sap public
TRANSCRIPT
mySAP™ PUBLIC SECTOR IN SAP® R/3® ENTERPRISE
SAP Functions in DetailmySAP Public Sector
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Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6mySAP™ Public Sector in SAP® R/3® Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Budgetary and Accrual-Based Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10SAP® Tax and Revenue Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14SAP® Business Information Warehouse (SAP® BW) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Cross-Application Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SAP Funds Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19What Is a Fund? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Master Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Budget Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Budget Preparation with SAP Strategic Enterprise Management (SAP SEM). . . . . . . . . . . . . . . . . . 26Budget Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Budget Control Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Availability Control (AVC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37SAP Funds Management Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38Expenditures and Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Period-Based Encumbrace Tracking (PBET) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Year-End Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Fund Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Financial Accounting Ledger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Subledgers Used in Fund Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55Special Ledger for SAP Funds Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60Integration Within SAP R/3 Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64SAP FM Derivation Tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
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CONTENTS
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SAP Grants Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73SAP Grants Management Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73Integration Within SAP R/3 Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73Master Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80Billing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84Overhead Costing: Indirect Cost Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84Complementary Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85Period-End Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SAP Tax and Revenue Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88Overview of Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88Managing Taxes and Other Statutory Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89Revenue Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92Integration with Accounting and Business Support Applications . . . . . . . . . . . . . . . . . . . . . . . . . . 94Performance and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Integration Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96SAP Asset Accounting (SAP AA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96SAP Controlling (SAP CO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99Classical and Electronic Procurement (SAP MM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103SAP Sales and Distribution (SAP SD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105SAP Plant Maintenance (SAP PM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107SAP Human Resources (SAP HR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108SAP Travel Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110SAP Position Budgeting and Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112SAP Records Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116SAP WebFlow and SAP Business Workflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
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This brochure is an update of the 1998 Public Sector Functions in Detail publication, and has been revised to describe the func-tionality of SAP® R/3® Enterprise, with the focus placed mainlyon financial accounting for the public sector. The subject ofintegration within SAP R/3 Enterprise, as well the integrationof mySAP™ Business Suite with applications external to it,remain very important and all components, whether “core” or add-on, are integrated with each other seamlessly. mySAP™Public Sector is an industry-specific add-on to SAP R/3 Enter-prise, together with mySAP™ Healthcare and mySAP™ Aerospace& Defense. SAP® Funds Management is a main component ofthe mySAP Public Sector solution.
In particular, with respect to mySAP Public Sector function-ality, there has been a consolidation of IS-PS and HR-PS func-tionality into one single core environment. Major developmentprojects are based on the SAP R/3 Enterprise environment.
Many areas of mySAP Public Sector have been redesigned inSAP R/3 Enterprise. A number of functions have been consider-ably expanded, in particular in the area of fund accounting.After the recent Internet bubble burst, the focus of businessesas well as public agencies has gone in the direction of detailedand exact financial accounting, with e-government running aclose second. Besides fund accounting, new functionality hasbeen developed in the areas of budget preparation, grants man-agement, and tax and revenue management. However, the subject of e-government still remains very much on the table.
A brief note on branding: Whereas the functionality of SAP R/3 Enterprise refers to the new and changed functions of theR/3 System, the Internet-based “mySAP.com” has now beenrenamed as “mySAP Business Suite”. This name change has also taken effect in mySAP Public Sector.
At the end of this brochure you will find a list of abbreviationsand a glossary of terms used.
PREFACE
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mySAP™ PUBLIC SECTOR IN SAP® R/3® ENTERPRISE
mySAP™ Public Sector lays the groundwork for forward-look-ing process and technology strategies that can be used by inter-national public institutions, federal and state governments,local authorities, public agencies, and nonprofit organizations.mySAP Public Sector is based on the core components of theworldwide market leader in standard software, SAP® R/3® Enter-prise, supplemented by industry-specific components to meetthe specific requirements of public bodies and organizations. In addition, mySAP Public Sector contains complementarysoftware components from third-party vendors, as well as SAP’spublic sector expertise and worldwide service and support fromSAP and its partners.
The SAP Solution Map for Public Sector incorporates and inte-grates all the functionality a government agency needs to carryout proper budgeting and fund accounting: budget formula-tion or preparation within the framework of organizationalmanagement, budget execution and reporting within the oper-ational management of an agency, and so on.
Creating and executing budgets are among the most importanttasks of organizations operating in the public sector. For thisreason, monitoring the flow of funds from the source via thebudget to those receiving the services financed by revenues is a core process in the mySAP Public Sector solution.
INTRODUCTION
Figure 1: SAP Solution Map for Public Sector
Citizen & Business Service Delivery e-Government Portals Constituent Relationship
Management e-Democracy Security & Authentication
eGovernment &eGovernance
Strategic & CapitalPlanning
Decision Support &Data Warehousing
Program Formulation &
FinancingBudget Formulation Program Evaluation
& AnalysisPerformance Results
MeasurementOrganization Management
Budget Execution Program/ProjectManagement
FinancialAccounting
ManagerialAccounting
GrantsManagement
CashManagement &
Treasury
Case & RecordsManagementInternal Operations Support
Organization &Position
ManagementRecruitment Personnel
Administration Time ManagementCompensation &
Benefits Administration
Payroll AccountingHuman ResourceManagement
Knowledge Development & Training Skills Development e-Learning Knowledge Library Knowledge AssessmentWorkforce Development
ProcurementProcess
Management
e-Procurement &Marketplaces Tender Management Contract
ManagementInventory
Management DistributionProcurement & Supplier Relationship Management
Facility & EquipmentManagement Fleet Management Reimbursable
ServicesProperty & Asset
ManagementReal Estate
Management Travel ManagementResource Management
Tax & RevenueManagement Homeland Security Justice & Corrections Transportation Social ServicesGovernment Programs I
EnergyManagement
Defense & National Security
Water & WasteManagement
Airport & PortAuthorityServices
Public Health Insurance EducationGovernment Programs II
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Double-Entry Accounting and Distributed ProcessingIn addition to the fiscal approach to revenue and expenditureaccounting, parallel use of a double-entry system of financialaccounting is possible. This ensures that you are able to assessyour organization’s position based on activities in the samemanner as private sector organizations. The double-entry sys-tem of financial accounting is the cornerstone to fund account-ing as practiced in the United States.
SAP R/3 Enterprise offers a number of components for thesafeguarding and proper management of resources such as per-sonnel, assets, materials, and so on. Because the use of theseresources reduces their availability for other purposes, whetherthe “use” is committing of budgeted resources or costs actuallyrealized by the receipt of goods and services, it is important tohave proper integration with the overall budget managementand control system.
Public Sector Budget PlanningApproving the budget is one of the most important tasks oflegislative bodies. While debates on the budget are usually conducted in full public view, the complex detailed budget-planning processes remain mainly in the background.
The annual budget-planning process begins when a govern-ment agency requires its organizations to produce detailed sub-budgets. After this initial planning, these sub-budgets arecollected at the higher level using a “bottom-up” approachand are then adjusted by increasing or reducing individual estimates. Once adjusted, the individual sub-budgets are nolonger consistent and must be reconciled with the lower levelsbefore they can be presented to the authority in charge. Thisadjustment and reconciliation process may not be completeduntil the draft budget is debated at the political level, and finally approved by the legislative body.
An example: You can copy and adjust the budget from the previous year by adding or deducting specific amounts. Thisbudget then forms the basis for the following detailed planningprocess. Fixed amounts, such as mandatory pension expendi-tures, can be taken over unchanged from the previous year,with only the variable budget amounts planned in detail.
See the section on budget preparation in the chapter entitledSAP Funds Management for more information.
BUDGET PREPARATION WITH SAP® STRATEGIC ENTERPRISE
MANAGEMENT (SAP® SEM)
Whether for public sector organizations such as agencies onthe federal, state, or local level, or for the military or univer-sities, the ability to formulate a budget according to clearobjectives and appropriate standards is crucial to obtainingfunding and accomplishing the organization’s goals. The budget describes both the organization’s objectives as well as the means it will use to accomplish these objectives.
As of SAP R/3 Enterprise, you can use SAP SEM to easily andinteractively plan your budget. This solution supports thebudget preparation and research process through its Web-enabled, user-friendly interface, with which, for example, youcan monitor departmental interdependencies and hierarchies.
Budget Execution ApplicationsAs of SAP R/3 Enterprise, the new budget control system (BCS)is available as a second budgeting system, existing side-by-sidewith the existing SAP R/3 budget execution application, whichhas been renamed “former” or “classical” budgeting.
BCS is the new strategic system for budget execution – how-ever, it does not have any influence on the existing budget execution application. For performance reasons and in order to avoid problems caused by handling errors, SAP does not recommend using both budgeting systems in parallel.
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Both budget execution applications enable you to do thefollowing:
• Enter and update budget data. Budgeting transactions enableyou to work in a detailed or overall fashion. You can docu-ment all data entries via document-specific texts in order tomaintain full auditability. Automatic distribution of annualvalues to periods and automatic calculation functions reducethe required user input. Validation rules ensure that agency-specific additional rules for budget maintenance are enforced.
• Carry out year-end closing in a user-friendly fashion. Forthis, you can use the SAP® Schedule Manager to automateyear-end closing tasks.
• Store budget versions. Individual budget estimates are main-tained in the form of budget versions, ensuring that all inter-im steps in the planning process – up to and including finalbudget approval – are documented. Once the budget hasbeen approved, it may need to be distributed to the respon-sible authorities and subordinate organizations using a “top-down” approach.
• Carry out active availability control, which draws on thebudget to verify that all expenditures are within the limits set by the available budget.
On top of this wide array of functionality included in the formerbudgeting system, BCS offers new features that provide youwith a flexible budget execution system. Please see the chapterentitled SAP Funds Management for detailed information.
SAP® FUNDS MANAGEMENT
Upon completion of budgeting activities, an organization thenmoves into the next, equally complex phase of available resourcemanagement: the management of funds. The business flowreflects different time horizons and situations, and processes afund through the blocking, reservation, precommitment, andcommitment stages, after which there is a payment order andthe actual payment is made.
With the exception of funds blocking, which must be liftedmanually, all steps pass automatically from one step to thenext within the process flow.
Individual organizational requirements determine the steps to be implemented. You can use SAP® Business Workflow tointegrate all of these steps, which streamlines and automatesthe process. Workflow can be adapted to fulfill the objectivesand procedures required during the approval processes.
POSITION BUDGETING AND CONTROL
A highly flexible, fully integrated HR and financial solution for the public sector, position budgeting and control is intend-ed to help organizations monitor personnel spending withinthe realm of budgetary policy. Integrated with mySAP™ HumanResources and mySAP™ Financials, position budgeting and con-trol supports proactive payroll expenditure management costeffectively and efficiently.
Position budgeting and control is tailored specifically to therequirements of public sector organizations, providing guaran-teed budget availability for all payroll expenditures, whichhelps public sector administrations realistically anticipate andcontrol these costs.
Position budgeting and control offers a detailed view of all personnel budgets – linking payroll expenditures with a depart-ment’s personnel requirements and tying them to specificemployees or positions within an organization. Errors, such as budget overspending or inconsistent application of payrollfunds, are detected and corrected immediately. Sophisticatedworkflow automation tracks the source of the problem andnotifies the users responsible for its correction.
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Procurement: Integrating SAP Funds Management andSAP® Materials ManagementPublic sector organizations procure goods and services fromsuppliers in both the public and private sectors. To help themin this, organizations that manage available resources need aprocurement system that includes requisitioning resources,processing purchase orders, and contracting with suppliers.
In order to have the proper budgetary control, the systemmust be customized so that it fulfills the requirements of yourorganization as well as your country. For some organizationsor countries, purchase orders can only be placed if the budgetline in question has sufficient funds or commitment authori-zations.
You can use budget control reports to determine availableamounts and earmark purchase orders for later payment. Inthis way, you can enter not only the expenditures for the orderin question, but also any costs that might arise from additionalcontractual obligations.
Integration with Purchase Order ProcessingIf you implement SAP® Materials Management (SAP® MM) forprocurement, the entire purchasing process is integrated withmySAP Public Sector. It begins with a purchase requisition,which is a request to the purchasing department for procure-ment of materials or services in the prescribed quantity at aparticular time. The functions of material requirements plan-ning also allow purchase requisitions to be created automati-cally from existing requirements.
If a specific budget line indicates a requirement, the systemconducts a simultaneous check against the budget to ensurethat sufficient funds are available. The available budget for thisbudget line is then reduced accordingly. You can also createrelease strategies to determine the review and approval processfor purchase requisitions. These integrated workflow processescontrol the transactions and release them for further processing.
To make purchase order processing as simple as possible, mostpurchase orders are created by referencing data already avail-able in the system. This substantially reduces the work involvedand the possibility of data entry errors. Once you have entereda purchase order, you can generate a budget report showing thecurrent state of funds, including the reduction of any relatedpurchase requisition amounts in the budget line to which thepurchase order was assigned.
PAYMENT REQUESTS
When goods are delivered or services rendered, an invoice isreceived that the person in charge must verify. To trigger pay-ment of the invoice to the supplier, you create a paymentrequest. The specifications governing payment are determined,and payment is approved after the invoice has been verified.
Figure 2: Integration of SAP R/3 Enterprise Components in SAP FundsManagement
PROCUREMENT W/O
PURCHASING PROCUREM
ENTW
ITH
PURCHASING
INTE
RN
AL
ALL
OC
ATIO
N
REVENUES
SALES
ORDERPAYROLL
ACCOUNTING
TRAV
ELM
AN
AG
EMEN
T
FI-FM
FI
MM
FI
HR
FI
SD
CO
FICOMMITMENTS
ACTUALS
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As an alternative to formal payment requests, you can havepayments generated automatically, based on the invoicesalready entered. The system automatically checks for possibleduplicate invoices to prevent duplicate payments. System secu-rity also ensures that only authorized personnel may makepayments, and only after proper invoice approvals have beenreceived.
Additional controls can be established that require a three-way matching of the invoice with the initial purchase orderand the receipt of materials or services. This ensures fully independent verification that the ordering of the materials orservices was originally authorized, the organization receivedthe materials or services ordered, and the invoice was properlyentered and approved.
Matching functions in SAP Materials Management also sup-port goods receipts and inventory management. If processingof goods receipts is not necessary, the next step in the chain isinvoice verification.
INVOICE VERIFICATION
This step links invoice entry with invoice verification and thecreation of a payment request or automatic payment of theinvoice. Invoice verification, which is part of SAP MaterialsManagement, is a highly integrated process. It automaticallyreferences the original purchasing information and the receiptof materials or services, as well as recording information in SAPFunds Management, mySAP Financials (accounts payable),SAP® Controlling, and SAP® Grants Management.
Invoice verification checks incoming invoices to ensure thatthey are complete, as well as correct factually, arithmetically,and with regard to price. The reference to a purchase order orreceipt of materials or goods supports the verification process.
When an invoice is posted, the system also checks whether fundsare available in the relevant budget line. The available funds forthe budget line are adjusted if the amount of the invoice differsfrom the original purchase order or goods receipt. If a purchaseorder exists for this invoice, the purchase order item is alsoadjusted accordingly. You can then print a payment requestonline or have the final payment made against the invoice.
BUDGETARY AND ACCRUAL-BASED ACCOUNTING
Budgetary accounting is the central control method used bythe public sector primarily to check and control availablefinancial resources (“fiscal accounting”). It also reflects theexecution of the political will, as expressed in the budgetsapproved by the legislative bodies. This results in two basicprinciples:
• Total expenditure must not exceed total available resources.
• Legal commitments of funds must not exceed the approvedexpenditure budget.
In SAP R/3 Enterprise, budgetary accounting is performedusing SAP Funds Management, a component of mySAP PublicSector.
Double-entry bookkeeping, based on accrual accounting, is the conventional accounting method used in the private sector(“commercial accounting”). The balance sheet illustrates, at a given point in time, where total financial resources camefrom (liabilities and owner’s equity) and how they were applied(assets). The income statement compares revenues realizedwith expenses realized and determines the profit or loss for a given period of time.
In SAP R/3 Enterprise, high-level accrual-based accounting is performed using the general ledger (G/L), which is linkedto various subledgers for vendors, customers, assets, and mate-rials. Low-level accrual-based fund accounting is performedusing the special ledger. In addition, accrual-based account-ing is fully integrated with cost and project accounting (for
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example, cost element, cost center, and cost object account-ing). These controlling components make costs more trans-parent and contribute to improved business performance.
Accrual-based accounting is becoming more prevalent in thepublic sector organizations of many countries, since it providesbetter cost visibility. In the United States, for example, double-entry fund accounting is performed by most public sectororganizations. This form of accounting, and the additionalintegration provided by the fund accounting solution inmySAP Public Sector, is described in the following section.
Fund AccountingUnder this form of accounting prevalent in the United States,certain funds (and some internal agencies) have always beenrequired to produce full accrual-based balance sheets andincome statements as in the private sector. In addition, otherfunds (and some agencies) have always been required to pro-duce balance sheets and income statements on a modified formof accrual-based accounting. Monitoring cash balances by individual fund and internal agency is also essential to propertracking of available cash funds and to allocate investmentearnings.
ACCOUNTS PAYABLE SUBLEDGER ACCOUNT MANAGEMENT
CASH ACCOUNTING
ACCOUNTS RECEIVABLE
ASSETS ACCOUNTING
MATERIALS MANAGEMENT
VENDOR ACCOUNTSCUSTOMER ACCOUNTS
BANK ACCOUNTSCASH ACCOUNTS
FIXED ASSETSCURRENT ASSETS
COMMERCIAL ACCOUNTING FISCAL ACCOUNTING
BUDGET PLANNING
INCOME STATEMENT:• REVENUE• EXPENSE
BUDGET EXECUTION:• BUDGET ALLOCATION• COMMITMENTS MGT.
ANNUAL ACCONTING AND REPORTING
CONTROLLING
GEN
ER
AL
LED
GER
, SPEC
IAL
LED
GER
Figure 3: Dual Approach to Accounting: Financial Accounting
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With recent accounting changes for many U.S. public sectororganizations, funds that previously only required “modifiedaccrual” financial statements are now also required to be report-ed on a full accrual basis in the same way as private sector com-panies. In many cases, the budgetary accounting view of thesefunds must also be reported.
In addition, cost accounting and full recovery of costs on anaccrual basis of accounting is becoming more important, aspublic sector organizations attempt to determine the true costof services. They are required to report these costs as a justifi-cation for charging administrative costs, as well as providingcomparisons with private sector companies, since they com-pete with these companies to continue providing certain ser-vices to their constituents.
The cornerstone for fund accounting is the ability to balanceevery financial accounting transaction by fund and internal
agency. This is performed automatically, with the results post-ed to a special financial accounting ledger, enabling full inte-gration of fund accounting with other transactions.
An internal agency or department is a breakdown of an orga-nization’s internal responsibility structure on a fairly highlevel. These can be represented in SAP R/3 Enterprise as busi-ness areas. Fund accounting provides for full sets of financialstatements for each fund as well as for each agency.
As an example, when a vendor invoice is entered, it makes no sense from a business process perspective to manuallydetermine each agency’s share of the invoice amount in orderto post the vendor payable to the balance sheet. This wouldrequire the entry of multiple invoices, which would confusethe vendor, as well as reduce the ability of the system to prop-erly identify duplicate invoices.
Figure 4: SAP Funds Management and Related Functions in SAP R/3 Enterprise
Outgoing invoiceDelivery of goods
Time scheduling and resource planning
Purchasing Warehouse management
Budget creationBudget execution
InvoicePayment
Overhead costsInternal activity allocation
Personnel planningPayroll accountingTrip costs
PROJECT PROCESSING
HUMAN RESOURCEMANAGEMENT COST ACCOUNTING
MATERIALSMANAGEMENT
SALES/DISTRIBUTION
COMMERCIALACCOUNTING
FUNDSMANAGEMENT
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In addition to financial statements by fund and internal agency,fund accounting also requires that revenues, expenses, andfixed assets be identifiable by functional activity, which may or may not be in alignment with the internal agencies. Thisincludes the ability to perform cost and project accounting not only by organization, but also by fund and functionalarea. Also, because reporting requirements are different andcan change over time, lower-level funds and functional activi-ties must be able to be flexibly grouped to meet both internaland external reporting requirements.
Because an organization may be using various accountingmethods for funds, it is also necessary for these accountingmethods to be reconciled. The mySAP Public Sector solutionincludes the ability to automatically reconcile the variousaccounting methods.
Grant AccountingGrant accounting is used to simulate, record, track, control,bill, and report on activities affecting programs determinedand funded by external sponsors. Because organizations mustcomply with the accounting and reporting needs of sponsors,grant accounting is carried out using the sponsor’s time framesand master data definitions. However, to meet the needs of theorganization’s internal and external accounting, reporting, andcontrol requirements, a link to the organizational structuresand time frames must also exist.
The mySAP Public Sector solution provides a grant accountingsubledger, which is the source of financial information for moni-toring and control of activities supporting programs of externalsponsoring organizations. Grant accounting is integrated withthe other accounting methods, with simultaneous updating ofthe grant accounting subledger as other postings are made.
New Budgetary Accounting SolutionsPublic sector organizations face numerous challenges thatrequire management to reconsider the heavy emphasis onbudgetary accounting and to implement fiscal accountingtogether with additional management tools. New ways of
thinking and acting are required to ensure that the levels andquality of services provided are maintained and improvedwhile processes are streamlined and overall costs are reduced.The budgetary accounting systems used in the past did notsupport this transformation of public sector organizations.Public sector organizations are increasingly searching for afinancial and cost accounting system that is useful both as aninformation tool and as a control instrument. The imple-mentation of such a system provides a solid foundation uponwhich to base important organization decisions. The mySAPPublic Sector solution provides public sector organizationswith these new fundamental financial and cost accounting features, as well as the flexibility to add additional features orchange approaches in the future.
Multiple Accounting ApproachesThe architecture of mySAP Public Sector enables a double-entry bookkeeping view as well as a budgetary accounting viewof organizations. These views are run in parallel, permittingyou to switch from one view to the other at any time, enablingyou to take full advantage of both approaches.
Figure 5: Multiple Approaches to Accounting: Controlling
COMMERCIAL ACCOUNTING FISCAL ACCOUNTING
• REVENUES• DIRECT COSTS• OVERHEAD COSTS
COSTELEMENTS
COSTCENTERS
COSTOBJECTS PROJECTS
CASH ANDREVENUE
CONTROLLING
FUNCTIONALGROUPING
AREAS OFRESPONSIBILITY
LOCAL RESOURCES/ FUNDS
MANAGEMENT
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The mySAP Public Sector model is based on the integration of all relevant accounting models and methods, ensuring thefollowing:
• Fiscal requirements of conventional budgeting and budget-ary accounting will continue to be supported.
• Cost accounting and double-entry financial accounting,including the ability to create balance sheets and incomestatements by fund and/or internal agency, are also available.
• Grant accounting allows for the recording of an externalsponsor’s structures and information, without affecting theorganization’s own internal structures and information.
• Comprehensive integration between all componentsprovides a single entry point for business transactions, withautomatic reconciliation of the accounting methods used.This eliminates multiple input and reconciliation proce-dures.
• You can transfer the planning results from one applicationcomponent to another.
• You can combine budgetary and accrual-based structures to meet your organization’s particular accounting require-ments.
SAP® TAX AND REVENUE MANAGEMENT
SAP Tax and Revenue Management with mySAP Public Sectoris a solution for public tax and revenue agencies that serves allyour tax administration needs while addressing the customerservice requirements of taxpayers. The SAP solution containsan integrated set of applications that brings you proven bestpractices. Key processes include:
• Registration and account maintenance enables taxpayers to register through multiple channels, such as over theInternet, on paper, or in person. Registration provides eachtaxpayer with a single, unique account that you can makeaccessible via the Internet. You can guide the taxpayer throughInternet self-services – providing suggested tax-type informa-tion, for example. Centralized address management makes it easy for government agencies and taxpayers to keep theirdata in sync.
• Return filing and remittance processing accepts paper,fax, telefile, and Internet-based tax filing; all methods accessthe same rules database. Internet-based services enable tax-payers to file and pay taxes, receive payment confirmations,and register complaints around the clock. You can monitorand process outstanding filing obligations (tax returns). Thesolution also works with non-SAP applications for tax calcu-lations and reconciliation of tax returns.
• Correspondence and contact management supports all correspondence with taxpayers, including tax returns and remittance documents. The solution automaticallymonitors incoming correspondence and creates outgoingcorrespondence between your agency and taxpayers.
• Billing supports the management, tracking, accounting, and reporting of all information related to taxpayer pay-ments, as well as all accounts receivable, billing, and refundactivities. Both paper-based and electronic forms of billingare supported.
• Audit and compliance provides business intelligence thatsupports careful decision making, audit triggering and planning, and knowledge management. You can spotlightcommon mistakes to educate taxpayers about potentialerrors and increase voluntary compliance. Your auditors can obtain complete and current taxpayer history andupdate the information online.
SAP® BUSINESS INFORMATION WAREHOUSE
(SAP® BW)
Public sector managers require a tool that provides them withfast and easy access to summarized information on which theycan base decisions. The SAP® Business Information Warehouse(SAP® BW) meets these requirements, providing a self-containedapplication within the mySAP Business Suite, a suite of busi-ness solutions. It uses a modern, open data warehouse conceptto provide you with the strategic information you require, suchas key figures, overviews, and statistical evaluations.
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As a result, SAP BW brings together all necessary data fromacross the applications or, if required, from external sources(for example, from business information services or from otherdatabases and systems). The information is transferred andprocessed on a separate reporting server, enabling SAP BW tomanage integrated and summarized information from differ-ent systems on a consistent basis.
Flexible Data CompilationSAP BW contains preconfigured information models and stan-dardized report templates, enabling users to rapidly obtainneeded information. SAP BW also includes user-friendly toolsthat you can use to create your own additional evaluations.Multidimensional analysis is possible and includes a drill-downfunction.
Figure 6: SAP Business Information Warehouse (SAP BW)
ADMINISTRATOR’SWORKBENCH:• SCHEDULING• MONITORING
• MASTER DATA• TRANSACTIONAL DATA• METADATA
SAP BW WAREHOUSESERVER
SAP BW InfoCubes
BAPI
BAPI
LEGACY SYSTEMS SAP R/3ENTERPRISE R/3, R/2 WEB
DATASOURCES
BUSINESS EXPLORER/REPORTING
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Particularly important in this respect are the InfoCubes. Indi-vidual information requirements and update rules enableorganizations to create and maintain flexible reporting struc-tures. SAP BW uses a meta-database to gather data, with a linkto the relevant master data (for example, people responsibleand organizational units) and useful operations on the data(for example, calculation of averages vs. totals). Data collectionfor the data warehouse operations is largely automated.
Analysis and ReportingMultidimensional InfoCubes are used to compile requiredanalyses and reports. A wide range of aggregations, compari-sons, hit lists, exceptions, and key figure displays are among the features you can use to evaluate the data. Templates areavailable covering the most frequently used selections (such as plan/actual comparisons at month end), reducing the needto enter data selection criteria more than once.
For presentation purposes, the completed reports are trans-ferred directly to high-performance spreadsheet or presen-tation programs and displayed there. You can use the editingand layout functions in these programs to further develop andchange the reports, producing high-quality data output. Youcan also access the reports via the Internet or through yourorganization’s intranet.
SECURITY
Strict access controls ensure data security in SAP BW, begin-ning with the actual authorizations for the reports; however,you can also enter restrictions on the various data levels withinthe report (restricting access to, for example, particular fundscenters, commitment items, and funds).
See the section on Budget Preparation in the following chapterfor more information on SAP BW.
CROSS-APPLICATION TOPICS
In this Functions in Detail brochure, you will find a lengthychapter entitled “Integration Aspects.” Besides explaining theintegration with all areas of SAP R/3 Enterprise – such as SAPFinancial Accounting (SAP FI), SAP Controlling (SAP CO), SAP Materials Management (SAP MM), and SAP® Sales andDistribution (SAP SD) – there is information on subjects cross-ing all applications, such as SAP Business Workflow or SAP®Records Management.
Internet and Self-Service FunctionsThe integrated Internet and intranet functions of mySAP Busi-ness Suite and SAP R/3 Enterprise enable your organization to meet the public sector requirements of tomorrow. Opticalarchiving and multimedia applications enhance the perform-ance of your system, and open interfaces enable you to linkSAP R/3 Enterprise with the desktop software of other suppliers.
Internet self-service functions relieve public administrationemployees of routine administrative tasks. Public agencies canuse these functions, for example, for filing and processing pass-port applications, or submitting engineering blueprints anddrawings for approval to local authorities. Moreover, publicemployees can enter and display their own vacation data andwork schedules electronically.
e-GovernmentIntegrated Internet and intranet functionality enables publicemployees or the general public to become actively involved inthe electronic processing of data over the Internet. Using self-service functions, public employees can track their own data,reducing routine administrative tasks.
Because a government agency should be free to decide its ownlevel of integration – right up to a fully implemented e-govern-ment solution – SAP offers various approaches within a flexibleframework. A carefully planned, staged implementation of thee-government capability of mySAP Public Sector can be adapt-ed to suit the needs of all stakeholders and users.
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Generally, the e-government capability of mySAP Public Sectoris structured according to the way government agencies inter-act with the outside world. There are three main e-govern-ment scenarios:
• Government-to-citizen (G2C)
• Government-to-business (G2B)
• Government-to-government (G2G)
E-government also addresses government’s internal workings,including new roles for customer contact centers and the virtual citizen center, as well as new functions that becomeavailable at electronic workplaces, such as Web content man-agement, knowledge management, and data warehousing. All of these are provided in mySAP Public Sector.
SAP Records ManagementSAP Records Management for mySAP Public Sector is a stan-dard solution for the electronic management of records, par-ticularly important in the age of e-government. Rapid access to information is an essential factor for successful transactionprocessing. SAP Records Management is a tool that enables thisquick access: In a record, all the information objects requiredfor a business process can be grouped together in an overviewhierarchy with any number of levels.
SAP Records Management meets international requirementsand provides an electronic representation of conventional paperrecords. It also offers functions that far exceed those availablefor conventional records management. In this way, you notonly obtain an electronic representation of your paper records,but also get electronic and workflow functionality that allowsthe handling of all information objects and guarantees the correct management of records.
Managing your records electronically provides you with thefollowing advantages:
• Low storage costs for records
• No physical transport of records
• No time-consuming and expensive copying procedures
• No switching between different media
• Optimal information retrieval
• Simultaneous access to a record for more than one person
• Immediate document processing using electronic officecommunication tools
WEBFLOW
SAP Records Management integrates SAP Business Workflowfor efficient process control. You can incorporate a workflowdefinition as an element in a record. A user can start the work-flow directly from the record, and the workflow log is subse-quently available as part of the record. A workflow task can be, for example, to create, display, or update a record. A recorditself can also be the object of a workflow and the record isthen processed as part of the workflow.
SAP Business WorkflowIn the age of Internet and e-government, it is becoming increas-ingly important to link tasks across systems, components, andgovernment organizations. SAP Business Workflow has beendesigned to accomplish this task.
Seen generically, a workflow is an automated electronic rep-resentation of a business process. There are three main reasonswhy organizations implement workflows: to improve the speed,consistency, and quality of a business process.
• Speeding up the business process improves efficiency, savestime and money, and improves customer satisfaction. The“customer” of the workflow may be an employee of theorganization, another organization, or a citizen, dependingon the business process involved.
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• Improving the consistency of the business process is a matterof ensuring that the business process happens as designedevery time without fail. This reduces errors and preventsusers from circumventing the business process. It also savestime and money when dealing with exceptional situations,prevents things from “falling through the cracks,” avoidslegal or financial penalties, avoids loss of goodwill, andimproves citizen satisfaction.
• Improving the quality of the business process is a matter ofmaking it more transparent, making it clear who is responsi-ble for each activity, using validations to improve the qualityof data, and containing attachments and instructions toemployees involved in the process.
WHAT CAN SAP BUSINESS WORKFLOW DO?
Workflow must be easy for an organization’s employees to use.In a nutshell, workflow is taking a process and automating it by:
• Pushing the tasks to the correct person when they’re readyto be acted upon
• Having the system fulfill tasks where no human involve-ment is necessary
• Walking a user through a task (“Now here’s what you haveto do, and here’s the information you need to do it, and thisis where you add your data”)
• Making the process visible to everyone (“What is going tohappen next?” “How far is the processing right now?” “Whodid what?”)
• Making sure that the process finishes on time (for example,escalating a process) and that everyone is kept informed
• Building up statistics about the process so that, eventually,useless bureaucratic steps are removed and bottlenecks eliminated
• Removing the task from your task list when it’s done or nolonger necessary (someone else did it, too late, the requesthas been retracted, and so on)
SAP Business Workflow and WebFlow, which refers to Inter-net-based workflows, are available in SAP R/3 Enterprise,mySAP™ Supplier Relationship Management (mySAP™ SRM),mySAP™ Customer Relationship Management (mySAP™ CRM),the employee self-service (ESS) capability of mySAP™ HumanResources (mySAP™ HR), SAP® Business Workplace, mySAP™Enterprise Portal (mySAP™ EP), and so on. Fund accounting is fully integrated with SAP Business Workflow.
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The SAP Funds Management (SAP FM) component of mySAPPublic Sector guides you through the planning and creation of budgets, and uses active availability control to monitor theappropriation of funds. The funds management capabilities ofmySAP Public Sector simplify the design of budget plans, usingspecial planning techniques as well as budget estimates andversions. The solution supports centralized and decentralizedplanning and status management for budget execution.
WHAT IS A FUND?
A fund is a separate and distinct fiscal or accounting objectcontaining a complete self-balancing set of accounts used todistinguish cash and other financial resources, together withassociated liabilities and residual equities. Within this context,the task of SAP Funds Management is to record and control all budgetary resources and to reconcile these resources to anorganization’s financial resources. SAP Funds Management isused to budget all relevant revenues and expenditures for indi-vidual areas of responsibility, to control future funds move-ments according to the distributed budget, as well as to preventthe budget from being exceeded.
Financial quantities are subdivided into funds so that certainactivities can be performed or objectives achieved in accordancewith special regulations, restrictions, or limitations stipulatedfrom outside the organization. A government agency can alsoset up funds at a lower level than those required for externalreporting, via the use of predefined fund groups. Funds areclassified into fund types, each with distinct accounting andreporting requirements.
In order to properly manage your funds, the SAP R/3 Enter-prise System contains organizational structures, master data,and detailed processes, which you need to tailor to your orga-nization’s needs.
ORGANIZATIONAL STRUCTURE
The budget for public authorities is divided according to externalrequirements into specific resource and expenditure categories.To represent the organizational structure of such authorities,you can decentralize responsibility for resources while, at thesame time, accessing a single integrated budget structure.Besides managing the budget, institutions such as universities,
SAP FUNDS MANAGEMENT
Plant PurchasingOrganization
PersonnelArea
SalesOrganization
CONTROLLINGAREA 1
CONTROLLINGAREA 2
COMPANYCODE 2
COMPANYCODE 3
FM AREA
COMPANYCODE 4
CLIENT
COMPANYCODE 1
Figure 7: Organizational Units Used in SAP Funds Management
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research institutes, associations, foundations, and other governmental and nonprofit organizations must also be able to administer funds from secondary sources.
The organizational units in SAP R/3 Enterprise enable you torealistically map a multilevel structure of your governmentalentity, mapping the purpose of budget use and enabling dis-tributed funding. Besides making use of standard SAP R/3Enterprise organizational units such as the company code and the controlling area, the main organizational unit used inSAP Funds Management is the financial management area(FM area).
Company CodeThe use of multiple company codes should be avoided if at all possible. A company code should represent the overall pub-lic sector organization, unless there are truly multiple legalentities that have differing fiscal years, separate operations, orrequire the issuance of separate reports (for example, W-2s or1099s in the United States).
Organizational units located below the company code, such as a purchasing organization, are linked to SAP Funds Manage-ment via the company code, as Figure 7 illustrates.
Controlling AreaThe controlling area (CO area) is an organizational unit withina company that is used to represent a closed system for costaccounting purposes. It can include single or multiple companycodes that use different currencies. All company codes allocatedto one controlling area must use the same operative chart ofaccounts.
Financial Management Area The financial management area (FM area) is the central organi-zational unit used in SAP Funds Management. FM areas subdi-vide an organization into units in which you can conduct inde-pendent cash budget management (used in the private sector)and independent funds management (used in the public sector).
The FM area and company code currencies must be the same.
MASTER DATA
The master data used in SAP Funds Management are: fund,funds center, functional area, commitment item, grant, andfunded program. These are very often also referred to as“dimensions,” providing you with a multidimensional struc-ture for defining and evaluating the funds managed by yourorganization.
FundFunds can be used to subdivide budgets and funds assignmentsfurther, including the management of funds from secondarysources (see also: SAP Grants Management). Funds are linked toa sponsor (customer) and an application of funds (the purposefor which the fund is used). You can also store a descriptivetext for each fund.
If you have implemented SAP Controlling (SAP CO), the SAPFM derivation tool can be used to flexibly link funds to therelated cost centers, orders, or projects in order to automati-cally default a relevant fund, which can then be changed if adifferent funding source is required. Using the SAP FM deriva-tion tool, you can also use data structures from other modules(such as plants, G/L accounts, and so on) as appropriate forderiving the fund. Flexible groups of funds are also supported.
Funds CenterA funds center is a clearly defined area of responsibility in SAP Funds Management. It is allocated to a financial manage-ment area to which budget can be assigned. Funds centers are arranged in a multilevel hierarchy. In SAP R/3 Enterprise,funds centers are managed in the form of master data.
You can use funds centers to structure your organization andits subordinate units. Subdivision of funds centers makes itpossible to delegate responsibility for available resources. Aswith the fund, if SAP Controlling is used, you can use the SAPFM derivation tool to link a funds center with the related costcenter, order, or project in order to automatically derive therelevant funds center.
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Employees can be identified as being responsible for funds cen-ters. In this way, you can use availability control and workflowtechniques to notify an employee when budgets have been (orwill be) exceeded, by sending an e-mail to their inbox.
You can enter both short texts and detailed long texts in thefunds center master record. The system documents all changesto the funds center master record, which can be evaluated atany time. Flexible groupings of funds centers are also supported.
Functional AreaUp to now in SAP Funds Management, it was possible to budg-et and report according to commitment item (object), fundscenter (organization), and fund. As of SAP R/3 Enterprise, thefunctional area represents a new structuring element, or“dimension” for SAP Funds Management. It is integrated withall postings in SAP® Financial Accounting (SAP FI), SAP Con-trolling (SAP CO), and SAP Funds Management. You can groupfunctional areas in various ways to facilitate budgeting, costallocation, internal financial management, and external finan-cial reporting.
In SAP Funds Management, functional areas are used to sub-divide budgets and fund assignments, in order to group relatedactivities aimed at accomplishing a major service or having regulatory responsibility. Some governments and nonprofitorganizations must also comply with the legal requirement tobudget and report at the functional area level. Functional areascan be determined, for example, through the cost centers orwork breakdown structure (WBS) elements, as well as throughcost objects or profit centers. Besides allocating overhead costs,this level of detail can provide information on the overall pur-pose and objectives of an organization.
An example of the “functional structure of a city” could be, for example: General Government, Criminal Justice, PublicSafety, Transportation, Public Works, Community Develop-ment, Community Enrichment, and Water Services.
If you have implemented SAP Controlling, you can use theSAP FM derivation tool to automatically specify the functionalarea based on a direct link with the related cost centers, orders,or projects. If you require a different functional area, you canchange it.
For more information on the derivation tool, see thecorresponding section in the following chapter entitled SAP Fund Accounting.
Commitment ItemCommitment items represent the financial grouping of expen-ditures and revenues within a financial management area (FMarea). For public sector organizations that are driven primarilyby budgetary accounting, commitment items are used to clas-sify the contents of budgets, making them the basis for the rep-resentation of the primary budget lines. A link between com-mitment items and SAP Financial Accounting (SAP FI) keepsdata input work to a minimum, since only the commitmentitem is required for postings that will affect both the budgetaryand accrual-based accounting ledgers.
For a range of users not using budgetary accounting as the primary accounting ledger (for example, the United States and Canada), the system is configured in such a way that SAPFunds Management is serviced by the business transactionsfrom SAP Financial Accounting and SAP Controlling (SAPCO). In such cases, the commitment items are usually deriveddirectly from the general ledger account in SAP FI or from thecost element in SAP CO. You can define derivation rules toenable the links for deriving commitment items automatically,allowing transaction data to be updated directly in SAP FundsManagement without further manual intervention.
You can enter both a short text and a detailed long text forcommitment item master record, as well as uploading existingMicrosoft Word texts from your PC. The system documents allchanges to the commitment item master record, which can beevaluated at any time. Flexible groups of commitment itemsare also supported.
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GrantAt a university or college, a grant is an award given to eligiblestudents by foundations or other institutions based on specificcriteria. From the grantor/sponsor perspective, a grant is regard-ed as a legal instrument used to establish a funding relationshipin order to carry out a public purpose in which the sponsor doesnot expect to be substantially involved. SAP Grants Managementhas been developed to account for grants from governmentagencies and other bodies doing, for example, commercial orscientific research. For more information on grants, please referto the chapter entitled SAP Grants Management.
Funded ProgramThe purpose of a funded program is to define a time frame and specific activities for funding control. This can vary fromsimple activities to long, complex projects. Funded programscan cross an organization’s fiscal years, funding sources, andorganizational units. This enables you to get a clear picture ofthe program-based or project-related grouping of your organi-zation’s resources and related expenditures, in addition to thefunctional area perspective.
A funded program can be budgeted but cannot be assigneddirectly to an account. The account assignment is alwaysderived from another account assignment object with a post-ing, for example, from an SAP CO order or WBS element.
BUDGET PLANNING
Two sets of tools are available for budget planning. The classicalbudget planning functionality is available within SAP FundsManagement, but if you are using the budget preparation sys-tem, you can access the SAP Strategic Enterprise Management(SAP SEM) component to plan your budget. This is a solutionthat fully supports the budget preparation and research pro-cess. It makes use of a Web-enabled, easy-to-use interface tomonitor departmental interdependencies and hierarchies, perform simulations, and incorporate multiple planningdimensions. Please see the corresponding section in this chap-ter for further details.
Using the budget preparation system, public administrationscan meet the full range of strategic planning, operationalbudget planning, and execution requirements effectively. Thebudget preparation system delivers information in formats tailored to meet user-specific needs, based on popular programslike Microsoft Excel and Microsoft Outlook.
For more information on budget preparation using SAP SEM,see the corresponding section in this chapter.
Figure 8: Integrated Basic Data in SAP R/3 Enterprise
BASIC DATA IN R/3 ENTERPRISE
• G/L account
• Asset
• Business area
• Functional area
ASSET ANDFINANCIAL
ACCOUNTING
FUNDS MANAGEMENT LOGISTICS CONTROLLING HUMAN
RESOURCES
• Commitment item
• Funds center
• Fund
• Functional area
• Grant
• Funded program
• Vendor
• Material
• Customer
• Equipment
• Cost element
• Cost center
• Order
• Project
• HR master record
• Organizational units
• Positions
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Budget Planning TechniquesTo manage a public body economically requires careful analysisof the relevant framework, factors, and prerequisites with whicheach organizational unit has to operate. Heightened expecta-tions on one side and a lack of funds on the other indicatewhat pressures can exist. Given all the possible restrictions,only detailed budget planning keeps sight of objectives andconcentrates on what is feasible.
Both budget planning and budget execution can be based onvarious elements, or dimensions: commitment items, fundscenters, funds, functional areas, funded programs, and grants.Combinations of these elements are then used in budget plan-ning to determine the following:
• What is to be planned?
• Which area of responsibility is to conduct the planning?
• Which funds – such as operational funds, special funds, or funds from secondary sources – are planned?
• For what specific purpose are these amounts planned?
• Which individual program or project do the plannedamounts support?
• Are the planned amounts subject to restrictions by externalsponsors?
Generally speaking, many people from different areas of anorganization are involved in developing a budget. There areseveral planning techniques available for this. Among otherthings, the values used for planning can be taken over from theprevious budget year as the first version of the new draft bud-get. The planning data can be adjusted to reflect such things as rate increases, price increases, and other factors. Percentagerate adjustments can be specified for each commitment item.
The individual areas of an organization can then work on thefirst budget draft. Changes are summarized directly to higherlevels in the budget structure using roll-up techniques. If ahigher level reduces a budget estimate, this can lead to the esti-mates of the higher levels not being reconciled with those ofthe lower levels. For this reason, the system supports two pro-
cedures: saving an unchecked draft budget that has not yetbeen reconciled, and posting a draft budget once it has beenreconciled at all levels.
If you want to save the interim draft budget for documentationpurposes, this version will be blocked for further changes. Thisdata can then be used to create a second, working-copy versionof the draft budget. Changes to the budget made during thedrafting phase are documented in change documents. Thesedocuments are the line items that can later be used to trace thedevelopment of the draft budget.
TOP-DOWN PLANNING
Commitment items classify the budget according to the natureof revenue or expenditure involved. By rolling up commitmentitems into summarization levels and creating a hierarchy, youcan create a structure with as many levels as necessary. You canplan budget estimates for each of these summarization levels, aswell as for the account assignment level. The total planned inone level of the hierarchy must not exceed the amount plannedin the superior commitment item (top-down principle).
Using this principle, neither the budget estimates nor the budgetallocations are tied to the lowest level in the commitment itemhierarchy. Budget planning can stop at any level, dependingupon individual requirements or how much information isavailable. At the same time, budget allocations can also be madeacross the organization.
BOTTOM-UP PLANNING
Funds centers are the organizational units used in SAP FundsManagement. The hierarchical arrangement of funds centersrepresents a structure of subordinate and superior responsibi-lity areas that are integrated into the budget planning processvia this structure. Estimates are often worked out at the lowerlevels and then combined for superior funds centers. This bottom-up procedure means you can draw up the budgetlocally, before completing and revising it at a higher level inthe hierarchy.
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Funds are the means of planning and managing operationalfunds, special funds, and funds from secondary sources. Theyare usually not governed by the principle of entering data onan annual basis. Instead, they are normally used to define theprerequisites for integrating longer-term resource availabilityand usage (for example, for investments) into budget planningand execution. Budget estimates can be planned as an overallestimate for the full duration of the fund (or estimated remain-ing available resources within a continuing fund), and then distributed to the individual budget years.
Creating a Hierarchical Budget StructureBudget estimates are created for a particular area of responsi-bility. These estimates are classified using financial categoriesand refer to a source of funding. Accordingly, meaningful com-binations of commitment items, funds centers, and funds need
to be set up for each budget year. Together, these combinationsof elements make up the budget structure that will be bindingfor budget planning and execution during the budget year inquestion.
The budget structure is arranged in a hierarchy. It is a stream-lined structure, containing only the required elements. Depending on individual needs, the budget structure is set upto meet the requirements of local or central budget planning,allocation, and control. The following two figures illustratethe local and central budget allocation models.
With local budget responsibility (see Figure 9), responsibilityarea “Public Services” can plan both at this organizational level,as well as at the level of the top commitment item of lowerorganizational levels.
HUMAN RESOURCES SUPPLIES HUMAN RESOURCES SUPPLIES
HUMAN RESOURCES SUPPLIES
ADMINISTRATION DEPARTMENT 1
PUBLIC SERVICES
EXPENDITURES EXPENDITURES
EXPENDITURES
Figure 9: Local Budget Allocation
Budget Allocation
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With the distribution of budget to lower organizational levels(top commitment item), the responsibility for the budget andits distribution rests with the lower-level funds centers, that is,budgeting is decentralized.
This is not possible with budget planning that is organized cen-trally. In this case, funds center entitled “Public Services” andcommitment item entitled “Human Resources” is in controlof any Human Resources commitment items in subordinatefunds centers (Administration, Dept. 1). Budget can be directlydistributed from the higher-level “Commitment Item HumanResources” to “Commitment Item Human Resources” at lowerfunds center levels.
BUDGET STRUCTURE CHANGES
If so configured, commitment items and funds centers can bedefined as “fiscal year-dependent.” This means that any neces-sary changes to these structures can easily be followed fromone fiscal year to the next (for example, if the assignments ofcommitment items or funds centers within the hierarchieschange).
In addition to the hierarchical classification, commitmentitems and funds centers can be grouped according to differentcriteria. Independently of any such grouping, you can alsomaintain alternative reporting hierarchies of commitmentitems and funds centers in parallel with the standardhierarchies.
Figure 10: Central Budget Allocation
HUMAN RESOURCES SUPPLIES HUMAN RESOURCES SUPPLIES
SUPPLIES
ADMINISTRATION DEPARTMENT 1
PUBLIC SERVICES
EXPENDITURES EXPENDITURES
EXPENDITURES
HUMAN RESOURCES
Budget Allocation
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BUDGET PREPARATION WITH SAP STRATEGIC
ENTERPRISE MANAGEMENT (SAP SEM)
An accurate and complete budget requires the input and collab-oration of employees throughout an organization. Compliancewith the appropriate governmental standards for budgeting isas important as sharing data among numerous contributorsand ensuring that this data remains consistent and accurate.
SAP Strategic Enterprise Management (SAP SEM) is the dedi-cated tool to meet all requirements placed on an efficient andeffective budget preparation. SAP SEM is used in public sectoragencies as well as in the private sector.
SAP SEM Solution OverviewSAP Strategic Enterprise Management provides a toolset that allows organizations to perform comprehensive budgetplanning and formulation. SAP SEM contains multiple com-ponents. Two of them are tailored towards facilitating an end-to-end budget preparation process:
• SAP® Business Planning and Simulation (SAP BPS) –Supports the preparation, consolidation, review, andapproval of financial budgets using simulative methods
• SAP® Corporate Performance Monitor (SAP CPM) –Contains the Balanced Scorecard and Management Cockpit,which facilitate the definition of organizational goals andobjectives, as well as the creation of performance measuresfor monitoring performance against goals.
Figure 11: Entering a Budget Layout via Web Link
SAP SEM as an application is directly sourced by SAP BusinessInformation Warehouse (SAP BW). A common approach forstarting the planning process is to use historical data (masterand transactional data) that was extracted from SAP R/3 or any other data source.
Examples of master data that users may want to extract fromSAP R/3 include:
• Funds management data (budgets, actuals, and commit-ments)
• Functional area, funded programs, funds, funds centers, and commitment items
• Controlling data (cost centers, projects, and orders)
• HR data (organizational units, positions, and employeenumbers)
This separates the planning environment from the operationalenvironment in which the budget is executed. SAP BW offersplanning flexibility via alternative hierarchies for what-if analy-ses or to define characteristics that do not exist in SAP R/3Enterprise, but that are nevertheless relevant to planning. Oneexample would be the planning of reporting sets for a commit-ment item, provided your commitment items are classifiedaccording to functional, economic, and technical criteria.
In addition to the fields provided in SAP SEM for budgeting(such as the fund, program, and commitment items), organi-zations can also create custom evaluation fields for budgeting.This enables the incorporation of data from multiple sourcesystems. After planning is complete and the budget has beenapproved, the data is posted (“retracted”) to SAP R/3 Enter-prise.
Figure 12: SAP Strategic Enterprise Management and SAP Business Information Warehouse (SAP BW)
SAP SEMBUSINESS PLANNING & SIMULATION
SAP BUSINESS INFORMATION WAREHOUSE (SAP BW)
CPMCORPORATE PERFORMANCE MONITOR
OTHERS
SAP R/3 ENTERPRISE
CORE
EXTENSIONS
SAP Web AS 6.2
0
HUMAN RESOURCES
• CONTROLLING• PROJECT SYSTEM• ASSETS
PUBLIC SECTORMANAGEMENT
Extract data from the source system into
an SAP BW InfoCube
Retract data from SAP BW into your source system
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SAP Business Planning and SimulationIn order to formulate the budget, organizations may havebudgeting requirements such as:
• Online preparation of detailed line items for budget requests
• Multiyear planning
• Use of summarized objects
• Grouping of objects in alternative hierarchies to model largeorganizational and structural changes
• Attachment of explanatory texts and documents to lineitems
• Online publication of budget values
• Planning all kinds of expenditures and revenues, such as personnel, capital, and others
• Simulation and forecasting capabilities
• Processing of global amount adjustments, for example, salaryadjustments due to inflation or cost of living increase
In SAP SEM, all of these budgeting requirements are taken intoconsideration.
STRUCTURE OF THE PLANNING PROCESS
Budgeting is an iterative process with various approval levels,with planning data being created bottom up and then distrib-uted top down. Budget versions track the development ofplanning data and represent the planning status at any giventime.
SAP SEM supports Web-based planning by making use of plan-ning applications and a status and tracking system. These toolsallow organizations to use planning scenarios that cut acrosslocations and organizational units. Managers can use the SAPCorporate Performance Monitor, which is the central controland monitoring tool of SAP SEM, in order to determine thecurrent status of the budget in their area of responsibility. ThisWeb-based monitor is fully integrated with Microsoft Outlook.The manager is in continual contact with the lower-level units,setting timelines for planning phases, sending out Web-basedplanning layouts, checking the planning status, or making useof the notification system to approve or reject specific actions.
An alternative to using the status and tracking system is to use SAP Business Workflow within SAP Business Planning andSimulation. This provides the infrastructure and tools to man-age, automate, and analyze business processes across the entireorganization. Information and process flows are accelerated,worksteps are fully linked, and a structured budget approvalprocess is the result.
TAILORED DATA EXTRACTS AND LAYOUTS
By tailoring the software to your data extraction needs, youcan designate which portion of the organization’s data the usercan view and change. The SAP Business Planning and Simula-tion component of SAP SEM contains planning level andplanning package features that allow managers to restrict thedata users see. This reduces the mass of data to what is reallyrelevant to a specific user. Planning levels provide general data filtering, whereas planning packages reside below the planninglevel and provide a further degree of data restriction.
Users have several options for accessing budget data:
• Web – The Web Interface Builder allows users to create Web-enabled planning applications. Users can execute this type ofplanning application in the Web browser, meaning that theydo not have to install any additional software on client work-stations.
• Microsoft Excel (embedded) – Because many users are already familiar with Microsoft Excel, this interface decreasesthe time they need to learn the budgeting system. SinceMicrosoft Excel layouts update the database, budgeting datadoes not have to be compiled separately, as it does whenusers plan independently in spreadsheets.
• SAP® List Viewer (SAP ALV) – This is an alternative to the embedded Microsoft® Excel layout, which is reduced to provide a list instead of offering the features that users arefamiliar with in spreadsheet calculation tools.
BUDGETING LAYOUTS
You can design the entire layout of budgeting screens, sinceSAP BPS comes with a tool for creating planning layouts soyou can select the fields that will be used in budgeting, and
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determine where the fields will appear (for example, in theheader, in a lead column, in a data column, and so on). Thisenables you to view data in ways that are familiar to you.
SAP SEM contains many layout examples and sample processstructures. You can determine which user will use which kindof planning function – SAP SEM offers a huge variety of pre-configured planning functions for data handling, such as copy-ing, revaluation, rounding off, data distribution, and so on.You can do what-if analyses or use software such as Powersimto carry out complex simulations of budgeting models thatrequire sophisticated mathematical functions.
Linked Strategic and Operational PlanningA strategy-driven organization must be able to turn its strategyinto specific actions. This is a common approach in perform-ance-based budgeting: The strategy defines the outputs andresults of the organization. For example, you could define thefollowing outputs:
• Optimization of the procurement process
• Improvement of the revenue collection process
To measure these outputs, you define mainly nonfinancial key performance indicators, such as “percentage cost reductionin procurement” or “number of overdue tax files.” To analyzehow much budget you require for meeting organizational goals,you break down strategies into sub-strategies and define indi-vidual projects, such as “Installation of e-Procurement” or“Change dunning procedures for tax files.” Finally, you calcu-late the required budgets.
Figure 13: Top-Down Budget Distribution with Checks
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In SAP SEM this is handled in the following way: The BalancedScorecard (BSC) in the SAP Corporate Performance Monitorvisualizes your strategies, sub-strategies, projects, and perform-ance measures (see example in Figure 14). You set your measures/key performance indicators as performance targets, providing a clear overview of your organization’s performance, and indi-cating areas with a need for improvement.
In the SAP Business Planning and Simulation component, you then specify your key performance indicators or measures(for example, what is the target number of overdue tax files forthe coming year) and you plan your projects (for example, youplan using cost elements referencing data from the SAP® Pro-ject System). Next, you check the effects on your expenditurebudgets based on SAP Funds Management data.
This is an iterative process and is finished once your targetmeasures and budget capabilities are in sync. When you are in live operations, all current information from the measures,costs, and expenditures is automatically updated in the centralSAP BW database and can be visualized to indicate your per-formance in the scorecard.
REPORTING ON PLANNING DATA
Reporting is crucial in the planning process, since the resultsneed to be communicated, for example, for final submission or approval by a government agency. The powerful reportingcapabilities of the Business Explorer Analyzer (BEx Analyzer)are flexible enough to satisfy all reporting needs. The BEx Anal-yzer has an embedded Microsoft Excel, and allows full Web-enabled reporting from ad hoc queries, including capabilitiesfor geographic data analysis.
Figure 14: Balanced Scorecard Using Key Performance Indicators
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DATA CONSISTENCY AND AUTHORIZATION
Monitoring and control are achieved through a series of userauthorization checks and monitoring tools within the budgetpreparation process.
The business planning and simulation capabilities of SAP SEMensure that users have the authority to use transactions, andthat the budget may or may not be changed. User authoriza-tions are managed centrally according to SAP BW authorizationprocedures.
BUDGET EXECUTION
Reserving and committing funds, entering payment requests,and effecting payment transfers are some of the processes thatbelong to the execution of budgets in SAP Funds Management.Controlling the availability of funds and defining tolerancesleading to warnings or error messages are equally important.
Payment and Commitment BudgetsIn mySAP Public Sector there are two forms (or categories) of budgets: the payment budget and the commitmentbudget. Using these, you can influence which business trans-action commits funds in the payment budget or commitmentbudget and at what point in time. For example, the followingcombinations are possible:
• Payment budget and commitment budgetThe payment budget forms the financial framework for all ofthe payment requests (invoices) in the current budget year.The commitment budget evaluates the earmarked fundsthat can be entered in the future, starting with the currentbudget year.
• Payment budget and commitment authorizationsUsing this variant, the payment budget forms the frameworkfor payment requests (invoices) and earmarked funds in thecurrent budget year, while the commitment authorizationsspecifically determine the earmarked funds for an identifiednumber of consecutive years.
Budget TypesGenerally speaking, public bodies need to differentiate budgetestimates according to their use, which is done in the mySAPPublic Sector solution using budget types. The following budget types are available:
• Original budgetThe budget at the time of the first approval, that is, the budgetnot yet changed by correction measures (supplements, returns, transfers, and so on).
• Budget carryforwardIf budget amounts are carried forward from the previousbudget year to the next, these budget amounts are identifiedseparately from the budget amounts for the current year.
• Budget advanceIf the law allows parts of next year’s budget to be used in thecurrent year, this advance appears as a separate budget typein the current year.
• Budget supplementsSupplements can be used to assign additional budget to SAPFunds Management account assignments where, for exam-ple, these accounts are charged with unplanned, yet neces-sary tasks. Supplements are effected outside of the generalbudget creation process.
• Budget returnsIf there are surplus funds in a specific account assignment,these funds can be returned to the higher-level SAP FundsManagement account assignments within their hierarchy.
• Budget transfersTransfers help avoid funds bottlenecks by moving budgetbetween elements of the budget structure.
In the classical budgeting system, additional user-definablebudget subtypes can be used to differentiate budget amountsaccording to an organization’s needs.
Budget subtypes allow organizations to classify and report ontheir budgets on a detailed level. For example, contingencybudgets are usually budgeted in one line item to start, and thentransferred to other account assignments as needed. Organi-zations can also use budget subtypes to visualize the entire
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contingency budget separately from their normal operatingbudget to see how it has been transferred to other accountassignments. Another example is a reappropriation budget,which refers to the system’s ability to separate and report onbudget that was carried forward from a previous year versusthe current year’s normal budget.
Revenues Increasing the BudgetOften, budgets are made available for expenditure only aftercorresponding revenue has been recognized. This is true forthe already approved budget as well as for additional budgetthat was not part of the original approval. For such require-ments, revenues increasing the budget (RIB) enable you todefine rules when and how such budget increases should takeplace.
You can choose between different phases of revenue recogni-tion (commitment from forecast of revenue or sales order,invoice, or true cash received in bank account). The expendi-ture budget is then increased in the budget address stipulatedin the revenues increasing the budget rules. You can also setlower and upper thresholds for the increase, requiring a baserevenue before the increase starts and limiting it to a maxi-mum amount of increase. As an alternative, Customizing settings also allow you to specify that available expenditurebudgets be reduced until required revenue limits are achieved.SAP provides three different automated procedures for increas-ing the expenditure budget using revenues intended for a spe-cific purpose: a document-based or totals-based distribution procedure, a call procedure, and manually creating budgetincreases.
Cover Pools and Cover EligibilityEvery administration attempts to achieve a workable compro-mise between the necessary level of detail for budgeting andfurther possible levels of detail for posting. Yet there are caseswhere it is not practical to shift budgets from one address toanother, for example, if the distribution pattern of expendi-tures was not originally planned. Nor is it acceptable to inten-
tionally change posting account assignments, just because thebudget distribution does not follow an unexpected shift inexpenditure patterns.
As a solution for such cases, public administrations may decideto join and share budgets. Multiple individual budgets are com-bined, and postings to any of the participating addresses arechecked for availability against the pooled budget, instead ofagainst the individual budget. The mySAP Public Sector budgetexecution solutions fully support this form of budgetary con-trol using cover pools. For each pool, participating budgetaddresses and the relationship of the addresses within the poolare defined (supply to and benefit from pooling, only supply,or only benefit).
In the Customizing rules for cover eligibility, you determinewhich expenditure SAP FM account assignments are entitledto cover and which are subject to cover (that is, must cover)within unilateral (only supply or benefit) and reciprocal covereligibility (supply to and benefit from pooling). You can alsospecify that an SAP FM account assignment for expenditurescan use budget from revenues increasing the budget by assign-ing a revenues SAP FM account assignment to the expendi-tures SAP FM account assignment.
BUDGET CONTROL SYSTEMS
As of SAP R/3 Enterprise, there are two systems for managingand controlling budgets: the tool previously available in SAPR/3 (“classical” or “former” budgeting) and the new budgetcontrol system (BCS). By switching to BCS, you will be able to precisely control the availability of your budget by:
• Specifying the budget values to be checked using filtersettings
• Setting tolerance limits for a budgeting process
• Defining availability control checking procedures for theupdated and summarized budget, as well as for commitmentand actual postings
• Performing multilevel active availability control in order toidentify possible budget underruns or overruns when fundsare being committed
• Using several availability control functions in parallel
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New Budget Control System (BCS)The budget control system (BCS) has been developed for SAPR/3 Enterprise as part of an effort to redesign the existing SAPFunds Management features. It provides an alternative tool tothe previous budget execution and availability control func-tions.
Although the principles of budget execution have not changed,certain budgeting and budgetary control features have beengreatly enhanced in BCS, as compared to the budgeting func-tionality prior to SAP R/3 Enterprise. A new budgeting tool wasnecessary in order to meet current and future requirements,and to provide customers with a greater degree of flexibilitywhen controlling the budget.
In detail, the following areas have been enhanced or redesignedin BCS.
FLEXIBLE MASTER DATA SUPPORT
The need for more flexible, transparent, and detailed planningand budgetary control has led to an increasing number ofdimensions in which organizations define their budget. In classical SAP Funds Management (until SAP R/3 Release 4.6C),only four dimensions are available: fund, funds center, com-mitment item, and functional area. BCS now offers six dimen-sions for detailed budget execution, supporting the existingorganizational structures of SAP R/3 4.6C, and in addition, thestructuring of budgets by funded program and grant. With theincreased number of potential master data dimensions, thebudgeting screens needed to become more flexible as well. BCSsupports user selection of master data dimensions, with thebudget data entry screens using only the desired dimensions.Layout settings further facilitate user interaction by offeringeach dimension in the following ways:
• Once per documentThe initial value entered is used for all lines within the document.
• Multiple times per documentHere, the user can enter values independently for each document line.
Once the relevant master data dimensions have been chosenand the master data is set up, you use the budget structureto define the permissible combinations of master data values.
BUDGET STRUCTURE
The budget structure represents all the funds centers, commit-ment items, functional areas, and funded programs for whichthe budget has been defined. A similar but independent struc-ture is available to control the posting of commitments andactuals. The structure contains the fund, funds center, andcommitment item combinations from the entire hierarchy forwhich you can enter budget and posting data, making yourbudget allocation transparent.
In the structure settings for the budget, you can specify validcombinations per budget version, enabling you to easily com-pare alternative budgeting approaches.
The budget structure posting definitions control the possiblemaster data combinations that you can use to record commit-ments and actuals. The combination of the two settings pro-vides flexible, user-definable rules for controlling the budget,which can be further enhanced using the detailed Customizingsettings for active availability control.
USER-DEFINED BUDGET TYPES
Each budget execution starts with an initially approved budget,called “original budget” or “President’s Budget.” However, manychanges, subdivisions, and distributions of this budget are usu-ally made before or during budget execution. Organizations arebound by legal rules as well as by their own internal guidelinesspecifying the manner in which budgets or changes to budgetsare presented. In addition, organizations also define Custom-izing rules determining how these various budget types inter-act.
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BCS supports this approach by offering user-defined budgettypes. When you create budgets and define the relationshipsbetween budget types, status management and consistencychecks ensure the proper use of these budget types.
STATUS MANAGEMENT
Many organizations tend to decentralize parts of their budgetexecution operations. This, together with the flexibility of mas-ter data and budget types, makes it increasingly important toclosely control who can access and change a budget. Statusmanagement in the budget control system provides support forbudget access in the following ways:
• Budget types used together can be grouped into budget status definitions.
• These status groups also determine the authorization groupsnecessary for accessing the related budget types. This way,you can grant different access rights to operational users andmanagers.
• A status definition is assigned to each budget version, pre-venting changes from being made to the operational version,while permitting changes to be made to different planning versions.
An example of status management is shown in Figure 15.
CONSISTENCY CHECKS
At a lower level of detail, consistency checks support users inmaintaining the budget in a correct and consistent fashion. Thechecks are performed either at the budget document level or atthe SAP FM account assignment level.
A check at the document level can compare all the data enteredin the document. For example, you can stipulate that certainbudget types may only be used in conjunction with specificmaster data values.
User-defined fund types allow you to distinguish betweenfunds that generate revenue due to sales activities and fundsthat do not. You can transfer expenditure budget between orga-nizational units only for the revenue-generating funds, and youcan carry out a document-level consistency check to enforcethis requirement.
In principle, authorizations can also be used to define valid userinteractions with budget documents. However, consistencychecks provide the ideal method to implement such validations,because they can be set up according to customer-specificrequirements.
STATUS 1
Preparation
Original budget
Cons. of preparation
Original budget
Restricted user group
Operation 1
Transfer 1
Transfer 2
Operation 2
Transfer 2
Transfer 3
Internal adjustments
Transfer 3
Year-end closing
Carryforward
Block budget
Nothing allowed
STATUS 2 STATUS 3 STATUS 4 STATUS 5 STATUS 6 STATUS 7
July Sept Oct Mar July Aug Oct t
2002 2003
BUDGETING CALENDAR FOR:
• FM AREA 0001• VERSION 0• BUDGET CATEGORY: PAYMENT BUDGET (PB)• FISCAL YEAR 2003• FUND A
Figure 15: Status Management in Budgeting
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A consistency check at the address level compares amountsentered in a document with amounts that have already beenposted. You can use this to enforce certain financial limits ontransactions.
Here is a business example for such a rule:An organization has a general policy that no individual budgettransaction may affect more than 10% of the overall budget. An exception is made for central budget managers, who areallowed to make budget changes in excess of the 10% generallimit. A consistency check at the SAP FM account assignmentlevel, validating that budget changes are not more than 10% of the existing overall budget, can be created and assigned tocertain document types for budget changes. These documenttypes are the only ones most users are allowed to use. Centralbudget managers, however, are allowed to use a special docu-
ment type that does not have this consistency check assigned,providing them with the capability to make unlimited budgetchanges.
DOCUMENT PRINCIPLE
The use of documents as the basis for budgeting requires im-proved and simplified processing and review capabilities. Thebudget documents in BCS are based on the same documentprocessing features used in other modules. A budget documentis identified by its document type, which controls the docu-ment numbering within the financial management area andfiscal year.
BCS provides users with a budgeting workbench, whichenables you to easily process budget documents. In this user-defined interface, you can create and change individual budgetentry documents.
Figure 16: Using the Budgeting Workbench to Process Documents
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Each document records the user name, and the date and timecreated. If an additional approval process is necessary, the rele-vant data for these approvals is also stored in the document.Documents may be placed on hold, for example, if a user issuddenly interrupted. Held documents can be retrieved at alater date, with a user searching only for his or her own docu-ments, or for all held documents. You can also use held docu-ments as templates for new budget documents. As long as adocument is on hold, it does not have any effect on the budgetor on availability checking.
Documents can also be posted preliminarily to allow approvalsusing standard workflow features. The effect of documents inworkflow on the budget and availability control is defined inCustomizing. It can be taken into account or disregarded untilfinal approval is given. Posted documents can be reversed if nec-essary.
BCS documents record budgeting information at both the document header and line item levels. For the document linelayout, you can use the SAP List Viewer (SAP ALV). For the pro-cessing of a budget document, SAP ALV is used to enter budgetdata. With this tool you can easily sort, filter, and sum up lineitems prior to posting.
MASS PROCESSING OF DOCUMENTS
Besides the budgeting workbench, which allows individual processing, mass maintenance tools exist to make copies of versions, mass adjustments, mass reversals of documents, andother activities for which similar processing is required for alarge number of documents. Each mass run can be identified inthe resulting documents via a document family number thatlinks the individual documents. If you want to have a
Figure 17: Overview of Budgeting Workbench
REVERSE DISPLAY POSTHOLD PARK POST
DOCUMENT SELECTION
MANAGEMENT OF FM BUDGET DOCUMENTS
DOCUMENT CREATION
BUDGET MODIFICATION
FLEXIBLE LAYOUTSINGLE-ENTRY SCREEN
INFORMATIVE DATA (KEY FIGURES)
BUDGETING WORKBENCH
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specific rule that, for example, there should be no budget docu-ments that do not balance by fund, a document split rule canbe applied that supports this requirement.
AVAILABILITY CONTROL (AVC)
Monitoring of allocated available resources is an essential element of budget control. The main reason for this is that you must always be able to compare the assignments (budgetusage) with the resources currently available.
The information recorded in SAP FM provides for “passive”availability control in the form of a budget monitoring report.For active availability control, budget usage is controlled byhaving the system compare budget consumption with budgetlimits every time a document is posted in SAP FM.
To determine budget usage, the system automatically takesinto account all relevant business transactions (for example, an invoice and the earmarked funds document it references).Availability control deals with three user-defined levels: Firstyou have to define the budgeting level (what can be budgeted),then you use the derivation tool to specify the control level.This is the level at which active availability control is enforcedand specified in the budget structure. The commitment man-agement process ensures that the budget is not used twice.Finally, the account assignment level is the level at whichSAP FM postings are made which can be at or below the con-trolling level.
BCS contains a flexible, yet easy-to-use tool for checking theavailability of funds, with the following features:
• You can define that the master data combination used forposting be the same combination used for budget checking.This requires just one setting to be made in Customizing,clearly defining the relationship between the objects to bechecked and the objects against which checking is carriedout, making the results of availability checks predictable.
• If necessary, you can specify that several posting combina-tions be checked against a single budget. The following com-plex requirements are supported:– Budget control might require fewer master data dimen-
sions than are used for commitment and actual postings.You can have postings summarized to a budget accountassignment by omitting unnecessary dimensions.
– For more detailed budget-checking requirements, you can use the extensive derivation capabilities of SAP FundsManagement.
– If several budgets need to be checked at the same time, youcan establish additional control levels to validate postingsagainst different budgets, based on predefined master datacombinations and the SAP FM derivation logic.
DEFINING TOLERANCES
Tolerances can be used for status-driven error messages in theform of an early warning or rejection. The budget usage rate,which is the tolerance level at which point these messages willbe generated, can be defined in Customizing. In addition, the system can be configured to automatically notify budget man-agers by e-mail when a certain budget condition is reached.
Active availability control includes a range of additional checkson expenditure postings:
• Checks on posting feasibility in the budget structure
• Consistency checks
• Authorization checks
• Status management checks
• Validation checks on basic data
In addition, you can apply filters to influence the budget typesto be included when available budgets are checked. This makesit easy for you to distinguish between consumable and non-consumable budgets.
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There are three types of objects in the AVC process: postingobjects, budgeting objects, and objects for availability control.They can be structured hierarchically or all three objects canbe on one level. The relationships within availability controlare depicted in Figure 18:
SAP FUNDS MANAGEMENT INTEGRATION
Payments or payment commitments can originate in many different areas of SAP R/3 Enterprise, as well as other areasincluding SAP® Plant Maintenance, SAP Materials Manage-ment, mySAP Financials, mySAP Human Resources, and SAPControlling. Integrated processing between SAP Funds Man-agement and the individual components ensures a coherentand nonredundant system.
Many of the feeder components to SAP Funds Managementproduce financial documents, which usually result in pay-ments at a later time. At the time these documents are created– for example, through a legal commitment such as a purchaseorder – SAP Funds Management provides control options thatcheck the resource availability before the actual payment is
AVAILABILITY CONTROL
BUDGETING
POSTING
BUDGET STRUCTURE
Figure 18: Levels of Availability Control in Budget Structure
MULTIPLE CHECK LEDGERS
For the most complex requirements, BCS enables you toperform multiple control checks. In this case, all the featuresmentioned previously can be applied more than once to definemultiple check ledgers.
You can apply all availability control features in parallel, inorder to define multiple check ledgers. Each ledger supports a separate availability control, based on the settings made inCustomizing. If an availability control error occurs for any of the ledgers, the entire posting process is stopped. Figure 19visualizes these possibilities.
Figure 19: Budget Control System: Multilevel Checking Ledgers
POST ACTUALS/COMMITMENTS
POST BUDGET
BUDGET OBJECT
AVC STANDARD LEDGER 9 H
CONTROL OBJECT 4
AVC CUSTOMER LEDGER C 1
CONTROL OBJECT 3
AVC CUSTOMER LEDGER C 2
CONTROL OBJECT 2
AVC CUSTOMER LEDGER C 3
CONTROL OBJECT 1
POSTING OBJECT PAYROLL POSTING
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made. Active availability control at this stage ensures that legalcommitments are not made if budgeted resources do not exist.Examples from SAP® Travel Management and SAP MaterialsManagement illustrate these points.
Integration with SAP Travel ManagementIn order to illustrate the integration with SAP Travel Manage-ment, here is an example. An employee wants to enter a travelrequest. The availability check on the travel budget for thisbudget line determines that the available funds are insufficientto cover this trip, so the employee is unable to complete thetravel request. If the trip is necessary, the employee must eitherreduce the costs for the trip or request additional funding. With-out the travel request and integrated availability check, therewould have been no easy means for preventing the future ex-penditure because the costs might have already been incurredby the time they were compared with the budget.
If you configure travel requests to carry out an availabilitycheck, the budget for the budget line will be assigned in theamount specified in the travel request as soon as the employeeenters the request. All travel requests and trip costs for the relevant budget lines are easily identifiable in the system. Atyear-end, open requests can be carried forward, along with thebudget, according to user-definable carryforward rules. Lockingmechanisms prevent unauthorized budget carryforwards tothe next budget year.
For more information on SAP Travel Management, please seethe chapter entitled Integration Aspects.
Integration with SAP Materials ManagementAs with SAP Travel Management, integration with SAP Mate-rials Management can be best shown by an example. An em-ployee from an agency requires three copies of a software pro-duct for different PCs and, accordingly, requests the softwareusing a purchase requisition. The software normally costs $110per unit. The total of $330 reduces the agency’s available budget.
The central purchasing agency converts the purchase requisitioninto a purchase order. The agency determines that several com-panies can supply the software. Using the evaluation criteria inthe SAP Materials Management component, the purchasingagency selects a supplier willing to provide the software for $315.The difference of $15 is restored to the requesting agency’savailable budget, allowing this amount to be committed/spentfor other purposes.
When the software is received, one of the units is damaged andit is returned to the supplier. A replacement will be obtainedfrom a different supplier. The requesting agency’s availablebudget of $105 that was committed to the original supplier isthen automatically reassigned to fund the replacement.
The original supplier apologizes for the damaged goods andallows a special discount of $10. The normal 3% discount is alsotaken on the non-damaged software. The amount of $16.30 isrestored to the requesting agency’s available budget, allowingthis amount to be committed/spent for other purposes. Finally,the cashier’s office pays the amount of the invoice, less the dis-counts.
You can tailor a scenario like this to suit your own require-ments. For example, you can enter a purchase order without a purchase requisition, or an invoice that does not reference a purchase order if so desired.
Integration with SAP Grants ManagementFunded programs can be used to subdivide budgets and fundsassignments across the other SAP FM structures. These are initiatives used to represent a plan or system under whichactions can be taken to achieve specific goals. An examplewould be the management of grants at universities.
A grant represents an agreement with a sponsor that can crossa public sector organization’s funding sources, as well as otherinternal organizational, functional, and programmatic struc-
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tures. With SAP Grants Management (SAP GM) integration,grants can be used to subdivide budgets and fund assignmentsacross the other SAP FM structures.
If SAP Controlling is used, either the SAP GM or SAP FM deri-vation tools (or both) can be used to automatically default the grant based on a direct link with the related cost centers,orders, or projects, which can then be changed if a different (or no) grant is required. The SAP GM and SAP FM derivationtools also allow other data structures to be used for derivingthe grant.
For more information on grants, please refer to the chapterentitled SAP Grants Management.
SAP FM DERIVATION TOOL
In order to streamline data entry and make using the mySAPPublic Sector solution as simple as possible, there are standardand user-defined flexible links available between the masterdata of the individual components. The SAP FM derivationtool is the primary method for automatically linking SAP FMmaster data with other components. However, in some com-ponents such as SAP® Human Resources, SAP Plant Mainten-ance, and SAP Sales and Distribution, you can also create manual links using the SAP FM derivation tool.
The derivation tool consists of a sequence of SAP-delivered oruser-definable derivation steps that, based on a user-definablesequence, subsequently determine the account assignment values to be used during updating to SAP FM (in particular to the fund, funds center, commitment item, functional area,funded program, or grant) from other account assignments in SAP FM or in other components such as the cost center,internal order, WBS element, G/L account, and so on. Ifdesired and enabled in Customizing, a user can also directlyenter the SAP FM account assignment, or derive it directlyfrom other components.
For more information on the SAP FM derivation tool, pleaserefer to the section entitled Integration Within SAP R/3 Enter-prise in the following chapter.
EXPENDITURES AND RECEIVABLES
All transactions that trigger the consumption of availableresources, lead to expenditures, or result in commitments forfuture payment, are recorded online within SAP R/3 Enterpriseas separate documents in SAP Funds Management, using theappropriate currencies. The origin of the document is con-trolled by the value type. The value type is a technical classify-ing attribute for individual document types and budget cate-gories, and controls the transfer of posting data from othercomponents into SAP Funds Management, as well as serving as a selection criterion in reporting. Each budget category (customer-specific definition of budget entry documents) corresponds to one value type within budgeting.
You can post the following information to SAP FM:
• The type of expenditure or available resource (whichcommitment item/budget line is affected)
• Who is responsible for the expenditure or available resource(budgeting responsibility area/funds center)
• What is the applicable funding source (which fund)
• What specific purpose is the expenditure or availableresource designated for (functional area)
• Which individual program or project does the expenditureor available resource support (funded program)
• To which external sponsor-related agreement does theexpenditure or available resource relate (grant)
In many cases, this account assignment information is derivedautomatically from other SAP posting objects – for example,the employee number from the HR master record, or accountinformation from the general ledger account or cost center.
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Actual Data/PaymentsThe obligatory documents produced in the system will, atsome point, either be cleared by a subsequent document orcancelled. SAP Funds Management keeps track of the docu-ment sequence, from obligatory document to either invoice orfinal payment (depending on customizing). You can recordpayments, down payments, or partial payments automaticallyusing the payment program.
Funds TransfersTransfers between SAP FM account assignments can be affectedthrough postings in the feeder components or through directpostings in SAP Funds Management. These include expenditurepostings in SAP Financial Accounting (SAP FI), internal activityallocation in SAP Controlling, or funds transfers in SAP FundsManagement. If SAP FM funds transfers are used, these post-ings do not impact SAP FI or SAP CO.
Earmarked FundsDuring budgetary accounting and execution, budget isconsumed as a result of different business transactions. InmySAP Public Sector, this is accomplished using earmarkedfunds, which differ with respect to validity period, usage, andany accompanying legal obligations. There is full integrationwith the budget management process.
Earmarked funds represent the link in the business processes ofbudgeting and accounting. You can use earmarked funds toreserve budgeted funds for a particular purpose. mySAP PublicSector has functions especially designed to support all process-es in this area. Integrated workflow functionality enhances theefficiency of these processes. There are a number of processesfor earmarked funds in mySAP Public Sector:
• Funds blockingFunds blocking can be used to prevent the budget from beingused by others. You can later remove the funds block onsome or all of the account assignments, thereby increasingthe available budget.
• Funds reservationFunds reservation can be used to reserve portions of thebudget early, even if you do not yet know specifically whatthe budget will be used for or the exact timing. The fundsreservation is a preliminary stage for funds precommitmentsand funds commitments.
• Funds precommitmentA funds precommitment can reference a funds reservation.At the time a funds precommitment is processed, moredetails are known about what the budget will be used for, but no definite contractual agreement has been made yet.
• Funds commitmentThe funds commitment represents a specific purpose for useof the budget, as well as the accompanying contractual obli-gation (for example, resulting in purchase orders to be madeto a supplier or other legal agreements). A funds commit-ment may or may not refer to a funds reservation or a fundsprecommitment. Additional information, such as the supplieror particular contract numbers, can also be referenced in thefunds commitment.
CommitmentsA commitment refers to an anticipated expenditure, which iseither contractual or scheduled, but not yet reflected in SAPFinancial Accounting. Commitment management gives youan early recording and analysis of such commitments with respect to their cost and financial effects. Commitments can be entered for the following objects:
• Production orders
• Internal controlling orders
• Maintenance work orders
• Sales orders
• Cost centers
• Networks and network activities
• Projects (work breakdown structure elements)
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Budgets normally contain authorizations that restrict expendi-tures to the current fiscal year. mySAP Public Sector providesvarious scenarios for setting up business transactions that aredirected towards future fiscal years. These scenarios determinethe method in which the different business transactions affectthe two budgets provided (payment budget and commitmentbudget). For example, transactions that can generate commit-ments (such as purchase requisitions, purchase orders, andinvoices) can be checked only against the commitment budget,whereas actual payments can only be checked against the pay-ment budget.
SAP Funds Management DocumentsA document in SAP Funds Management has two functions:
• As part of active availability control, the document forms the basis for determining how much of the budget has beenassigned. When configuring the system, you can specifywhether these fund assignments should draw on the pay-ment budget or on the commitment budget.
• The document forms the basis for reporting: periodic evalua-tions such as budget/actual comparison, line item reports, or workflow lists showing the amounts still to be approved.Each document refers back to the original document, so that you can always drill down to the original document(for example, purchase orders, payment requests, invoices,payments, and so on).
In Customizing, you specify how SAP Funds Management documents are to be produced and how budgets are assigned.Customizing options for expenditure update include:
• Period/fiscal year determination
• Tax processing
• Timing of funds assignment in SAP Funds Management
Figure 20: Budget Execution: Earmarked Funds and Transfers of Funds
FORECASTOF REVENUES
ACCEPTANCEREQUEST
FUNDSTRANSFER
FUNDSTRANSFER
FUNDSBLOCK
FUNDSRESERVATION
FUNDSPRECOMMIT-
MENT
FUNDSCOMMITMENT
PAYMENTREQUEST/INVOICE
REVENUES BUDGET EXPENDITURES BUDGET
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EARMARKED FUNDS DOCUMENTS
An earmarked funds document consists of a document headerand multiple line items. With some exceptions, changes arepossible after these documents have been created. These changesare then validated and logged.
• Document headerEntering earmarked funds starts with document headerinformation. Critical information is the document type,posting date, company code, currency and exchange rate, anddocument header text. After your first save, no subsequentchanges are possible to the document type, company code,and currencies. However, at certain points during the docu-ment entry and approval process, you can change the rate,posting date, and document header text. Among otherthings, the document type controls how the documentnumber is assigned and determines whether workflow isavailable for this document.
• Line itemsAn earmarked funds document contains the documentheader and at least one line item. The most important datain a line item is the amount requested and the relevantaccount assignments. You can also carry out active avail-ability control against the relevant budget.
At certain points during the document entry and approvalprocess, the amount and SAP FM account assignments arefrozen and can no longer be changed. You can also add addi-tional line items, but you cannot delete line items that alreadyexist in the document. The unused portion of the earmarkedfunds is also displayed, with access to detailed change historiesas required.
If your funds commitment refers to a funds precommitment,the commitment will use the account assignment from theprecommitment and check that the required amount is stillavailable in the budget. If additional funds are required, the system determines whether the additional amounts requiredare also available in the budget.
SAP Business WorkflowIntegrating workflow automates the approval process for alltypes of earmarked funds, including creation and changes to these documents. Workflow is started when an earmarkedfunds document is created using a workflow-enabled docu-ment type. The transaction must be approved before the avail-able budget is actually used. However, to ensure that the amountwill be available after approval, available budget is reserved pro-visionally. Additionally, an earmarked funds document cannotreference another earmarked funds document until the refer-enced document has been approved.
Amounts reserved can be changed after approval; however, this will restart the approval process (including workflow inte-gration). Increases to existing earmarked funds documents aretreated differently than decreases. For an increase, the availablebudget is immediately reduced by the relevant amount to ensurethat this budget cannot be used by other earmarked funds during the approval phase. Earmarked funds reductions, onthe other hand, do not immediately result in an increase in the available budget until the new reduced amount has beenapproved.
Once approved, the account assignments can only be changedif no portion of the earmarked funds document has been used.Changes to the account assignments are not valid until theyhave been approved.
Workflow can be configured such that the assignment of trans-actions (for example, funds reservation for approval) to partic-ular employees is dependent upon information contained inthe document itself, such as the account assignments or theamount.
For more information, see the section on SAP Business Work-flow in the chapter entitled Integration Aspects.
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INCOMING INVOICES
You can enter incoming invoices in either the SAP MM Pur-chasing or SAP Financial Accounting components. The in-voices entered are checked by the system to make sure that thecontents are correct. You can add any account assignmentsand then approve them. This procedure is the one used in theprivate sector, and all transactions are fully integrated withSAP Funds Management.
You can also use a payment request as another option forentering vendor invoices and credit memos. This method isprimarily used by organizations that are interested only in a budgetary accounting view.
PAYMENT REQUESTS
Payment requests lead to the entry of vendor invoices and any appropriate credit memos for those organizations using a purely budgetary accounting viewpoint. This method hasadvantages for organizations that are not concerned withfinancial or cost accounting because transactions are assigneddirectly to SAP FM account assignments without regard to SAP FI or SAP CO cost accounting objects.
An SAP FM account assignment is a combination of a commit-ment item, funds center, fund, functional area, funded pro-gram, and grant. The system uses this account assignment todetermine the general ledger account to which the posting ismade in the background. If a transaction does not reference abudget, you can post it directly to a G/L account.
This assignment to SAP Funds Management provides differentviews of the overall document: the budgetary accounting viewwith emphasis on the SAP Funds Management account assign-ments versus the financial accounting view that concentrateson cost objects and G/L accounts.
The payment request is based on the parked document (pre-liminary posting) process, meaning that the document entryprocedure can be interrupted at any point. It is not a precon-dition of document entry that, for example, the paymentrequest must show a zero balance. However, when you deter-mine that the document is “complete,” extensive validationsare performed, the data is recorded in SAP Funds Managementand the available budget is consumed. Active availability con-trol verifies that the funds needed to make the payment areactually available.
When you create or change a payment request, you can refer-ence a funds commitment. If the payment and commitmentbudgets for a fiscal year differ from each other, the availablebudgets for these two budget types are managed separately.You can also indicate that a funds commitment is “complete”in the payment request entry transaction. As an example, thisenables you to specify that a purchase order is “complete” evenif not all the goods have been delivered. This releases the differ-ence as budget available for other purposes. You can also accessand display related funds commitments in order to reviewunused amounts or any other information.
AUTOMATIC PAYMENT
The payment program automates all payment transactionscarried out with customers and vendors, including the selec-tion of the open items due (invoices or payment requests),determining the payment method and bank accounts used,and generating and managing the payment media. Also includedare functions to process cross-company code payment trans-actions, cash discounts, offsetting of customer and vendor pay-ments, down payments (advance payments), and credit memos.
Payment Process FlowThe payment process runs through the following three steps:
• Determining the payment proposal list
• Processing payment proposals
• Posting payment documents and creating payment forms or data media
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PAYMENT PROPOSAL LIST
The system determines the payment proposal list using docu-ment information, customer and vendor master records, spe-cific control tables, and user-definable selection criteria. Ifthere are payment proposals to be processed, several employeescan work on them simultaneously (for example, differentemployees can work on changing the proposed paymentmethod, bank details, terms of payment, or payment blocks on individual items).
Payments are then created, based on the proposal list, and cor-responding posting documents are generated. Outstandingpayables and receivables are cleared and linked to the relevantpayment before forms are printed or data media created. Theentire payment run is monitored, providing an overview of theprocess at all times.
PAYMENT PROGRAM
The due date determines if an open item is cleared. This date iscalculated using the payment period and cash discount termsindicated in the document. The general rule is that paymentsare to be processed at the latest possible date without loss ofdiscount; however, you can configure these rules to meet orga-nizational requirements.
The payment program supports all of the common methods of processing incoming and outgoing payments, including payment by check, bank transfer, direct debit, bill of exchange,postal check, and a range of country-specific methods. Youdetermine which of these methods are to be used. Up to 10 different methods can be assigned to a vendor or customer.Items can be grouped together for payment, or they can bepaid individually.
Figure 21: Payment Process Flow
PROPOSAL RUN BUSINESS PARTNER DATA
PAYMENT PROGRAM
OPEN ITEMS
PAYMENT RUN
PAYMENT DATA
PAYMENT PROGRAM
DOCUMENT
GENERATEPAYMENT MEDIA
LIST FORM SAVED DATA REPOSITORY OF CHECKS
<– TERMS OF PAYMENT<– CASH DISCOUNT BASE AMOUNT
STRATEGY
<– CHANGE PAYMENT PROCEDURE<– CHANGE BANK<– CHANGE CASH DISCOUNT TERM
PAYMENT BLOCK
PRINT PROGRAM
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PAYMENT FORMS AND DATA MEDIA
In the last step of the payment run, the program prints therequired forms or creates the file for data medium exchange.The system contains the different payment forms required for each country and bank. You can use the delivered forms,change them, or create your own.
The file provided for data medium exchange (DME) containsall payment information. It conforms to the standards of banksin each relevant country. The data can be downloaded or trans-ferred directly to the bank.
All the information flows into DME management, based onthe data media created. This information includes the paymentrun ID, house bank, clearing house, amount paid, and otherrelevant information. You can display the documents con-tained in the data media or print them out, as required.
Types of ReceivablesYou can reproduce the entry of receivables (such as chargesand outgoing invoices) using the SAP Sales and Distributionand SAP Financial Accounting components. This procedure is the one used in the private sector.
REVENUES
In the revenue area, the emphasis is on planning (see also:Budget Preparation) and the associated processes. Normally, youuse availability control to monitor your expenditures budget.However, as of SAP R/3 Enterprise Release 2.0, you can alsoactivate availability control to monitor your revenues budget.
RECOVERY ORDER
For organizations focused on a budgetary accounting view,acceptance requests are used to record the receivables duefrom third parties. These orders represent billing documentsthat are based on contracts or other receivables with a legalbasis (for example, taxes, royalties, deductions, and so on). Theyalways reference a specific SAP Funds Management accountassignment, the relevant general ledger account, and a cus-tomer, providing the integration with SAP Financial Account-ing and the various subledgers.
If the revenue budget is managed on the basis of invoices, thebudget is updated when you post the acceptance request. Ifdocument parking is used, the budget is updated when thedocument is parked.
Recovery orders are also part of the dunning procedure thatcan be used to request payment for items due.
FORECASTS OF REVENUE
Forecasts of revenue are revenues that are expected and includedin the budget planning process. However, the method by whichthese revenues are received, and the timing, is not yet known.
Forecasts of revenue always include an SAP FM account assign-ment. Recovery orders control reductions in the forecast ofrevenue. When you post an acceptance request, you can refer-ence a forecast of revenue, which is then reduced by the amountof the acceptance request. If you set the “completed” indicatorin the acceptance request, the system clears the entire revenueforecast, regardless of the amount entered in the acceptancerequest.
Use of the revenue forecast functionality is optional. You canalso enter acceptance requests without referencing a revenueforecast. You can enter a revenue forecast that simultaneouslyreferences a customer from whom the revenue is expected.This will not, however, update items in the customer accountin SAP Financial Accounting. You can also define a revenueforecast as increasing the expenditure budget, linking the fore-cast values with amounts that are to be made available in theexpenditure budget.
Instead of SAP FM postings, you can also use an SAP Sales andDistribution (SAP SD) order to create a revenue forecast.
Since workflow processes are fully integrated, detailed control-ling and monitoring of expected revenues are supported inother areas of SAP R/3 Enterprise.
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Figure 22: Period-Based Encumbrance Tracking
COMMITMENT02/02
COMMITMENT06/02
COMMITMENT09/02
100 $
COMMITMENT02/02
70 $
-20 $
-10 $
PERIOD-BASED ENCUMBRANCE TRACKING (PBET)
YEAR-BASED ENCUMBRANCE TRACKING
PURCHASE ORDERREDUCTION
09/2002
PURCHASE ORDERREDUCTION
06/2002
PURCHASE ORDERCREATE 02/2002
100 $
80 $
CASH RECEIPTS
Receipt of the cash in the bank account clears the matchingopen item from the customer account. You can use electronicbanking, which updates bank statements automatically, forthis process.
If you are managing the revenue budget on a cash basis, post-ing the cash receipt causes the budget to be updated.
DUNNING
A dunning program is available to request payment from cus-tomers that do not meet their obligations on a timely basis.This program determines the customers and open items to bedunned, using this information to print the appropriate dun-ning letters. All dunning data is stored in the open items andcustomer accounts. Details of the dunning process, such as thenumber of dunning levels and the content of the dunningtexts, can be defined based on organizational requirements.
You can define multiple dunning procedures with differentdunning areas, which can then be assigned when posting trans-actions. This allows separate processing of these items for eachdunning area.
INTEREST CALCULATION
You can calculate interest on items that have not yet been paidbut are already overdue, or on items which were paid too late.The following interest calculation possibilities are available:
• The interest is to be posted; interest is only calculated oncleared items. The interest calculation starts from the duedate for net payment.
• The interest is to be posted; interest is calculated on bothcleared and open due items. The interest calculation startsfrom the upper limit of the last interest run.
• The interest is not to be posted. The interest calculationalways starts from the due date for net payment.
A correspondence function can be used to inform customersabout relevant interest information.
PERIOD-BASED ENCUMBRANCE TRACKING (PBET)
Many public sector organizations require that no changes bemade to information after a fiscal period is closed for posting.This is not only true for financial accounting, but also forbudgetary accounting. When you use period-based encum-brance tracking (PBET), this control capability is provided forupdate settings such as the posting date and whether the post-ing is statistical or not. These settings are stored in an updateprofile.
For each update profile, you specify the document date pervalue type when you allocate the period for commitment andactuals data in SAP Funds Management. The value type classi-
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fies the attributes used for individual document types andbudget categories. The value type is used not only to controlthe transfer of posting data from other components into SAPFunds Management, but also as a selection criterion in reporting.
Document ChangesCertain obligatory documents do not have change controlwith corresponding posting dates. As a result, these trans-actions, when changed, can post these changes into a priorperiod document. PBET controls changes to these documentsby posting the changes to open posting periods, ensuring thatfinal reported period balances for encumbrances do not change.
Period Posting ControlPosting periods are used in accounting to ensure that historicalinformation is not changed. Because SAP Funds Managementincludes information from obligatory documents that are notnormally controlled by the financial accounting posting peri-ods, it is important that changes made to these types of docu-ments do not impact previous (closed) SAP FM periods but,instead, are updated within the current (open) period.
PBET enables you to control posting periods for any or all documents updating SAP FM, as well as for different SAP FMaccount assignments. PBET also allows prior period correc-tions to obligatory documents, if changed amounts must bereflected in the prior period and not just in the current period.
YEAR-END CLOSING
Budgets are usually processed and controlled in relation to aparticular fiscal year. This may require open documents to bereviewed and special provisions made, with emphasis on thosetransactions that must be addressed in subsequent years. Themost important matter to consider is what to do with unusedresidual budgets, including whether to carry budgets forwardto the next year. This may mean reassigning funds or changingyour budgeting systems.
You can carry out periodic reviews of open commitments, aswell as establish detailed rules prior to the carrying forward ofcommitments and budget. This enables a smooth transition to the next fiscal year.
Open CommitmentsTransactions not fully completed by the end of a fiscal year go against the principle of annual budgeting. If the invoice forsome ordered goods is delayed or the payment period endswithin the new year, you may have to assign the document tothe new year. Your own specific requirements and rules deter-mine which types of documents are carried forward and howoften a document may be carried forward.
How open commitments are carried forward is determined as part of fiscal year closing operations. The system uses yourspecifications to determine the open documents and displaythem. You can then review the documents and decide, for eachindividual document, whether the remaining balance is to bereduced to zero or if it should be carried forward to the newfiscal year. The last step is the actual commitment carryforward.
The processes – reviewing the open commitments, determin-ing which commitments are to be carried forward, and actu-ally carrying the commitments forward – occur at a number of stages and do not necessarily depend on the date when thefiscal year actually ends. You can, for example, carry forwardparticular documents earlier or later than planned (if you for-get one, for example), which helps keep your year-end closingoperations correct. A simulation function supports you inthese processes.
Commitment Transfers to the General LedgerCertain organizations are required to reserve fund balances foropen encumbrances at the end of a period. mySAP Public Sectorfacilitates this accounting entry by summarizing the opencommitments in SAP Funds Management and automatically
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posting the reservation of fund balance entry to the relatedagencies and funds. This transfer program can be run at anytime, with the SAP FI balances in the reserve account (and corresponding postings to unreserved fund balances) updatedfor any changes made to SAP FM commitments during theperiod.
Residual BudgetsEven the best budget plan will result in budget versus actualand commitment variances, resulting in unused budget at theend of a fiscal year. For example, projects for which you haveentered concrete budgets may be delayed, while others mayhave been completed under budget. You will have to decidewhat to do with this available budget.
Strictly interpreted, the principle of taking an annual budgetview specifies that unused available budget cannot be madeavailable for expenditure in the new fiscal year, resulting in abudget “lapse.” This lapse can be addressed in a number of ways,including transferring the remaining budget to the budgetedfund balance for general appropriation within the followingyear or, with proper approvals, carrying the budget forward to
the next year (in effect “reappropriating” the budget for thesame use in the new fiscal year), especially for those SAP FMaccount assignments that represent specific purposes.
How much of the residual budget is to be carried forwarddepends on various factors. When determining how to carryforward residual budget, you may need to also consider changesin areas of responsibility or financial categories. In some cases,you may need to return some or the entire residual budget to a higher-level account assignment (for example, a higher ad-ministrative authority or budgeted fund balance) so that thebudget can be redistributed based on the requirements for thenew fiscal year. In most cases, there are statutory rules govern-ing how unused budgets are managed, including the mannerin which unused budget may be used once it has been carriedforward to the new budget year and the number of years bud-geted amounts may be carried forward.
The closing operations function covers all requirements forcarrying forward residual budget. The system determines anddisplays the available budget, which is the basis for calculatingthe amount of unused budget to be carried forward and defines
Figure 23: Commitments and Budget Carried Forward
COMMITMENTS CARRIEDFORWARD FROM 2002
NEW COMMITMENTS 2003
RESID. BUDGET FROM 2002
2002
CARRYFORWARD
COMMITMENTS
BUDGET ESTIMATE 2003
CommitmentsCarried Forward
BudgetCarried Forward
Approved
BUDGET 2002 BUDGET 2003
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the SAP FM account assignment(s) that will benefit from thebudget carryforward. Specific carryforward rules enable thecarryforward process to be as detailed as necessary, allowing for the exclusion of individual account assignments from thecarryforward or the distribution of amounts, or partial amounts,to different recipients. These reassignments, in addition to gen-eral rules, are used during the budget carryforward process.
Regardless of the actual year-end, you can carry budgets for-ward to certain points in time. The amounts are always deter-mined based on the latest available budget and account assign-ment data, and the carryforward is updated according to theexisting rules. You can use a simulation function to test carry-forward scenarios for the same available budget.
REPORTING
The information system in mySAP Public Sector supports theevaluation of summarized records using drill-down reportsand individual records using line-item reports. In addition, you can use a number of logical databases that are available to create reports of your own.
Drill-down ReportingInteractive drill-down reporting offers an easy way to displayresults on various objects, such as commitment items, fundscenters, or funds. You can use different key figures (for exam-ple, total of the payment requests in workflow). The systemalso supports different forms of variance analysis (for example,plan vs. actual comparisons, fiscal year comparisons, objectcomparisons, and so on).
Drill-down reporting includes easy-to-use functions for navi-gating through the data, permitting efficient movementbetween hierarchy levels and objects, with access to relevantdetailed lists. You can hide levels, as well as create reports withcomplex or simple detailed lists. There are also many otherfunctions available to process lists online, including conditions,
exceptions, sorting, hit lists, and so on. Integration with mySAPBusiness Suite features such as the XXL List Viewer, in additionto Microsoft Word and Excel, completes the informationsystem’s wide range of functions and uses.
Drill-down reporting functions are found on various levels, soyou can use them to suit your particular information needs. In addition to the online reporting functions, the informationsystem also includes facilities for mass printing and for storingselected reporting data for future access.
Line Item ReportingRecords are created with each posting relevant to SAP FundsManagement. These detailed line items contain various itemsof information, including the SAP FM account assignments,amount posted, posting date, and who made the posting. Theseline items can be easily accessed at any time.
During line-item reporting, you can restrict the line items thatare displayed based on particular account assignments, fiscalyears, and posting periods. In addition, you are able to selectvarious settings to change the format of the report, as well asdirectly display the relevant documents from other compo-nents – for example, an accounting document produced by a G/L account posting.
LOGICAL DATABASES
If you need additional evaluations of data, you can also use the logical databases and the ABAP programming language to create these reports. The logical databases support variousselection options, data collection, and central authorizationchecks. Logical databases also provide user and error dialoginterfaces that can be used to check user input.
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OVERVIEW
Fund accounting is the basis for financial accounting and report-ing for most U.S. public sector entities. This form of account-ing requires that government agencies be able to track all finan-cial activities and produce financial statements by individualfund and groups of funds, including balance sheets, incomestatements, and cash flow statements.
While SAP Funds Management has the goal of enabling govern-ment agencies to manage their funds properly, fund account-ing also requires that government agencies record financialtransactions – including revenues, expenses, and assets – accord-ing to the functional area they belong to. This enables thesetransactions to be tracked by the governmental or businesspurpose they support.
Fund accounting is supported using one main financial ac-counting ledger and various subledgers, which facilitate thereporting of financial activities for various purposes. The mainledger supports cash and accrual-based accounting in compli-ance with Generally Accepted Accounting Principles (GAAP).For most U.S. public sector entities, these are the accountingand reporting requirements determined by the GovernmentalAccounting Standards Board (GASB).
The GASB accounting requirements contain common practicesthat have been adopted and formalized through other organi-zations such as the Government Finance Officers Association(GFOA) and the American Institute of Certified Public Accoun-tants. Some government agencies are also required to followthe accounting and reporting requirements of the FinancialAccounting Standards Board (FASB).
Types of FundsFunds can be grouped according to external accounting andreporting requirements. Specific types of funds, in three broadcategories, are recognized by GASB: governmental funds, fidu-ciary funds, and proprietary funds.
Governmental funds are used to account for governmental-type activities. These funds provide for the receipt, use, andposition of expendable general government financial resourcesand related current liabilities. They are subdivided into the fol-lowing categories:
• General funds are used to account for all resources tradition-ally associated with government that are not required by lawor by sound financial management to be accounted for inanother fund.
FUND ACCOUNTING
• Funds• Funds centers• Commitment items• Functional areas
FUNDS MANAGEMENT MAIN ACCOUNTINGLEDGER
COST ACCOUNTINGFOR FUNDS VARIOUS
Financial Accounting Special Ledger• Split processor
CO• Cost accounting subledger,
using fund and functional area
• Project System (PS)• Assets Accounting (AA)• Human Resources (HR)• Travel Management• Grants Management• Operational Accounting
(FI-GL)
R/3 ENTERPRISE ENHANCED FUND ACCOUNTING
Figure 24: Fund Accounting Concept in SAP R/3 Enterprise
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• Special revenue funds are used to account for specific revenues (except for expendable trusts or major capital pro-jects) that are legally restricted to expenditure for specifiedpurposes.
• Debt service funds are used to account for the accumula-tion of resources for, and the payment of, general long-termdebt principal and interest.
• Capital projects funds are used to account for financialresources to be used for the acquisition or construction ofmajor capital facilities (other than those financed by pro-prietary funds and trust funds).
Fiduciary funds are used to account for money received andheld by a government in the capacity of trustee, custodian, oragent for individuals other governmental agencies and privateorganizations. Here again, there are several different categories:
• Expendable trust funds are used to account for moniesfrom a donor or outside entity, set aside in a trust, that canbe used by the government but which are restricted to a purpose specified by the donor or outside entity.
• Nonexpendable trust funds are used to account formonies from a donor or outside entity, set aside in a trust,the income from which can be used by the government. The original principal amount must be maintained and not reduced.
• Pension trust funds are used to account for the accumula-tion, investment, and distribution of government employeepension contributions.
• Agency funds are used to account for assets received by a government in its capacity as an agent for individuals, businesses, or other governments.
Proprietary funds are used to account for all continuingbusiness-type organizations, activities, and related financialresources. There are two major types of proprietary funds:
• Enterprise funds are used to account for the followingbusiness-type operations:– Operations that are financed and operated in a manner
similar to private businesses where the intent is to recoverall costs of providing goods or services to be financed orrecovered primarily through user charges.
– Operations that are deemed appropriate by the governingbody for which periodic determinations of revenues earned,expenses incurred, or net income is useful for capital main-tenance, public policy, management control, accountability,or other purposes.
• Internal service funds are used to account for the financ-ing of goods or services provided by one department oragency to other departments or agencies of the government,or to other governmental entities, on a cost-reimbursementbasis.
Funds in SAP R/3 EnterpriseThe SAP Funds Management (SAP FM) component must beconfigured and active in order to implement fund accounting.Fund master data is used as the basis to integrate funds be-tween SAP FM, SAP Financial Accounting (SAP FI), SAP Con-trolling (SAP CO), and SAP Project System (SAP PS), as well asto SAP HR, SAP BW, and so on. Funds are user-definable andshould be created at the lowest level necessary for budgetingrequirements, creating balance sheets, or tracking specific cashbalances. Individual funds can then be grouped in various waysfor reporting purposes.
Within a fund accounting implementation, SAP FM is requiredto record, track, report, and control budgeted revenues, expen-ditures, encumbrances, fund transfers, and fund balances on a budgetary accounting basis. For more information on SAPFunds Management, see the previous chapter entitled SAP FundsManagement.
Functional AreaUsing functional areas, you can classify financial transactionsaccording to their function or purpose. Similar activities aregrouped by function based on high-level objectives for the pro-vision of major services or carrying out regulatory responsibi-lities. Organizations can define functions at a lower level thanthose required for external reporting, for which they must alsodefine functional areas.
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Encumbrances, that is, commitments made to purchase goodsor services using existing budgeted funds, are usually realizedwithin the budget year or shortly thereafter. However, somegovernments have encumbrances that span multiple fiscal years,such as multiyear construction contracts.
For more information on the functional area, see the sectionentitled Integration with Master Data.
FINANCIAL ACCOUNTING LEDGER
The main financial accounting ledger, or general ledger (G/L),as it is known in SAP R/3 Enterprise, is the primary tool usedto support external reporting requirements. You preparefinancial statements and much of the required disclosureinformation for reporting to third parties using informationfrom this ledger.
Postings to the financial accounting ledger are made usingdual-entry bookkeeping, requiring balanced postings (debits =credits) by organization, agencies, or funds. Because this ledgeris the source of external financial information similar to cor-porate accounting, all “real” financial transactions must berecorded in this ledger. Most governmental entities are requiredto record these transactions using one of two different account-ing treatments:
• Full accrual accounting, which is comparable to accrualaccounting done by corporate entities
• Modified accrual accounting, where long-term financialtransactions are not recorded on the balance sheet of a fundbut, instead, may immediately impact the financial positionof the fund (long-term transactions are, instead, recorded asmemo entries within the balance sheets of long-term accountgroups)
Figure 25: Fund Accounting and Ledgers in SAP R/3 Enterprise
BUDGETARYSUBLEDGER
BUDGETARYACCOUNTING &
CONTROL
COSTING & PROJECT SUBLEDGERS
COST ACCOUNTING &CONTROL
MAIN ACCOUNTING LEDGER
FINANCIAL ACCOUNTING
GRANT ACCOUNTINGSUBLEDGER
GRANT ACCOUNTINGCONTROL & BILLING
FUNDS & FUNCTIONS
GrantsManagement
FI (SpecialLedger)/Split
Processor
CO/PSFunds Management
Modified Accrual
Full AccrualCash
Encumbrances
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The correct accounting basis for your organization depends onthe type of fund involved. Governmental, expendable trust,and agency funds utilize the modified accrual basis of account-ing. Proprietary and pension trust funds use the full accrualbasis.
FULL ACCRUAL ACCOUNTING
This basis of accounting requires that all financial transactionswith economic value be reported in the same manner as thereporting of corporations. In full accrual accounting, there arethe following transactions:
• Long-term assets are depreciated over their useful life, withthe assets and accumulated depreciation reported on the bal-ance sheet.
• Long-term liabilities are included on the balance sheet, withpremium or discount on long-term debt deferred and amor-tized over the life of the debt issuance.
• Payments of long-term liabilities reduce the balances report-ed on the balance sheet.
• Investments are adjusted to reflect market value.
• Noncurrent revenues and expenses are included in the cal-culation of net income and carried forward into retainedearnings.
• Retained earnings are not reserved for encumbrances andinventory.
MODIFIED ACCRUAL ACCOUNTING
This basis of accounting requires that only financial transac-tions that are short-term in nature be reported. In modifiedaccrual transactions, there are the following differences as com-pared with full accrual transactions:
• Long-term assets are shown as capital expenses when in-curred, and are reported in a separate account group, withno depreciation reported.
• Long-term debt issued is shown as another financial source,with premium or discount reported as current financialresources.
• Long-term debt principal repayment is shown as a debt service expense when paid.
• Long-term liabilities are reported in a separate accountgroup, with no premium or discount reported.
• Noncurrent revenues and expenses are not included in thecalculation of net income and are not carried forward intothe fund balance.
• The fund balance is reserved for encumbrances and inven-tory.
One example of the difference between modified accrual andfull accrual accounting is the accounting and reporting forassets. When an asset is purchased, it is recorded in govern-mental funds as an expense. The asset is also recorded in a“General Fixed Asset” account group. Depreciation over theuseful life of assets is not recorded as an expense in the finan-cial records under modified accrual accounting.
GASB 34 AND 35
In 1999, the Governmental Accounting Standards Board issuedStatement Number 34, which redefined the accounting andreporting requirements for many governments. This statementrequired organizations to make the following changes:
• Full accrual accounting for all funds, including a statementof net assets and a statement of activities
• Continuation of modified accrual accounting for govern-mental funds
• Reconciliation of full accrual statements with modifiedaccrual statements
• Expanded accounting and reporting according to revenues,expenses (including asset depreciation and proprietary funds),indirect cost allocations, and GASB Internal Service fundactivities included in governmental activities, not business-type activities
GOVERNMENTAL ACCOUNTING AND REPORTING
GASB Statement Number 34 applies to state and local govern-ments, such as villages, towns, cities, school districts, publicutilities, and special districts. GASB Statement Number 35requires public colleges and universities to also adopt State-ment Number 34.
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These entities must comply with the new accounting andreporting requirements based on the following schedule:
Furthermore, GASB 34 and 35 now require that all funds – notjust proprietary funds – report on a full accrual basis. Whilethe new reporting standards only require accrual-based account-ing at the overall entity level as compared with the individualfund level, the best approach is to perform accrual accountingat the detailed fund level and aggregate for reporting purposes.Also, since governmental funds must be reported on a modi-fied accrual basis, reconciliation between the modified accrualand full accrual types of accounting is also required.
While not required previously for funds subject to full accrualaccounting, functional reporting is now a requirement for allfunds under GASB 34 and 35 and has been expanded to includefunctional classifications of revenue.
SUBLEDGERS USED IN FUND ACCOUNTING
Subledgers are used to support additional accounting and control requirements required by U.S. public sector entities.Budgetary accounting should be provided in a separate sub-ledger because these processes are usually performed on abasis different from the accounting required by GAAP (budget-ary accounting is usually focused on the receipt, commitment,and use of short-term financial resources, similar to a modifiedaccrual basis of accounting).
You can carry out cost and project accounting for both bud-getary and GAAP purposes. However, one may be done at amore detailed level than the other, or using different organiza-tional structures that, again, may require separate subledgers.Transactions carried out in subledgers may or may not influ-ence other subledgers or the main financial accounting ledger.
Budgetary Accounting SubledgerBudgetary accounting is used to record, track, control, andreport on budgetary activities related to the financial resourcesof a governmental body. Since many organizations are focusedon short-term control of financial resources, budgetary account-ing is usually carried out in a manner similar to the modified
Revenue Fiscal Year Beginning
After 6/15/2003< $10 Million
After 6/15/2002> $10 and < $100 Million
After 6/15/2001> $100 Million
General governmental infrastructure must now also be capital-ized, depreciated, and reported under GASB 34 and 35. Whileadoption of these standards is encouraged when an entityimplements the first GASB 34 and 35 requirements, complianceis required based on the following schedule:
Component units of primary governments required to followGASB 34 or 35 must implement the standards at the same timeas the primary government, regardless of total revenue.
This means that the general governmental infrastructure mustnow also be capitalized, depreciated, and reported. These regu-lations do not significantly alter the previous reporting for governmental funds, except to change the grouping of fundsfor reporting purposes. Instead of reporting by fund type,GASB 34 and 35 now require the grouping of funds by majorfunds versus other funds.
Prospective capitalization
Retroactive capitalization
After 6/15/2007< $10 Million
After 6/15/2006> $10 and < $100 Million
After 6/15/2005> $100 Million
After 6/15/2003< $10 Million
After 6/15/2002> $10 and < $100 Million
After 6/15/2001> $100 Million
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accrual basis of accounting; however, organizations may budgeton more than one accounting basis. The following are typicalaspects of budgetary accounting and control:
• Annual and multiyear budgets for expenditures and short-term commitment of funds are developed for organizations,classified by type of expenditure, including fund, function,and project dimensions.
• Changes made to original budgets are recorded and reported.
• Expenditures and encumbrances are validated, recorded, and reported against the annual and multiyear budgets.
• Annual and multiyear revenue estimates are developed bytype of revenue, including fund, function, and projectdimensions.
• Revenues accrued or received are recorded and reportedagainst the annual and multiyear estimates.
• Financial resources available for future use (fund balances)are estimated by fund.
• Actual fund balances are recorded and reported against thefund balance estimates.
The budgetary subledger is the source of all internal financialinformation for monitoring and control against the legal bud-get. Postings to this ledger are ideally not made using dual-entrybookkeeping because the focus is on the receipt, commitment,and expenditure of legally budgeted funds.
Figure 26: Integration of Budgetary Accounting
COST ACCOUNTINGDOCUMENTS CO/PSFI
BUDGET-BASIS LEDGER
HRPM/MM/SD
SAP ACCOUNTINGDOCUMENTS
BUDGETARY DOCUMENTS
Plan/Actuals/Allocations
HR DOCUMENTSLOGISTICS DOCUMENTS
BUDGETARY DOCUMENTS
Actuals/EncumbrancesActuals/Encumbrances
FUNDS MANAGEMENT (FI-FM)
FM DOCUMENTS
Plan/Budget/Encumbrances
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For budgetary accounting purposes, encumbrances are treatedin a manner similar to expenditures. However, they are usuallyrecorded against the budget at the time you make a legal com-mitment of funds (contract date), not when you expect toreceive the goods or services (due date). In some cases, encum-brances reduce the budgetary fund balance, and any differencesin the following year are shown as a recovery of unspent funds.
Not all financial transactions are budgeted – for example,many balance sheet accounts are not. Encumbrance amountsare not posted as expenses for financial accounting purposesunless the corresponding goods/services are received.
U.S. public sector budgetary accounting and control are per-formed using the SAP Funds Management subledger. This isthe same as the “budgetary ledger” within the context of fundaccounting for state and local governments. You can configurethis subledger to meet the unique budgetary needs of yourorganization and simultaneously enable the reconciliation of the budgetary ledger with the main accounting ledger.
Documents created by other components (including non-financial commitment documents such as purchase orders,funds commitments, and so on) can, if relevant, create addi-tional documents in SAP Funds Management. These SAP FMpostings are validated against the corresponding budget andcan be carried forward to a subsequent fiscal year.
Postings in SAP FM are not fully balanced. This means thatonly the items that are budgeted, included in or reconciledwith the budgetary fund balance should be recorded in SAPFunds Management. Usually only the expense line itemsupdate the SAP Funds Management component.
Prior to SAP R/3 Enterprise, the functional area was not recordedin SAP FM. With the changes made to facilitate functionalaccounting and control requirements, SAP FM now also in-cludes the functional area field.
Cost Accounting SubledgerCost accounting is used to simulate, record, track, control, and report on activities impacting the cost recovery of a govern-mental entity. Since many organizations, including federalgovernments, are focused on actual cost recovery, cost account-ing is usually performed in a manner similar to the full accrualbasis of accounting. Cost accounting and control have the fol-lowing goals:
• To develop annual and multiyear plans for the expenses ofindividual organizations, grouped by type of expense, includ-ing the fund and function dimensions.
• Expenses and units of measure are recorded, allocated, andreported against the annual and multiyear plans.
• Annual and multiyear revenue plans are developed by typeof revenue, including the fund and function dimensions.
• Revenues accrued or received are recorded, allocated, andreported against the annual and multiyear plans.
• Internal and external user charges or cost bases are developedfrom expense and revenue plans.
• Internal user charges or cost bases are recorded and used forinternal cost allocations and distributions.
• Internal cost movements that cross funds and functions arerecorded in the financial accounting ledger.
• Budgeted internal cost movements that cross organizations,funds, and functions are recorded in the budgetary account-ing ledger.
The cost accounting subledger is the source of internal finan-cial information necessary to the monitoring and control of alloperational activities. As with budgetary accounting, postingsto the cost accounting subledger are ideally not made usingdual-entry bookkeeping, because the focus is on actual costsand cost recovery.
Commitments are treated statistically, to provide a managerwith information about when costs are expected to be incurred.This means that it is not possible to carry out any further set-tlements, distributions, or cost allocations for a commitment.
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As with budgetary accounting, you usually record commit-ments when you expect to receive goods or services (due date),not when you make the legal commitment of funds (contractdate).
Again, not all financial transactions are included for costaccounting purposes, or they are recorded in another manner– fixed assets are depreciated over the useful life, not whenpurchased.
For more information on cost accounting, see the section “SAP Controlling” in the chapter entitled SAP Tax andRevenue Management.
Project Accounting SubledgerProject accounting is used to simulate, record, track, control,and report on the activities of specific projects of a govern-mental entity. Due to the integration with assets and potentialbilling to third parties, project accounting is usually performedin a manner similar to the full accrual basis of accounting. Thefollowing are typical approaches used for project accountingand control:
• Annual and multiyear plans for expenses and milestones aredeveloped for individual projects, including the participatingorganization, fund, and functional area dimensions.
• Expenses and results are recorded, allocated, and reportedagainst the annual and multiyear plans.
BUDGETARYACCOUNTING FMFI
COST-BASIS LEDGER
HRPM/MM/SD
SAP ACCOUNTINGDOCUMENTS
COST DOCUMENTS
Encumbrances
HR DOCUMENTSLOGISTICS DOCUMENTS
COST DOCUMENTS
Actuals/CommitmentsActuals/Commitments
CONTROLLING/PROJECT SYSTEM(CO/PS)
CO/PSDOCUMENTS
Plan/Budget/Actuals/Commitments
Figure 27: Cost and Project Accounting Integration
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• Annual and multiyear revenue plans are developed, includ-ing the participating organization, fund, and functiondimensions.
• Revenues accrued or received are recorded, allocated, andreported against the annual and multiyear plans.
• Projects related to capital assets are periodically recorded asconstruction in progress to properly update the financialaccounting ledger.
As with the other two forms of accounting, the project account-ing subledger is the source of internal financial information for the monitoring and control of project activities. Postings tothis ledger are ideally not made using dual-entry bookkeeping,because the focus is on actual costs, cost recovery, and ultimatedisposition of these costs (for example, recording of construct-ed assets).
Again, commitments are treated statistically, and as with bud-getary accounting, commitments are usually also recordedwhen you expect to receive goods or services (due date), notwhen you make a legal commitment of funds (contract date).
SUMMARY
You can carry out cost and project accounting for both bud-getary and GAAP purposes, but you usually do this at a moredetailed level and using different organizational structuresthat, again, require separate subledgers (SAP Controlling andSAP Project System). Transactions performed for cost and pro-ject accounting purposes may also influence the budgetaryand main accounting ledgers.
Documents created by other components (including non-financial commitment documents such as purchase orders,funds commitments, and so on) can, if useful for cost account-ing purposes, create additional documents in SAP Controlling(SAP CO) or SAP Project System (SAP PS). These SAP CO/PS
postings are reflected/validated against a separate cost account-ing plan or budget in order to assist with cost or project plan-ning or control.
Postings in SAP CO/PS are also not fully balanced. This meansthat you should only record items that are planned/budgeted,or are to be included for cost accounting purposes.
Prior to implementing additional functionality for GASB 34/35,the fund and functional area were not recorded directly in SAPCO/PS. With the changes made to facilitate the new accountingand reporting requirements, SAP CO/PS now also include thefund and functional area fields for most postings.
Grant Accounting SubledgerGrant accounting (from a “grantee” perspective) is carried outat a detailed level, using the organizational structures of thesponsor, requiring a separate subledger (SAP Grants Manage-ment).
If applicable to a grant, documents created by other compo-nents (including nonfinancial commitment documents suchas purchase orders, funds commitments, and so on) will createadditional documents in SAP Grants Management. These post-ings are reflected/validated against a separate grant accountingbudget in order to properly control spending of grant-relatedfunds.
All grant funding (amounts to be received from the sponsor aswell as amounts to be funded by the organization) is recorded,controlled, and available for reporting. Amounts to be receivedfrom the sponsor are then billed from SAP Grants Manage-ment, with the related revenue recorded. Grant-related assets(cash, deposits, and fixed assets) and program income are alsorecorded and reportable from SAP Grants Management.
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Grant-related postings can be fully balanced by grants. For more information, see the following chapter entitled SAP Grants Management.
SPECIAL LEDGER FOR SAP FUNDS MANAGEMENT
The split ledger is the same as the “financial accountingledger” within the context of fund accounting for state andlocal governments. In other words, the combination of SAP FIspecial ledger and split processor gives you the “split ledger.”This is used as the main source of accounting data in mySAPPublic Sector.
The SAP Funds Management split ledger is based on the SAP FIspecial ledger and populated using the split processor function-ality. This enables you to carry out completely self-balancingpostings by business area and fund, and to create a balancesheet structured by fund or fund groups, as well as recordcash- and accrual-based transactions.
The SAP Financial Accounting (SAP FI) component must beactive and configured in order to implement fund accounting.Organizational and transaction data in SAP FI is used as thebasis for external accounting and reporting.
FIFINANCIAL
ACCOUNTINGDOCUMENTS
GRANT ACCOUNTINGDOCUMENTS CO/PS
GRANTACCOUNTING LEDGERGRANTS MANAGEMENT (FI-GM)
COST ACCOUNTINGDOCUMENTS
Plan/Actual Allocations
PM/MM/SD GRANT ACCOUNTINGDOCUMENTS FMFM DOCUMENTS
Encumbrances
GM DOCUMENTS
Billings/Indirect Costs/Revenue/Accruals GM DOCUMENTS
Budget
LOGISTICS DOCUMENTS
Actuals/Encumbrances
HR HR DOCUMENTS
Actuals/Encumbrances
Figure 28: Grant Accounting Integration
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For fund accounting, the special ledger provides financial infor-mation by business area, fund, functional area, and generalledger account. The general ledger is then only used to recordand manage information at an overall organizational (com-pany code) or open-item managed account level.
You have to configure and activate the split processor in Cus-tomizing, in order to make fund accounting entries to it. Fromthis moment on, accounting documents coming from SAP FIare split or balanced online in the split ledger. Within this pro-cess, line items and total records are created in the split ledger,thus referencing the underlying document in SAP FI.
In addition, fund accounting also requires that you record spe-cific transactions – such as revenues, expenses, and assets – byfunctional area. This enables you to track these transactionsby the governmental purpose they support.
You may not need to produce complete financial statementsfor every function, since functions that require full sets offinancial statements are normally handled via funds. However,you must post line items to a specific function, which is theinformation stored in the functional area field.
Split ProcessorTransaction splitting can be influenced by the financial docu-ment type or financial accounting transaction involved, as wellas by the general ledger accounts entered. You can include validations, which check that each document contains specificgeneral ledger accounts. You can also prevent postings for pre-defined general ledger accounts. A separate split ledger isassigned to the applicable company code(s), with the appropri-ate fields (for example, business area, fund, and grant) deter-mined for the splitting.
As an example, if a vendor invoice is entered with the expenselines posted to two funds, a standard SAP accounting docu-ment will contain the following postings as shown in Figure 30.
PM/MM/SD
FI
HR
CO/PS
ACCOUNTING DOCUMENTS
SPLITPROCESSOR
SPECIAL LEDGER DOCUMENT
MAIN FINANCIALACCOUNTING
LEDGER
SPLIT LEDGER(FI-SL)
Figure 29: Using the Split Processor for the Split Ledger
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To properly post this document based on fund accountingprinciples, a document is created in the main financial account-ing ledger, which is linked to the original accounting docu-ment. Not only the invoice is split, but also the subsequentdocuments in the processing chain. Figure 31 illustrates thesplit of an incoming partial payment.
The underlying split ratio is determined by looking at the ini-tial invoice. The split ledger will automatically split the docu-ments according to this ratio (see Figure 32).
For documents where no line needs to be split, the split ledgerensures that for the splitting criteria – in our case the businessarea (BA) and fund – only balanced postings are created. Asillustrated in Figure 33, the system creates the offsetting entryautomatically, using a “special” clearing account assigned inCustomizing.
Split of Original Line
Figure 30: Split Processor Document: Invoice Split
Original Financial Accounting Document – Payment (Partial Payment on Invoice # 2000000000)
Figure 31: Split Processor – Partial Payment
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Figure 32: Split Processor Document – Partial Payment Allocation
Figure 33: Sample Balancing Posting
1500 / 2000 = 75%500 / 2000 = 25%
Allocation of PaymentBased on Original
Invoice Split
Balancing Entry
Split Processor Document
Original FinancialAccounting Document
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INTEGRATION WITHIN SAP R/3 ENTERPRISE
Because fund accounting includes many different components,integration is critical for proper configuration and use of thisfunctionality in compliance with Generally Accepted Account-ing Principles (GAAP), including the requirements of GASBStatements 34 and 35. Customizing activities in the areas ofmaster data, SAP Funds Management (SAP FM), SAP FinancialAccounting (SAP FI), SAP Controlling (SAP CO), the SAPProject System (SAP PS), and SAP Human Resources ensurethis integration.
Integration with Master DataMaster data structures in SAP R/3 Enterprise are very impor-tant to correctly integrate functionality and master data forfund accounting purposes. The following approach to masterdata is the correct one to properly implement enhanced fundaccounting within the mySAP Public Sector solution:
• Business areasStrictly speaking, business areas are organizational units inSAP R/3 Enterprise. However, they are handled like masterdata, and should be used to represent agencies, lines of busi-ness, or locations for which full financial statements arerequired. If only one agency/line of business/location is deter-mined, it would still make sense to use business areas toallow for the easy addition of future agencies/lines of busi-ness and prevent future data migration problems.
Since business areas represent organizational structures, theyare accordingly directly linked to organizational structures in other components. For example, a cost object is only per-mitted to have one business area when a posting is made. Asa result, the misuse of this object for anything but an organi-zational view of information will result in the need to createand maintain multiple organizational objects that do notmake sense from a responsibility perspective.
Business areas are usually available for reporting in other SAP components as well, providing a predefined grouping ofinformation within these components. This means that youdo not have to rely on the groupings of organizational struc-tures defined by other areas. If not properly maintained, suchstructures might result in the possible exclusion or misclassi-fication of information.
• FundsFund accounting is activated by requiring the use of thefund field in SAP Funds Management. Because fundaccounting requires maintaining balance sheets at the fundlevel, splitting documents by the SAP FM fund field is nowthe approach that should be taken by all fund accountingcustomers. This allows full financial statements at the fundlevel, with the possibility to roll up by fund type and fundgroups (in a special ledger). If splitting by fund is not neededinitially, there may be serious data migration issues whenfund splitting is implemented at a later date.
Funds are user definable and can be created at the lowestlevel necessary for tracking specific funding sources.
You can group funds according to various criteria, in orderto fulfill various accounting and reporting requirements.Fund groups can further be used to build fund hierarchies,which summarize similar accounting treatments and objec-tives according to the particular requirements of the organi-zation. The individual funds form the lowest hierarchicallevel. You can create any number of fund groups, and struc-ture them, for example, according to internal or externalaccounting and reporting viewpoints. Using fund groups,you can carry out financial reporting evaluations for eachview. They also support cost accounting processes duringplanning and internal allocations.
Fund groups cannot be used for budgeting, however, you can use them for reporting purposes. Fund groups are notavailable for SAP Funds Management budgeting, only forreporting.
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• Functional areasThe functional area has been designed to capture the profitand loss information (revenue and expenses) of a govern-ment organization. In order to carry out functional account-ing and reporting, you have to use the functional area in SAPFunds Management. Functional areas are user definable andcan be created at the lowest level necessary for tracking spe-cific functions, general programs, and functional activities. Ifthe functional area is not used initially, there will be seriousdata migration issues in the case that the functional area isimplemented later. Even if you only define one function/mission, it would still make sense to use functional areas toallow for the easy addition of future functions/missions andprevent future data migration problems.
Like funds, individual functional areas can be grouped in various ways for accounting and reporting purposes. Groupscan be used to build functional area hierarchies, which sum-marize similar activities or objectives according to the partic-ular requirements of the organization. The individual func-tional areas form the lowest hierarchical level. You can createany number of functional area groups and structure them,for example, according to internal or external accountingand reporting viewpoints. Functional area groups enable youto carry out financial reporting evaluations for each report-ing view. They also support cost accounting processes duringplanning and internal allocations.
Functional area groups can be used for SAP FI reporting andSAP CO/PS transactions enabled for fund accounting. Func-tional area groups are available for master data maintenance,and for SAP Funds Management budgeting and reporting;this functionality will form part of SAP R/3 Enterprise 2.0.
The use of functional areas for full financial statementreporting is not supported.
SAP FM DERIVATION TOOL
By defining derivation rules and strategies in Customizing, youcan control how certain target characteristic values are derivedautomatically from predefined source characteristic values, inparticular for fund master data fields.
You define master data derivations for Funds Management andfund accounting using the SAP FM derivation tool. This toolenables the creation, activation, or deactivation of master dataassignments to funds, funds centers, commitment items, andfunctional areas based on the information available in the cod-ing block (account assignment information) such as the G/Laccount, the asset number, and SAP CO object.
You can use these derivation assignments as defaults, but alsooverride the contents via manual input. The derivation assign-ments can be date-dependent, allowing new assignments to becreated but not used until a certain date.
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Only SAP FM account assignments (fund, funds center, com-mitment item, functional area, funded program, and grant)can be derived using this tool. However, in order to determinethe SAP FM account assignment, you can use account assign-ments from other components, such as SAP Controlling orSAP Financial Accounting.
Account GroupsAn account group is a hierarchical structure containing anynumber of accounts from one chart of accounts. In SAP R/3Enterprise, account groups are used for reporting the financialbalances of general governmental long-term assets and long-term liabilities. Memorandum-type entries are necessary tooffset these balances, since these financial transactions are
reported separately and differently within the applicable funds.Account groups are user defined and set up for a specific num-ber range. An account group must be assigned to each G/Lmaster record. GASB requires that depreciation be reported for fixed assets, so you need to define at least the following twoaccount groups:
• The General Fixed Assets Account Group is used toaccount for all general government fixed assets, with offset-ting entries made to an “Investment in General Fixed Assets”account.
• The General Long-Term Debt Account Group is used to account for all general government long-term liabilities,with offsetting entries made to “Amount Available” and“Amount to Be Provided” accounts.
Figure 34: Customizing of SAP FM Derivation Tool
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Integration with G/L AccountsGeneral ledger accounts can be linked directly to commitmentitems in the G/L master record. However, it is better to makethis a direct 1:1 assignment using the SAP FM derivation tool.Here, the “move” rule eliminates the need to create manuallinks to G/L accounts. When binding is turned on in the deriva-tion tool, this link cannot be changed. This is known as activating binding. In this way, the commitment item cannotbe overwritten during postings.
The commitment item linked to the G/L account determineswhether the posting updates SAP Funds Management or not.Postings can be set to update the SAP FM budget, postings canbe updated statistically for reporting and reconciliation pur-poses, or postings can be defined not to update SAP FM at all.
Revenue and expense G/L accounts are also hard-linked to pri-mary cost and revenue elements to reflect these postings inSAP CO and SAP PS. If allocations of revenues are required, rev-enue G/L accounts can be linked to nonstatistical cost elementsinstead of to revenue elements. Secondary cost elements arealso linked 1:1 to commitment items using the SAP FM deriva-tion tool, so that the commitment item cannot be overwrittenduring postings.
The commitment item linked to the secondary cost elementdetermines whether a posting updates SAP Funds Manage-ment. Through the SAP FM derivation tool, you can create arule that changes the commitment item linked to the second-ary cost element for those cases where costs are moved betweenfund types (or organizations) and the credit must be shown inSAP FM as revenue.
You need to configure SAP CO cost postings that cross compa-ny codes, business areas, funds, and functional areas in order toupdate accounting data through the SAP FI/CO reconciliationledger. Using the SAP FM derivation tool, you can create a rule
that changes the G/L account to a revenue account. This isdone during reconciliation ledger processing for SAP FI/CO, incases where costs are moved between fund types or for organi-zations that must show credit postings in SAP FI as revenue.
Cost Objects (SAP CO/PS) and Funds CentersThese represent the internal organizational units of respon-sibility, at the lowest level necessary for each component man-aging expenses. Cost objects (cost centers, orders, and WBS elements) should be directly linked to funds centers using activating binding in the SAP FM derivation tool. This meansthat the funds center cannot be overwritten during postings.This can be a direct 1:1 link: However, it is preferable to linkmany cost centers to one funds center if budgetary control isperformed at a higher level in SAP FM. It is best to make thisassignment based on intelligent numbering using the SAP FMderivation tool “move” rule to eliminate the need for manuallinking.
Other fields, such as the fund and functional area, can belinked as defaults to cost objects or funds centers through theSAP FM derivation tool. However, if organizational units aremultiple-funded and support multiple functions, then thefund and functional area should be able to be overwritten during postings.
Integration with SAP FI/CO/PSIn SAP R/3 Enterprise, SAP FM active availability control, usedto evaluate your SAP Controlling and SAP Project Systemtransactions, now incorporates the fund and functional area.You can also copy funds and functional areas entered in SAPCO/PS detailed planning to SAP FM budgeting.
Only online SAP CO/PS transactions are processed using SAPFM active availability control. Transactions run using batchprocesses (allocation cycles, overheads, and settlements) are notactively checked; however, they still reduce available budget.
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Description G/L Account Commitment Statistical PostingItem Indicator
X273199273199Unrealized InvestmentIncome
(blank)273100273100Realized InvestmentIncome
G/L Account P&L Statement Account Type & Related Fund Balance Account
IN = Net Assets – Full Accrual - GAAP (Interest revenue)273199
RI = Fund Balance – Revenue - Budgetary Interest (modified accrual)
273100
Commitment Item Carryforward Item Cat. & Related Fund Balance Commitment Item
IN = Fund Balance – GAAP- Interest Revenue (statistical)273199
RI = Fund Balance – Budgetary-Interest Income273100
Posting Encumbrance Reservations to SAP FinancialAccountingFor open encumbrances at the end of a period, you may haveto reserve fund balances in SAP Financial Accounting. In orderto make this accounting entry, you summarize the open com-mitments in SAP Funds Management and automatically postthe reservation of your fund balance journal entry to the relat-ed agencies and funds. You can run this transfer program atany time, with the SAP FI balances in the reserve account (andcorresponding postings to unreserved fund balances) updatedfor any changes made to the SAP FM commitments during theperiod.
Reconciliation of SAP FM with SAP FI and SAP COYou can post transactions to SAP FI and SAP CO that shouldnot be offset with budgeted amounts in SAP FM. For this, youcarry out a statistical posting (thus not consuming budget inSAP FM) of these transactions in SAP FM, to enable reconcilia-tion and reporting in SAP FI and SAP CO.
Some organizations need to reconcile the budgetary fund bal-ance with fund balances calculated on a modified accrual basis.This means that they may also need to make certain types ofpostings in SAP FI for modified accrual accounting purposesthat would not update SAP FM on an actual basis. You canrecord these postings against statistical commitment items andcarry them forward to future fiscal years in SAP FM, for recon-ciliation and reporting purposes.
As an example, compliance with GASB Statement Number 34requires that investments be recorded at fair market valueunder modified accrual accounting, resulting in an unrealizedgain or loss on investments. For budgetary accounting and con-trol purposes, however, only realized gains and losses can bebudgeted and recorded for investments.
The different G/L accounts, as well as the commitment items,are mapped to individual fund balance (retained earnings)accounts to separate them as balance carryforwards from yearto year.
Both transactions are posted in SAP FI and SAP FM, making the unrealized gain or loss a statistical posting in SAP FM, andtracked as a timing difference from year to year in both compo-nents.
You can create G/L accounts in SAP FI specifically for non-budgetary use and link them to statistical commitment itemscreated in SAP FM. You can create separate P&L statementaccount types (for the non-budgetary G/L accounts) in SAP FI,and link them to separate fund balance (retained earnings)accounts, in order to make visible the different amounts carriedforward from year to year. You can also link certain budgetaryG/L accounts to separate fund balance accounts, enabling aneasy comparison between the budgetary and non-budgetary
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balances. The separate fund balance accounts should reflectthose categories of timing and permanent differences thatmust be reported.
In SAP FM, you can also create separate carryforward item categories, with the statistical commitment item(s) linked toseparate fund balance commitment items for carryforwardfrom year to year. Certain nonstatistical commitment itemscan also be linked to separate fund balance commitment items,to allow for easy comparison between the budgetary and non-budgetary balances. As for fund balance accounts, the individ-ual commitment items should reflect the categories of timingand permanent differences that must be reported.
Using Multiple Bases of AccountingYou can post and isolate transactions in SAP FI by using sepa-rate G/L accounts, fund balance (retained earnings) accounts,and contra accounts. This enables full reporting and recon-ciliation of different accounting bases (full accrual versus modified accrual) in SAP FI.
Some funds must be accounted for on a different basis ofaccounting than others. In addition to fiscal accounting, fullaccrual accounting must be carried out, so that more than one type of fund meets the requirements of GASB Statements34 and 35. Under modified accrual accounting, certain types of postings are different from the ones made for full accrualaccounting. These postings are recorded against separate G/Laccounts, included or excluded in reporting as required, andcarried forward to future fiscal years for reconciliation andreporting purposes.
As an example, compliance with GASB Statement Numbers 34and 35 requires reporting on a modified accrual basis for yourgovernmental funds and on a full accrual basis for general governmental activities. This requires that you record bondprincipal payments as expenditures (under modified accrualaccounting) and reductions of a liability (under full accrualaccounting).
You can map the debt principal expense and contra accounts toindividual fund balance (retained earnings) accounts to differentiate them as balances that are carried forward from yearto year.
G/L Account P&L Statement Account Type & Related Fund Balance Account
PC = Net Assets-Full Accrual (GAAP-Debt Principal Contra)
483199
ED = Fund Balance-Modified Accrual (Expend-Debt Principal)
483100
Modified Accrual
Adjustment To Full Accrual
$1,000,000 Credit483199 Debt PrincipalExpense Contra
$1,000,000 Debit179000 Bonds Payable
$1,000,000 Credit110000 Cash
$1,000,000 Debit483100 Debt Principal Expense
Both entries are then posted in SAP FI and tracked as a perma-nent difference from year to year. You can carry out reportingon the various bases of accounting, by including or excludingthe related G/L accounts as necessary.
You can create G/L accounts in SAP FI specifically for full accrualuse. These accounts may or may not be reflected in SAP CO,SAP PS, or SAP FM, depending on the cost accounting andbudgetary accounting needs of the organization. If you do notwant these amounts to be recorded in SAP CO or SAP PS, youcan specify that cost elements not be created for these accounts.If these amounts are not recorded in SAP FM, G/L accounts canbe linked to nonrelevant commitment items or, if reconciliationwith SAP FM is required, posted against a statistical commit-ment item.
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You can create separate P&L statement account types in SAP FIand the related G/L accounts linked to the separate fund bal-ance (retained earnings) accounts, in order to ensure the carry-forward from year to year. The separate fund balance accountscan then reflect those categories of timing and permanent dif-ferences that you are required to report.
To reconcile full accrual accounting to budgetary accounting,you create separate carryforward item categories in SAP FM,linking the accrual-related G/L accounts to statistical commit-ment items, and linking the statistical commitment item(s) to separate fund balance commitment items for carryforwardfrom year to year.
ASSET ACCOUNTING INTEGRATION
For asset master data, you can record and report asset trans-actions by fund, functional area, and grant. You can use sub-assets to record multifunded or multifunctional assets. Forassets under construction, you can create subassets using anautomated program, provided the projects include postings to multiple funds and functional areas.
The asset master values you enter for the fund, functionalarea, and grant are used for all transactions (including acqui-sitions, transfers, retirements, and depreciation) that updateSAP CO, SAP FI, SAP Grants Management, and SAP FundsManagement. Asset settlements also use the fund, functionalarea, and grants values when postings are made in SAP COand SAP Project System.
You can customize the asset reports provided in SAP R/3 Enter-prise to enable reporting based on the fund, functional area,and grant values. You can also customize messages to controlchanges made to the fund, functional area, and grant fields.
For more information on asset accounting, see the corres-ponding section in the chapter entitled Integration Aspects.
SAP CONTROLLING AND SAP PROJECT SYSTEM
The SAP Controlling (SAP CO) and SAP Project System (SAP PS)components must be active and configured before fund account-ing features are available in cost or project planning andaccounting. SAP CO and SAP PS master data structures can be used to derive SAP Funds Management information, includ-ing the fund, functional area, and grant values used for fundaccounting.
In SAP R/3 Enterprise, many SAP CO and SAP PS transactionsnow include the fund and functional area fields. This enablesyou to make more effective use of your cost and project infor-mation for fund accounting purposes. The following featureshave been enhanced to include direct recording of the fund,functional area, and grant:
• SAP CO updating of actual data and commitments fromother components
• Manual actual postings of costs, revenues, line itemrepostings, activity allocations and repostings, as well as man-ual cost allocations, statistical key figures, and Customizingscreen variants for manual actual postings
• Manual planning postings for the Customizing settings ofplanner profiles, costs, activity and process input planning,and statistical key figures
• Actual allocations for periodic repostings, overheads, distributions, assessments, and indirect activity allocations
• Planned allocations for periodic repostings, overheads, distributions, assessments, and indirect activity allocations
• Settlement of actual and plan data
• Planning tools, such as copy plan, or copy actual to plan
• SAP FI/CO reconciliation ledger
MANUAL PLANNING INTEGRATION
In SAP R/3 Enterprise, the fund, functional area, and grant areincluded when detailed SAP CO and SAP PS cost and activityinput planning is carried out for cost centers, internal orders,and WBS elements. Detailed cost element, activity, and statisti-cal key figure planning are able to provide for the movement ofamounts from the sender(s) to the receiver(s), using fund(s),functional area(s), and grants as specified in the line items.
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MANUAL POSTING INTEGRATION
Funds, functional areas, and grants are now considered whenthe following SAP CO and SAP PS manual actual postings andrepostings are made for cost centers, internal orders, and WBSelements:
• Manual reposting of costs
• Manual reposting of revenues
• Reposting of line items
• Activity allocation and activity allocation reposting
• Manual cost allocation
• Posting of statistical key figures
These postings and repostings move fund amounts from thesender(s) to the receiver(s), using the fund, functional area,and grant, as specified in the line items. You can enter thefund, functional area, and grant directly in the line items.Alternatively, this can be defaulted based on assignments madewith the SAP FM derivation tool.
Integration of Planned and Actual AllocationAllocation refers to the SAP CO process of assessing or distrib-uting amounts and quantities from one sender object to oneor more receiver objects, for example, from one cost center tomultiple cost centers. Allocation cycles summarize the rulesand Customizing settings that enable an allocation to be made.An allocation cycle consists of header data and one or moreallocation segments.
In SAP R/3 Enterprise, funds, functional areas, and grants areconsidered when planned and actual amounts are allocatedusing the following allocation cycles and segments:
• Periodic reposting
• Overhead
• Distribution
• Assessment
• Indirect activity allocation
In Customizing, you can define that internal orders and WBSelements should be enabled as senders within the above alloca-tion cycles.
Allocations are used to move amounts from the sender(s) to the receiver(s), using the fund, functional area, and grant(including groups), as specified in the allocation segments. For each type of allocation, you can change the way funds andfunctional areas are dealt with. Funds, functional areas, andgrants are entered for the sender cost objects; however, fundgroups can be used in order to select the proper funds,functional areas, and grants.
In the allocation cycle header, you specify that the fund, func-tional area, and grant be derived when posting to receivers. Inthis case, the fund, functional area, and grant assigned to thereceiver in the SAP FM derivation tool are used when posting.Otherwise, the fund, functional area, and grant entered againstthe receivers in the allocation cycle are used. If you do not entera fund or functional area for the receiver, the system uses thesender’s fund, functional area, and grant.
INTEGRATION OF SETTLEMENT (PLANNED AND ACTUAL)
In SAP R/3 Enterprise, the fund, functional area, and grant in SAP CO/PS postings are now included when planned andactual amounts are settled from internal orders and WBS elements.
Internal order and WBS element settlements provide for themovement of the original fund, functional area, or grant thatwere posted against the sender(s), using these same objects forthe amounts settled, to the receiver(s).
RECONCILIATION OF SAP CO TO SAP FI
You can update financial data for internal SAP Controlling andSAP Project System postings that cross certain organizationalunits. The SAP FI/CO reconciliation ledger can be activated inSAP CO, which will then summarize cross-organizational costand revenue movements and update SAP FI. For externalfinancial and accounting purposes, you can use cost and reve-nue movements across company codes, business areas, funds,functional areas, and grants.
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Integration with SAP Human ResourcesThe SAP Human Resources (SAP HR) component must beactive and configured before fund accounting features areavailable. The fund, functional area, and grant can be entereddirectly as cost distribution account assignments or derivedusing the assigned cost objects based on the assignments madethrough the SAP FM derivation tool.
In SAP R/3 Enterprise, the following SAP HR functionality hasbeen enhanced to properly integrate the fund, functional area,and grant for fund accounting purposes:
• Assignments for cost distribution
• Integration of training and event management
• Integration of time management and Cross-ApplicationTime Sheet (CATS)
COST DISTRIBUTION ASSIGNMENTS
You can include funds, functional areas, and grants for costdistributions over organizational units, positions, and persons.These account assignments are then used for related actualbudgetary, financial accounting, and cost accounting postings.If detailed account assignments are not made for cost distribu-tion purposes, SAP FM account assignments will be derivedusing the SAP FM derivation tool, based on the master costcenter assigned to the employee.
You can evaluate the cost distribution of the fund, functionalarea, and grant using SAP HR query. These fields are alsoincluded for Application Link Enabling (ALE) distribution purposes.
TRAINING AND EVENT MANAGEMENT INTEGRATION
For training and event management, you can use the fund,functional area, and grant when carrying out SAP CO activityallocations, cost transfer postings, and cost distributions.
TIME MANAGEMENT/CATS INTEGRATION
Fund, functional area, and grants can be used for time entry,both in time management and the Cross-Application TimeSheet, including employee self-service (ESS) applications.These account assignments are then used for SAP HR payroll,SAP CO activity allocation, and SAP PM order confirmation, as required.
Related SAP Business Information Warehouse (SAP BW)InfoCubes and extractors also include fund, functional area,and grant values.
SAP TRAVEL MANAGEMENT
The SAP Travel Management component must be active andconfigured before fund accounting features are available. Youcan enter the fund, functional area, and grant directly whendoing cost distribution account assignments, or you can havethem derived using the cost objects assigned with the SAP FMderivation tool.
You can use the fund, functional area, and grant to distributetrip costs. These account assignments are then used for relatedcommitment and actual postings for budgetary, financial ac-counting, and cost accounting purposes. If detailed accountassignments are not made for a trip, the account assignmentsfrom SAP HR will be used or, if necessary, SAP FM accountassignments will be derived using the SAP FM derivation tool.
For the extraction of SAP HR data, you can use SAP BW toevaluate the fund, functional area, and grant. These fields arealso included in the interface for ALE distribution purposes, if you are using SAP HR.
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SAP Grants Management (SAP GM) helps you manage spon-sored programs, such as grants, contracts, and cooperativeagreements, from pre-award administration to post-awardmanagement and reporting. You maintain master data for thesponsors of an organization, which in turn relates its financialstructure to the financial and administrative requirements ofthe sponsor.
This means that you don’t have to compromise your organiza-tional structures or financial reporting to meet the administra-tive and financial requirements of your sponsors. SAP GrantsManagement also provides solutions unique to sponsored pro-gram management, such as budgeting, cost sharing and match-ing, billing, and indirect cost and overhead calculation, as wellas closing out awards.
In keeping with SAP’s fundamental principal of openness andintegration, SAP Grants Management works in an integratedfashion with all areas of SAP R/3 Enterprise. SAP Grants Man-agement also takes advantage of such SAP tools as workflow,records management, and schedule management.
SAP GRANTS MANAGEMENT PROCESSES
Some of the processes defined in SAP Grants Management are:
• Planning of revenues and expenses involved in the managingof grants
• Defining of internal and external budget funding sources,and checking the availability of funds on the budget itemlevel
• Carrying out control postings
• Relating sponsor requirements to the financial structures of the grantee organization
• Providing billing solutions
• Calculating of indirect and overhead costs
• Managing of grant-related documentation and transactions
• Automating close-out procedures
• Assigning responsibilities and authorizations
• Defining workflow activities
INTEGRATION WITHIN SAP R/3 ENTERPRISE
SAP Grants Management is integrated with the following components of SAP R/3 Enterprise:
• SAP Human Resources (SAP HR): Planning of positions,travel, time, and expenses
• SAP Materials Management (SAP MM): Purchase requisi-tions, purchase orders, goods receipt/goods issue, invoices
• SAP Controlling (SAP CO) and SAP Project System (SAP PS): Proposal and application planning, internal costallocations, and postings
• SAP Financial Accounting (SAP FI): Accounting docu-ments in all ledgers
• SAP Funds Management (SAP FM): Organizational bud-geting and availability checking, earmarked funds
• SAP Asset Accounting (SAP AA): Depreciation and assetdetails
• SAP Plant Maintenance (SAP PM): Maintenance order postings
For more information on integration, please refer to the chap-ter entitled Integration Aspects.
SAP GRANTS MANAGEMENT
Figure 35: SAP Grants Management External and Internal Views
GRANT• FISCAL YEAR VARIANT –> X• CURRENCY –> CAD• SPONSORED PROGRAMS• SPONSORED CLASSES• EXTERNAL FUND• SPONSOR
EXTERNAL SPONSOR VIEW(GRANTS)
INTERNAL GRANTEE VIEW(SAP R/3 ENTERPRISE)
GRANT• FISCAL YEAR VARIANT –> Y • CURRENCY –> USD• R/3 ENTERPRISE OBJECTS• SPONSORED CLASSES• EXTERNAL FUND• CUSTOMER
Operate, Manage, and Control
Report and Show Results
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Integration with SAP CO, SAP PS, and SAP FundsManagementThe grant is an object in SAP Controlling, which enables you to plan revenues and record costs for both internal andexternal funding sources. In SAP GM, planning revenues andexpenses normally occurs during the grant proposal and appli-cation phases. After funding from the sponsor is received, youcan update the grant budget and then transfer it to SAP FundsManagement. Transferring budget data between SAP R/3 Enter-prise components eliminates the need for duplicate entries andensures data accuracy.
In addition to transferring SAP Grants Management budgetdata to SAP Funds Management, you can check fund avail-ability in both SAP Grants Management and SAP FundsManagement:
• In SAP Grants Management, you use the grant budget tomaintain spending rules and tolerances and to control post-ings at the sponsored program or sponsored class level. Thiscreates fund availability checks from a sponsor’s perspective.
• In SAP Funds Management, you maintain availability check-ing at the fund, funds center, functional area and commit-ment item levels. This enables you to control funds avail-ability from both your organization’s and the sponsor’sperspective.
You can use the two solutions together or independently,depending on your requirements. The flexible nature of avail-ability checking in SAP Grants Management and SAP FundsManagement provides you with the ability to address all busi-ness requirements.
Integration with SAP Financial Accounting and SAP AssetAccountingArchitecturally, SAP Grants Management maintains a separateview of an organization’s sponsored program activities andprojects. The organization’s structures, such as projects, gener-al ledger accounts, cost elements, commitment items, fiscal
year, and currency, are linked to the sponsor’s projects, costand revenue categories, budget validity period, fiscal year, andcurrency.
In this way, you can review your organization’s financial activi-ties and transactions for sponsored programs according to asponsor’s requirements, without affecting the integrity of yourfinancial transactions and activities. For example, your organi-zation and your sponsor each maintain their own fiscal years,and the two often differ. This creates administrative and report-ing challenges, and organizations must often create customreports to accommodate the fiscal year differences.
In addition, SAP Grants Management maintains its own sub-ledger using the split ledger technique, which enables you togenerate an individual balance sheet per grant. The followingfigure depicts the flow of data from SAP R/3 Enterprise com-ponents to SAP Grants Management. The flow of transactionsfrom other components into SAP Grants Management allowsyou to view the transactions from the sponsor’s perspective,based on the grant’s administrative guidelines and require-ments. This enables you to relate your organization’s transac-tions based on such sponsor and grant criteria as the fiscal year variant and currency.
Figure 36: Grantee Integration and Updating
GRANTACCOUNTING
LEDGER
TRAVELMANAGEMENT
MATERIALS MANAGEMENT
MM
FI
FUNDS MANAGEMENT
FM
CONTROLLING
CO
ACCOUNTING &SPLIT LEDGER
FI
AccountAssignment/Coding Block
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To help manage equipment purchased and built with spon-sor funds, SAP Grants Management makes use of SAP AssetAccounting and SAP Plant Maintenance. Based on sponsorrequirements, these components help SAP Grants Manage-ment account, track, and report on grant assets to meet sponsor guidelines.
MASTER DATA
The master data used in SAP Grants Management is: sponsor,grant, fund, sponsored program, and sponsored class:
• A sponsor is an institution or individual that provides fund-ing to a grantee organization. Strictly speaking, a sponsorcan be regarded as a business partner involved with a granteeorganization in the sponsoring of programs through busi-ness contracts defined as grants.
• A grant is the funding instrument that the sponsor providesand that documents the funding agreement between thesponsor and the grantee organization.
• A fund is an accounting object containing a complete self-balancing set of accounts, maintaining different types of funding – external and internal – from the grantee organization’s perspective.
• Sponsored programs are the grantee organization’s pro-jects, including the functions, tasks, and funding necessaryto meet the objectives of an external organization.
• Sponsored classes summarize the sponsor’s expense andrevenue categories. The sponsored class is used to groupexpenses and revenues in order to meet the sponsor’s reporting requirements.
To support sponsored program accounting and control, SAPGrants Management applies contractual and administrativerequirements to a grant based on various combinations of eachof the components. These components together correspond to“sponsored objects,” which represent allowable posting andbudgeting objects, and they also create dimensions for manag-ing, controlling, and reporting.
Figure 37: SAP Grants Management Master Data
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The grant and sponsor maintain a many-to-one relationship.The grant and sponsored program, on the other hand, have amany-to-many relationship, meaning that a grant can fundmany sponsored programs, and sponsored programs can beassigned to many grants.
Sponsors are assigned funds within a grant master record, andfunds are used to distinguish between external and internalfinancial support for a project. In addition, funds and grants alsomaintain a many-to-many relationship. In summary, SAP GrantsManagement master data relationships are adaptable, so that theycan ensure many combinations and accommodate a granteeorganization’s sponsored program administration requirements.
Within a grant master record, the sponsor, sponsored pro-grams, sponsored classes, and funds concern the funding pro-vided to the grantee organization. The relationships betweenthese master data components are flexible and support themany combinations needed to satisfy the funding correlationbetween the grantee organization and its sponsors. Two SAPtools are available for this:
• SAP Business Partner, which contains functionality for thecentral creation and management of business partner masterdata. In this way, you can create flexibly linked, centralized,cross-component master data records, eliminating the need tocreate multiple master data records for external organizationsand individuals who conduct business with your organization.
• Business Data Toolset (BDT), which enables you to cus-tomize screens and data elements specific to your organi-zation and comply with sponsored program administrativerequirements. In this way, you have flexibility without com-promising the ability of your organization to implementroutine system maintenance and subsequent upgrades.
GrantsGrant master data supports the sponsored-program businessprocess by maintaining details specific to the pre-awardprocess – the creation of the sponsor application – and post-award process – the administration of the award after a sponsor funds the application.
Here’s an example of how the business process and life cycle of a grant work. An employee first creates a project proposal.Next, the organization reviews the proposal, approves it, anddetermines if external financial support is needed. The organi-zation then creates an application and submits it to the spon-sor(s). Once a sponsor approves and funds the project, theorganization application becomes an award, and the organi-zation is responsible for managing the award according to thefinancial and administrative requirements of the sponsor.
Within the various phases of the sponsored program process, a grantee organization assigns a life-cycle status to indicatewhere a grant is in the business process (proposal, application,
Figure 38: Phases of a Grant and SAP R/3 Business Processes
PROPOSAL APPLICATION AWARD AWARDADMINISTRATION
CLOSEOUT/REPORTING
PROJECT PLANNING MASTER DATA ANDBUDGETING SPONSOR FUNDING POSTINGS AND
BILLINGSFINAL ACCOUNTING
AND REPORTING
time
GRANT PHASE
SAP R/3 ENTERPRISE PROCESSES
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award, and closeout). This status assignment triggers work-flow scenarios, routing the grant and related information electronically within the organization for the necessary reviewsand approvals during each of the business processes.
For example, an initial project draft begins with the status proposal. If the grantee organization approves the proposal,SAP Grants Management updates the status to application.Additional stages include:
• Sent application: When the organization mails the appli-cation to the sponsor
• Rejected application: If the sponsor does not fund the application
• Awarded application: If the sponsor funds the application
• Closed award: When the grant has completed its life cycle
The grant master data and budgeting activities are allowed for the proposal and application planning stages. For the sentapplication and rejected application stages, you can restrict orblock business transactions from being carried out. Thus, dur-ing a pre-award phase of a project, you can begin processingthe grant based on funding that you anticipate from a sponsor.
Next, at the award level, you should convert the planningbudget to the sponsor budget. This allows your organization tobegin posting transactions, such as payroll, purchase requisi-tions, purchase orders, and invoices. Finally, the closed awardstatus suspends new transactions, but allows continued processing of existing commitments according to sponsoradministrative guidelines.
Each of these statuses enables you to view the various stages of the grant during its life cycle, while controlling the trans-actions carried out for a specific business process.
SAP Grants Management also contains functions for trackingrevisions and updates for both the pre-award and post-awardprocesses. It accomplishes this by assigning versions to the ob-ject being modified and maintains a log of these modificationsfor subsequent review and historical purposes.
The grant also maintains SAP Grants Management businessobjects, such as the fund (or funding source), sponsored pro-gram, and sponsored class. SAP Grants Management transfersdefault values for these business objects from the sponsor mas-ter data and updates the data as needed, based on the require-ments specific to the sponsor award.
The sponsored program, sponsored class, and fund control thepossible posting combinations, defined in Customizing andused when planning, budgeting, and recording actual postingsto the grant. In addition, SAP Grants Management classifiespostings as actual or statistical, and blocks postings for process-ing and control using validity periods.
PRE-AWARD COSTS
Pre-award costs represent the consumption of funding beforeofficial funding is received for a project. In such cases, a spon-sor confirms funding of a project prior to the grantee organi-zation receiving confirmation of the funding. Another scenariois that you anticipate a project will receive funding so the pro-ject is started, and anticipate reimbursement for outlays priorto the official start of the project. You may need to begin man-aging a project in advance, and taking into consideration thesponsor’s guidelines. Based on such requirements, manyorganizations and sponsors develop specific rules governingpre-award costs, in particular for:
• Grant life-cycle status
• Posting objects
• Budget release and tolerances
• Billing
Figure 39: Grant Life-Cycle Statuses
PROPOSAL APPLICATION AWARD
GRANT
GRANT – AWARD STATUSES
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You can place restrictions on a grant’s posting objects. Forexample, you can restrict the issue of purchase requisitions,purchase orders, funds reservations, and payments. These typesof transactions are controlled using value types. In addition,you can control pre-award costs using budget releases and tolerances to limit an organization’s expenditures:
• Budget releases refer to the budget amounts recorded to an object (such as a grant) that is available for consumption.
• Tolerances are used to compare the budget of an object tothe amount consumed or posted to that object.
Finally, you can use life-cycle statuses to indicate the stage ofthe grant within an organization’s business processes. You canuse each of these solutions independently or together to man-age the pre-award cost requirements.
PROGRAM INCOME
Program income is revenue that a grantee organization earns,which is attributable to a sponsor-supported project or projectactivity. The sponsor’s guidelines determine how your organi-zation accounts for program income. For example, you may ormay not have to use program income to offset sponsor fund-ing. Similarly, your organization may or may not need to trackor report program income. Regardless of sponsor requirements,you should monitor sources of revenue and record programincome transactions according to your business requirements.
You can use SAP Grants Management to monitor and trackprogram income in a variety of ways. Using a derivation rule,you can map a sponsored class to your organization’s generalledger accounts, commitment items, and cost elements. Youcan also map cost elements and cost objects, such as cost cen-ters, work breakdown structure (WBS) element, and internalorders, since some organizations treat program income not asrevenue, but as an offset to expenses.
After completing the mapping for derivation, SAP Grants Man-agement then records program income postings to accountsand posting objects, and, based on the mapping, records themto the SAP Grants Management sponsored program. In addi-tion to recording program income transactions, SAP GrantsManagement can also plan and budget program income.
Program income can be budgeted directly in SAP Grants Man-agement, or budgeted in SAP Funds Management and trans-ferred to an SAP Grants Management budget posting. Based on your approach and the management of program income,reporting of the transactions, and budget, SAP Grants Manage-ment can satisfy both the sponsor’s and grantee organization’srequirements.
GRANT TYPES
The grant type is a key master data element that allows youto manage grants and to meet both the sponsor’s requirementsand your own. It is recorded in the sponsor master record, andused in conjunction with the grant to describe and control agrant’s behavior. First, if a grant is created and assigned to asponsor, only grant types recorded in the sponsor master recordcan be selected with the new grant master record. In addition,the grant type is customizable, so you can create as many granttypes as needed to classify and describe your organization’sgrants, such as:
• Classifying grants into categories
• Defining budgeting strategies for grants
• Monitoring the grant using the status function
• Maintaining sponsor rules for indirect costs or overheadposting
• Making use of SAP Records Management templates
SponsorsIn SAP R/3 Enterprise, grant sponsors are maintained in theform of SAP Business Partners. A business partner refers to anatural or legal person or a group of natural or legal persons,who are not part of the organization in question, but withwhom a business interest exists.
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In the business partner record, you can store all informationfor an organization’s sponsors. Sponsor master data also pro-vides default values for grant master data. These default valuesare transferred to the grant master record and can be saved orupdated based on your organization’s requirements and thegrant’s requirements. The sponsor default values serve as astarting point when you create a grant master record, savingtime and reducing the chance of error.
Examples of grant default data for a sponsor include: sponsoredprograms and classes, cost sharing details, indirect cost calcu-lation details, fiscal year variants, currencies, as well as thesplitting rule to be applied for budgeting and fund detail data.
Sponsored ProgramA sponsored program refers to a sponsor’s program or projectand links it to your internal projects. It is used to group coststo satisfy the sponsor’s view and reporting needs, and definesthe program to be funded from the sponsor’s viewpoint.
Details such as the person responsible, budget objects, fundscenter, functional area, and funded program are stored in thesponsored program master data. You can also include infor-mation on legislative codes to be adhered to. The funds center,functional area, and funded program represent the link be-tween SAP Grants Management and SAP Funds Management,which enables you to relate the sponsor’s budget and postingdata in SAP Grants Management to budget data in SAP FundsManagement.
Within SAP Grants Management, the sponsored programmanages all accounting and reporting transactions. Multiplegrants can fund one sponsored program, which can be linkedto one or more cost objects (such as cost center, internal order,WBS element, and funds center). Alternatively, one grant canfund many sponsored programs. This many-to-many relation-ship enables you to maintain your own internal projects inde-pendently of the funding sources and still fulfill the sponsor’sadministrative and reporting requirements.
SAP Grants Management also enables organizations to recordsponsored programs in the sponsor master data, providingdefault values for the grant master data. Based on the relation-ship of the sponsor to a grant, SAP Grants Management canselect the sponsored program defaults and import them intothe grant from the sponsor master data. These default values,however, merely serve as a starting point when assigning thesponsored programs to a grant.
Sponsored ClassA sponsored class categorizes sponsor budget data accordingto revenues and expenses. It is also used to specify in detailwhich expenses are relevant for billing and for indirect cost calculation.
When a sponsor funds an application, the award documentstypically include a budget summarized by expense category.For example, sponsored classes are used to link G/L accounts,cost elements, and commitment items to the sponsor revenueand expense categories. A sponsor can fund a grant and pro-vide a budget for personnel, supplies, travel, and equipmentexpenses, which means that the organization must manageand report the financial activities of the grant based on thesebudgeted expense categories.
Accordingly, you create sponsored classes for each expense category and assign the sponsored classes in the grant masterdata. Afterwards, you assign G/L accounts and cost elements tothe sponsored classes. When transactions are recorded in theG/L accounts and cost elements, the sponsored class is derivedfrom the G/L accounts and recorded in the SAP Grants Manage-ment special ledgers.
This enables you to record financial transactions according toyour business requirements and reflect the transactions in thegrant’s sponsored classes according to the sponsor’s require-ments. The sponsored class links the sponsor requirements to
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the financial structures of your organization, providing yourorganization’s transactions in the sponsor view. Also, theintegrity of the financial structures of your organization ismaintained by deriving the sponsored class for the existingposting objects of your organization.
You can also record sponsored classes, which serve as defaultvalues for the grant master data, in the sponsor master data.Based on the relationship of the sponsor to a grant, you canselect the sponsored class defaults and import them into thegrant from the sponsor master data. These default values,however, merely serve as a starting point when assigning thesponsored programs to a grant.
BUDGETING
Budgeting plays a significant role in the administration ofsponsored programs, enabling you to fulfill both the sponsor’sand the grantee organization’s management and reportingrequirements. You can record revenue and expense budgetdata to support both the pre-award and post-award stages ofsponsored program management.
Using SAP Grants Management, budget data is entered andmaintained from the sponsor’s perspective. For example, bud-get data is entered into the sponsor’s currency and the timeperiod as required for the sponsor’s reporting requirements.You can also enter budget data for various life-cycle statuses of the grant. That means you can enter budget data for a pro-ject’s planning phase (proposal status) and then maintain andupdate it as needed for the remaining phases (application andaward).
Grant budgets are entered using the following dimensions:grant, funds, sponsored programs, sponsored classes, and timeslice. The grant is the primary budgeting object, and the fundis the source of external or internal funding. In addition, the
sponsored program identifies a sponsor’s programs or projects,and the sponsored class maintains the sponsor’s budget at anitemized revenue and expense category level, such as personnelcosts, supplies and equipment, as well as revenues.
SAP Grants Management budgeting is integrated with SAPFunds Management budgeting using the new budget controlsystem (BCS) delivered as of SAP R/3 Enterprise. For moreinformation on BCS, please refer to the corresponding sectionin the chapter entitled SAP Funds Management.
Time SlicesYou can record budget data in a variety of ways during the lifeof a grant. For example, you can enter a budget for the totalamount funded and release it all at once or periodically, per-haps monthly, quarterly, or annually. The ability to enter theentire budget and to use a release strategy provides controlover when the budget is available for consumption during thelife of the grant.
You can also enter budget data based on the sponsor’s fiscalyear and your own. Based on this requirement, time slices arecreated in Customizing. This enables you to create splittingrules for grants, which facilitates the budgeting process and themonitoring of grant budget data according to the sponsor’sadministrative and reporting requirements.
For example, a sponsor funds a grant for a two-year period(from April 1, 2002 to March 31, 2004) and requires that thegrantee manage and report the funds according to the sponsor’sfiscal year. The sponsor’s fiscal year runs from January toDecember, but the grantee organization’s fiscal year is July to June. The time slices would be as follows:
• April 1, 2002 to December 31, 2002
• January 1, 2003 to December 31, 2003
• January 1, 2004 to March 31, 2004.
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Through integration with SAP Funds Management, you canalso manage the grant according to your organization’s finan-cial structure and fiscal year.
You can also revaluate transactions with different currency.When you revaluate a posting that results in an amount differ-ent from the original entry, SAP Grants Management posts anew entry, or attachment, to the original transaction, but theoriginal entry remains as is. Attaching a new entry to the orig-inal transaction preserves the audit trail and simplifies recon-ciliation runs.
Released and Unreleased BudgetsA budget is recorded to a grant based on the splitting rule fortime slices defined for the grant in Customizing, as well as onthe grant’s life-cycle status. The splitting rule also determineswhether a budget is entered with a released or unreleasedstatus. The purpose of these statuses is to maintain control ofbudget consumption using smaller time slices, while planningitself can be done for the entire grant.
When budget is entered using the unreleased status, it is notavailable for consumption, and conversely when a budget isposted with a released status, the funds are available for con-
Figure 40: SAP Grants Management Time Slices Concept
GRANT VALIDITYAPR 2001 – MAR 2003
GRANT VALIDITYAPR 2001 – MAR 2003
SPLITTING RULES APPLIED
GRANT BUDGET VALIDITY
GRANT VALIDITYAPR 2001 – MAR 2003
4/01 3/02 3/03
1/01 12/01 12/02
4/01 3/02 3/03
7/01 6/02 6/03
4/01 7/01 3/02 6/02 3/03 6/03
SAP GRANTS MANAGEMENT (SAP GM)
SAP FUNDS MANAGEMENT (SAP FM)
SAP GM BUDGET VALIDITY
SAP GM BUDGET VALIDITY
1
1B1A
2
2B2A
“TIME SLICES”
1 2
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sumption. Together the two statuses allow you to enter theawarded budget for the life of the grant, in the form of un-released budget, and then consume only a part of it – forexample, the first year’s budget – which is recorded with thereleased status.
Cost Sharing and Indirect CostsCost sharing or matching represents the portion of total pro-ject costs that a grantee organization must contribute to andfund internally. Some sponsors have mandatory cost sharingrequirements for all or certain types of sponsored programs.Also, there are voluntary cost sharing arrangements in whichan organization contributes to the project’s expenses eventhough there is no requirement to do so.
You can use different funding sources to record a grant andsponsored program, containing the individual cost sharingrequirements for each organization.
For example, if a sponsor funds a grant that requires 25% costsharing, the system records the sponsor budget using an exter-nal fund associated with the sponsor and the cost-sharingbudget using an internal fund associated with the organization.Thus, SAP Grants Management records the grant budget intotal, including the cost-sharing budget, whereas the use ofinternal and external funds allows you to distinguish betweenyour cost sharing budget and the sponsor budget.
Because cost sharing or matching requirements vary fromsponsor to sponsor, a system must be flexible enough to com-ply with differing guidelines. Using the posting objects fundand functional area, you can easily identify cost sharingtransactions.
SAP Grants Management also allows you to view the impacton cost sharing and indirect costs for the duration of a grant.Since grant budgets are recorded by the grant’s dimensions(such as grant, funds, sponsored programs, sponsored classes,
and time slices), the requirements for cost sharing and indirectcosts are readily available for online review and evaluation.
The grant’s values for cost sharing and indirect costs are main-tained in the grant master data. As budget data is entered for agrant, the system calculates the related cost sharing and indi-rect cost amounts involved. Since SAP Grants Managementrecords the grant budget data by budgeting dimensions (fund,funds center, commitment item, and so on), the cost data isupdated with every posting.
MATCHING FUNDS
SAP Grants Management documents a sponsor’s cost sharingrequirements in the sponsor’s master record. Next, when agrant is created, the cost sharing data defaults from the spon-sor master data. Based on the grant’s requirements, SAP GrantsManagement either leaves the grant’s cost sharing informationunchanged or updates it. This provides a starting point for youto create the grant master record, and capture the sponsor’scost sharing requirements for each grant.
Most importantly, SAP Grants Management creates fundingdimensions in the grant master record, recording both externalsponsor and internal organization funds in the funding dimen-sions. The funds, in conjunction with sponsored classes andsponsored programs, create posting combinations for record-ing business transactions to the grant. Users employ externalfunds to record expenses attributable to the sponsor and inter-nal funds to post expenses associated with your organization’scost sharing requirements.
You can also use multiple internal funds to fulfill a sponsor’scost sharing requirements. Whereas SAP Grants Managementrecords transactions to the grant, the fund is used to indicatewhether the line item is attributable to the sponsor or to theorganization (that is, cost sharing is involved).
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Spending RulesBudgeting is important in administering a sponsor’s spendingrules in coordination with availability checking. The grantbudget and availability checking help monitor spending toensure that a grantee spends funds according to a sponsor’sspending rules. SAP Grants Management performs availabilitychecking to monitor the postings and works in conjunctionwith the grant, fund, sponsored program, and sponsored classes.
In Customizing, you can decide whether to enforce spendingrules flexibly or stringently. For example, a sponsor may estab-lish tolerance rules so that the system sends a warning or errormessage if a transaction exceeds the sponsor’s budget. Similarly,you can establish a tolerance rule so that the system generatesa warning message after 80% of the award’s budget is consumedor prohibits additional transactions if 100% of the budget isexceeded.
Tolerance RulesLike spending rules, budget tolerances can be flexibly con-figured to meet the needs of your organization and sponsorrequirements. In conjunction with tolerance rules, SAPBusiness Workflow sends electronic notifications to keep themanagement personnel informed of the transaction and theimpact on the grant budget.
SAP Grants Management maintains a sponsor’s availabilitychecking and tolerance rules, whereas SAP Funds Managementmaintains an organization’s availability checking andtolerance rules. The separation of the tolerance rules enablesyou to manage the availability of funds at the sponsor andorganization levels independently of each other.
ReportingBudget details and actual postings recorded to SAP GrantsManagement are the basis of financial reporting for the spon-sor as well as for the grantee organization. SAP Grants Man-agement ensures that each relevant component, such as SAPHuman Resources, SAP Materials Management, SAP Control-ling, SAP Financial Accounting, or SAP Project System, alsorecords the actual transaction, from the perspective of thesponsor, in the SAP Grants Management subledger.
In this way, the financial activities of the organization remainseparate from any external sponsor requirements, and supportthe internal and external view of transactions related to thesponsored program activities.
Budgetary CeilingsAn organization with limited resources can manage its spon-sored programs with budgetary ceilings, which helps monitorthe amount of external funding that the organization receivesand ensures that you do not accept more funding than youcan adequately manage. See Figure 41 as an example of a ceilingscenario.
Figure 41: SAP Grants Management Budgetary Ceilings
FUNDS MANAGEMENT
OVERALL BUDGETEDUCATION $30,000 RESEARCH $70,000
FUNDS – UNRESTRICTED FOR GRANTS
EDUCATION $20,000RESEARCH $50,000
FUNDS – RESTRICTED FOR GRANTS
EDUCATION $10,000RESEARCH $20,000
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Funded ProgramsSAP Funds Management in SAP R/3 Enterprise contains a newdimension called the funded program. Funded programshave an operational purpose with a defined time frame, andcan vary from simple activities to complex projects. Fundedprograms can cross an organization’s fiscal years, fundingsources, and organizational units.
In SAP Grants Management, you can use the funded programby mapping an SAP Grants Management sponsored programto an SAP Funds Management funded program. This allowsyou to record budget, control postings, and monitor the per-formance of the sponsored programs for your organization’sinternal activities in SAP Funds Management.
BILLING
You obtain reimbursements for sponsored programs in manydifferent ways: cost reimbursement (monthly invoices, quar-terly invoices, or sponsor letter-of-credit accounts), scheduledpayments (monthly, quarterly, or milestone payments), andadvance payments (billing plans).
Sponsors may require your organization to submit invoices ona cash or accrual basis, or they may even permit your organiza-tion to invoice encumbrances and expenses. In addition, specialbilling requirements, such as letter-of-credit scenarios, are alsopart of the SAP Grants Management billing functions. SAPGrants Management provides a flexible billing tool to supportcost reimbursement, milestone billing, periodic billing, andmanual billing.
Resource-Related BillingThe most common billing scenario is cost reimbursement. SAPGrants Management uses resource-related billing, includingdown-payment capability, to satisfy this requirement. In addi-tion, SAP GM billing can identify billed versus unbilled expens-es and generate invoices for unbilled expenses related to a
grant. To accomplish this, a billing delta is used that comparesthe cumulative expenses to the expenses for which you havealready submitted invoices, and then creates a new invoicereflecting the new expenses.
Resource-related billing generates invoices for a specified timeperiod, such as monthly, quarterly, or other periods, as well asfor nontraditional billing periods that do not begin on the firstor last day of the month. This permits many billing periodcombinations, enabling an organization to produce invoicesbased on its requirements, as well as on sponsor-defined billingrules.
Resource-related billing generates invoices on a cash or accrualbasis for various transaction types, such as commitments,invoices, or actual payments. You can also block transactionsassociated with a grant and sponsored class.
SAP Grants Management supports Application Link Enabling(ALE) and Electronic Data Interchange (EDI) for sponsors thatsupport these protocols, so organizations can communicateelectronically with sponsors and share financial and adminis-trative information regarding the sponsor’s projects. Thebilling solution also provides a printing and distribution func-tion to help you prepare the sponsor invoices.
OVERHEAD COSTING: INDIRECT COST CALCULATION
SAP Grants Management offers a solution specifically for sponsor overhead costing, also known as indirect cost (IDC)calculation, to address differing requirements. In addition tostandard functions, you can use overhead allocation for over-head costing. This allows you to choose from three methods to allocate and manage your IDC allocations: the SAP GrantsManagement indirect cost calculation program, standard func-tions in SAP Controlling, or a combination of the two methods.
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For sponsor master data, you initially maintain rules and ratesfor calculating indirect costs. The grant master data containsIDC rates for each sponsored class, in order to calculate theindirect cost expense based on the sponsor and grant’s guide-lines. In addition, assigning IDC rates to the grant’s fund, pro-gram, and sponsored classes offers multiple calculation scenar-ios. You can retrieve this data later when creating the grant’sbudget. For example, a grant provides funds for personnel,supplies, and equipment, which are sponsored classes or costcategories, and provides indirect cost funding at a 10% rate forpersonnel costs only.
You can assign indirect cost rates at the grant, fund, program,and sponsored class levels, making use of conventional sponsorindirect cost calculation methods. These are indirect cost basemethods, such as total direct costs or modified total direct costs.Using one of these base methods requires that you apply a singleindirect cost rate to a specified group of costs.
You can use the indirect cost calculation to include your orga-nization’s IDC earned for the billing period. You can select specific grants or ranges of grants, as well as specify the calcu-lation period and the posting date.
SAP Grants Management also supports IDC fund recovery,which is the recording of revenue postings. The grant masterdata maintains this information and records the IDC revenueand expense G/L accounts. The tool also enables you to specifymultiple funds, if required, for recording revenue. Validityperiods and dollar amount or percentage ceilings can influencethe distribution of revenues to your organization’s funds.
COMPLEMENTARY FUNCTIONS
In addition to unique business processes, SAP Grants Manage-ment uses complementary SAP solutions, such as SAP BusinessWorkflow, SAP Records Management, and status managementto support administrative processes for sponsored programs.
SAP Business WorkflowWorkflow scenarios for SAP Grants Management consist of asequence of steps that a system or user processes automatically.Several workflow scenarios exist for SAP Grants Management,including a pre-award review and approval process. In a pre-award scenario, you prepare a formal application for submis-sion to a sponsor. Before the application is submitted, thesponsor reviews the proposal. SAP Grants Management usesSAP Business Workflow to route the proposal electronicallythrough the organization, to ensure that the appropriatereviews and approvals are carried out according to your orga-nization’s requirements.
As each area reviews the proposal and completes its task, work-flow determines the routing of the proposal and the nextaction required. The workflow process authorizes specific usersto approve, reject, forward, or update the document. Finally,workflow interprets the status of the proposal (whether theorganization has approved, rejected, or updated it), and routesit accordingly until it meets the last condition and the reviewprocedure is complete.
Users do not require a comprehensive understanding of thereview protocol to obtain the organization’s approval on a pro-posal – they simply perform a routine task within the approvalprocedure. For SAP Grants Management, the predefined work-flow scenarios include the review, change, and approval of grantmaster data and grant budgets, availability checking notifica-tions, and grant closeout processes.
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SAP Grants Management and SAP Records ManagementSAP Grants Management provides authorized personnel withcomplete online access to all documents relating to a grant.Sponsored program administration involves managing vastamounts of documentation from the proposal and applicationstages up to the completion of a project. Your organizationmay receive such documentation in many forms, includingelectronic documents, word-processing files, spreadsheets, and CAD drawings. Using SAP Records Management, you canstore such documentation in the form of grant pre-award docu-ments, grant master data, grant budget documents, sponsoraward documents and correspondence, and general organiza-tion correspondence.
All grant and sponsor information is stored in a central area, to allow easy access and flexible document searches. You canalso use the records management capabilities of mySAP PublicSector to integrate external documents.
SAP Grants Management also provides document templates,which contain a basic framework of the types of documenta-tion that apply to grants. Via the grant type, a grant is linkedto a template, so that when a grant type is assigned to a grant,the correct template is accessed. You can easily create and cus-tomize templates to meet your organization’s documentationrequirements.
SAP Records Management uses a hierarchy to store documents,and authorizations to restrict access to documents and inte-grate with workflow scenarios. You store documents by grantwithin a predefined hierarchy, and define security authoriza-tions to limit access to grant information to the appropriatepersonnel. For example, central users in the sponsored pro-grams office may have full access to all grant documents,whereas a project manager may be restricted to documen-tation for grants for which he or she has specific responsibility.
In addition, you can use workflow scenarios with grant docu-ments to assist the person responsible for approving the request,by providing online information pertaining to the grant. Thesystem also stores the history related to the grant pre-awardprocess, proposals, and the actual application.
For more information on SAP Records Management and SAP Business Workflow, please refer to the chapter entitledIntegration Aspects.
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PERIOD-END CLOSING
The SAP Grants Management closeout features help you com-plete the life cycles of your sponsored programs. Part of thecloseout process includes a final review of financial transactionsand administrative tasks to ensure that proper action has beentaken to conclude the programs and projects according to asponsor’s requirements. To assist with these activities, you cancreate customized closeout rules that meet sponsor guidelinesand requirements. For example, you can create rules for:
• Updating master data settings to restrict or prevent additionalpostings
• Reviewing and acting on outstanding obligations
• Detailing the steps that a sponsor requires to prepare financial and technical reports
• Maintaining program and grant stages of completion
• Detailing all steps to satisfy organizational reporting require-ments
Using the SAP Schedule Manager, worklists can be created foremployees responsible for managing grant closeout activities.Worklists have a variety of uses, including helping you performcloseout procedures. Worklists allow you to apply a single taskto multiple objects, which is useful for preparing a grant’s post-award reporting requirements. For example, you can generate apreliminary invoice on the termination date of a grant, whichyou then use to review postings in preparation for the finalinvoice to the sponsor.
REPORTING
A major challenge for organizations implementing sponsoredprograms is balancing externally required financial reportingwith internal reporting needs and business processes. SAPGrants Management provides the financial information requiredto manage the program effectively from both the sponsor’s andgrantee organization’s perspectives. You record financial trans-actions based on your organization’s internal structure, whilesimultaneously applying these transactions to a sponsor’sdesired financial view and recording them in the SAP GrantsManagement subledgers.
Basic differences between a sponsor and a grantee organizationcan include fiscal years, budget period dates, expense and reve-nue categories, and currency – all of which require an organi-zation to maintain a separate view for each reporting purpose.Supporting separate views allows you to review and monitorfinancial transactions according to your organizational orsponsor requirements and to make decisions accordingly.
In addition to financial reporting, SAP Grants Managementproduces statistical and summary reports to help you managesponsored program activities, such as funding success rates,sponsor applications submitted versus applications funded, andother metric information. SAP Grants Management deliversbasic reports, but the diversity of such reporting requirementsand data may require the creation of custom reports.
Other tools used to satisfy reporting needs include SAP Busi-ness Information Warehouse (SAP BW), Report Writer, ReportPainter, drill-down reporting, and user-defined forms.
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Governments cover their financing requirements by definingfunds from different sources. Inland revenue offices collecttaxes from citizens and businesses, cities charge for their ser-vices, associations receive contributions from their members,and universities charge tuition fees. These all involve massprocedures – it is not uncommon for authorities to deal withhundreds of thousands or even millions of citizens at one time,as for example, when tax returns are due.
Public agencies are increasingly looking to improve their inter-action with citizens, companies, and other public administra-tions. More and more services are being provided over the Inter-net, consequently the public now expects round-the-clockaccess for registrations, making queries and requests, and gettingand submitting information 365 days a year.
SAP Tax and Revenue Management is a key component ofmySAP Public Sector. It is the solution provided by SAP formanaging taxes and revenues in the public sector, and is basedon the following components: SAP® Collection and Disburse-ment, mySAP Customer Relationship Management (mySAPCRM), SAP® Biller Direct, and mySAP Enterprise Portal.
SAP Tax and Revenue Management has the following features:
• The system supports all core tax and revenue adminis-tration processes, including registration, return filing andpayment processing, collections, audit, customer assistance,and financial management. It also provides a full range of e-government services.
• All applications and data are fully integrated, providingevery authorized employee with access to comprehensivetaxpayer data and supporting applications. The integrateddata architecture stores master data once, then makes itavailable to all components – saving memory, enhancingdata consistency, and reducing ongoing maintenance.
• As the back-end system, SAP Collection and Disburse-ment can handle high-volume data processing tasks in thebackground, as well as process transactions in distributed systems. The SAP Collection and Disbursement functionalityis based on the mySAP Financials contract accounting solu-tion (SAP FI-CA).
• SAP Tax and Revenue Management is easily configurable.Each application component can be configured to addressspecific user needs.
OVERVIEW OF FUNCTIONS
SAP Tax and Revenue Management covers – by itself or in conjunction with other software components – all processesinvolved in tax and revenue management:
• Registration for services or tax returns by entering citizenmaster data and payment-relevant information
• Calculating and posting taxes, and processing statutory payments and tax returns
• Processing of payments
• Collecting taxes in arrears and calculating interest, includingfollow-ups until transfer to collection agencies
• Tax inspection (audit)
• Forwarding of revenues to other government agencies
• Support and information for taxpayers
• Revenue accounting
SAP Tax and Revenue Management starts by dividing tasksbetween the tax calculation and the settling systems. The cal-culating system determines the amount and due date of certaintaxes or fees. This can take place within an SAP component,such as SAP Sales and Distribution (SAP SD) or mySAP CRM,or by using a special third-party feeder system or a homegrownsystem. Master and posting data is provided to these systemsthrough the SAP Collection and Disbursement interface.
SAP TAX AND REVENUE MANAGEMENT
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SAP Collection and Disbursement manages postings, controlspayment transactions, and processes cash receipts, dunning,and correspondence. Furthermore, the transfer of postings toSAP Financial Accounting (SAP FI) or SAP Funds Managementis affected in this way, and payment data is prepared for strate-gic reporting in SAP BW.
MANAGING TAXES AND OTHER STATUTORY PAYMENTS
With SAP Tax and Revenue Management, mySAP Public Sectorprovides a software solution developed especially for mass processing of tax data. Extremely large amounts of data can be handled quickly and reliably due to its advanced technicaldesign. It is also extremely flexible and can be customized tofulfill requirements placed by government agencies residing on different levels or in different countries.
SAP Tax and Revenue Management is seamlessly integratedwith mySAP CRM. Using mySAP CRM, a government agencycan process all essential tax and revenue steps, whether theyare classical (all within one system) or e-government (process-ing via the Internet), from the initial request up until the finalpayment. Taxpayers can submit their tax returns electronicallyusing mySAP CRM.
The point at which a citizen accesses public tax services ismySAP Enterprise Portal. Here the tax agency provides different services (information, interaction, and so on). Thesecond important component used to interact with citizens,mySAP CRM, is linked into mySAP Enterprise Portal.
Figure 42: SAP Tax and Revenue Management Framework
CALCULATIONSERVICEORDER
MASTERDATA
BILLING
PAYMENTS/COLLECTION
COLLECTION ANDDISBURSEMENT
REVENUEACCOUNTING
FINANCIALACCOUNTING
FUNDSMANAGEMENT
mySAP CRM
BillingEngine
IPC OTHER
CASE MANAGEMENT AUDITMANAGEMENT
REGISTRATION RETURNRECONCILIATION
SERVICESSAP BUSINESSINFORMATIONWAREHOUSE
(SAP BW)
BILLER DIRECTONLINE PAYMENT
mySAP ENTERPRISE PORTAL
TAX AND REVENUE MANAGEMENT
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The first step for the citizen is to register. For most tax pay-ments, a citizen registration is necessary. This can happenthrough different channels: phone, person, letter, or Internet(multichannel access). If mySAP Enterprise Portal is used, thecitizen master data is managed in mySAP CRM as the leadingsystem and then passed on to SAP Collection and Disbursement.
SAP Collection and Disbursement is a central subledger accounting tool, providing government agencies with an integrated view of all citizen data stored, and managing themaster data for taxes and fees due to a government agency.
You can use SAP Biller Direct if you want citizens to access thisintegrated view of their data on the Internet and carry out allpayments online. SAP Biller Direct is an SAP software compo-nent that enables the conversion of bills to an electronic format.This unique integration makes payment-relevant processesmore intelligible for government agencies and citizens, whilealso improving the quality of services provided.
Master Data and RegistrationAll the people or institutions that a government agency hasdealings with are depicted as business partners. Whether tax-payers themselves, their tax consultants, or other authorities –all use the central SAP Business Partner functions. SAP BusinessPartner is used to store contact-specific details and contains anefficient address management facility. It also stores informationon the relationship between business partners. The differencesbetween individual business partners, determining who has topay taxes, and who is only a contact person are reflected in aflexible role concept.
SAP Business Partner enables seamless integration with otherSAP components and solutions, such as mySAP CRM, whichhelps public employees optimize relationships with citizensand taxpayers by providing a large selection of front-officesolutions.
Incoming and outgoing payments are handled with one ormore contract accounts or contract objects. These contain the payment-relevant master data, such as bank details oralternative payers, and enable public agencies to create variousviews of a business partner, based on the agency’s organizationalstructure (for example, partners classified by tax type paid),business rules, reporting requirements, or other criteria.
Contract objects also contain all payment-relevant controlparameters, valid payment methods, rules on assigning pay-ments, interest calculation, handling petty amounts, creatinginvoices, and payment requests or reminders. In addition, thecontract account and contract object store rules on incomingand outgoing correspondence.
Figure 43: Inclusion of Business Partners and Alternative Payers
An example of SAP Tax and Revenue Management function-ality can be seen in Figure 43. Anna and Paul are married. Annaruns a business with two offices, for which she pays businesslicense fees and sales tax. She files her tax returns through hertax accountant, who is also kept in the system as a businesspartner (contact person). Of course, she also pays personal
BUSINESSLICENSE
OFFICE 1 OFFICE 2
SALES TAX PERSONAL INCOME TAX PROPERTY TAX
TAX ACCOUNTANT
ANNA S.COMPANY X
PAUL
alter-nativepayer
PRIVATE HOUSE
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income tax. Also, she and her husband own a private home.Anna is liable for the property tax. But Paul, as co-owner, isknown in the system as an “alternative payer,” since he is theone who pays the property tax.
ONE CITIZEN ACCOUNT – DIFFERENT CONTRACT ACCOUNTS
The number of contract accounts an administration uses foreach business partner depends on the control parametersinvolved. The more differences there are with respect to legalor political regulations, the more contract accounts a taxpayerneeds. This could be one contract account for each type of tax.You can display the data in as detailed or summarized fashionas you wish, with several individual contract accounts beingdisplayed for one integrated citizen account. Written informa-
tion related to the citizen account, such as invoices or accountstatements, can be created for citizens periodically or byrequest.
SAP Tax and Revenue Management provides a centralized viewof a particular citizen and their citizen account. Employees inall departments of an organization can look at or maintain thesame data. Inconsistencies in person-related data are thereforea thing of the past. In contrast with traditional, nonintegratedsoftware, this represents a considerable savings in time andmoney. Of course you can also restrict access to certain confi-dential data using authorizations, which ensures data protec-tion and proper access to sensitive data.
TAX AND REVENUE MANAGEMENT
BUSINESS PARTNER
LEISURE TAX
CITIZENBUSINESS
PROPERTYTAX
Figure 44: Citizen Account on mySAP Enterprise Portal
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The citizen can see all open items on the Internet. In the back-end office, there are different contract accounts with differentauthorizations and business rules. The layout shown here isonly an example of a possible citizen account.
Online Tax Return FilingA citizen or company files a tax return online by filling inInternet forms. If further information is required for onlinesubmission, the tax agency contacts the taxpayer by e-mail,phone, or letter. These contacts are managed in mySAP CRM,with the tax return now transformed into a mySAP CRM service order.
An important part of the return reconciliation process is car-ried out when the government agency calculates the taxes due.The service order is connected to the SAP Internet Pricingand Configurator (SAP IPC), which is a part of the standardfunctionality of mySAP CRM. SAP IPC is a toolset of pricingfunctions that can be configured and enhanced for use in thetax calculation process.
It is important to note in this context that SAP does not pro-vide any content for SAP IPC nor maintain any calculationrules, but rather provides a tool that the tax agency can use to define its own tax calculation rules.
Next, SAP IPC sends the calculation results back to the serviceorder. If the government agency has an Internet tax returnform, the citizen can now call up SAP IPC to check any calcu-lation errors that may have occurred. An interactive tax formcould be part of the services the tax agency provides.
The service order within mySAP CRM sends the billing andposting information to the SAP® Billing Engine. This is a high-performance billing tool that sends an invoice to the taxpayerand posts the amount due in the taxpayer’s account in SAPCollection and Disbursement. SAP Tax and Revenue Manage-
ment handles all payments and collections as well as relatedprocesses such as interest, dunning, or account maintenance.Online payment becomes simple for taxpayers using SAP BillerDirect in mySAP Enterprise Portal.
Postings made by SAP Collection and Disbursement regularlyupdate the G/L account. Further revenue accounting is donein SAP FI and SAP Funds Management.
REVENUE MANAGEMENT
Revenues in the public sector need to be managed on a dailybasis. Payments made to the government, dunning procedures,and deferrals are examples of such revenue processes.
PaymentsPayments triggered by a government agency can be processedautomatically using the payment program and executed byvery different payment methods (for example, electronic trans-fers, debit memos, or checks).
Incoming payments such as transfers from citizens are inter-preted by the system using unique criteria and assigned usingflexible clearing control. Payment receipts that cannot beassigned are forwarded to manual post-processing in the clari-fication worklist, with each processor accessing a personal pro-cessing list. Individual post-processing can lead to complete orpartial clearing, to a repayment of an amount, or to resubmis-sion at a later date – with or without the approval of anotheremployee. This can be individually defined using SAP BusinessWorkflow.
In addition to the clarification worklist, you can use SAP Collec-tion and Disbursement to manually process credits. Creditscan be cleared by means of an individual decision (with orwithout approval) whether it is by clearing, transfer, keepingfunds in the account, and so on.
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CASH JOURNAL AND CASH DESK
The cash journal used by SAP Collection and Disbursementhas functions that enable you to manually settle paymenttransactions. This functionality has been specifically designedto fit public sector requirements, roles, and authorizations, aswell as day-end closing procedures.
The cash journal reflects the cash desk structure of an organi-zation and its individual agencies. Using the cash journal, postings at the cash desks can be logged and evaluated. Thisdouble-entry compact journal is managed in account formand records the postings for all cash transactions.
The cash journal shows the cash balance at any time by addingthe cash receipts and deducting the cash expenses. The cashjournal also serves as a basis for entries in the general ledgerand thereby represents the “Cash” G/L account.
DUNNING AND COLLECTION PROCEDURES
The dunning program can incorporate various dunning pro-cedures simultaneously. The dunning procedure to be used isdetermined by the contract account or the open line item.
For each dunning procedure, you can specify different rules forthe minimum amount of the receivable due, the number ofgrace days, or calculation of interest and dunning charges/dun-ning amount. You can exclude certain items or entire contractaccounts by using the time-dependent dunning block indica-tor.
The dunning program also determines which activities arelinked to a dunning level: for example, a dunning notice, anoutgoing payment block, the deactivation of an installmentplan, or notification to the call center to call the taxpayer whois in arrears. Lastly, the unpaid receivable can be transferred toa collection agency.
DEFERRAL, REMISSION, AND TEMPORARY WAIVER
In the case of financial difficulties, an agency can refrain fromimmediate enforced collection of the receivable and eitherdefer, remit, or temporarily waive the receivable instead.
SAP Collection and Disbursement supports remissions andlimited and unlimited waivers using a clarification worklist,in which you monitor write-offs and initiate further steps ifrequired. Individual or grouped receivables can be bundled inan installment plan when a deferral is granted. If necessary,interest and fees are also calculated, the installments agreedupon, and the appropriate letter is printed.
REVENUE DISTRIBUTION
Revenues often do not remain with the authorities, but areforwarded to other public or private institutions. SAP Collec-tion and Disbursement supports this distribution to other busi-ness partners through its mass processing functionality. Thisensures fast and time-dependent allocation and transfer of theamounts received to other institutions.
Taxpayer’s Obligation to Submit DeclarationThe SAP Collection and Disbursement component of SAP Tax and Revenue Management not only manages payment-relevant processes, but also supports tax management for thehandling of tardy declarers. The system saves the taxpayer’scommitment to submit certain tax returns, requests, or otherdocuments in regular intervals. This commitment is first fedinto the system automatically on a particular schedule (month-ly, yearly, and so on), and given a due date, as for an open item.
If the documents are not received within the specified timelimit, the system reminds the taxpayer of his commitment bysending a dunning letter or e-mail. A comprehensive functionis available for monitoring outstanding payments, as with theregular dunning procedure in FI. The business rules for dun-ning inbound correspondence are stored in the contract object.
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Managing Information on TaxpayersEffective financial management requires that measures betaken in accordance with an individual’s circumstances. Becauseof this, when dunning activities or payment deferrals are car-ried out, the system also takes the history of the taxpayer intoaccount.
Automatic mass processing of taxpayers must allow for thesedifferences. Government agency employees must be able to geta fast overview of a business partner – in this case, the taxpayer.
For this reason, all essential information on the relationshipwith the taxpayer is stored in the system: payment history,dunning history, correspondence history, adherence to dead-lines for tax returns (inbound correspondence history), andcontact history. A poor payment history is automaticallyreflected in the taxpayer’s creditworthiness.
INTEGRATION WITH ACCOUNTING AND BUSINESS
SUPPORT APPICATIONS
As a fully integrated solution, SAP Tax and Revenue Manage-ment represents the link between the feeder systems and thesupporting applications in which analyses and reports are created, such as SAP BW, SAP FI, SAP CO, SAP Funds Manage-ment, and cash management in SAP R/3 Enterprise are all supplied with data from SAP Collection and Disbursementthrough a central interface, reflecting the necessary level ofaggregation. This ensures reconciliation between accountingdocuments from SAP Collection and Disbursement and G/Laccounting documents in finances.
In the context of revenue management, government agenciescan also implement SAP Funds Management within mySAPPublic Sector in order to depict integrated budgeting processesand optimized revenue and expenditure management.
Online Citizen Account and E-Government SolutionsA government agency can set up an online citizen accountusing SAP Biller Direct, which is fully integrated with SAPCollection and Disbursement. Taxpayers access the accountand can view all receivables and credits. They can then decidewhether to pay them all or only some, and choose their pre-ferred payment method. It is also possible to clear items in fullor partially.
SAP Biller Direct has a complaints management facility so thatcitizens can get in touch with their local government agencyand refer directly to a particular line item. The taxpayer’s com-ments on the receivables are stored in a contact history relatedto the business partner and specific to the line item in question.The government agency can then evaluate and process the lineitem together with the citizen’s comments.
The SAP Biller Direct billing engine has the following features:
• Full Web access
• Display of all items on the citizen account (open, paid, payment arranged)
• Initiation of payments (via credit card, direct debit)
• Recall of payments if required
• Payment authorization (via interface, with amount)
• Electronic bill presentment
• Contact log integration (complaints or inquiries)
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PERFORMANCE AND BENEFITS
The back-end SAP Collection and Disbursement component,which is linked into SAP Tax and Revenue Management, en-ables you to process large amounts of data in a short period oftime. The parallel processing of batch processes ensures rapidand high-volume throughput. In a high-end performance testcarried out by SAP and Hewlett-Packard in the SAP R/3 System,the following results were achieved (documents per hour):
• Transfer of posting data: 14,300,000 (20 requests, 320 jobs)
• Posting run: 3,600,000 (7 requests, 112 jobs)
• Correspondence: 8,900,000 (6 requests, 96 jobs)
The structural advantages of a client/server system – especiallythe high scalability – apply in full.
SAP Tax and Revenue Management offers the following bene-fits for public authorities and their clients:
• Complete view of the constituent or citizen and his or heraccount
• One logical master data framework with selective views,defined according to the individual needs of the respectivepublic services agency
• Shorter response time to inquiries – Citizens and companiescan easily obtain quick, ad hoc information on their accountstatus, including all open debts, filing obligations and dead-lines, as well as due claims against the public authority.
• Improved contact rate in the call center – Inquiries can be routed and processed more quickly.
• Improved technical performance
• Decrease in outstanding receivables
• Faster detection of non-compliers and non-filers
• Efficient use of resources in audits and investigations
• Enhanced revenue accounting
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In this chapter, you will find assorted information linking theSAP Financial Accounting (SAP FI) component of mySAP Pub-lic Sector to many other areas of SAP R/3 Enterprise. WithinSAP FI, there is information on assets and internal controlling.Within SAP Logistics, you will find information on procure-ment and plant maintenance. There are descriptions of thefunctionality in SAP HR and in SAP® Position Budgeting andControl, which is new to SAP R/3 Enterprise. Lastly, there isinformation on SAP Records Management and SAP BusinessWorkflow.
SAP ASSET ACCOUNTING (SAP AA)
Traditional asset accounting encompasses the entire lifetime ofan asset, from the purchase order or initial acquisition (possiblymanaged as an asset under construction, or a leased asset) upto its retirement. The system calculates – largely automatically –the values for depreciation, interest, and insurance (and so on)of an asset. This information is grouped in reports: For exam-ple, you can define a report for depreciation forecasting or forthe simulation of asset value development.
INTEGRATION ASPECTS
Figure 45: Integration of SAP Funds Management with SAP Asset Accounting
FINANCIAL STATEMENT
BUDGET
COST PLANNING
ACTUAL COSTSOVERHEAD ALLOCATION
SIMULATION AND CONTROLLING
INVENTORY
WAREHOUSE
PURCHASING
VENDORS
INVOICE VERIFICATION
MAINTENANCE WORK ORDERS
CAPITAL INVESTMENT
ASSET ACCOUNTING
• MATERIAL• COMPLEX FIXED ASSETS• FOREIGN CURRENCIES• AMOUNTS AND VALUES• SIMULATION
• DEPRECIATION• INTEREST• PROPERTY VALUE• INSURABLE VALUE• SUBSIDIES
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However, demands on asset accounting in the public sector arechanging. In addition to the traditional emphasis on inventoryaccounting for assets, in the public sector there is a growingneed for the continuous management of monetary asset values,as practiced mainly in the private sector, using accrual-basedaccounting.
SAP Asset Accounting provides a comprehensive solution thatmeets both of these requirements. Furthermore, it is fully inte-grated with SAP Funds Management, SAP Financial Account-ing, and other SAP R/3 Enterprise components. The assets sub-ledger serves as a subsidiary ledger to the SAP FI general ledger,providing detailed information on transactions involving fixedassets.
Public administrations are asking to be able to create financialstatements and P/L statements, a requirement fulfilled by SAPR/3 Enterprise. This enables U.S. government agencies, forexample, to carry out accounting according to U.S. GAAP orGASB 34 regulations. For this, you need to be able to groupyour fixed assets according to funds or fund groups.
Using the functional area, fixed assets can be grouped accord-ing to functional aspects of an organization. If you are usingSAP Grants Management, assets can also be grouped accordingto grants.
Asset ClassesFixed assets are classified according to asset classes, which aredefined according to legal and management requirements. Foreach asset class, you can define control parameters and defaultvalues for depreciation calculation and other master data. Hereis one possible way to group your assets:
• Financial assets
• Assets under construction
• Technical assets
• Leased assets
• Low-value assets
You can specify central default values for each asset, such asclassification criteria, depreciation keys and useful life, data onthe valuation of net assets, insurance-related data, and so on. Ifa physical inventory is taken of fixed assets, default informationfrom the asset class is used. Even if an asset portfolio is exten-sive and complex, it can still be structured and classified in aclear and appropriate way. This facilitates asset-specific report-ing and tracking.
You can also define individual validation and replacementrules for asset classes. These rules form the basis of checks onthe data entered during master data maintenance or posting.In the integrated system, these functions enable buyers oraccounts payable processors to create new asset master recordswhen they need them, rather than having to wait for confir-mation from asset accounting.
Flexible Valuation and DepreciationDifferent requirements for different kinds of asset valuation arereflected in the chart of depreciation, in the form of deprecia-tion areas. For example, you can define depreciation areas forthe valuations required by controlling and financial account-ing.
All commonly used methods for calculating depreciation values are supported. The system calculates and posts depreci-ation for the individual depreciation areas as required. Cost-accounting depreciation, for example, can be posted directly toSAP CO and depreciation items relevant to financial account-ing can be posted directly to SAP FI.
Depreciation is not usually posted to SAP Funds Management.Within the context of accrual accounting, however, this maybe required, and can be set up using the asset customizingfunctionality of SAP R/3 Enterprise.
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Asset ClassificationUsing asset classes, you can classify your asset portfolio in abasic manner. If a more complicated vertical classification ofcomplex or hierarchical assets is required, asset groups, assetsuper numbers, as well as main asset numbers and subnumbersare used.
An asset group refers to a grouping of several fixed assets thatbelong together, typically based on their function. An assetgroup can have its own master record. In reports, you can dis-play the fixed assets that belong to the asset group.
While asset verification is primarily carried out for the mainasset number, the super number represents the grouping ofassets including both asset main numbers and subnumbers,whereas the asset subnumber is used to represent special inter-changeable components or subsequent additions to the asset.You must use subnumbers if you want to record data for multi-funded or multifunctional assets. You create an asset group in order to combine multiple assets for a single depreciationcalculation. The main asset number is used in reporting tosummarize data for any number of assets.
Asset AcquisitionsRegardless of the process used for procurement of assets, theintegrated SAP Asset Accounting component supports varioustransactions, including:
• Asset acquisition triggered by the creation of a purchaseorder in purchasing, and followed by the receipt of the goodsand invoice
• Asset acquisition without a purchase order, based on a vendor invoice
By customizing asset transaction types, you can define themovement of asset transaction data in SAP Funds Manage-ment. If your accounting procedures group assets according tofund, functional area, or grant, you can use these as accountassignment objects to manage your assets. To represent assetsthat are financed by several funds, you can use an asset sub-number to link to the corresponding fund for these assets.
For all asset postings such as acquisitions, transfers, depreci-ation, or retirements, the fund, functional area, or grant areautomatically posted to and updated in SAP Controlling, SAPFinancial Accounting, and SAP Funds Management. If you areusing SAP Grants Management and the grant is stored in theasset master record, all asset postings will automatically alsopost to the grant.
For asset clearing in SAP Controlling or SAP Project System,the fund, functional area, and grant form part of the postingdata.
SimulationYou can simulate various scenarios for asset transactions. Forexample, you can change the depreciation method or the use-ful life of an asset, and then analyze the different values thatthe system calculates. Once you have found the most favorablescenario, you can use it as your final version.
In the following areas, you can use simulation functions tokeep track of your assets:
• User-defined replacement and validation rules simplify assetinventory taking and increase the reliability of posted data
• Comprehensive simulations can be generated from any assetinformation system report
• Flexible tools support the transfer of asset data from legacysystems to SAP R/3 Enterprise
• Tools for mass processing of data simplify the posting of masschanges and mass retirements
ReportingThe asset information system contains all the reports you needfor quantity- and value-based asset management, includingasset lists, inventory and insurance lists, reports for cost account-ing purposes, and other analyses and statistics.
When you customize your asset reports, you can categorizeyour assets according to fund, functional area, and grant.
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SAP CONTROLLING (SAP CO)
As public sector organizations face increasing budgetary pres-sure, they are also facing demands to deliver services and products at reduced cost. Many of these organizations are alsorequired to compete with private sector companies for deliveryof these services and products, as constituents demand moreprivatization in an effort to improve the services or productsand lower the amounts they are required to pay for them.
Whether private companies can deliver these services or prod-ucts as efficiently as the public sector is questionable; however,public sector organizations must gather the proper informa-tion necessary to defend against these privatization attempts.Accrual-based cost accounting delivers the necessary infor-mation that, if properly used, will result in the continuation of revenues and cash flows that would have otherwise disap-peared – and, with them, large portions of available budget!
Figure 46: SAP Controlling in SAP R/3 Enterprise
HUMAN RESOURCES
PERSONNEL COSTS
ASSET ACCOUNTING
IMPUTED COSTSIMPUTED INTEREST
MATERIALS MANAGEMENT
COSTS FROMEXTERNAL PURCHASE
FINANCIAL ACCOUNTING
OTHER PRIMARYCOSTS AND REVENUES
EXTERNAL SYSTEMSIMPORT VIA DATA AND/OR
COMMUNICATIONINTERFACES
COST ELEMENTACCOUNTING
COST CENTERACCOUNTING
COST CENTERACCOUNTING
ACTIVITY- BASED COSTING (ABC)
PROCESSES
OVERHEAD COSTORDERS
PRODUCT COSTING
PRODUCTSORDERS
COST OBJECTS
PROJECT SYSTEM
PROJECTS
COST ELEMENTSCOST CENTERSACTIVITY TYPES
ASSESSMENTDIRECT ACTIVITY ALLOCATIONIMPUTED COST CALCULATION
COST ELEMENTACCOUNTING
REVENUEELEMENTS
PROFITABILITY ANALYSIS
PROFITABILITY SEGMENTS
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In addition, efficient cost accounting and controlling featuresare necessary for public sector organizations to understand theactual costs of their services or products, recognize underuti-lized resources, identify inefficient activities, and take immedi-ate advantage of opportunities for true cost savings. These costsavings will translate into increased available resources that will allow organizations to “do more with less” in the future.
The SAP Controlling (SAP CO) component within SAP R/3Enterprise solution enables a government organization tomonitor, coordinate, and improve all business transactionswithin and outside of the organization. The cost and activityaccounting methods provided in SAP R/3 Enterprise are com-prehensive, using key figures, reporting tools, planning andbudgeting functions, and other agency-specific activities. Inaddition, true cost and activity accounting methods are used,which are the prerequisite for accrual accounting. These methods are the first step toward establishing performancemeasurement and activity-based management systems.
Accurate and relevant cost accounting information is invalu-able to managers within public sector organizations, allowingthe best possible business decisions to be made, while simul-taneously estimating costs more efficiently and controllingexpenses.
Integration Within SAP R/3 EnterpriseRegardless of whether you use budgetary accounting or finan-cial accounting methods, the controlling and accountingapplications in SAP R/3 Enterprise are integrated and recon-cilable (see the chapter entitled SAP Fund Accounting for relevant integration points).
Cost and activity accounting consists of a number of differentapplications that help you answer different types of questionsfor the public sector. These are cost and revenue elementaccounting, cost center accounting, overhead order and prod-uct cost controlling, cost object controlling, and SAP Project
System. Furthermore, SAP R/3 Enterprise contains activity-based costing and profitability analysis. All of these accountingtypes are discussed in detail below.
COST AND REVENUE ELEMENT ACCOUNTING
Cost and revenue element accounting collects an organization’scosts and revenues for controlling and cost accounting pur-poses. Most values are transferred automatically from SAP FI.Costs that do not have a corresponding expense posting in SAP FI are calculated and posted directly in cost and revenueelement accounting.
The reports in cost and revenue element accounting providean overview of costs that have been incurred and revenues thathave been generated by an organization. These actual valuescan be compared with numerous planned amounts and recon-ciled with the postings made in SAP FI.
Cost and revenue element accounting organizes revenues andcosts according to nominal income and expense codes, whileother controlling components identify the relevant activitiesand areas of responsibility. Overview reports allow drill-downaccess to other components of cost and activity accounting.
COST CENTER ACCOUNTING
Due to the structure of services in public institutions, it is notalways possible to assign revenue and costs directly to individ-ual products or services. As a result, cost center accounting isused to assign revenues (such as fees and charges for services)and costs (such as office supplies, rent, utilities, personnel, andso on) to the relevant cost center as they are incurred, andthen perform various evaluations on the organizational unitsof these cost centers. The costs can then be distributed over therelevant products or activities using a number of different allo-cation methods. These methods range from allocations madeusing general allocation criteria, up to detailed activity allo-cations that allow costs to be assigned to the correspondingproducts or services with great accuracy.
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Cost center accounting records monetary values and statisticalquantities, allowing you to analyze the actual costs by cost cen-ter, together with the related activities. This is important forensuring the efficiency of individual organizational units. Forexample, sound decision support may require the personnelcosts of a cost center to also be attributed to the number ofhours worked by employees.
OVERHEAD ORDER AND PRODUCT COST CONTROLLING
The overhead orders and product costing components of SAPControlling allow you to plan, calculate, and control costs forall activities and products or services of an organization. Youcan use them separately or together.
The overhead orders component uses SAP CO orders as costcollectors. These orders allow you to plan, enter, and controlcosts for both one-time jobs and ongoing activities, regardlessof whether these are performed for other internal cost centersor for external parties. An example of a one-time job might bethe creation of a land development plan. An ongoing activitymight be the issuing of passports or vehicle licenses. You canset cost budgets for individual jobs or ongoing activities, whichcan be automatically monitored and notifications providedwhen these budgets are exceeded.
COST OBJECT CONTROLLING
You can also use the product cost controlling component tocalculate product costs. The cost collector here is referred to asa “cost object.” A cost object differs from an overhead order inthat it is more closely integrated with the logistics functions ofmySAP Supply Chain Management. In cost object controlling,you can determine the costs of tangible or intangible productsor activities.
SAP PROJECT SYSTEM
To monitor more complex, one-time projects, you can use theSAP Project System (SAP PS) together with SAP Controlling(SAP CO). Included with SAP PS are project management
functions that allow you to control deadlines, costs, andresources of your projects. Project planning can also beintegrated with the other SAP Controlling components.
The elements of a project are organized into a hierarchicalstructure using a work breakdown structure (WBS) or WBS elements. This can be supplemented with more detailedoperational activities, also referred to as “networks.” TheProject System is fully integrated with the other SAP Con-trolling functions, since the individual elements of a WBS element and individual network operations represent cost collectors in SAP Controlling.
You can assign costs and statistical quantities to projects usingactivity allocations or other methods. Costs can be allocated to one or several WBS elements. Capital investment projectscan also be periodically capitalized and recorded in SAP AssetsAccounting through project settlement functions. Noncapitalcosts can be transferred to other cost collectors or directly toSAP Financial Accounting.
ACTIVITY-BASED COSTING
Activity-based costing represents another important controllingapproach for public organizations, and is particularly recom-mended for organizations that perform primarily administrativetasks and internal services between departments. In activity-based costing, business transactions are analyzed in the form of cross-departmental processes and optimized with regard totime, cost, and output. This view of public sector activitiesfocuses on the overall optimization of the business transactions,instead of viewing the activities performed within individualcost centers.
In activity-based costing, you define the relevant business pro-cesses for your organization. You can plan and calculate costsand quantities, as well as develop scenarios for improving pro-cesses using special analysis functions.
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PROFITABILITY ANALYSIS
Profitability analysis is an important efficiency-optimizing step for those areas within public organizations that generaterevenues for their products and services. The SAP CO compo-nent enables you to analyze revenues according to user-defin-able segments of an organization’s activities and supports thetargeted analysis of different areas for their contribution toprofitability. The analysis functions in profitability analysis provide critical support for decisions regarding price determi-nation and outsourcing.
Integration with mySAP Public SectorCost and activity accounting components are integrated withother application components of the mySAP Public Sectorsolution. Integration provides for a single point of entry for all information, with automatic recording in the other compo-nents.
The data relevant for cost and activity accounting is transferredfrom the other application components to the SAP Controllingcomponent. Postings you make in SAP Financial Accounting(SAP FI) or in SAP Materials Management (SAP MM) are up-dated in real time in the relevant SAP Controlling components,allowing immediate access to this information for cost and ac-tivity accounting analyses. Master data and related assignmentsare also checked for validity and consistency (see the chaptersentitled SAP Funds Management and Fund Accounting for addi-tional information on mySAP Public Sector data integration).
This tight integration minimizes the time necessary to postboth actual and planning data. As an example, master dataintegration allows seamless transfer of planned costs fromcost center accounting to SAP Funds Management.
You can also transfer data from external systems to SAP Con-trolling – either in real time, asynchronously, or periodically.Figure 46 shows the components that work together with SAPControlling, along with the possible data flows within andbetween these components.
Cost Accounting MethodsAll prevalent cost accounting methods are supported in themySAP Public Sector solution. The following is an overview of key methods supported:
• Actual cost system, standard costingThe simplest cost accounting method is the entry and allo-cation of costs compared to standards. In standard costing,allocated quantities (such as hours of work for an adminis-trative task) may be valuated using planned activity prices,which will allow you to analyze variances.
• Absorption costing, direct costingThis cost accounting view emphasizes the difference betweenabsorption costing and direct costing. Under this method,costs are allocated according to their relation to specificactivities. All costs may then be divided into fixed and vari-able (activity-dependent) components. In absorption costing,all of the costs are allocated to products or activities, whiledirect costing allocates only the variable costs.
• Contribution margin accountingIn contribution margin accounting, you avoid distributingoverhead costs but, instead, leave the costs assigned to theoriginal cost collectors.
• Cost assessmentCost assessment is a method of allocating all planned andactual costs without splitting them into fixed and variablecomponents. Overhead is allocated to cost collectors andproducts using various allocation techniques.
• Overhead costingOverhead costing is similar to the cost assessment method.Costs are not split into fixed and variable components but,instead, are allocated based on calculated rates. As an exam-ple, the personnel costs for administrative activities would becalculated based on planned hourly rates in cost center plan-ning. The residual overhead would then be passed on to theorders, projects, and cost objects using these calculated rates.
• Static standard costingIn contrast to the cost assessment and overhead costingmethods, static standard costing divides the cost centerstructure into activity types and uses activity allocations.Costs, however, are not divided into fixed and variable com-ponents.
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Other cost accounting methods include marginal costing and more complex methods of activity-based costing. You can implement and use in parallel any of these methods.
INTERACTIVE PLANNING IN SAP CO
SAP Controlling provides you with extensive interactive plan-ning functions. You can create different versions to store various scenarios and planning assumptions. You can also copy and reevaluate these versions.
Planning may be carried out by individual cost center, project,or product managers, or may be performed centrally by a con-trolling agency. Numerous automatic functions are available to accelerate the planning process.
SAP CO ReportingmySAP Public Sector contains powerful information systemsfor creating controlling reports. Threshold values allow effi-cient targeting of your analyses. You can navigate interactively,access additional reports to obtain detailed information onindividual values in an overview report, and display individualdocuments that created each line item.
Standard reports fulfill the most common analysis require-ments. You can adapt these easily to meet the specific require-ments of your organization without any programming knowl-edge. When you define the reports, you can immediately seethe final list format to be displayed.
CLASSICAL AND ELECTRONIC PROCUREMENT (SAP MM)
The SAP Materials Management (SAP MM) procurementprocess refers to one of the most important logistics processesfor governmental bodies. Depending on the administrativearea in question, the outsourcing of activities is one of themost important tasks of the public sector. Within the contextof public procurement, there are special requirements withrespect to the process and monitoring of procurement thatneed to be fulfilled.
SAP Materials Management is a fully integrated component of mySAP Business Suite. It supports all the phases of materialsmanagement: material requirements planning (MRP), pur-chasing, goods receipts, inventory management, and invoiceverification.
Procurement ProcessThe typical procurement cycle comprises the following phases:1. Determination of demand
The materials and services in the demand (requirements)pipeline come either from the individual departments of anorganization or within the course of centralized materialrequirements planning. Besides manual input of requisitionsby a department employee, materials management alsoautomatically identifies materials to be procured based oninventory reorder levels. In the case of more complexpurchasing projects, you can also use a bill of service.
2. SourcingIn many cases, procurement for the public sector requiresthat an invitation for bids be published, in order to obtainprocurement sources. After a bid has been accepted, you canuse the purchasing functionality of mySAP SRM to find pos-sible sources on the basis of the agreements or contractsmade.
3. Purchase order handlingThe purchasing system takes over the information from thepurchase requisition or contract, which simplifies data entrywhen the order is placed. Scheduling agreements and con-tracts are also supported. Customizable PO release proce-dures enable a government agency to realistically map itsapproval procedures.
4. Purchase order monitoringThe system checks the resubmission times specified by thegovernment agency and then automatically prints outreminder letters. You can see the current status of all yourrequisitions, offers, and orders.
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5. Goods receipt and inventory managementThe shipment and goods receipt personnel can confirm thereceipt of goods by entering the order number. If over orunderdelivery tolerance values have been defined in Cus-tomizing, the purchasing personnel in an agency can limitover or under delivery. Services rendered are recorded on aservices entry sheet. In this case, the data entered is monitoredby an internal release process.
6. Invoice verificationAt the end of the logistics chain of purchasing, inventorycontrol, and invoice verification, the incoming invoice ischecked for correctness of product, price calculation, andapproval procedure. When the invoice is posted, the invoicedata is saved in the system. The data in the system is furtherupdated with the posting documents in SAP MM and SAP FI.
Integration with FinancialsBesides being integrated with the other logistics components of mySAP Business Suite, such as SAP Plant Maintenance, SAPProject System, or SAP Sales and Distribution, from which pur-chasing processes can be triggered, SAP Materials Management(SAP MM) is also directly linked with all SAP accounting func-tions. Besides SAP Controlling (SAP CO) and SAP FinancialAccounting (SAP FI), the integration of SAP MM with SAPFunds Management (SAP FM) is particularly important withrespect to the execution of public budgets.
During the entire purchasing process, commitment and actualpostings are updated in SAP Funds Management. The accountassignment information can be manually input or derived auto-matically by the system. In active availability control, you canensure that expenditures do not exceed the stipulated budget.
Updating and availability control can be carried out for the following activities:
• Purchasing: purchase requisitions, orders, scheduling agree-ments
• Inventory management: goods receipt, goods issue, transferpostings
• Invoice verification
Electronic Procurement with mySAP SRMUsing mySAP Supplier Relationship Management (mySAPSRM), you can carry out the entire procurement process formaterial and services via a user-friendly, browser-based inter-face. If your organization is distributed, you can use the Inter-net or an organizational intranet for procurement.
mySAP SRM is SAP’s follow-on product to Enterprise Buyerprofessional edition (EBP). You can use mySAP SRM in a dis-tributed system landscape. You can link up SAP R/3 systems,SAP® R/2® systems, or other ERP systems.
Various scenarios are available for the integrated use of mySAPSRM with an SAP R/3 Enterprise or other ERP system. Theactual procurement process, for example, can be carried out inSAP R/3 Enterprise, while users access the Web-based interface
Figure 47: Relationship Between Purchasing and Budgeting Documents
PURCHASE ORDER FUNDSCOMMITMENT
PURCHASEREQUISITION
FUNDSPRECOMMITMENT
FUNDSRESERVATION
references
ACTUAL POSTING(INVOICE)
MATERIALSMANAGE-
MENT
FUNDSMANAGE-
MENT
Seen from the perspective of SAP Funds Management, pur-chasing documents represent a type of expenditure document,as the following figure shows:
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of mySAP SRM. Here the user can select materials to be ordered,order services from the catalog, and use an electronic shoppingcart. Figure 48 shows this “classic scenario.”
SAP SALES AND DISTRIBUTION (SAP SD)
As an alternative to the SAP FM functionality for expected revenues (See the Receivables section of the chapter entitled,SAP Funds Management), you can also use the SAP Sales andDistribution component to post revenue-related documents.
The integration between the SAP Sales and Distribution (SAP SD) and SAP Funds Management (SAP FM) componentsenables you to assign SAP FM account assignments to the busi-ness transactions in SAP SD, such as sales orders and sales contracts, and update a funds management document withthe value type forecast of revenues. This means that you canassign revenues that were posted in SAP SD to the SAP FMaccount assignments (commitment item, funds center, andfund).
Figure 48: Procurement Using mySAP Supplier Relationship Management
CREATESHOPPING CART
CREATE GOODSRECEIPT
CREATE INVOICE
mySAP SUPPLIERRELATIONSHIP MANAGEMENT(mySAP SRM) PURCHASE
ACCOUNTING INFORMATION
INVENTORY INFORMATION
ACCOUNTS PAYABLE
ACCOUNTING (FI/CO)
CHECK FUNDS
FUNDS MANAGEMENT
CHECK AND UPDATE FM
Classic Scenario
CREATE PURCHASE REQUISITION
CREATE PURCHASE ORDER
CREATE GOODSRECEIPT
CREATE INVOICE
BACK-END SYSTEM
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You can also have SAP FM account assignments to procure-ment transactions that are triggered by a sales order, as well asgoods issue postings arising in conjunction with the delivery of materials.
When you process a sales order, you assign the SAP FMaccount, and can enter it individually for each order item.When you enter an order item, the system will derive the SAPFM account assignment from the account assignment table inCustomizing. If account assignments from SAP FM to SAP CO(profit center, WBS element) have been maintained, and anorder item has been assigned to a profit center or WBSelement, the SAP FM account assignment appears as thedefault value in the sales order and can be overwritten.
In the follow-on documents for the sales order, the purchaserequisition, goods issue, and billing document, the SAP FMaccount assignment is not ready for input, since it is automa-tically derived from the sales order.
As of SAP R/3 Release 4.0A, the following processes of SAP SDare integrated with SAP Funds Management:
• Sales order (credit and debit memo requests) –> Billing
• Sales order –> Delivery/Goods issue –> Billing
As of SAP R/3 Enterprise, you can update the commitmentvalue of the SAP SD order in SAP Funds Management. Thegeneration of purchase requisitions (third-party business trans-actions) in a sales order is also supported as of SAP R/3 Enter-prise.
Figure 49: Integration of SAP Funds Management with SAP SD
ITEM 10 –> FM ACCOUNT ASSIGNMENT
ITEM 20 –> FM ACCOUNT ASSIGNMENT
ITEM 30 –> FM ACCOUNT ASSIGNMENT
FUNDS CENTER A2
COMMITMENT ITEM 221
FUND A
FUNDS CENTER A1
COMMITMENT ITEM 321
FUND B
SALES ORDER 4711
SD BILLING DOCUMENT FI INVOICE
MM GOODS ISSUE
SD DELIVERY
FM Account Assignment:• Transfer from SD order
FM Account Assignment:• Automatic proposal• Manual entry
FM Account Assignment:• Transfer from SD order• Automatic redetermination
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SAP PLANT MAINTENANCE (SAP PM)
In most cases, public sector organizations are responsible forthe complex management of a significant number of verydiverse public resources, including physical infrastructure (forexample, streets, highways, bridges, railways, tunnels, parks,pipelines, cabling, and so on), buildings, facilities, vehicles, andequipment. The SAP Plant Maintenance functionality of SAPR/3 Enterprise covers all maintenance requirements of publicsector organizations.
Proper preventative maintenance is a key component for man-agement of these resources, ensuring that these public resourcesare always in optimum condition to provide the highest quality
and level of service to constituents and within the organizationwhile, at the same time, meeting the increasing number ofstrict environmental and various other legal stipulations affect-ing the planning, processing, and verification of these mainte-nance tasks.
In order to ensure that the highest quality of service is pro-vided by the internal and external maintenance areas of yourorganization, the mySAP Public Sector solution provides com-prehensive, integrated maintenance features.
Scope of ActivitiesSAP Plant Maintenance is a high-performance component thatsupports you when carrying out all maintenance tasks such as:
• Detailed representation and management of assets to bemaintained
• Detailed planning and processing of maintenance tasks (for example, inspection, preventive maintenance, and repair)
• Construction and modification of plants
• Capacity scheduling and resource planning
• Cost planning and determination
• Recording of complete task-based, functional, and asset-oriented history
• Recording of financial results
Integration Within SAP R/3 EnterpriseThe SAP Plant Maintenance application component is an inte-gral part of the mySAP Public Sector solution, with direct links to SAP Materials Management (SAP MM), SAP FinancialAccounting (SAP FI), and SAP Human Resources (SAP HR).The continuous exchange of information with other mySAPBusiness Suite components ensures an online, integratedworking environment. In addition, integrated workflow man-agement contributes considerably to the optimization of yourorganizational activities.
Figure 50: Integrated Activities in SAP Plant Maintenance
HISTORY
DOWNTIMES DAMAGE LIST COSTS TASKS
OBJECTS
CONFIRMATIONS
RESOURCES
MATERIAL INTERNALSERVICE
EXTERNALSERVICE
PM WORK ORDERS
DIRECT ORDER CREATION PLANNING REQUIREMENTS/
NOTIFICATIONS
MASTER DATA
ORGANIZATION
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Integration with the SAP Funds Management features of themySAP Public Sector solution specifically supports:
• Planning, budgeting, and monitoring of complex mainte-nance operations in connection with the various functionsof the SAP Project System
• Direct verification of available budget funds, if external procurement of materials or services is necessary for the execution of maintenance tasks
• Cross-charging the cost centers concerned with services performed internally or with materials consumed from thewarehouse
• Monitoring not only the internal costs of budgeted mainte-nance work (internal control), but also the external expenses(budgetary control). In Customizing, you define rules for theaccount assignment and settlement of maintenance orders.
The SAP Plant Maintenance solution provides an open envi-ronment, linking maintenance procedures to other areas ofSAP R/3 Enterprise, as well as with external solutions such ascomputer-aided design (CAD), plant data collection (PDC), or geographical information systems (GIS). This allows you toestablish a very sophisticated asset management environment,ensuring constant and consistent monitoring of your organi-zation’s critical operational resources.
SAP HUMAN RESOURCES (SAP HR)
Employee competence and productivity play a decisive role inthe quality and efficiency of public administration. In view ofheavy public sector spending on personnel, the managementof positions and lean administrative processes has become thefocal point of operative budgeting, and is shaping discussionson the necessity for further rationalization measures.
The integrated SAP Human Resources (SAP HR) package for mySAP Public Sector is a highly efficient solution that combines the established standard functions of the SAP R/3Enterprise HR application with processes developed especiallyfor the public sector. The system is highly integrated, withinterfaces to SAP Financial Accounting, SAP Funds Manage-ment, and SAP Controlling.
SAP Human Resources for mySAP Public Sector offers a com-plete solution for all areas of the public sector – from federaland regional governments, municipal authorities and publicworks, through universities, nonprofit organizations and foun-dations, to broadcasting companies and research institutions.This will help you streamline all your strategic activities, allow-ing you to simulate and analyze everything from organization-al structures to compensation packages, in order to make themost effective use of your organization’s talent and resources.
By handling all of the basic HR processes for workforce man-agement, the solution streamlines payroll activities, supportsregulatory and labor requirements, and creates effective man-agement strategies for the entire organization.
State-of-the-art technology such as workflow management,Internet and intranet functions, integrated desktop systems,graphics tools, and optical archiving expands the possible ways
Figure 51: SAP HR Solution for Public Sector
CORE FUNCTIONSADMINISTRATION, PAYROLL,TIME MANAGEMENT, LEGAL
REPORTING, ETC.
STRATEGICRECRUITMENT, TOTAL REWARD, LEARNING AND DEVELOPMENT
ANALYTICS STRATEGIC ALIGNMENT, WORKFORCEANALYSIS, BENCHMARKING, ETC.
HR PUBLIC SECTOR HR PUBLIC SECTOR LOCALIZATION
ENABLEMENT KNOWLEDGE MANAGEMENT, PORTALS, MOBILE COMPUTING, ETC.
R/3 ENTERPRISE – HR COLLABORATIVE BASIS
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of managing the SAP HR application. Key processes in SAP HRfor the public sector include the following:
• High-performance payroll accounting, to calculatewages, salaries, and pensions of public officials, civil servants,public employees, and workers for many countries. The solu-tion covers not only collective agreements of public sectoremployees, but also payroll and pension issues as well as sup-plementary benefits – such as seniority, sick pay, maternitybenefits, vacation allowances, and bonuses.
• Full integration with SAP Funds Management and SAP Controlling, which supports all administrative andaccounting functions to manage funds, as well as fully inte-grated functions for planning, monitoring, and controllingresources, costs, and personnel. For more information,please see the chapters entitled SAP Funds Managementand Fund Accounting.
• Planning and management of personnel budgets, link-ing individual processes – such as planning of personnelbudgets, funds approval, and management and continuousbudget control – within integrated process chains. Integratedavailability checks provide visibility into allocated funds andexpenditures, and notify managers of the need to take action.For more information please see the section below on SAP Position Budgeting and Control.
• Reporting functions enable you to compile statistics, forexample, on the part-time and full-time staff employed in a particular government office, or on different employeegroups.
SAP Payroll Country-specific payroll accounting takes statutory and ad-ministrative regulations of a country into account. SAP Payrollis a major component of the SAP HR solution for mySAPPublic Sector, and has been tailored to the needs of the publicsector. The requirements per country have been updated inSAP R/3 Enterprise for various public sector organizations.
International payroll accounting is fully integrated with thestandard SAP Funds Management component. It providesorganizations with the tools to efficiently complete day-to-day
payroll activities and supports country-specific as well asmySAP Public Sector solutions, in particular in the UnitedStates, Australia, Singapore, Germany, Great Britain, France,and Austria.
The SAP HR reporting features include a wide selection ofstandard and statutory reports, which you can easily access andexecute. They are integrated with popular desktop applications,such as Microsoft® Excel, enabling you to optimize the outputas required.
Country-Specific FeaturesFor many countries, the SAP HR for mySAP Public Sectorcomponent delivers country-specific functionality. The local-ization of SAP HR requirements for the public sector is part ofthe SAP R/3 Enterprise functionality. Check with your countryoffice to get more information on country-specific solutions,or see www.sap.com.
UNITED STATES
There is specific functionality in the areas of personnel man-agement (Nature of Action processing engine, Reduction inForce processing, Priority Placement Program, or functions tosupport the U.S. Federal recruitment process), time manage-ment (sick leave donation or sick leave pools), benefits admin-istration (U.S. 403B and U.S. 457 savings plans, savings plansunder IRC Section 414(h)(2) and U.S. Federal bonds), payroll(nonresident alien payroll, deferred pay, multiple hourly rates,and so on), and reporting (EEO4 & 5). The functionality forFamily and Medical Leave Act (FMLA) has been enhanced.
GREAT BRITAIN
You will find specific functionality in the payroll area: Theconcurrent employment solution allows customers to correct-ly pay employees that have more than one contract of employ-ment with their employer. These functions include NationalInsurance, income tax, statutory sick pay, statutory maternitypay, and court orders. Furthermore, there are solutions avail-able for employees in higher education and research, such asthe Higher Education Statistics Agency (HESA) data collectionsolution.
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GERMANY
For Germany, HR for mySAP Public Sector contains specificfunctionality for administration and payroll, which conformsto German laws, including: child allowance, special paymentssuch as Christmas and vacation bonus, deferred payments,supplementary pension fund, official housing, rehabilitationpay, pension payments, maternity leave, sick pay, and partialretirement.
AUSTRIA
There is specific functionality within payroll, for example,social insurance calculation, pension increments, advancedpayments, and higher duty allowance.
FRANCE
Some of the key functions within the French payroll are: seniority calculation, promotions, and flexible part-time workschemes.
AUSTRALIA
There are several country-specific HR functions within admin-istration, payroll, and time management, such as: higher dutyallowance, superannuation, termination workbench, andredundancy and leave processing.
SINGAPORE
Here there is specific functionality in the areas of payroll, leaveschemes, and administration, such as for pension and discipli-nary measures.
ConclusionA complete solution with fully integrated funds managementand controlling, SAP HR for mySAP Public Sector allowsadministrations to optimize the HR processes and interactionsthat support employees. By enhancing workforce managementperformance, SAP HR for mySAP Public Sector helps organi-zations discover new opportunities for cost savings, generateprocess efficiencies, and provide employee development thatkeeps top talent in place.
SAP HR for mySAP Public Sector also supports the reengineer-ing of internal processes, helping public administrations im-prove workflows and seamlessly link to applications such asSAP Funds Management, SAP Financial Accounting, SAP Con-trolling, and SAP HR recruitment.
SAP TRAVEL MANAGEMENT
SAP Travel Management is an integrated end-to-end solutionthat supports public sector institutions and organizations inoptimizing their business travel processes. Some of the servicesprovided include:
• Pre-trip approval handling with workflows to streamlineapproval processes
• Online booking with automatic policy checks to increasepolicy compliance
• Travel expenses management to achieve 100% control of consolidated travel expenditure
• Full integration with SAP’s financial, payroll, and fundsmanagement solutions
• Reporting on supplier volumes and incurred travel expenses
Numerous functions accompany every phase of SAP TravelManagement, from application and approval to accountingand posting of both domestic and foreign business trips. SAPTravel Management is fully integrated with SAP R/3 Enterprise,providing interfaces to SAP Funds Management, SAP Con-trolling, and SAP Human Resources.
SAP Travel Management provides the functions, forms, state-ments, and valuation tables necessary for the efficient manage-ment of business trips, including an electronic approval proce-dure.
SAP Travel Management can be used by employees in a self-service scenario, by team assistants and expense departmentadministrators, and by line managers with approval authoriza-tion. SAP R/3 Enterprise contains preconfigured role defini-tions, which include the respective authorizations and menuentries.
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SAP® Travel PlanningCosts incurred for employee travel – such as direct purchasingcosts, agency fees, and indirect processing costs – can be cutsignificantly by implementing a self-service scenario for onlinebooking of travel and transportation.
SAP Travel Planning is powered by online connections to majorcentral reservation systems, providing access to thousands ofairlines, hotel chains, and car rental companies. It enables anorganization to electronically enforce established travel policyguidelines and negotiated fares directly at the point of sale.Employees are independent of business hours, with 24/7 systemaccess, which means that they can skip renegotiating with anagent in case their travel plans change. Travel agents can con-centrate on value-adding services instead of just fulfillment.
Using this form of travel planning, organizations have a highercompliance with official policy as well as obtaining a clear over-view of their travel cost structure. A consolidated management
information system facilitates decision making regarding travelservice providers and changes in an organization’s travel policy.
Expense RecordingSAP Travel Management enables per-diem accounting ofaccommodation, meals, mileage, and accounting using indi-vidual receipts. You can classify the per-diem rates according to criteria such as trip purpose and vehicle class, and draw up different policy rules for expenses. You can also settle tripsbased on the legal regulations governing foreign and domesticbusiness trips in your country. To facilitate system maintenance,SAP offers downloads of the latest per-diem allowances andeasy import into the customer’s system.
Trip settlement rules are based on trip characteristics definedin Customizing – foreign or domestic trips, for example – andthe per-diem rate. Receipts can be broken down according toindividually adjusted maximum rates.
Figure 52: SAP Travel Management in SAP R/3 Enterprise
mySAP HR
• Employee data stored in mini mas-ter dataset (use of HR optional)
• Transfer of tax-relevant and tax-free amounts –> correct taxation in payroll
• Option: payment via HR• Integration with non-SAP systems
mySAP FINANCIALS
• Integration–> Financial accounting–> Controlling
• Option: Payment via Financials • Integration with non-SAP
systems possible
FUNDS MANAGEMENT
• Creation of commitment items–> funds control based on
commitment items, funds, funds centers…
DATA MEDIUM EXCHANGE
• Option: Payment of expenses via data medium exchange (DME)to bank
PRE-TRIP REQUEST & APPROVAL • Travel request including purpose, destinations,
estimated costs, travel & transportation services needed
• Connection to SAP Business Workflow for system-automated routing of approval
TRAVEL PLANNING – ONLINE BOOKING• Real-time availability and online booking of
air, hotel, car• Best fare checks• Auto-check on official travel policy throughout
entire application–> Consolidate and improve supplier nego-
tiations to cut direct purchasing costs• Personal traveler preferences• For self-service users, team assistants
and managers
TRAVEL EXPENSES MANAGEMENT• Per-diem based and receipt-based expense
reporting for domestic & international trips• Recording of travel purpose, destinations,
cost assignments, advances, deductions, credit card clearing, etc.
• Auto-check of expense policy • Official versions for Public Sector in
Germany, France, US, Canada• Germany only: Separation Allowance/
Relocation (TGV, LTGV)• For self-service users, travel administrators
and managers
INTEGRATION
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In Customizing, you can also define rules for the layout of userscreens, mandatory fields, default and maximum values, aswell as for the settlement process, based on trip criteria such asinternational or domestic trips. You can also maintain a detailedcost assignment for all types of cost objects (for example, costcenter, project, and fund).
The use of a corporate credit card accelerates the data entry,settlement, and reconciliation process. An employee onlyneeds to electronically insert the corresponding receipt itemsfrom an online receipt pool, which is based on imported creditcard transactions, when entering expenses into the system.
Integration of SAP Travel Management with SAP Payroll SAP Travel Management uses the master data stored in the HRstructures, but only as a minimal dataset. The use of SAP HR isnot a prerequisite for the use of SAP Travel Management. TheHR datasets contain information such as organizational unitassignments, personal address, cost level assignments, expensereporting authorization, and so on.
The SAP Travel Management component processes businesstrips for private enterprises as well as for the public sector. Theadvantages of integrated data become particularly evident inSAP Travel Management:
• Integration of SAP FI with SAP Payroll ensures correctposting, taxation, and payment of travel costs in SAP HR.You can post HR accounting results directly to SAP FI with-out reentering any data. Payments to employees can takeplace via different methods including SAP HR payroll runs,the payment program in SAP FI, or via data medium ex-change (DME). You can repeat a period-related payroll runor carry out retroactive accounting for changes to masterdata and trip data at any time.
• Integration with SAP Funds Management: Travel expen-ditures incurred in the public sector can be budgeted indetail (for more information, please see the following section,SAP Position Budgeting and Control). The system can auto-matically create commitments for travel requests and expen-ditures in SAP Funds Management, where they are subject
to budgetary control. You can assign accounts for travelrequests and travel expense reports directly to commitmentitems, funds centers, and funds according to different crite-ria. For more information on funds, please see the chapterentitled SAP Funds Management.
• Integration with SAP Controlling: You can make directaccount assignments of trip costs to different cost account-ing objects – cost centers, orders, or work breakdown struc-ture (WBS) elements. Costs specified for all of an employee’strips or for individual trips can be distributed at different levels, with different distribution possibilities for the totalcosts of a trip, costs per stopover, or per individual receipt.
SAP POSITION BUDGETING AND CONTROL
The SAP Position Budgeting and Control (SAP PBC) compo-nent of mySAP Public Sector is specially tailored to the needs of public organizations. This solution closes the gap betweenthe existing budget for personnel expenses in SAP Funds Man-agement (SAP FM) and the existing organizational structuresand persons in SAP Human Resources (HR).
The new SAP Position Budgeting and Control solution replacesthe existing “SAP HR Funds and Position Management” solu-tion and is available with the SAP R/3 Enterprise Extension EA-HR 1.10. It includes functions for:
• Creating personnel commitments by means of an event-driven background process (automatic commitmentcreation)
• Workflow support for processing messages that occurredduring commitment creation
• Using the payroll simulation and the personnel cost plan-ning functions to determine the financing requirement generated by a commitment
• Posting the commitment to SAP Funds Management, SAP Grants Management, and SAP Controlling
• Minimizing data entry requirements by automatically determining the budgets to be debited from existing accountassignment information
• Direct integration with SAP® Personnel Administration and SAP® Organizational Management
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The automatic commitment creation function enables you to call up a precise overview of the existing commitments interms of personnel expenses at any time. This allows you torecognize any deficits or excess in good time and make theappropriate corrections.
Integration with SAP Organizational ManagementSAP Position Budgeting and Control uses the existing organiza-tional management structures of a government agency, whichinclude organizational units, positions, and persons. You candefine financing requirements for a position using the SAP HRinfotype planned compensation. A vacancy indicator con-trols the time frame of the financing requirement.
Figure 54: SAP Position Budgeting and Control
ORG. MANAGEMENT
CREATE OR MAINTAIN DATA CREATE OR MAINTAIN DATA
PERSONNEL ADMINISTRATION
PAYROLL
AVAILABILITY CONTROLOBJECTS
BUDGET OBJECTSFUNDSMANAGEMENT
HUMAN RESOURCES
POSITION BUDGETINGAND CONTROL
PRECOMMITMENT
PERSONNELCOST PLANNING
POSITION
COMMITMENT
PAYROLL SIMULATION
PERSON
ACTUAL POSTING
PAYROLL POSTING
PERSON
Figure 53: Integration of the Accounting and Personnel Departments
ACCOUNTING
• COMMITMENT PROCESSOR
• PERSONNEL COST SAVINGS
PERSONNEL DEPARTMENT
• MANAGING FULL-TIMEEQUIVALENTS
• BUDGET PLAN• STAFF ASSIGNMENTS• RULES
WORKFLOW
BUDGET PLANNING
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Within these structures, you can store account assignmentinformation such as the cost center, funds, grants, and so on,which can be passed on (inherited) along the organizationalstructures. Here, you can also distribute funds on a percentagebasis among different account assignments. The stored accountassignments are used to automatically determine the budget to be debited in SAP Funds Management.
The system automatically recognizes changes to informationrelevant to financing within the organizational structure andpersonnel master data, and updates commitments accordingly.
This process takes place automatically in the background. Youdo not have to make any additional entries. You can also trig-ger a refinancing run manually if necessary.
PERSONNEL ADMINISTRATION
The information stored in the SAP HR master record formsthe basis for determining the financing requirement. All therelevant information from the SAP HR master record is consid-ered during the payroll simulation, which determines theamount and distribution of financing requirements for em-ployees over time.
Changes made to information relevant to financing are alsorecognized automatically by the system and result in refinanc-ing being performed for the appropriate person.
POSTING THE PAYROLL RESULTS TO ACCOUNTING
You can use the payroll simulation to determine a person’sfinancing requirement. All the functions available during areal payroll run are also available in payroll simulation. Thismeans that the expected financing requirement can be forecastas accurately as possible.
In the payroll run, you store the commitment documents created previously in the payroll result. When the payrollresults are subsequently posted to SAP Funds Management,these commitment documents are reduced by the amountsdetermined in the payroll run.
SAP PERSONNEL COST PLANNING
SAP Position Budgeting and Control is closely integrated withSAP® Personnel Cost Planning. This component supports deci-sion making through the definition of actual personnel costs,cost predictions based on actual costs, and cost planning basedon planned organizational changes or changes to the wagestructure.
Both solutions use the same data basis, which means that noadditional data has to be maintained for the other application.
SAP Personnel Cost Planning enables you to determine theextra costs incurred for a position, for example, in terms of thefinancial amount and time involved. You can also use SAPPersonnel Cost Planning to determine the financing require-ment on the basis of the master data (without payroll simula-tion).
Integration with SAP Funds ManagementTo provide full support for budget execution using mySAPPublic Sector, SAP Position Budgeting and Control is fully inte-grated with SAP Funds Management. You post commitmentdocuments directly to SAP Funds Management using the func-tions this component provides, such as active availability con-trol.
In SAP Funds Management, you can post SAP HR documentsto funds, funds centers, commitment items, and functionalareas. The commitment documents are created using a multi-level concept:
• Funds precommitment: For vacant positions, funds pre-commitment can be used to “precommit” the expectedfinancing requirement by period and for the expectedamount.
• Funds commitment: As soon as a holder is assigned to theposition, the expected financing requirement can be deter-mined in detail by means of a payroll simulation. Thisextremely precise financing requirement is used to create afunds commitment that reduces the funds precommitment.
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• Actual results from the payroll run: When the payrollresults are posted to SAP FI, the amounts actually incurredare also posted with reference to the funds commitmentscreated in the planning process.
• Funds blocking: You can use the funds blocking functionto ensure that a budget that is released but not directly avail-able for further use remains committed. The person respon-sible can then decide how this budget is to be used further.
This multilevel concept enables you to forecast the expectedfinancing requirement very accurately. Depending on thedegree to which a commitment is realized, you can committhe required funds at a higher or lower level. An example wouldbe the announcement of a planned staff assignment due to avacancy (precommitment), in contrast to the actual staffassignment itself (commitment).
INTEGRATION WITH FURTHER COMPONENTS
In addition to SAP Funds Management, SAP Position Budgetingand Control can also post commitment documents to SAPControlling and SAP Grants Management.
For SAP Grants Management, you can create grants as masterdata. The cost center, internal order, and the WBS element arealso available to SAP Controlling or SAP Project System.
AUTOMATIC COMMITMENT CREATION FUNCTIONS
The commitment processor, which you can use to createcommitments automatically, makes position budgeting datavisible in SAP FI and SAP CO immediately after each posting, in particular for the update function and availability control.
The commitment processor is the central tool in SAP PositionBudgeting and Control. Among other things, you can use it to calculate and check funds required for positions or personsand to create commitments using active availability control inSAP Funds Management. The update of commitments is trig-gered by an event, such as a change to an SAP HR infotype.System messages are processed using SAP Business Workflow.
This means that the automatic commitment creation functionis an event-driven background process, which does not gener-ate any extra maintenance work for the user. Changes thataffect financing are recognized automatically by the system.The relevant persons and the positions they fill are determinedautomatically and earmarked for refinancing. A periodic runfor the automatic commitment creation then adjusts the com-mitment in line with the changes.
Figure 55: Process Flow for Commitment Creation
USER-DEFINEDSELECTION
CHANGE LOG
EVENT TRIGGER
HR PERIODIC BACKGROUNDPROCESSING
FMCOMMITMENTPROCESSOR
FM
CO
OTHERS
IF ERROR
WORKFLOW
Selected automatic commitment creation functions are:
• Determination of the budget to be debited: The systemautomatically determines the budgets that are to be debitedfrom the master account assignment stored in SAP Organi-zational Management and in the SAP HR master record orfrom the cost distribution. The account assignments thatmight be derived from existing account assignments aredetermined automatically here (funds center from cost center, for example). The derivation rules stored in SAPFunds Management are used for this purpose.
• Processing of messages output by the system: If the sys-tem outputs messages during an automatic commitment creation run (to indicate insufficient budget in SAP FundsManagement, for example), the relevant person responsible is informed by means of a workflow process.
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Four role types (categories of person responsible) exist in SAPPosition Budgeting and Control:
• Administrator for an automatic commitment creation run
• Person responsible for financing
• Person responsible for the payroll simulation
• Person responsible in the accounting department
The person responsible receives a detailed message log viaworkflow, which provides support for processing the particularmessage.
Personnel Cost SavingsPersonnel costs make up a large part of the budget in mostpublic sector organizations, which are usually required to fol-low strict legal guidelines on budgeting, managing, and moni-toring the costs of public institutions. It is particularly impor-tant to recognize budget surpluses early on in the fiscal yearand take proactive measures to deal with them by automatic-ally identifying the funds that were not paid out in the salaries,for example. Other possibilities include the automatic transferof contingent liabilities, the implementation of a hiring freezefor positions that become vacant, or a request for an additionalbudget from a higher-level authority.
Instead of releasing budget surplus directly, you can commit it further with “personnel cost savings,” by making changes to financing requirements, for example. You can then decidewhether only part of the budget is to be released, and part of it posted to a different account assignment. Extensive informa-tion is provided for this purpose on the date and reason forthese personnel cost savings.
The funds blocking function in SAP Funds Management isused to commit this budget further.
SAP Position Budgeting and Control enables you to identifypersonnel cost savings early in the budgeting cycle, by compar-ing actual commitments with the budget.
ReportingReporting for SAP Position Budgeting and Control can be per-formed entirely in the SAP Business Information Warehouse(SAP BW). The new SAP PBC loads all reporting data into SAPBW and makes it available there. You can analyze the data herefrom both the personnel and the accounting perspectives. You can also call up SAP Funds Management reports using thereport-to-report interface.
You can use the reporting function to display detailed person-nel requirements for specified financial amounts, includingfund account assignments for positions or persons. You canalso use the reporting function to display the financing historyof each person and position.
SAP RECORDS MANAGEMENT
Governments need records to administer their processes anddeliver services to people. For the public, records provide thelegal documentation of a government’s actions, and they areevidence of its work. Therefore, records management is essen-tial to the work of governments and other public sector organ-izations.
One very important focus of the SAP Records Managementsolution is to manage records in the public sector. It is a newapproach to records management. Based on cutting-edgeinformation technology, the solution enables you to managedocuments and records on paper and in electronic form. Theoutstanding innovative feature of SAP Records Management is that you can manage any kind of SAP business objects andnon-SAP business objects with it. Together with SAP BusinessWorkflow, SAP Records Management lets you map both prede-fined and ad hoc process flows, such as so-called circulars, inyour system.
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SAP Records Management integrates all areas in public admin-istration, ranging from simple business processes to specifictechnical procedures running on different application systems.In particular, this means that you can:
• Provide a single point of access to all information, especiallyto records, for all authorized employees
• Enhance the efficiency and transparency of your businessprocesses
• Integrate public and corporate services on the Internetdirectly into electronic records management
• Manage paper and electronic records in one system
• Integrate business objects, such as application documents,with their scanned images
• Cut costs for storing paper records
With SAP Records Management, communication with publicand private institutions, as well as with individual citizens, isnot restricted to the institutional boundaries of the govern-ment agency involved, since records can be viewed by or sentto other public agencies without complex transport proce-dures.
Also, citizens and companies can send queries or requests viathe e-government framework of mySAP Public Sector throughthe Internet. All documents created while processing requestsare automatically stored in one record. Finally, all functions forprocessing requests and storing documents in a record are fullyintegrated.
Record StructureEvery day, government agencies perform a variety of regulatedand unregulated functions to provide public services. To ensurethat these functions are carried out according to legal require-ments, they must be structured accordingly and individualprocessing activities established. In addition, certain contextinformation is required and must be taken into account. Thiscontext information can vary in nature – from annotationsand processing allocations to legal and organizational constraintsor other specialized applications.
A record can be regarded as all recorded information on a caseand activities required to document a task in full – from thepoint at which the task is started until its completion. Thestorage medium used to record the information is irrelevant,although electronic data storage is always preferable.
BUSINESS OBJECTS
A record can contain different types of information. In addi-tion to conventional paper documents, technical descriptions,and drawings, applications must cater to the entire range ofinformation in multimedia formats. In SAP Records Manage-ment the various components of a record are depicted as business objects, which also include electronic documents. A business object can be regarded as a representation of a tangible or intangible object (such as a concept, businessprocess, or triggering event) that is used in conjunction with a business application.
Business objects in SAP Records Management come from a vast range of sources, including:
• Office applications (word processing, e-mail, fax, calendar,and contacts)
• Accounting systems (SAP Funds Management, SAPControlling)
• Human resources (time recording, HR qualifications)
• Procurement (such as service descriptions)
• Real estate management (such as rental contracts)
• Production applications (such as bills of material)
• Plant maintenance applications (maintenance instructiondocuments, equipment description documents)
• Electronic forms and requests downloaded from the Internet
• Links to Internet or intranet pages for incorporating externalinformation sources or application forms
Integrating SAP business objects in records has distinct advan-tages. Interfaces for communication between the applicationsystems are standardized, as are the procedures for buildingcomponent-based applications, the description of the dataexchange format for Internet-based business processes, and the
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structure of electronic business documents. The prerequisitesfor communication between business processes are fulfilled sodifferent agencies can collaborate in managing and processingthe same set of records.
Records management is intrinsically linked to workflow management. For this reason, SAP Business Workflow is fullyintegrated with SAP Records Management.
DATA AND METADATA IN A RECORD
You need to structure your records by modeling the attributesof records. These attributes are usually referred to as metadata.Examples of metadata include the storage location, the nameof the record creator, the file number, and defined keywordsfor a record.
Besides the metadata for the entire record, you can enter spe-cific metadata for each part of a record (record components).The storage location of a record is an example of record meta-data, whereas the creator of a document is an example of spe-
cific metadata stored in the document header. The definitionof record metadata as well as of record components is user spe-cific and is done during implementation. You can add furthermetadata on all levels of a record.
RECORD AND REFERENCE NUMBERS
Two types of metadata are relevant in this context: the recordnumber and the reference number. In general, the record andreference numbers are made up of different fields (for example,the fiscal year, organizational unit, filing plan number, andcurrent number) and include separators between these fields.Normally public sector administrators apply specific rules,according to which the record and reference numbers are gen-erated automatically. SAP Records Management provides dif-ferent generation procedures for this in Customizing. By usingthese generation procedures, public agencies can define theirown generation rules.
Figure 56 illustrates the record structure and the variety ofbusiness objects involved. Every business object carries its ownmetadata. Documents that are only available in paper form areshown separately, because the content is not digitized andtherefore cannot be stored in SAP Records Management. Therecord entries from electronic workflow management systems(for example, workflow tasks and work items), are also listedseparately, because they are used to control and log businessprocesses.
In order to receive an official notification – for example, abuilding permit – from a government agency, a citizen usuallyhas to pay a fee. Figure 57 shows the example of an applicationprocess, which ends when the approval or notification hasbeen given. The government agency processes the applicationin the following steps:1. First the incoming application generates a case with meta-
data in the government agency’s system, in this case CRM. The application is stored electronically in the record.
Figure 56: Structure of an Electronic Record
RECORD COMPONENTS
RECORD METADATA
STRUCTURED ELECTRONIC RECORD
METADATA DOCUMENT 1
REQUEST
METADATA DOC. APPLICATION SYSTEM
ACCEPTANCE REQUEST
METADATA URL
WWW.LAW
METADATA DOCUMENT 2
AVAILABILITY
METADATA FOR ELECTR. PROCESS
REQUEST WORKFLOW
CASE METADATA
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2. Next, the person in charge requires further informationfrom other departments, as well as their approval for deci-sions made. The record is then passed on to these depart-ments via SAP Business Workflow. Any requests and furtherinformation are also stored in the record.
3. In order for the invoice number to be sent together with theofficial notification, the fee schedule is entered in SAP FundsManagement. The reference to the fee document is stored inthe record. This ensures integration of SAP Records Manage-ment with financials.
4. The application is approved, stored in the record, and theapproval is sent to the citizen.
The record contains all transaction documents, text docu-ments, and information collected in the processing of theapplication.
MANAGING CONVENTIONAL PAPER RECORDS
In the most basic case, SAP Records Management is used tomanage conventional records, which usually contain all thebusiness processes and information required to manage theworkflow of paper documents. Depending on the extent of theinformation involved, the record can include several volumes.User-defined metadata is assigned to these conventional recordsand documents. As with electronic records, this metadata caninclude the storage location, file number, or date of receipt ofthe paper document.
The metadata is entered in an electronic record and refers tothe corresponding paper-based records. The registration andclassification of the correspondence in accordance with the filing plan can also be stored in the metadata.
FILING PLAN
The filing plan is a systematic and practical means of structur-ing the entire collection of administration tasks. It forms thegeneral framework for storing all correspondence. The stricthierarchical structure of a filing plan enables documents andrecords to be stored systematically across all administrativeoffices of a government agency.
RECORD
• APPLICATION• INFORMATION
RECORD
• APPLICATION• INFORMATION• FEE DOCUMENT
RECORD
• APPLICATION• INFORMATION• FEE DOCUMENT• APPROVAL
Submit application
• WWW• CRM
Gather information
• WORKFLOW• INTRANET
Post invoice
PUBLIC SECTOR FUNDS MANAGEMENT
Create approval
RECORDS MANAGEMENT
RECORD
• APPLICATION
Figure 57: SAP Business Workflow and Record Structure
RECORD METADATA
• WORKPLACE• REFERENCE NUMBER• . . .
RECORD COMPONENTS
ELECTRONIC RECORD FOR DOCUMENTS
METADATA OF MANUAL ACTIVITY
• CREATOR• ACTIVITY
INDICATOR• ACTIVITY
REFERENCE
METADATA FORCORR. 1
• CREATOR• DOCUMENT
NUMBER• REFERENCE
METADATA FORCORR. 2
• CREATOR• DOCUMENT
NUMBER• REFERENCE
Figure 58: Electronic Record for Correspondence
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The filing plan is maintained as part of SAP Records Manage-ment. You can also import a filing plan via an interface. Thisway, you can use standard electronic filing plans for similaradministrative tasks carried out by local authorities, federalauthorities, hospitals, statutory health insurance funds, and soon. Using standard filing plans has the advantage that activitiesmanaged in the same way can be stored under the same filingplan number, simplifying and rationalizing document process-ing. Standard filing plans also save you the effort of creatingyour own plan.
In addition, verification of manual processing can be includedin the record in the form of a paper or an electronic document.You can also use SAP Records Management purely as a corre-spondence management system. In this case, you do not needto digitize the conventional documents.
Electronic correspondence management provides two advan-tages. First, the work process is optimized because the electronicrecords management system searches for metadata that relatesto records and documents. Second, you can do an electronicsearch.
MANAGING HYBRID RECORDS
Paper documents are an intrinsic part of records management,partly for historical reasons and partly because scanning ofdocuments is too expensive or even impossible (in the case of a book, for example). Because paper stubbornly refuses to dis-appear, current record management systems often use hybridrecords containing both paper-based and electronic documents.You can view the electronic components of these hybrid recordsdirectly in SAP Records Management without duplication.
In the case of hybrid records, you should digitally incorporatethe manual processing verifications into the record. This pro-vides greater clarity and makes it easier to track the processingstatus.
Managing hybrid records provide two advantages. First, elec-tronic documents can be processed directly from the record.Second, conventional records and documents can be includedin electronic records without being digitized first, and they can be integrated electronically using metadata.
MANAGING PURELY ELECTRONIC RECORDS
In the best of all possible worlds, a record only contains elec-tronic documents. From a technical perspective, an electronicrecord is a list of business objects, consisting of metadata and a structure containing the links to the actual documents andtheir content. The components of the record can be storedlocally on different servers for storage or processing reasons. As soon as a clerk processes a document, it is retrieved acrossthe network and displayed on the screen. This minimizes thevolume of data transported.
The advantages of purely electronic records include the following:
• All components of the record are instantly accessible.
• Documents can be processed instantly with office commu-nication tools.
Figure 59: Example of the Content of Hybrid Records
RECORD METADATA
• REFERENCE NUMBER• . . .
RECORD COMPONENTS
ELECTRONIC RECORD FOR HYBRID RECORD
METADATA CORRESP. 1
• CREATOR• DOCUMENT
NUMBER• REFERENCE
METADATA DOC. 1
• CREATOR• DOCUMENT
NUMBER• REFERENCE
WEB REQUEST REPLY
METADATA DOC. 2
• CREATOR• DOCUMENT
NUMBER• REFERENCE
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• There is no media fragmentation.
• All digital information is incorporated.
• Paper is eliminated from the office.
MANAGING RECORDS WITH ANY TYPE OF BUSINESS OBJECT
The solutions described up to now only map the functions of a conventional records management system. One of the out-standing differences between SAP Records Management andconventional records management solutions is that it providescontext information for processing a record from a wide rangeof specialized applications and office communication systems.
Specialized applications are often featured in the context ofrecords management. In SAP Records Management, all appli-cations are integrated using business objects. These businessobjects are characterized by attributes and accessed and pro-cessed using certain methods. From a programming point ofview, these methods are implemented by SAP Business Appli-cation Programming Interfaces (BAPI®s).
Integration with mySAP Business Suite and SAP R/3EnterpriseAll the business objects defined in SAP R/3 Enterprise can beincluded in a record. The set of methods that can be applied tothese business objects (business object methods) is defined inthe record. An example of a method for the invoice documentbusiness object is one for displaying the document. mySAPBusiness Suite includes a wide range of powerful solutions,including mySAP Financials, mySAP Human Resources, andmySAP Customer Relationship Management, as well as a variety of industry solutions such as mySAP Public Sector.
Incorporating the business objects from these mySAP BusinessSuite solutions ensures that the context information requiredfor a task, such as the processing of an acceptance request – orthe posting of an outgoing invoice – can be seamlessly integratedin records management without system fragmentation.
SAP Records Management can also communicate with applica-tions from other manufacturers. In principle, documents andcontext information from business objects in these non-SAPsystems can be incorporated and managed in records. Com-munication between the records management system and specialized application takes place using standard function callsor BAPIs, so that computer-aided design (CAD) or geographi-cal information systems (GIS), for example, can be integrated.
Solutions from complementary software partners can also beintegrated using certified interfaces. SAP Records Managementalso integrates URLs for Internet Web sites that refer to exter-nal information sources, applications, and all needed Web con-tent.
INTEGRATION OF OFFICE COMMUNICATION TOOLS
In SAP Records Management, you can integrate informationfrom office communication tools, such as e-mail, faxes, calen-dars, contacts, and Microsoft Word or Microsoft Excel. Bydoing so, you can access communication and organizationtools to help you process your records.
Figure 60: Structured Electronic Record
RECORD COMPONENTS
RECORD METADATA
STRUCTURED ELECTRONIC RECORD
METADATA DOCUMENT 1
REQUEST
METADATA DOC. APPLICATION SYSTEM
ACCEPTANCE REQUEST
METADATA URL
WWW.LAW
METADATA DOCUMENT 2
AVAILABILITY
METADATA FOR ELECTR. PROCESS
REQUEST WORKFLOW
CASE METADATA
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SAP BUSINESS WORKFLOW AND SAP ORGANIZATIONAL
MANAGEMENT
SAP Records Management is closely linked to SAP BusinessWorkflow – SAP’s workflow management system – to helpusers process records. You can include a workflow in a record,enabling all processing objects and steps within a task to beentered electronically, so the time and effort required for pro-cessing can be calculated automatically. These can be changedeither for the whole process or for individual work items.
SAP BUSINESS WORKFLOW AND CIRCULARS
SAP Business Workflow is an extremely powerful system thathandles predefined structured processes. However, in someareas of an administration, you may also have to manage un-structured processes. Here SAP Records Management offersthe ad hoc definition of a process route involving all respon-sibilities. Within a step of a process route, you can define a circular as an activity.
A circular refers to a group of elements from a record that isprocessed along a process route. It contains a list of record elements to be processed, together with the process route,agent assignments, and task description. For example, you can define for a signature whether a cosignature is required on a document or not, and so on.
REGULATION OF REPRESENTATIVES
Another workflow capability is the regulation of represen-tatives. Users define their representatives via the SAP RecordsManagement desktop. This desktop, called “electronic desk” or “e-desk” is described in the following section. The next stepis to activate the representative(s), and his or her represen-tatives then will cover all of a user’s tasks.
SAP Business Workflow leverages the organizational manage-ment capabilities of mySAP Business Suite, which can be usedto create the entire organizational plan of an institution orderive it from the organizational and business distribution
plan. The business distribution plan defines who is responsiblefor which tasks, whereas the organizational plan is a represen-tation of the organizational units that share the tasks carriedout by the institution.
SAP Business Workflow determines the person responsible forcarrying out a specific task. SAP Organizational Managementuses a variety of different positions, jobs, work centers, and so on, each of which can be assigned tasks from SAP BusinessWorkflow. By doing so, you define the group of possible agentsfor a task within a process.
For more information, see the next section on SAP BusinessWorkflow.
CUSTOMIZING RULES
You can also define a set of rules that determine which of the possible agents is the actual agent responsible for the task.These rules can be defined in various ways:
• Function modules: You define rules with function modulesif the selection criteria for locating the agent for a specifictask are extremely complex. The system then locates theagent responsible by executing the function. The manner inwhich the data is received varies from function to function.You can use predefined functions or create your own. Therule resolution, which takes place at runtime to determinethe agent for a workflow step, forms part of an intelligent,efficient, and flexible tool.
• Organizational data: If you choose the organizationalmodel to control your business processes, the organizationaldata is used to define rules. The agent responsible for a par-ticular task is determined when the rules are resolved usinglinks between the task and SAP organizational objects.
• Responsibilities: If responsibilities are used to define rules,you need precise selection criteria to determine the relevantagents. You can also use the organizational model to deter-mine the agents responsible via jobs, positions, and so on.
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RECORD MODELING
Records are structured to facilitate processing, to representtheir content more clearly, and to provide the necessary con-textual information. From the outset, you can also specifywhich record components are allowed. SAP Records Manage-ment features a variety of tools to help you model your records.In practice, records are categorized using different characteris-tics, for example, whether they belong to the area of SAPHuman Resources, Social Security, and so on. SAP RecordsManagement allows you to define individual record typesto specify the following:
• Which metadata is assigned to the record type
• Which business objects are permitted in the record
• The structure of a record hierarchy
The record type provides users with a flexible way to structurerecords. For example, paper-based record types require thestorage location and creator of the record (according to therequirements for managing correspondence) as metadata. Inan aircraft procurement record type, bills of material for theindividual assemblies are required as business objects in therecord. You can extend record types on an ad hoc basis whilethe record is being processed. You can also create record typesthat contain other record types. By doing so, you can divide a record into sub-records, group records hierarchically, orarrange sub-records within a record hierarchy.
You can define views of records based on the record type.Depending on the role of the user, different parts of the content of a record can be viewed.
DRILL-DOWN REPORTING
You can carry out drill-down reporting in existing records and their objects. Search paths extend, for example, across the filing plan or metadata of all records. You can also storekeywords in the metadata and define an index to allow fasteraccess to the required records. Intelligent search engines sup-port any number of nested search terms so you can createcomplex drill-down procedures. Full-text searches are alsoallowed. You can use the hit list to display the record directlyor navigate through its objects.
AUTHORIZATIONS
It is important that users be permitted to execute only thosetasks for which they have authorization. Corporate organiza-tions are typically divided into various roles, and the employeesassigned to these roles carry out certain tasks. Access to certaintasks and processes is only permitted for the relevant roles.
The SAP authorization concept protects against unauthorizedaccess and is implemented in SAP Records Management. Allactivities involving records and objects in records (for example,documents, business objects, and processes) can only be carriedout with access authorizations. Among other things, accessauthorizations control which records can be read and changed,which can only be read, and which cannot be accessed at all. Ifyou are using the mySAP Enterprise Portal, this data is accessedacross a secure connection.
USER-SPECIFIC ACCESS
Parallel access to records means that several employees canread a record at the same time without having to copy it. Thisis a major advantage over conventional record processing sys-tems, because you cannot transfer paper records to a differentIT system for processing. However, not every employee canview all the records or components of a record. SAP, therefore,provides a range of sophisticated options for assigning authori-zations.
Using authorizations, you can specify who can display a recordtype and its components. If a record contains a link to a busi-ness object in a mySAP Business Suite component, such as aninvoice, employees can only display this invoice if they areauthorized to do so.
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DISTRIBUTED RECORDS PROCESSING
In some cases, other authorities may have to be included in the workflow for government-to-government collaboration.For this, you can use SAP® WebFlow. SAP WebFlow is an exten-sion of SAP Business Workflow on the Internet and supportsnetworked workflow management, which enables direct inter-agency collaboration. It also facilitates the structured transferof records from one government agency to another.
For this purpose, SAP Records Management supports a generaldata exchange format that contains both the content and thestructure of a record. This means that records no longer haveto be physically sent. In many cases, records don’t even need tobe copied, accelerating business processes that may span severalgovernment agencies.
A problem may arise when several persons have to process adocument at the same time. In this case, a separate version ofthe document is created for each recipient. Once processing iscomplete, these different versions have to be merged to form anew version. This procedure – called versioning – can be usedto ensure that processing is completely verified.
For more information on SAP Business Workflow, see the corresponding section in this chapter.
Business Processes with SAP Records ManagementAdministration activities in a government agency can be divided into three steps: inbound processing, workflowmanagement, and outbound processing.
INBOUND PROCESSING
When a letter, fax, e-mail, or form is received, it is usually han-dled by a central mail center or by a clerk. The date of receiptis entered on the document and a reference number is assigned.
If the correspondence is a reply to a request, the file numberassigned previously is also written on the document. After this,the document is classified, scanned, and, if necessary, the bar-code information is transferred to the record.
The document can be assigned to a record at this point in theprocess or at a later stage. During inbound processing, therecipient is also determined according to the business distribu-tion plan, and the actual business process is initiated by work-flow management.
WORKFLOW PROCESSING
Workflow processing is generally controlled by rules, which areuser defined in Customizing. Business processes are subject toa variety of internal and external rules. External rules includelaws or ordinances that directly or indirectly govern how busi-ness processes are managed. External rules can also containspecifications regarding decisions. Internal rules, on the otherhand, can be used to further specify and regulate the process.An internal set of rules could be a set of internal procedures, inwhich the basic distribution of tasks within the organization isset out.
When you define a process, you specify the individual stepsaccording to the rules you have specified. You also define theresponsibilities of individual clerks and appoint project or workgroups to process a record jointly. Resources are then assignedto the process.
SAP Records Management comes with predefined workflowtemplates for important, recurring business activities. You canadapt these workflow templates to your individual workflows.
During workflow processing, you can enter memos and assign-ments. If an assignment was already made in inbound process-ing, these new documents are automatically assigned to thisrecord.
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SAP Business Workflow also defines the signature procedure.That means you can specify who has signatory power and inwhat order, and you can also specify the final signatory. Thesystem maintains a detailed log of the entire signature proce-dure and of any changes made.
OUTBOUND PROCESSING
The process finishes with the reply to the initial correspondence.This reply is also stored in the record assigned to the process.
Every record is registered using the filing plan, which containsspecifications on how the respective type of administrative data is to be stored. It merely needs to be adapted to the specificrequirements of the individual administrative bodies.
mySAP Enterprise PortalOne of the more notable features of SAP Records Managementis that it is fully integrated with mySAP Enterprise Portal, rep-resenting the central starting point for all employee activities.
mySAP Enterprise Portal is an interface that brings together all types of enterprise information, including business applica-tions, databases, stored documents, and Internet information,and facilitates users’ role-based access to and action on busi-ness-critical information within the extended enterprise.
From mySAP Enterprise Portal, employees can access all infor-mation and functionality they need to carry out their dailywork, providing quick, simple, and Web-based access to both
Figure 61: Document Processing Using Photographs
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SAP and non-SAP applications. It can also incorporate links toInternet sites and services, so employees can access the infor-mation they need quickly and easily. mySAP Enterprise Portalis personalized and role-based. You can use it to process recordsfrom SAP Records Management over the Web.
ELECTRONIC DESK (E-DESK)
The electronic desk, or e-desk, of SAP Records Management is the interface for the daily work of users in a governmentagency. It is browser-based and can be arranged in a flexible,user-specific fashion. The records browser in the e-desk is alsostructured according to user-defined criteria, containing onlythe documents, information, and objects of records and work-flow management that a user needs to see and process.
Depending on the role assigned to a user, his or her recordsbrowser is subdivided into different areas. A user can also savefavorites and get an overview of items for review, follow-up, orresubmission. Using a role-based view, a public employee auto-matically has the correct authorizations for objects in recordsmanagement.
In the favorites list, a user can also structure his or her per-sonal folders, for example, according to a separation of docu-ments and records, with objects coming up for resubmission as scheduled.
Figure 62: mySAP Enterprise Portal – Internet Demo and Evaluation System (IDES)
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Besides the user-specific folders, the e-desk also contains aninbox and an electronic bulletin board for general postings,and the ability to define agents or representatives acting on an employee’s behalf should the employee be absent or on holiday. As of SAP R/3 Enterprise, the e-desk functionality isincluded in the mySAP Enterprise Portal and contains addi-tional roles for users of SAP Records Management, such as a post office employee, a registration authority, the head ofdepartment, and a processor of a record.
Application ScenariosSAP Records Management can be flexibly adapted to users’needs, facilitating a step-by-step transition from a conventionalrecords management system to an electronic correspondencemanagement solution, right through to full digitization of allrecords. SAP Records Management also supports Internet ser-vices. The following sections describe a series of applicationscenarios.
SIMPLE CORRESPONDENCE MANAGEMENT
Suppose that a public agency has an extremely high volume ofarchived, paper records. Scanning all of the documents in eachrecord would be too time-consuming so only the record man-agement system is digitized. The electronic registry acts as avirtual table of contents for the records. When the govern-ment agency receives a new item of correspondence, only themetadata is entered in the electronic records management sys-tem: the date of receipt, storage location, and other data thatsimplifies processing. All employees have access to the registry,which means they can view the set of records at any time fromtheir portals and search for records using predefined search criteria.
CLASSICAL APPLICATION PROCESSING
Here’s another example. Suppose a citizen submits an applica-tion for a housing subsidy to a housing agency. In inboundprocessing, the document is scanned and assigned to a processthat triggers a workflow. Next, a record is created automaticallyin the background. Via SAP Business Workflow, the systemdetermines the clerk responsible for the housing subsidy and
sends it to his electronic inbox for processing. The clerk work-ing in SAP Records Management enters comments directlyinto the record, and all of the information required to processthe application is made available online. To reply to the appli-cation, the clerk uses an available form, which is provided viathe record type. Only the inbound and outbound documentsexist in paper form, since the government agency itself uses the electronic record for processing.
APPLICATION PROCESSING OVER THE INTERNET
A citizen submits an application for a housing subsidy to a gov-ernment agency via the Internet. The system checks the datato determine whether it is complete and consistent, thus avoid-ing any processing delays as a result of queries. The documentreceived by the government agency is in electronic form rightfrom the start and does not have to be digitized.
The application is then processed in two ways. First, the appli-cation is processed in parallel with SAP Records Management.All of the documents that result from processing the applica-tion, including the process itself, are automatically stored inthe record. SAP Business Workflow also automatically logs theprocess. Second, when the application is received, it is enteredin a record. The application is then processed directly in SAPRecords Management.
DISPLAYING RECORDS OVER THE INTERNET
Over the Internet, a citizen calls up a record documenting aprocess concerning him or her. He or she discovers incorrectdata (for example, an incorrect address) and can report it electronically.
Another example is a government agency that wants to pub-lish tender documentation for the construction of a new road-way. This documentation is available in electronic form, whichmeans that the government agency can make it available to thepublic over the Internet. Companies can view the documenta-tion on the Internet and all citizens can view documentationon planned construction sites.
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APPLICATION INTEGRATION
Incoming invoices are recorded in SAP Financial Accounting(SAP FI). When the invoices are posted, the scanned docu-ments and associated documents are entered directly into arecord. The invoices then have to be verified. This procedurecan be carried out quickly and effectively because there is noneed to search for and copy the documents in question. Theinvoice documents are also entered in chronological order intoan electronic invoice document book (or predefined recordtype).
PERSONNEL FILES
If you are managing your HR data in the SAP Personnel Admin-istration component, all of the HR data defined as a businessobject is automatically integrated into the personnel files inSAP Records Management. This means that you only need tomake changes to SAP HR master data in the system once.
In addition to the information from SAP Personnel Adminis-tration, you can add documents to the personnel file, whichare then only available in the records management system. InCustomizing, you can structure the personnel files to suit yourorganization’s requirements.
CITIZEN SERVICES
mySAP Public Sector provides government-to-citizen (G2C),government-to-government (G2G), and government-to-busi-ness (G2B) services. For example, citizens can communicatedirectly with public institutions over the Internet. By doing so,they can send inquiries to the government agency in question,submit requests, or view records. Government agencies, fortheir part, can provide citizens with information, such as devel-opment plans and official decisions.
Another type of citizen service takes the form of communica-tion between companies and authorities. This allows govern-ment agencies to handle invitations to tender and bids via theInternet, which is a government-to-business scenario. In many
cases, SAP provides forms for this type of request and plans toprovide appropriate forms for different situations. This tech-nology can be used for internal business processes within agovernment agency. The services are supported by the e-govern-ment solution of mySAP Public Sector. SAP Records Manage-ment provides interfaces for these services.
Data Security and ProtectionData security and protection are essential prerequisites fordeploying an electronic records management system. Inessence, this means you must take the following five crucialissues into account:
• Authentication: Access to a system must be restricted toauthorized users, and the system must ensure that otherusers cannot assume their identity to gain access to the system.
• Authorization: Users must be restricted to only those tasksfor which they are authorized.
• Integrity: Data cannot be changed unless personnel areauthorized to do so.
• Confidentiality: Reliability and adherence to legal obli-gations must be ensured.
• Recording and logging: All activities and events must be recorded so that they can be accessed at a later stage.
AUTHENTICATION
User authentication in SAP Records Management is guaranteedusing passwords. Various standard rules are defined for gener-ating and using passwords, but if necessary, you can extendthese rules. In addition, the solution supports Secure NetworkCommunications (SNCs) because it enables cryptographic pro-cedures and uses smart cards for user authentication.
You can also use SNC to set up a single sign-on environment.In a single sign-on environment, users only have to authenti-cate themselves once, even if they are working with more thanone system. Single sign-on environments require an externalsecurity product that provides authentication, data integrity,and data confidentiality services.
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Depending on the selected security product, smart cards canbe used for authentication. These cards store the user’s authen-tication information and are protected by a personal identifica-tion number (PIN). Because the user owns the card and knowsthe PIN, it is extremely unlikely that the information will becopied or put into the wrong hands. With smart card authenti-cation, no password information needs to be transferred acrossthe network. The network connections between distributedcomponents of SAP systems can be protected with SNC.
INTEGRITY AND CONFIDENTIALITY
Support for electronic authentication mechanisms and protec-tion of electronic business processes is increasingly importantfor a variety of applications. This applies in particular to trans-actions handled across public data communication networks.
To ensure that data has not been modified, that the creator ofthe data can be uniquely identified, and that the data cannotbe accessed by unauthorized parties, SAP uses two basic mecha-nisms: digital signatures and digital envelopes, which sup-port the asymmetric digital signature method. These mecha-nisms are provided via the digital Secure Store and Forward(SSF) interface to external security products. SSF uses digitalsignatures and digital envelopes to secure digital data anddocuments. A digital envelope is a security mechanism thatprotects a message from being viewed by anyone other than the intended recipient and is created using hybrid encryption.
Digital signatures verify the identity of a signatory, as well asthe integrity of a signed data package. A digital signature can-not be falsified, so it protects the integrity of the data involved.Any changes to the data after the signature has been providedrender the digital signature invalid for the modified data. TheSSF interface operates using public and private digital keys,ensuring that only the intended recipient can read the datacontent. Digital signatures are based on public key technology.
SSF also protects SAP data and documents stored on data carri-ers. SAP Records Management protects data transferred acrossunsecured communication channels like the Internet by pack-ing the data and documents into secure formats before theyare stored on a data carrier or transferred via unsecured com-munication channels.
Protecting data and documents with SSF fulfills the followingbasic security requirements:
• Data integrity (protection against falsification)
• Confidentiality of data (protection against unauthorizedreading)
• Sender authentication (protection against impersonation)
• Verification (proof of order placement)
LOGGING
SAP Records Management logs all access to records, includingread access, so you can track who viewed which records andwhen they viewed them. Records intended for citizens can alsobe physically stored on a separate server. The extent to whichyou implement logging is determined in Customizing.
Version management is available for records and other editabledocuments, in order to provide a complete history of recordsand documents. Using this versioning function, the currentstatus of records can be stored and restored if necessary. Individ-ual activities within a business process defined with SAP BusinessWorkflow can be monitored using the associated workflow log.
SECURITY FOR INTERNET APPLICATIONS
Internet data is usually transferred in plain text so this datamust be encrypted to ensure confidentiality. For this purpose,SAP uses Hypertext Transfer Protocol with Secure SocketsLayer (HTTPS) as an encryption method to provide a secureconnection. HTTPS is an extension of HTTP.
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Technology and ArchitectureSAP Records Management is based on SAP® Web ApplicationServer and features a three-tier, client/server architecture. The architecture consists of three layers: the presentation layer,application layer, and the database layer. All of the benefits andservices of SAP Web Application Server are highly scalable. Youcan also run SAP Records Management on a separate system.
INTEGRATING EXTERNAL SYSTEMS
You can easily integrate external systems into SAP RecordsManagement. Integration within SAP R/3 Enterprise is effectedusing cross-system workflows from SAP WebFlow (an exten-sion of SAP Business Workflow for the Internet). All objectsnot stored in the online transaction-processing (OLTP) data-base can be integrated into records. In other words, the solu-tion provides a link to external systems from both a businessprocess and an object perspective. You also have significantflexibility in how you structure the system environment.
WEB TECHNOLOGY
SAP Records Management uses state-of-the-art Internet lan-guages and protocols. Record types are modeled with eXtensi-ble Markup Language (XML) and generated as an XML schema.Each record is saved as an XML document, which can be con-verted to a HyperText Markup Language (HTML) documentusing a style sheet from eXtensible Stylesheet Language (XSL),and then displayed with a conventional browser.
XML and HTML are languages that are used to transfer dataover the Internet. SAP Records Management uses the moreflexible XML language to model and store records. XML hasseveral advantages over HTML. It is more extensive thanHTML, and it supports user-defined data formats.
A data exchange format based on XML for storing records provides a generic interface for transferring records. XML-compliant browsers can then display records directly.
Within SAP R/3 Enterprise, the common HyperText TransferProtocol (HTTP) is used for communication with the Internet.
OBJECT ORIENTATION AND FRAMEWORK
SAP Records Management was developed with the object-ori-ented Advanced Business Application Programming (ABAP)language. It is based on the records management framework,which manages access to the component and physical server/instance data of record types and other object classes, as well as access to the individual records and their objects.
SAP WEBFLOW AND SAP BUSINESS WORKFLOW
SAP Business Workflow is a component of SAP Web Appli-cation Server and is designed to work with all areas of SAP R/3Enterprise. Principal features of SAP Business Workflow include:
• Workflow definition: A workflow can be defined and thetask it contains assigned to clerks.
• Workflow templates: Workflow templates shipped by SAPthat can be used by customers to create their own workflowdefinitions and tailor them to their specific requirements.
• Ad hoc functions: A task can be directly forwarded or dele-gated to a different employee on an ad hoc basis.
• Workflow log: Every step within a workflow is logged so it can be evaluated.
• Workflow Builder: You can modify and adapt the work-flows that SAP provides, and you can also define new work-flows.
• Workflow tools: These tools support standard scenarios.
• SAP WebFlow: The workflow can run on the Internet oryour organization’s intranet.
SAP Business Workflow is embedded in the heart of SAP R/3Enterprise, and provides the scalability and stability that youneed to ensure that your business processes run smoothly andconsistently. SAP solutions such as mySAP CRM and mySAPSCM are built on this platform to incorporate workflowfeatures directly in their application.
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SAP Business Workflow automates your business processes in a flexible and transparent way. It integrates tasks across depart-ments, applications, and system boundaries. You can use agraphical interface to define workflows and map individualtasks to users. This “push technology” informs and helps usersthrough the processes they are working on.
Steps that do not require user intervention are carried outautomatically, along with business logic and escalation proce-dures. The process creates a precise audit trail and can providepowerful analysis reporting to allow you to optimize yourprocesses.
The term “WebFlow” refers to the e-business functionalityof SAP Business Workflow. SAP Business Workflow is the solu-tion for all your workflow requirements. It is active “behindthe scenes” in many Internet processes of mySAP BusinessSuite, ensuring the delivery of the right information to theright person at the right time.
Although Web-based workflow functionality has been availablesince SAP R/3 Release 3.1, the enhanced functionality has led to the creation of the new product name SAP WebFlow, whichbasically designates the Web-based workflow functionality forSAP R/3 Enterprise.
Optical ArchivingSAP Business Workflow is used in conjunction with an opticalarchiving system, which is linked to SAP R/3 Enterprise appli-cations using the ArchiveLink interface. This enables you toreduce the amount of paper in your office, and create flexiblelinks between business objects such as earmarked funds, pur-chase orders, or invoices with archived documents. Someexamples are letters, faxes, drawings, applications, or calcula-tions. In this way, you can quickly access any archived docu-ments you need.
Figure 63: Using SAP Business Workflow to Process Activities for Funds Commitments
CREATED
WORKFLOW FOR APPROVAL
NOT PROCESSED RELEASED
INBOX
INQUIRY STATUS
EARMARKEDFUNDS
EARMARKEDFUNDS
APPROVED
USER
CREATE EARMARKEDFUNDS
INBOXUSER
USER RELEASE OFEARMARKED FUNDSINBOX
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An example of how SAP Business Workflow works in conjunc-tion with optical archiving:
• A business sends its financial returns, which are paper-based,to a government agency.
• These documents are then scanned in by the governmentagency, for example, the Internal Revenue Service.
• The scanned-in image is sent to the person responsible viaSAP Business Workflow, and the original image is barcodedand linked to an SAP business object (“optically archived”).
• After this point, processors will only work with the imageand not with the paper original. This improves efficiency,reduces processing costs, and shortens processing times.
Using the ArchiveLink interface, there is full integration bet-ween the optical archiving system and SAP Business Workflow.For more information on electronic filing and archiving, seethe previous section on SAP Records Management.
SAP Business Workflow ApplicationsSAP Business Workflow makes a substantial contribution toimproving administrative efficiency. It is a high-performancetool with functions going beyond those offered by conven-tional workflow and document management systems. SAPBusiness Workflow ensures a smooth flow of information and short transaction lead times, including the following:
• Extensive automation and acceleration of routine activities is possible across application boundaries, functional areas,organizational units, and time zones.
• The SAP® Business Workplace, which forms part of yourSAP R/3 Enterprise solution, enables efficient communi-cation between those involved in a process. You can select all the required tasks for processing online – nothing is omitted or remains unprocessed. Time-consuming dunningor queries are no longer necessary.
• Workflow processes predefined specifically for an organiza-tion clearly describe your business transactions in a graphicalmap. These graphical maps can be created using the SAP®Workflow Builder tool. You can carry out organizationalevaluations, and make business processes and responsibilitiesmore transparent. Each employee has an activity profilederived from where he or she is positioned in the structure.
• Complete integration with the operative applications meansthere is no need for duplicate input. The system suppliesevery step in a process with the required data and docu-ments, and produces results that determine what steps areperformed next.
• Constant process improvement using an integrated infor-mation and diagnostic system which analyzes all the compo-nents of the workflow system and compiles information onthe actual process execution, such as: how often a process isrun, runtimes, those involved, any queries arising, and so on.
Integration with SAP Organizational ManagementSAP Business Workflow is not on the level of existing processstructures in the business application components. Instead, itshould be regarded as an integration level “above” the standardbusiness applications. After implementing SAP Business Work-flow, you continue to use the existing transactions, functionmodules, and reports as before, but with substantially moreelectronic processes than previously.
The integration of SAP Organizational Management withinSAP Business Workflow means that you can easily link taskswith employee positions. Since positions are held by the em-ployees defined to carry out specific tasks, you can assign tasksand activities to the right personnel. This also means that youdo not have to change the workflow when organizationalchanges (restaffing of positions, retirement, and so on) takeplace.
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Figure 64: SAP Workflow Builder for Funds Reservation Process
SAP Business Workflow controls and automates complex trans-actions based on established models of business processing.Communication networks link the desktops of the personnelinvolved and transport information and documents quicklyand efficiently in all directions.
Checking and approval processes, regulations, and legal re-quirements are taken into account, as is scheduling coveringthe whole process from start to finish.
Every authorized employee has access to the information he orshe needs at any time. All messages and documents intendedfor that employee are sent to the SAP Business Workplace, whichcan be fully integrated with groupware products such as LotusNotes or the Microsoft Exchange inbox. The employee is toldwhat tasks have been assigned to him/her and is provided withthe information needed to carry them out.
An integrated workflow log ensures that you can view the stateof transaction processing at any time; the information is logged,ensuring complete and clear information on all running orcompleted transactions.
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Solutions:mySAP CRM mySAP Customer Relationship ManagementmySAP SCM mySAP Supply Chain ManagementmySAP SRM mySAP Supplier Relationship Management
Components of SAP R/3 Enterprise:AA Assets AccountingCO ControllingFI Financial AccountingFM Funds ManagementGM Grants ManagementHR Human ResourcesMM Materials ManagementPM Plant MaintenancePS Project SystemSD Sales and Distribution
Further SAP abbreviations: ALE Application Link EnablingALV SAP List ViewerAVC availability controlBCS budget control systemBDT Business Data ToolsetBPS Business Planning and SimulationCAD computer-aided designCATS Cross-Application Time SheetCPM Corporate Performance MonitorDME data medium exchangeEDI Electronic Data InterchangeESS Employee Self-ServicesGAAP Generally Accepted Accounting PrinciplesGASB Governmental Accounting Standards BoardHTTP hypertext transfer protocolPBET period-based encumbrance trackingPDC plant data collectionRIB revenues increasing the budgetSAP BW SAP Business Information WarehouseSAP SEM SAP Strategic Enterprise ManagementSAP Web AS SAP Web Application ServerSNC Secure Network CommunicationsWBS work breakdown structureXML eXtensible Markup LanguageXSL eXtensible Stylesheet Language
ABBREVIATIONS
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A
ABAP List ViewerSee SAP List Viewer.
accrualAn expense made before the closing key date that representsan expenditure for any period after this date.
accrual accountingMethod used to distribute expenditures, revenue, gains, and losses to the correct period, based on the origin ofthese amounts. In this way, irregularly occurring costs canbe evenly spread over the periods involved and distributedby cause to the appropriate periods. See full accrual accountingand modified accrual accounting.
account assignmentSee FM account assignment.
active availability controlIn SAP Funds Management (SAP FM), a check on budgetusage which identifies possible budget underruns or over-runs when funds are being committed. Using tolerance levels predefined in Customizing, the system comparesagainst budget limits at the time a document is posted inSAP FM. Active availability control is carried out for boththe former budgeting system and the BCS.
B
BAPISee Business Application Programming Interface.
Balanced ScorecardFunctionality in the SAP Corporate Performance Monitorof SAP Strategic Enterprise Management (SAP SEM) tohelp organizations visualize their business strategies, pro-jects and performance measures. You set your performance
measures and key performance indicators as performancetargets, in this way providing a clear overview of your orga-nization’s performance and indicating areas with a need forimprovement.
budgetFor a specific fiscal year, a plan of expenditures or outlays,containing detailed information on the funds to be provid-ed to specific public organizations within a particular timeframe. In SAP R/3 Enterprise, the budget is defined by usinga budget structure, which contains funds centers and com-mitment items. A balanced budget occurs when total receiptsequal total outlays for a fiscal year.
budget addressAn element of the budget structure to which budget can be committed. It consists of a combination of, for example,fund, funds center, and commitment item. Budget is allo-cated to this combination. See dimension.
budget categoryThere are two categories for budgets, the payment budgetand the commitment budget. Both can be either released or not released. As defined in Customizing, the system controls which business transaction commits funds in thepayment or commitment budget and at what point intime.
budget control system (BCS)As of SAP R/3 Enterprise, a solution for budgeting andbudget execution, as well as for the active monitoring ofavailable funds in SAP Funds Management. The budgetcontrol system includes functions for budget planning,entering, updating and carrying forward budget, as well as availability control.
budget objectSee budget address.
GLOSSARY
Terms in italics refer to other terms in this glossary.
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budgeting processWhen budgeting with BCS, the budgeting process definesthe basic type of action carried out. Processes are predefinedby SAP. The budget type, defined by the customer, is used todetail the budgeting process information, enabling custom-ers to define their own budget types for each SAP budgetingprocess. In the BCS, budget can only be entered for a com-bination of process and budget type.
budget profileAn object that combines the control parameters for bud-geting and availability control. Only used in the formerbudgeting system, not in the budget control system (BCS)of SAP R/3 Enterprise.
budget returnA type of budgeting process used in the budget control system that effects a reduction in the budget amount, forexample, as when funds are returned because they were not used.
budget structureThe budget structure represents all the funds centers, commitment items, functional areas, and funded programsfor which budget may be entered. A similar but independ-ent structure is available to control the posting of commit-ments and actual values. See budget address.
budget subtypeUsed only in the former budgeting system. Budget subtypescan be used to differentiate and classify budget amountsaccording to an organization’s needs, and report on theirbudgets on a detailed level. In the new budget control system (BCS), similar functionality can be used with thebudget type.
budget typeUsed in the budget control system (BCS). A user-definedsubdivision of the SAP-defined budgeting processes, whichhelps to recognize the origin of the budget. Examples are theoriginal budget entry, supplements, returns, transfers, andreleases. See budgeting process.
budgeting workbenchIn the budget control system (BCS), the budgeting work-bench is the transaction for individual budget maintenance.It provides a user-defined interface and enables the check-ing of budget consistency, as well as providing a detailedaudit trail through the use of budget documents.
Business Application Programming Interface (BAPI)Standard programming interface that facilitates externalaccess to business processes and data in the SAP R/3 Enter-prise system. BAPIs are defined in the Business ObjectRepository (BOR) as methods applied to SAP businessobjects or SAP interface types. BAPIs offer an object-orient-ed view of business components. They are implementedand stored as RFC-enabled function modules in the ABAPWorkbench.
business areaIn SAP R/3 Enterprise, an organizational unit of financialaccounting that represents a separate area of operations or responsibilities within an organization and to whichvalue changes recorded in SAP Financial Accounting can beallocated. You can create financial statements for businessareas, and you can use these statements for various internalreporting purposes.
Business Information Warehouse See SAP Business Information Warehouse.
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C
carryforwardSee Commitment carryforward.
chart of accountsA classification scheme consisting of a group of generalledger (G/L) accounts. A chart of accounts provides a frame-work for the recording of values to ensure an orderly ren-dering of accounting data. One chart of accounts must beassigned to each company code. For each G/L account, thechart of accounts contains the account number, the accountname, and technical information.
circularIn SAP Records Management, a group of elements from a record that are processed along a process route (ad hocworkflow). A circular consists of the list of elements from a record that are to be processed, together with the processroute, agent assignments, and task description.
commitmentA liability incurred by an organization due to outstandingorders (delivery commitment from confirmed orders), openpurchase orders (acceptance commitment from bindingorders), and bill of exchange liabilities (total bill of exchangecommitments at a bank). Commitments are managedusing commitment items. Funds commitments may or maynot refer to a funds reservation or a funds precommitment.Additional information, such as the supplier or particularcontract numbers, can also be referenced in the funds com-mitment.
commitment budgetA standardized framework within a particular area of res-ponsibility that can be used to enter and control commit-ments leading to expenditures or costs in the current yearor in subsequent years. See budget category and paymentbudget.
commitment carryforwardThe transfer of commitment amounts into the followingyear. The term “carry over” refers to the possibility of alsotransferring amounts into a past year.
commitment itemCommitment items represent the grouping of expendituresand revenues within a financial management (FM) area.You can enter budget for a commitment item.
cost sharingIn SAP Grants Management, a portion of total expensesthat parties other than the sponsor contribute to a spon-sored project or program. See matching grant.
D
derivation toolSee FM derivation tool.
dimensionIn SAP Funds Management, the term “dimension” desig-nates FM account assignment elements. The possible dimen-sions used in SAP Funds Management are fund, funds cen-ter, functional area, commitment item, grant, and fundedprogram. The combination of such dimensions enables youto define both budget and posting addresses.
document (SAP Financial Accounting)A data record containing a financial posting, which pro-vides proof of a business transaction. A distinction is madebetween original documents and data processing (DP) documents. Original documents include incoming invoicesand bank statements, whereas DP documents includeaccounting documents, sample documents and recurringentry documents.
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DP documents have a header and line items: the header is an object that contains information valid for the entiredocument, such as the document date and documentnumber. A line item contains information on a line of the document such as the amount, account number, andwhether the item is a debit or credit.
E
e-governmentE-government refers to a government agency’s use of infor-mation technologies (such as Wide Area Networks, theInternet, and mobile computing) to exchange informationand services with citizens, businesses, and other arms ofgovernment.
earmarked fundsIn SAP Funds Management, funds classified according tovalidity period, usage, and any accompanying legal obliga-tions. Earmarked funds lead to business transactions thatprocess budget that has already been distributed for revenuesor expenditures to be expected. The distinguishing charac-teristics of earmarked funds are that they commit budget,they are used in accordance with a specified purpose, andcontractual obligations associated with them must beadhered to. The individual business transactions are:
• Funds reservation
• Funds precommitment
• Funds commitment
• Funds blocking
• Estimated revenue
e-governmentA key functional area of mySAP Public Sector that allowscitizens to use Internet portals to gain role-based, personal-ized access to public information, services and functions. Aswell as collaborative procurement opportunities for publicagencies, mySAP Public Sector also supports online servicesand payments through Web-based interfaces.
encumbranceA high-level commitment made to purchase goods or ser-vices using existing budgeted funds. Commitments are usu-ally realized within the budget year or shortly thereafter.However, some governments have encumbrances that spanmore than one fiscal year, such as multiyear construction contracts.
For budgetary accounting purposes, encumbrances areusually treated in a manner similar to expenditures. Insome cases, they reduce the budgetary fund balance, withany differences in the following year shown as recovery ofunspent funds.
F
financial management area (FM area)The central organizational unit used in SAP Funds Manage-ment. FM areas subdivide an organization into units inwhich you can conduct independent cash budget manage-ment (used in the private sector) and independent fundsmanagement (used in the public sector). The FM area andcompany code currencies must be the same.
FM account assignmentAssignment of budgeting or posting data to a combinationof fund, funds center, functional area, commitment item,grant or funded program. There are revenue accountassignments and expenditure account assignments. Seeposting address and dimension.
FM derivation toolA set of functions used to derive account assignments inSAP Funds Management from objects of other compo-nents. You define the individual derivation steps in Cus-tomizing. Using derivation rules and strategies, you cancontrol how certain target values are automatically derivedfrom source values.
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former budgeting systemThe SAP Funds Management budgeting system, which isavailable simultaneously with the budget control system(BCS). SAP does not recommend using the two budgetingsystems in parallel. Migration tools are available to switchfrom the former budgeting system, also called “classical”budgeting, to BCS.
full accrual accountingA type of accrual accounting requiring that all financialtransactions with economic value be reported, as is the casefor businesses or corporations. This means that long-termassets must be depreciated over their useful life, with theassets and accumulated depreciation reported on the balancesheet. Long-term liabilities must also be included on thebalance sheet, with premium or discount on long-termdebt deferred and amortized over the life of the debt issuance.See modified accrual accounting.
functional areaIn SAP Funds Management, functional areas are used tosubdivide budgets and fund assignments, in order to grouprelated activities having the same purpose or regulatoryresponsibility. The functional area provides structured infor-mation on the function or objective of an organization. The “functional structure of a city” could be, for example:General Government, Criminal Justice, Public Safety, Trans-portation, Public Works, Community Development, Com-munity Enrichment, Water Services. The functional area isused for budgeting, financial management, external report-ing, and cost controlling purposes. Organizations can estab-lish functional areas at a lower level than those required forexternal reporting.
functional area groupA functional area group is a user-definable set of functionalareas used to meet internal and external accounting andreporting requirements. Functional areas can be grouped invarious ways to facilitate budgeting, cost allocation, internalfinancial management, and external financial reporting.
fundA separate and distinct fiscal/accounting object containing acomplete self-balancing set of accounts, used to distinguishcash and other financial resources, together with associatedliabilities and residual equities. Funds are classified accord-ing to fund types, which have distinctive accounting andreporting requirements.
fund accountingModified accrual or full accrual accounting carried out bythe private sector and increasingly used by the public sector.
fund groupUser-defined set of funds used to meet internal and exter-nal accounting and reporting requirements. Funds can begrouped in various ways to facilitate budgeting, cost alloca-tion, internal financial management, and external financialreporting. Fund groups can be used to build fund hier-archies, which summarize similar accounting types andobjectives as defined by the specific requirements of theorganization.
fund typeA subdivision of funds according to the applicable externalaccounting and reporting requirements defined for them.You define fund types in Customizing.
funded programA program within SAP Funds Management with an opera-tional purpose and a defined time frame. Funded programscan vary from simple activities to complex projects, and cancross an organization’s fiscal years, funding sources, andorganizational units. Funded programs enable you to recordbudget, control postings, and monitor the performance ofinternal projects.
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funds blockingA function for preventing the budget from being used byothers or by further processes. You can later remove theblocks on some or all of the account assignments, therebyincreasing the available budget. Technically, a funds block-ing document is similar to a funds reservation document.See earmarked funds.
funds centerA clearly defined area of responsibility in SAP Funds Manage-ment. It is an organizational unit within a financial manage-ment area (FM area) to which budget can be assigned.Funds centers are arranged in a multilevel hierarchy.
funds commitmentSee commitment.
funds management (FM)See SAP Funds Management.
funds precommitmentA process step in the chain of commitment documentswhich lies between reservation and commitment. A pre-commitment represents an initial but not binding commit-ment of funds, and can reference a funds reservation. At thetime a funds precommitment is processed, more details areknown about what the budget will be used for, but no defi-nite contractual agreement has been made yet. The nextstep is a funds commitment.
funds reservationThe entry of expected costs in SAP Funds Management.Manual funds reservation is also called “manual commit-ment.” You may not yet know which transaction (such as a purchase order or material reservation) will actually causethe costs you expect. However, you can use manual fundsreservation to reserve some of the budget for expected costs.See earmarked funds.
G
general ledger (G/L)A ledger designed to present the values used in creatingfinancial statements. It contains the G/L accounts managingfinancial values at the company-code level.
G/L accountA structure that records value movements in a companycode and represents the G/L account items in a chart ofaccounts. A G/L account contains transaction figures thatrecord changes to the account during a posting period.These figures are totals that are used for G/L reporting.
grantLegal instrument that allows a sponsor to transfer money to a grantee when no substantial involvement is expectedbetween the sponsor and grantee when the planned grantactivity is carried out. A grant usually contains terms andconditions for the control, use, reporting, and reimburse-ment of sponsor funding.
grant typeUser-defined classification of grants, which controls thebehavior of a grant in the system. It determines which func-tions are available, which number ranges are used for grants,and so on. A grant type must be entered in the master dataof each grant created.
granteeOrganization or other entity that receives sponsor fundingand assumes legal, financial, and management responsibilityand accountability for the awarded funds and for the per-formance of the grant-supported activity. Also called “con-tractor.”
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I
indirect costsIn SAP Grants Management, the costs related to expensesincurred in performing or supporting program activities,but not directly attributable to a specific project.
infotypeA data structure within mySAP Human Resources. Info-types are grouped according to subject matter and mirror a logical set of data records. Infotypes are identified by theirfour-digit keys, for example, the addresses infotype (0006). To facilitate reporting on past employee data, infotypes canbe saved for specific periods.
K
key performance indicator (KPI)See performance measure.
M
manual commitmentSee funds reservation.
matching grant (see cost sharing)A grant that requires a specified portion of the sponsoredprogram costs be obtained from other sources, such as thegrantee.
modified accrual accountingAccrual accounting in which only financial transactionsthat are short-term in nature must be reported. Long-termfinancial transactions are not recorded on the balance sheetof a fund, but however may immediately impact the profitand loss statement of the fund. Instead, long-term transac-tions are tracked statistically.
mySAP Enterprise PortalUser interface unifying all types of enterprise information,including business applications, databases, stored documents,and Internet information, which facilitates users’ role-basedaccess to and action on business-critical information withinthe extended enterprise.
mySAP Public SectorA set of tools designed to help governments and publicorganizations increase efficiency, improve economic viability,enhance process transparency, and improve communica-tion with the public. SAP delivers all public sector capabili-ties in an open, Internet-based solution.
O
original budgetThe budget at the time of the first approval, that is, budgetnot yet changed by correction measures such as supple-ments, returns, and transfers. Also called “President’s bud-get” in some organizations.
overall budgetIn the former budgeting system, a structured representationof the revenue and expenditure proposed for a fund, withthe option to break overall values down into fiscal year values. While SAP Funds Management itself focuses on theplanning and execution of overall budgets, position budget-ing and control focuses on budgeted costs for persons andpositions.
P
payment budgetA standardized framework for the forecasted expendituresand revenues or for the costs, revenues, and investmentsthat can be expected within a fiscal year and area of respon-sibility. See budget category.
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payment programA program for making the payments specified in paymentrequests. The payment program generates documents,which are used by programs for generating payment mediato create payment forms and lists, and result in postings topayment processing accounts in SAP Financial Accounting.
payment requestA document for generating payment media. Paymentrequests can be generated automatically when paymentsthat are due are posted. They are subsequently settled indi-vidually or collectively using the payment program.
performance measureA measurement or metric used for evaluating a company’sbusiness strategy, performance, or technology. Performancemeasures express abstract company objectives in financial or physical units for comparative purposes. SAP StrategicEnterprise Management (SAP SEM) uses performancemeasures for monitoring an organization’s performance.They are recorded in the Balanced Scorecard.
period-based encumbrance tracking (PBET)In SAP Funds Management, a function that tracks encum-brances per period, with a change record issued for eachchange made in a period. You can control posting periodsfor any or all documents updating SAP FM, as well as fordifferent FM account assignments. PBET also allows prior-period corrections to obligatory documents, whereby thechanged amounts may be reflected in prior periods and notjust in the current period.
posting addressThe posting address is an element of the budget structure. It is the combination of, for example, fund, funds center,and commitment item to which postings can be made. See dimension and FM account assignment.
posting objectSee posting address.
R
returnSee budget return.
residual budgetThe unused budget calculated as part of the closing opera-tions at the time of the fiscal year change. It equals the cur-rent budget minus the assigned budget, and the budget stillto be carried forward from the commitment carryforward.
S
SAP Business Information Warehouse (SAP BW)SAP’s data warehouse and reporting interface. SAP BW getsdata from various source systems, such as SAP systems,manual flat files, or a database system into which data isloaded from a database supported by SAP, and systems inwhich data and metadata are transferred using BAPIs.
SAP Business WorkflowSAP application component that consists of technologiesand tools for automated control and editing of cross-appli-cation processes. SAP Business Workflow primarily involvescoordinating the persons and worksteps involved, as well as the data to be processed. The chronological and logicalsequence of the steps, linked to the evaluation of conditions,is monitored by the workflow manager and can be con-trolled flexibly with event-related response mechanisms.
SAP List Viewer (ALV)SAP’s standard grid reporting tool. Used, for example, inBCS budgeting where you can easily sort, filter, and sum upline items during budgeting or reporting. The SAP ALV gridcontrol includes additional application-specific functions,while making it possible to hide functions not relevant tothe application.
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SAP Funds Management (SAP FM)An application in SAP R/3 Enterprise whose task is to bud-get all relevant revenues and expenditures for individualareas of responsibility. SAP Funds Management controlsfunds movements according to the distributed budget, andprevents the budget from being exceeded.
The values defined and approved for the individual areas ofresponsibility when planning the budget are binding. Youcan adapt the distributed budgets to changing conditionsusing gradual releases, supplements, returns and transfers.
SAP Schedule ManagerAn SAP tool that uses extensive automation to enable orsimplify the definition, scheduling, execution, and controlof periodically recurring tasks, such as period-end closing in SAP Funds Management. For SAP Grants Management,worklists can be created for employees responsible for man-aging grant closeout activities. Worklists allow you to applya single task to multiple objects, which is useful for prepar-ing a grant’s post-award reporting requirements.
SAP Strategic Enterprise Management (SAP SEM)A key functional area of mySAP Financials that enablescompanies to execute strategies rapidly and successfullywhile managing business performance throughout theentire organization. SAP SEM supports integrated strategicplanning, performance monitoring, business consolidation,and effective stakeholder communication, thus enablingvalue-based management. Used in the budget preparationphase. See Balanced Scorecard and performance measure.
special ledgerSee Special Purpose Ledger.
Special Purpose LedgerAn application used for customer-defined ledgers, whichcontain information for reporting purposes. The customer-defined ledger can be used as the general ledger or as a sub-ledger and may contain the account assignments desired.The account assignments can be either SAP dimensions fromvarious applications or customer-defined dimensions, suchas a business region.
split processorTool that enables you to automatically generate self-balanc-ing documents for account assignments other than thecompany code. The split processor is mainly used for fundaccounting purposes, utilizing the fund dimension fromSAP Funds Management. The split processor is includedwithin the special ledger, but not visible within SAP FundsManagement.
sponsorAlso called grantor. An organization or individual funding a project or program with external financial assistance orcontracts. Financial and administrative information on thesponsor must be maintained, such as name, contact infor-mation, fiscal year, currency, billing instructions, and carry-forward rules for available funds.
sponsored classIn SAP Grants Management, sponsored classes representexpense and revenue categories of an external organization.Can be used to summarize an organization’s expenses basedon a sponsor’s cost categories.
sponsored fundsFinancial assistance or contracts provided to others to further the programs of the sponsoring entity.
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sponsored programDefines the program to be funded from the sponsor’s view-point. A sponsored program contains all functions, tasks,and funding necessary to meet the objectives of an organi-zation sponsoring a grantee organization. It is used to collect costs reflecting the grantor’s sponsored projects.
Strategic Enterprise Management (SEM)See SAP Strategic Enterprise Management.
supplementA budgeting process in which the original budget is increasedby additional funds. A supplement can be created for eithera payment budget or a commitment budget. See budgetingprocess and original budget. Also known as supplementarybudget.
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update profileA summary of parameters that control the update of com-mitment data and actual data in SAP Funds Management.The update profile is maintained in IMG Customizing. Viathe update profile, for example, you can define whether apurchase requisition consumes budget or not (statisticalpostings).
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value typeThe value type is used not only to control the transfer ofposting data from other components to SAP Funds Manage-ment, but also as a selection criterion in reporting. It con-tains a classification of the attributes used for individualdocument types and budget categories.
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WebFlowA key functional area of mySAP Technology that provides a workflow solution using the Internet as the communi-cation infrastructure and Web-based applications as infor-mation delivery vehicles. You can configure the time- andevent-driven business workflows and graphically display theworkflow in your business processes. WebFlow enables XMLdocuments to be sent to other systems via a workflow, or to be started when an XML document is received.
workflowSee SAP Business Workflow.
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year-end closingThe annual fiscal-year processing of financial informationin order to create a balance sheet and/or profit and lossstatements, both of which must be created in accordancewith the legal requirements of each country. Standardaccounting principles require that all assets, debts, accruals,and deferrals, and all revenues and expenses be contained in the balance sheet and P/L statement.
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