Best Practices for R/3Financial and CO-PAReporting

Quentin HurstVirtuoso

What Well Cover

Looking at R/3 Financials reporting overview Getting the most out of FI/CO Leveraging CO-PA best practices

Objective: Provide best practices you can implement at home toget the most out of your R/3 Financials investment and reports

What Well Cover

Looking at R/3 Financials reporting overview Getting the most out of FI/CO Leveraging CO-PA best practices

R/3 Financials Reporting Overview

Now more than ever, financial reporting is at theforefront of an organizations reporting needs Greater visibility to their data (more/better reports) Verification that existing reports are timely and accurate

Driven by such factors as Stock market collapse New legislation Sarbanes-Oxley New board of directors Building Block

R/3 Financials Reporting Overview (cont.)

This places new requirements on financial reportingteams Must think outside the box Use new and different reporting tools Ensure that documented reporting standards exist and

are followed Need additional knowledge on new tools and best

practices Increased interaction and pressure from upper

management

For a historical perspective on our current and future economic and regulatory environment, read Manias, Panics, and Crashes: A History Of Financial Crisis by Charles P. Kindleberger

R/3 Financials Reporting OverviewTop 5 Pitfalls for R/3 Financial Reporting Tools

1. Not knowing all of the reporting options in R/3 When all you have is a hammer, everything looks like a

nail2. Not knowing which tool to use for which report3. Lack of report performance optimization

techniques4. Not making advanced configuration settings,

which limits the reporting options5. Bad design decisions in the reporting submodules,

which negatively impact reporting optionsGOTCHA!

R/3 Financials Reporting OverviewFI/CO Reporting Universe

SAP Query

Painter/Writer

Drill-down

Reportingsubmodules

CashManagement

CO-PA

Special Purpose Ledger

Report request

1 2 3 4 5 6 7 8 9 10 11no no nononononononono

Canned report Drill-down

Painter/Writer

SAP Query

Reportingsubmodules ABAP

R/3 Financials Reporting OverviewPicking the Right Tool

1. Is a canned report available? 2. Can I make a config. change to use a canned report?3. Can I use drill-down reporting?4. Can I make a config. change to use drill-down reports?5. Can I use Painter/Writer?6. Can I make a config. change to use Painter/Writer?

R/3 Financials Reporting OverviewPicking the Right Tool (cont.)

7. Can I use a submodule (CO-PA, SPL, Cash Mgmt.)?8. Can I make a config. change to use a submodule? 9. Can I use SAP Query?10. Can I make a config. change to use SAP Query?11. Can I write the report in ABAP? Report request

1 2 3 4 5 6 7 8 9 10 11no no nononononononono

Canned report Drill-down

Painter/Writer

SAP Query

Reportingsubmodules ABAP

R/3 Financials Reporting OverviewPicking The Right Tool Dont Forget Periodicity

X*SAP Query

XCash Management

X**Special Purpose Ledger

X*CO-PA

XDrill-Down

XPainter/Writer LIS/SIS structure

XPainter/Writer Standard Table

Non-accountingperiod

Accountingperiod

R/3 Financials Reporting OverviewIn This Session, Youll Learn...

Key reporting tools (and submodules) you should beusing

How to get the most out of these reportingtools/modules

How to alleviate common performance problems Tips for maximizing your reporting options when

configuring the reporting submodules Advanced configuration techniques that will enable

additional reporting functionality (in Appendix B onthe CD)

What Well Cover

Looking at R/3 Financials reporting overview Getting the most out of FI/CO Leveraging CO-PA best practices

Getting the Most from R/3 FI/CO

Explore R/3 drill-down reporting Discover the Special Purpose Ledger Start using R/3 Cash Management! Consider implementing CO-PA

Getting the Most from R/3 FI/COExplore R/3 Drill-Down Reporting

Powerful, flexible tool that draws data from InfoCubes Enables reporting on multiple characteristics at once Users can slice and dice data A single report can fulfill multiple report requests Originally built for CO-PA, but now also usable for other

FI/CO areas Foundational technology for BW reporting

See Appendix B for more on how to use this tool for PCA/Costing

Getting the Most from R/3 FI/COExplore R/3 Drill-Down Reporting (cont.)

Powerful, flexible tool that draws data from InfoCubes(cont.)

Getting the Most from R/3 FI/COExplore R/3 Drill-Down Reporting (cont.)

Where can I use it? General Ledger (G/L) Accounts Payable (A/P) Accounts Receivable (A/R) Profit Center Accounting (EC-PCA) Treasury (TR) Enterprise Controlling Consolidations (EC-CS) Controlling-Profitability Analysis (CO-PA) Project Systems Product Costing Special Purpose Ledger

Getting the Most from R/3 FI/COExplore R/3 Drill-Down Reporting (cont.)

There is no single place to access drill-down reporting You must go to the specific application area you want to do

drill-down reporting on

See the handout on drill-down reporting for transaction codecharacteristics and value fields for each area

Getting the Most from R/3 FI/COExplore R/3 Drill-Down Reporting Output Types

In 4.6C, there are new output types that you can use Standard drill-down layout

Getting the Most from R/3 FI/CO Explore R/3 Drill-Down Reporting Output Types (cont.)

New layout options

Graphical output

Getting the Most from R/3 FI/CO Explore R/3 Drill-Down Reporting Output Types (cont.)

Getting the Most from R/3 FI/CO Explore R/3 Drill-Down Reporting Output Types (cont.)

ALV output

Getting the Most from R/3 FI/CO Explore R/3 Drill-Down Reporting Output Types (cont.)

You can give your users the option of selecting which outputtype to use when executing the reportTip

Getting the Most from R/3 FI/COTips for Drill-Down Reporting

Dont include too many characteristics in your report Hinders performance A good rule of thumb is to limit characteristics to six or less

Use report-to-report interface to link to other reports Line item report for reconciliation Other drill-down reports that have additional characteristics Other SAP report types that are useful for your report

Use frozen data for reports that take a long time to run See Appendix A for details!

Use mass print settings when you need hard copies

Getting the Most from R/3 FI/COExplore R/3 Drill-Down Reporting (cont.)

Creating andusing drill-

downreports

Getting the Most from R/3 FI/CODiscover the Special Purpose Ledger

The Special Purpose Ledger is a user-defined,flexible ledger Captures only what you want, for the activities you want, in

the time frame you want In very general terms, SPL can be thought of as the CO-PA

of FI What can I do with an SPL?

An SPL can update based on any activity You can pick up FI accounts as well as cost elements You can set up a series of ledgers that roll-up into one

another for consolidated reporting

R/3 Profit Center Accounting is actually a Special Purpose Ledger!

Getting the Most from R/3 FI/COWhen is the SPL a Good Fit?

The SPL is particularly good when you need to: Report off of a different fiscal year variant Report off of a different organizational structure Report on a different accounting basis (cash basis) Combine data from different parts of the system that

arent normally available in a single transaction orreporting tool

Consolidate data that falls outside of EC-CS or SEMConsolidations

Stage data for export to an external consolidation tool Report off a subset of system activities Handle complex foreign currency reporting issues

Getting the Most from R/3 FI/COSpecial Purpose Ledger Best Practices

Include all currencies you need when defining theledger It is hard to add them later! At a minimum, include transaction

currency and local currency Research how your data flows before trying to set up an

SPL Make sure you identify all of the activity types that you need to

map Use user exits in movement types

To capture all of the characteristic data you need You will also have to maintain integrated master data via

transaction code GCS1

Getting the Most from R/3 FI/COSpecial Purpose Ledger Best Practices (cont.)

Use Painter/Writer and drill-down to create SPL reports Your SPL totals table is available as a reporting table in

Painter/Writer Use transaction code GCRE1 to activate drill-down reporting

for your SPL You will also have to maintain integrated master data via

transaction code GCS1

See also: How to Tap into the Power of the SpecialPurpose Ledger Quentin HurstNote

Getting the Most from R/3 FI/COStart Using R/3 Cash Management

What is Cash Management? Submodule within Treasury Used to report short-term and medium-term cash

position and forecast Key Cash Management features you should use

Electronic bank statement Lockbox processing The Cash Management Position (CMP) report The Liquidity Forecast (LF) report

Well cover the CMP and LF reports since theyre particularlyimportant!Note

Getting the Most from R/3 FI/COWhat Is the CMP Report?

Used to forecast cash position in the short-term Based on banking transactions entered in R/3 Looks at actual cash transactions only Great tool to help manage float timing differences of

when different deposits, outgoing checks, wires, etc.,clear the bank

T codeFF7A

Getting the Most from R/3 FI/CO What Is the LF Report?

Used to forecast liquidity position over short/medium term Forecasts future obligations and receipts Based on business transactions entered in R/3 Includes transactions to convert outgoing/incoming documents

to cashPurchase orders, A/P invoicesSales orders, A/R invoices

Getting the Most from R/3 FI/CO What Is the LF Report? (cont.)

T codeFF7B

Getting the Most from R/3 FI/COCash Management Best Practices

The CMP and LF can be combined You can merge the two reports together to get a

consolidated picture of your cash and liquidity positions Provides the optimum view of short-term cash position

and forecasted cash position Use a proper bank account G/L structure Set up the appropriate number of planning groups

You can always combine Key to a good CMP is value dating timely

transaction entry

What Well Cover

Looking at R/3 Financials reporting overview Getting the most out of FI/CO Leveraging CO-PA best practices

Leveraging CO-PA Best PracticesConsider Implementing CO-PA

Why Implement CO-PA? R/3 module for tracking and analyzing profitability Helps you understand where your profits come from Captures revenue and cost of goods sold conditions from

Sales and Distribution (SD) Can also capture variances and assessments

Materials Manager (MM) variances, Production Planning (PP)variances, CO assessments, and FI journal entry activity

Gives you the information you need to make strategicdecisions Which are the most profitable customers? What product lines give me maximum contribution margin?

Leveraging CO-PA Best Practices Top CO-PA Pitfalls

Poor report performance Bad design decisions limits what data you can

report on Inconsistent value for the same key figure on

different reports Difficult or erroneous reconciliation

GOTCHA!

Leveraging CO-PA Best PracticesGetting the Most from CO-PA

1. Choose value fields strategically2. Ensure consistency with key figure schemes3. Boost performance with summarization levels4. Hasten runtimes with report splitting and Report/Report

Interface (RRI)5. Reconciliation tools

In the Appendix on the CD, there are five more CO-PAbest practices!

Leveraging CO-PA Best Practices Strategically Choose Your Value Fields

Many teams skimp on the number of value fields theyset up Example: setting up a single field called Net Revenue

instead of the components as separate fields

R/3 wont allow you to break the data out later Its indivisible once its posted As time goes on, you will be asked to break out Net

Revenue to its individual components for analysis

Leveraging CO-PA Best Practices Strategically Choose Your Value Fields (cont.)

Break potentially useful conditions into their own fields Even if you dont have a current requirement to justify the

field, in the future someone will probably ask You can always add value fields together when detail isnt

needed

Leveraging CO-PA Best Practices Ensure Consistency with Key Figure Schemes

Key figure schemes are groupings of value fields You set them up once and use them across your reports Ensures line items have the same definition across

reportsNet revenue, total cost of goods sold, etc.

When creating your report forms, you have the option ofusing value fields or key figures

Leveraging CO-PA Best Practices Ensure Consistency with Key Figure Schemes (cont.)

Set up key figure schemes via transaction KER1

Leveraging CO-PA Best Practices Ensure Consistency with Key Figure Schemes (cont.)

Leveraging CO-PA Best Practices Ensure Consistency with Key Figure Schemes (cont.)

How to use them in reports When creating the report form, you will be prompted on

whether to use characteristics, value fields withcharacteristics, or a key figure scheme

Leveraging CO-PA Best Practices Boost Performance with Summarization Levels

Summarization levels speed up report runtimes You define summary levels (tables) and specify an

update frequency R/3 generates, loads, and updates the summary tables When designing reports, you tell R/3 to use the

summarized data R/3 fills in any missing data from original table (new with

4.5!) The best tool for maximizing CO-PA report

performance!

Leveraging CO-PA Best Practices Boost Performance with Summarization Levels (cont.)

Summarization levels speed up report runtimes

SL

CE3

SL

SL

Report R/3

First

If none found

Leveraging CO-PA Best Practices Boost Performance with Summarization Levels (cont.)

How to set them up1. Define summarization levels using transaction code

KEDV2. Then tell R/3 to load the level by executing report

RKETRERU Transaction code KEDU

3. Schedule report RKETRERU to periodically run toupdate your levels Create variant in KEDU, then schedule a batch job

to run off of that variant

Leveraging CO-PA Best Practices Boost Performance with Summarization Levels (cont.)

TcodeKEDV

Leveraging CO-PA Best Practices Boost Performance with Summarization Levels (cont.)

Keys to success Choose a frequent update strategy to get the most boost

normally a nightly update strategy is used Set up and transport your levels from your Gold/CTS client Include dependent characteristics in summarization levels Dont define too many summarization levels (8-20 suffice) Avoid redundant summarization levels Make sure to periodically delete unused summarization

levels Use the delivered summarization level tools

Tip

You can also use the summary tables created by summarizationlevels to hasten custom ABAP reports

Leveraging CO-PA Best PracticesHasten Runtime with Splitting and RRI

Report splitting and report/report interface Both improve performance Break one report into multiple reports Useful with large number of characteristics or high data

volume Whats the difference?

Report splitting one report automatically calls the other RRI from the first report list you use, manually navigate

to the lower-level report using a menu path

Original slow report Faster runtime: 2 smaller reports;one calls the other when needed

SplittingRRI

Leveraging CO-PA Best PracticesHasten Runtime with Splitting and RRI (cont.)

How to split reports Use transaction code KE3L

Leveraging CO-PA Best PracticesHasten Runtime with Splitting and RRI (cont.)

How to set up a report/report interface For drill-down reporting, go to the Options tab in either

the create or change mode and click on the Reportassignment button

Leveraging CO-PA Best PracticesHasten Runtime with Splitting and RRI (cont.)

When to use splitting Reports that use a lot of characteristics or

characteristics that have a lot of values performancebecomes an issueUsers typically do the same drill-down, e.g., company

code, then product line, then customer When to use RRI

When you want to link different types of reports, such asABAP programs to Painter reports or SAP queries todrill-down reports

Users dont use a single drill-down approach, so splittingisnt a viable option

When splitting a report, users are limited to specific drill-downs

Leveraging CO-PA Best PracticesReconciliation Tools

Standard delivered CO-PA reconciliation report in R/3 4.5+ Name was derived from its transaction code KEAT Tries to reconcile FI, PCA, SD, and CO-PA at an SD

condition/account level Provides a quick overview of any discrepancies Offers drill-back functionality for out-of-balance entries

Leveraging CO-PA Best Practices Reconciliation Tools KEAT

T codeKEAT

Leveraging CO-PA Best PracticesEase Reconciliation with KEAT

Unfortunately, KEAT has some drawbacks Not completely reliable, especially in make-to-order

environments FI initiated updates arent tracked well or consistently Report output isnt customizable

The verdict: Use as a quick check to identify errorsIf KEAT shows an error, generally it is an errorDoesnt always show all errors

Still need a more reliable reconciliation tool for detailedreconciliations

Leveraging CO-PA Best PracticesSet up COS for Easier Reconciliation

What is Cost of Sale (COS) reconciliation? Simply stated, it is the creation of a COS cost element in

CO, coupled with the necessary configuration to force aCO-PA segment update during any COS activity

The solution providesDual update into CO-PA delivery and billingA separate value field for each update

A low-data alternative to setting up account-based CO-PA

Leveraging CO-PA Best PracticesMore Best Practices in the Appendix!

1. Benefit from R/3s frozen data feature2. Boost performance with summarization data3. Use realignments for mass changes4. Leverage line item reports5. Start using characteristic hierarchies

Resources

Dig into your system... On CO-PA or financial reporting: help.sap.com The R/3 Reporting Made Easy Guidebook Configuring SAP R/3 FI/CO, by Quentin Hurst and

David Nowak Sybex 2000 On your CD

Drill-down reporting handout Appendix A: More CO-PA best practices Appendix B: Using Drill-Down for PCA and Product

Costing!

7 Key Points to Take Home

Drill-down reporting isnt just for CO-PA anymore Search for the node information system in the IMG

You may be surprised at the tools you will find There are report optimization techniques in CO-PA

that arent available to other reporting tools There are specific reasons why you would use a

Special Purpose Ledger

7 Key Points to Take Home! (cont.)

SAP Query has been given a bad wrap give it a try Cash Management Position and Liquidity Forecast

are two strategic reporting tools that are oftenoverlooked

Dont forget the Appendices

Your Turn!

Questions?

How to Contact Me:qahurst@virtuosollc.com