to be segregated in different reports related to vendors.

Capital expenditure vendors cannot be segregated

In the sap design the account group was not created as a standalone and thus business created such vendors in the account groups available.




1.2 Finance - Bank Accounting


sub process


business owners


concerns?

Solution

10 Balance Display

3 Bank accounts per bank account have been created following the standard SAP

Balance display of all the accounts taken together if negative should be clubbed in liabilities

St andard SAP works on each account balance and cannot consider a group of account balances


11 Postings Bank payments are made against each invoice. The system picks the relevant account assignment from the reference document.

Inter Unit payables or Receivables are not evident from the system in a centralized environment.

Since the bank payments arecentralized the account assignmenti.e. Profit center should get derived for the corporate.


12 In the bank postings Assignment number field is used to carry the reference for the financialinstrument used in the transaction.

In case of Bank Transfer the RTGS / NEFT transfer UTR reference ismore than 22 digits

Limitation in the filed length in standard SAP

Not possible in SAP

13 Using Automatic PaymentProgram the vendor payments are automatically posted using one bank account only.

No possibility to assign different banks for the automatic payment being processed.

Bank determination configuration has not been defined properly.



sub process


business owners


concerns?

Solution

14 Incoming payment received from customers through bank transfer or cheque.

The payments so received should only be made from the permitted bank accounts of the customer.

St andard SAP does not cheque therelevant bank account. In case of bank transfer the system can mark receipt from a certain customer bank based on preference.

Possible with standard SAP

15 Cheques are printed for the payment.

Requirement to print the cheque in another name rather than the vendor name.

Proper configuration solution for the same is not being used.


16 Bank provides the business the remittance details from various customers.

Manually all the receipts are entered into the system.

Functionality of Lockbox forautomatic receipts upload in customer record is not configured.

Possible with Standard SAP



1.3 Finance - Cash Accounting


sub process


business owners


concerns?

Solution

17 Receipts/ Payment prints

Cash receipts and payments are made through cash journal

Cashier is not able to issue areceipt/ acknowledgement for the receipt

Business specific receipt/ payment form has not been configured and attached to the transaction.

Possible through development



1.4 Finance - Accounts Receivable


sub process


business owners


concerns?

Solution

18 Incoming Payments

Post dated cheques/ due date cheques are received by the business usually at depotlocations and are transmitted back to head office by next day.

Cheques available with the depot is not known through the system.

No process is followed to acknowledge the receipt of cheque -in hand insystem.


19 Cash discount is offered to customers who pay within the credit period offered.

Discount so calculated is provided upfront in the invoice itself.

Payment terms are not being used. Business wants to reduce the excise liability to be passed on to customer by decrease the base value withdiscount percentage.


20 Credit Control Area

Credit control area is used tomonitor the credit extended to the customer through the open sales orders.

Credit control area check at order level. Based on the sales orderproduction is producing resulting in high inventory cost.

Business is not aware of the functionality




1.5 Finance - Accounts Payable


sub process


business owners


concerns?

Solution

21 Down Payment Request

Down Payment request is created by the concerned department usually procurement.

Down Payment created is not linked to PO

Functionality to trigger automatic Down Payment request available in EHP 5


22

If down payment created is wrong a new down payment request iscreated without reversing the original down payment.

Business is not accepting to reverse the down payments so created to be reversed due to an internal issue.


23

Down Payment

Down Payments are made to vendor and upon receiving the invoice in the system, DP iscleared against the invoice manually.

Down payment remains open along with invoice thus creating theinflated credit and debit side in the financials./ Discipline Issue.

Manual clearance of down payment is sometimes done manually or is left open. The discipline of clearing the documents is missing.



sub process


business owners


concerns?

Solution

24

Invoice Processing

The physical copy of the invoices received is matched with the PO and subsequent G/ R and if successful MIRO is posted in the system

MIRO needs to be done manually where Physical invoice is notrequired.

Configuration related to ERS functionality is missing


25 Salary Processing

Salary register is prepared using the payroll functionality in HR module.

Expense bookings for salary payable needs to be recorded through JV manually.

HR Module is not l inked with FI to make subsequent postings of payroll.


26 Withholding Tax Liability

Same vendor is issuing the material as well as serviceswherein the tads deduction is applicable only on services.

TDS base amount needs to be adjusted manually in case ofmaterial invoice for non- deduction of TDS

Vendor master is marked to deduct tads on the invoices being posted.

Standard functionality of SAP


sub process


business owners


concerns?

Solution

27

As per the compliance, TDS needs to be deducted either at the time of payment or at the time of invoice whichever is first.

TDS gets deducted twice.

Configuration and process discipline not followed.


28 TCS is added to customer invoice and is charged from the customer as per the regulatory norms

TCS is not appearing in the withholding tax reports.

TCS sales condition has not been configured with the withholding tax types.


29 Automatic Payment Run

Vendors are paid periodically through APP.

Debit memos are not picked by the system in APP.

St andard SAP Behavior as non referenced debit memos are not considered by APP.

Possible with Standard SAP, but need more clarification


sub process


business owners


concerns?

Solution

30 Clearing Accounts for GR/ I R

The clearing account for different materials is analyzed for pending invoices to be received from the vendor.

Clearing amounts in case of services and assets cannot be determined separately.

The configuration to define separate clearing accounts for such group of orders is missing.


31 Regrouping of Creditors

Vendors need to be regrouped based on the balances available in sub- accounts at month end/ Year end.

Not being routed directly through the system and need to be done manually




1.6 Finance - Asset Accounting


sub process


business owners


concerns?

Solution

32 Depreciation Depreciation calculation is available for Book depreciationbut the same is not available for Income Tax Depreciation.

Income Tax Depreciation is calculated manually and is not system driven.

Separate depreciation area for Income Tax Purpose has not been created


33 AUC Acquisition

Each department is provided with their respective internal order numbers with budget assigned to them against with Capex Po areraised using an expense G/ L. The total cost incurred is then settled to main asset from order.

Capex Advances are not directlyidentifiable against which assets the same has been processed.

Since Po is raised against the order and Asset master itself is not created at that point. Therefore the same detail is not available in the system.




1.7 Finance - Discounting


sub process


business owners


concerns?

Solution

34 Scheme Discounts

After achieving a certain level of target sales, the customer/ dealers are offered some discounts for achieving that target.

requirement to print the cheque in another name rather than the vendor name.

A standard solution in SAP is missing to the stated problem.

Issue Not Clear



1.8 Finance - Indirect Taxation


sub process


business owners


concerns?

Solution

35 Purchase/ Sales Tax/ Service Tax

Invoices are created directly in Finance skipping the MM route.

Taxes are not getting calculated when using transaction FB60

Configuration error. The access sequence has not been configured for finance.


36 Sales order are created with the appropriate tax codes and sent to customer.

Tax codes selected to make the order are wrong

Negligence on the part of person punching sales orders.

Possible in Standard SAP through User Discipline

37

Service Tax As per the amendment in service tax, the liability of service tax needs to be borne by both the vendor and the beneficiaryhimself.

RCM- Service Tax is handled manually by the business.

System is not configured to handle the RCM-Service Tax Liability.



sub process


business owners


concerns?

Solution

38

In case of GTA ( Goods Transport Agency) service tax, the tax is not included in the invoice but needs to be paid by the beneficiary for discharge of his liability.

Business handles the business scenario manually and is not system driven.

Relevant Tax codes have not been configured in the system.


39

Input service tax distributor (I SD) invoice needs to be raised on different plants. The service taxcredit lying on the head office needs to be transferred to plants so that the set off against excise can be availed by the plants.

Tracking and raising I SD invoice is a manual process and routedthrough manual JVS

SAP is yet to come with a solution on I SD. There is no standard solution available for the said process.


40

Withholding taxes

Work Contract Tax is deductedfrom the vendor invoices falling in the category and printed onrelevant forms specific to the state.

Business handles the business scenario manually and is not system driven.

Relevant withholding tax codes have not been configured and attached to vendor master.



sub process


business owners


concerns?

Solution

41 Tax Collected at source is deducted by the customers and HIL receives the remainingremittance.

The withholding tax reports do not show the TCS amount deducted.

The configuration for the same is not proper and needs to be reworked.


42 Withholding Tax Reports are used to analyze and submit returns for TDS deducted.

The report used does not details about the percentage deducted and the exemptions availed by the vendors.

The new SAP report J1INEMISresolves the issues but has not been implemented.




1.9 Finance - Excise


sub process


business owners


concerns?

Solution

43

Excise Utilization

Excise Payables created through collecting excise from customers need to be adjusted against the Excise recoverable and service tax recoverable.

The utilization of excise is manual and not system driven.

The requisite configuration for the utilization of excise and service tax against excise payable is missing.


44

Excisable goods sent to customer could not reach to customer due to breakage, accident etc.

Excise document was originallycreated for the customer but due to accident the material is taken to nearest plant. Excise transfer to the plant needs to be shown along with inventory.

In this case stock transfer order has not been created thus the inventory at receiving plant is kept outside SAP.




2.0 Finance - General Ledger


sub process


business owners


concerns?

Solution

45 Accrual/ Deferral

Periodic Provision entries need to be posted in the system which need to be reversed back in the next month.

Such entries are tracked and updated through manual JV'S

No process has been configured the system to handle this scenario.


46

Restatement of Financials

The documents that are posted in foreign currency are restated at the end of the period with thecurrent exchange rate of the document currency to derive the unrealized profit/ loss

The G/ l Accounts posted withforeign currency documents are not revalued.

The functionality for revaluation of G/ L Accounts is not used by the business.



sub process


business owners


concerns?

Solution

47 Notes to Accounts

Notes to accounts are prepared as a support to financial statements based on the data fetched from the system itself.

Notes to Accounts are prepared Manually.

Notes to accounts have not beenconfigured in the report format for the business.

48 Interest Calculation

Interest is calculated on the customer/ Vendor securitydeposits. The cheque so deposited cannot be identified

Profit center is not populated in all the customer / Vendor postings

This is a standard SAP design. The related reconciliation account isposted with the Profit center always.




2.1 Finance – Reports / MIS


sub process


business owners


concerns?

Solution

49

Profitability at Plant Level

Plants are created as profit centers and under them Depose arecreated as profit centers. One to one mapping between depots and plants exist

Material gets transferred from two plants in depots.

Due to One to one mapping between plants and depots, the financials at depots levels are rolled up to plantlevel.


50 Cost Sheet Costing sheet is prepared per plant wise by allocation all thecommon costs incurred at plant & HIL Level.

Costing reports per product and at plant level not getting generatedfrom the system.

Costing module is not being used to its potential by SBU1 & SBU2.


51 Vendor report FBL1N display.

FBL1N report is executed for the analysis purposes.

Upon execution of report FBL1N in some vendors the system is notproposing the relevant purchase order number.

Master data settings are missing..




2.2 Finance - Costing


sub process


business owners


concerns?

Solution

52

Allocations Common cost accumulated on common cost centers/ corporate cost centers need to be allocated back in SBU'S and loaded onproducts being manufactured.

Allocations is a manual exercise and is done using excel.

Costing Module is not being used toits full potential. Only the cost centers are being used for recording relevant costs.


53

St atistical Key Figures

Machine Minutes are the only SKF'S used in HIL SBU 3 as the distribution basis

The allocation cycles are onlyprevalent for allocating common cost of SBU3 standalone.

Since Other SBU'S and HIL as a whole is not using allocation cycles, SBU3also has to pass the manual Jives for allocations. Internal allocations are done using the same base for all cost


54

By- productInventory Generation and costing process

In SBU3 in the production process there is a bi-product gettinggenerated named "Compound (Reusable Scrap)"

The bi product is getting generated at a nil value.

The movement type used to produce this bi - product is of a non- valuated category.

Standard functionality of SAP, based on material valuation category


sub process


business owners


concerns?

Solution

55

Inventory Valuation- FG Stock

In order to comply with AS2, the inventory is revalued with themost recent realization prices or cost prices whichever is low.

The flow is manual and is notsystem driven. Inventory valuation is done manually in excel and JV'S are passed accordingly.

Co module is not being used. TheSt andard cost is not updated/ released on a monthly basis thus the inventory is not revalued automatically by the system.


56

Under the reclamation process, certain percentage of the product is reclaimed and remaining is scrapped.

The reclamation product is not taken back in inventory and to adjust the same the actual raw material consumed is not entered in the system.

The system has not been configured to adjust the process. Also the plant is reporting the consumption as posted in the system.


57

Some consumable items onceissued by the stores are getting consumed directly but theworkshop holds inventory for the same.

Available inventory is considered as consumption in books of accounts.

System configured such that thematerial issued once from stores is consumed.


Gap Analysis

Documents

Transcript of Gap Analysis