BBP_FI_JBM_v10

JBM Group

BUSINESS BLUEPRINT(Financials)

SAP ERP 6.0 Implementation

Prepared by:

Bristlecone India Ltd.(Formerly Mahindra Consulting Ltd.)

Project TOUCHSTONEProject TOUCHSTONE

Document ControlPrepared by Contact details

Rambabu.Namamula E-mail: [email protected]: +91-9990384799

Reviewed by Contact detailsBiswadeep Sarkar E-mail: [email protected]

Mobile: +91-9811555977

Revision HistoryVersion # Date Prepared / modified by Significant changes0.9 10.04.2009 Rambabu.Namamula Submitted to JBM1.0 27.04.2009 Rambabu.Namamula Final version with corrections, for sign-off.

Distribution listDistributed to Contact details

Mr Rajesh Kumar Goyal E-mail: [email protected]: +91-9711209683

Mr Ratnesh Shrivastava E-mail: [email protected]: +91-9971003146

Mr Nitin Jindal E-mail: [email protected]: +91-9990939073

Ms Priya Kwatra E-mail: [email protected]: +91-9873151845

Last changed on: Last changed by: Version: Page:

12/8/2009 12:49:00 AM Rambabu.Namamula 1.0 2 of 82


Table of Contents

1 Project Introduction..................................................................................................................................72 Introduction to Financials in SAP...............................................................................................................73 Organizational Structure...........................................................................................................................93.1 Reporting Requirements:......................................................................................................................93.1.1 Legal Requirements:..........................................................................................................................93.1.2 Management Requirements:.............................................................................................................93.2 Proposed Enterprise Structure:............................................................................................................103.2.1 Client (Cross Application):................................................................................................................103.2.2 Company Code:...............................................................................................................................103.2.3 Profit center:...................................................................................................................................103.2.4 Profit center Group:.........................................................................................................................113.2.5 Segments:.......................................................................................................................................114 General Process Details...........................................................................................................................164.1 <JBM-FI-01>: IFRS Requirement (AS-IS Ref: FICO_P-39 & FICO_P-23)...................................................164.1.1 General Explanations.......................................................................................................................164.1.2 Explanations of Functions and Events..............................................................................................164.1.3 Special Organizational Considerations.............................................................................................164.1.4 Process Diagrams............................................................................................................................174.1.5 Changes to Existing Organization processes.....................................................................................184.1.6 Description of Improvements..........................................................................................................184.1.7 Solution in SAP................................................................................................................................194.1.8 Description of Functional Deficits.....................................................................................................234.1.9 Approaches to Covering Functional Deficits.....................................................................................234.1.10 Integration considerations...............................................................................................................244.1.11 Reporting Requirements..................................................................................................................244.1.12 Authorization Requirements............................................................................................................244.1.13 File Conversion / Interface Considerations.......................................................................................244.2 < JBM-FI-02>: General Ledger Planning (AS-IS Ref: FICO_P-27).............................................................254.2.1 General Explanations.......................................................................................................................254.2.2 Explanations of Functions and Events..............................................................................................254.2.3 Special Organizational Considerations.............................................................................................254.2.4 Process Diagrams............................................................................................................................254.2.5 Changes to Existing Organization processes.....................................................................................254.2.6 Description of Improvements..........................................................................................................254.2.7 Solution in SAP................................................................................................................................254.2.8 Description of Functional Deficits.....................................................................................................264.2.9 Approaches to Covering Functional Deficits.....................................................................................264.2.10 Integration considerations...............................................................................................................264.2.11 Reporting Requirements..................................................................................................................264.2.12 Authorization Requirements............................................................................................................264.2.13 File Conversion / Interface Considerations.......................................................................................264.3 < JBM-FI-03>: Cash Transactions (AS-IS Ref: FICO_P-03 & FICO_P-08)..................................................274.3.1 General Explanations.......................................................................................................................274.3.2 Explanations of Functions and Events..............................................................................................27




4.3.3 Special Organizational Considerations.............................................................................................274.3.4 Process Diagrams............................................................................................................................274.3.5 Changes to Existing Organization processes.....................................................................................274.3.6 Description of Improvements..........................................................................................................274.3.7 Solution in SAP................................................................................................................................274.3.8 Description of Functional Deficits.....................................................................................................284.3.9 Approaches to Covering Functional Deficits.....................................................................................284.3.10 Integration considerations...............................................................................................................284.3.11 Reporting Requirements..................................................................................................................284.3.12 Authorization Requirements............................................................................................................284.3.13 File Conversion / Interface Considerations.......................................................................................294.4 <JBM-FI-04>: Purchase Invoice Booking (AS-IS Ref: FICO_P-01, P-04, P-05, P-14, P-15, P-17, P-18, P-19, P-25, P-26, P-28, P-30 & P-31).........................................................................................................................304.4.1 General Explanations.......................................................................................................................304.4.2 Explanations of Functions and Events..............................................................................................304.4.3 Special Organizational Considerations.............................................................................................304.4.4 Process Diagrams............................................................................................................................304.4.5 Changes to Existing Organization processes.....................................................................................324.4.6 Description of Improvements..........................................................................................................324.4.7 Solution in SAP................................................................................................................................334.4.8 Description of Functional Deficits.....................................................................................................484.4.9 Approaches to Covering Functional Deficits.....................................................................................494.4.10 Integration considerations...............................................................................................................494.4.11 Reporting Requirements..................................................................................................................494.4.12 Authorization Requirements............................................................................................................494.4.13 File Conversion / Interface Considerations.......................................................................................494.5 < JBM-FI-05>: Bank Payment Voucher (AS-IS Ref: FICO_P-02)...............................................................504.5.1 General Explanations.......................................................................................................................504.5.2 Explanations of Functions and Events..............................................................................................504.5.3 Special Organizational Considerations.............................................................................................514.5.4 Process Diagrams............................................................................................................................514.5.5 Changes to Existing Organization processes.....................................................................................524.5.6 Description of Improvements..........................................................................................................524.5.7 Solution in SAP................................................................................................................................524.5.8 Description of Functional Deficits.....................................................................................................554.5.9 Approaches to Covering Functional Deficits.....................................................................................554.5.10 Integration considerations...............................................................................................................554.5.11 Reporting Requirements..................................................................................................................564.5.12 Authorization Requirements............................................................................................................564.5.13 File Conversion / Interface Considerations.......................................................................................564.6 < JBM-FI-06>: Sales Invoice Booking (As-Is Ref: FICO_P-06, FICO_P-09, & FICO_P-10)...........................574.6.1 General Explanations.......................................................................................................................574.6.2 Explanations of Functions and Events..............................................................................................574.6.3 Special Organizational Considerations.............................................................................................574.6.4 Process Diagrams............................................................................................................................574.6.5 Changes to Existing Organization processes.....................................................................................58




4.6.6 Description of Improvements..........................................................................................................584.6.7 Solution in SAP................................................................................................................................584.6.8 Description of Functional Deficits.....................................................................................................644.6.9 Approaches to Covering Functional Deficits.....................................................................................644.6.10 Integration considerations...............................................................................................................644.6.11 Reporting Requirements..................................................................................................................644.6.12 Authorization Requirements............................................................................................................644.6.13 File Conversion / Interface Considerations.......................................................................................654.7 < JBM-FI-07>: Bank Receipt Voucher (As-Is Ref: FICO_P-07).................................................................654.7.1 General Explanations.......................................................................................................................654.7.2 Explanations of Functions and Events..............................................................................................654.7.3 Special Organizational Considerations.............................................................................................654.7.4 Process Diagrams............................................................................................................................654.7.5 Changes to Existing Organization processes.....................................................................................654.7.6 Description of Improvements..........................................................................................................664.7.7 Solution in SAP................................................................................................................................664.7.8 Description of Functional Deficits.....................................................................................................674.7.9 Approaches to Covering Functional Deficits.....................................................................................674.7.10 Integration considerations...............................................................................................................674.7.11 Reporting Requirements..................................................................................................................674.7.12 Authorization Requirements............................................................................................................674.7.13 File Conversion / Interface Considerations.......................................................................................674.8 < JBM-FI-08>: Asset Accounting (As-Is Ref: FICO_P-12)........................................................................684.8.1 General Explanations.......................................................................................................................684.8.2 Explanations of Functions and Events..............................................................................................684.8.3 Special Organizational Considerations.............................................................................................684.8.4 Process Diagrams............................................................................................................................684.8.5 Changes to Existing Organization processes.....................................................................................694.8.6 Description of Improvements..........................................................................................................694.8.7 Solution in SAP................................................................................................................................694.8.8 Description of Functional Deficits.....................................................................................................714.8.9 Approaches to Covering Functional Deficits.....................................................................................714.8.10 Integration considerations...............................................................................................................724.8.11 Reporting Requirements..................................................................................................................724.8.12 Authorization Requirements............................................................................................................724.8.13 File Conversion / Interface Considerations.......................................................................................724.9 < JBM-FI-09>: Bank Reconciliation (As-Is Ref: FICO_P-12).....................................................................734.9.1 General Explanations.......................................................................................................................734.9.2 Explanations of Functions and Events..............................................................................................734.9.3 Special Organizational Considerations.............................................................................................734.9.4 Process Diagrams............................................................................................................................744.9.5 Changes to Existing Organization processes.....................................................................................744.9.6 Description of Improvements..........................................................................................................744.9.7 Solution in SAP................................................................................................................................744.9.8 Description of Functional Deficits.....................................................................................................774.9.9 Approaches to Covering Functional Deficits.....................................................................................77




4.9.10 Integration considerations...............................................................................................................774.9.11 Reporting Requirements..................................................................................................................774.9.12 Authorization Requirements............................................................................................................774.9.13 File Conversion / Interface Considerations.......................................................................................774.10 <JBM-FI-10 > Inventory Valuation: (As-Is Ref: FICO_P-29 & FICO_P-37)................................................784.10.1 General Explanations.......................................................................................................................784.10.2 Explanations of Functions and Events..............................................................................................784.10.3 Special Organizational Considerations.............................................................................................784.10.4 Process Diagrams............................................................................................................................784.10.5 Changes to Existing Organization processes.....................................................................................784.10.6 Description of Improvements..........................................................................................................784.10.7 Solution in SAP................................................................................................................................784.10.8 Description of Functional Deficits.....................................................................................................804.10.9 Approaches to Covering Functional Deficits.....................................................................................804.10.10 Integration considerations...........................................................................................................804.10.11 Reporting Requirements..............................................................................................................804.10.12 Authorization Requirements........................................................................................................804.10.13 File Conversion / Interface Considerations...................................................................................804.11 <JBM-FI-11>Buyers Credit: As-Is Ref: FICO_P-40..................................................................................814.11.1 General Explanations.......................................................................................................................814.11.2 Explanations of Functions and Events..............................................................................................814.11.3 Special Organizational Considerations.............................................................................................814.11.4 Process Diagrams............................................................................................................................814.11.5 Changes to Existing Organization processes.....................................................................................814.11.6 Description of Improvements..........................................................................................................814.11.7 Solution in SAP................................................................................................................................814.11.8 Description of Functional Deficits.....................................................................................................814.11.9 Approaches to Covering Functional Deficits.....................................................................................814.11.10 Integration considerations...........................................................................................................814.11.11 Reporting Requirements..............................................................................................................814.11.12 Authorization Requirements........................................................................................................824.11.13 File Conversion / Interface Considerations...................................................................................82




1 Project IntroductionJay Bharat Maruti Group (JBM) is currently in the process of implementing SAP ERP 6.0 as a central ERP application for managing their business operations. Mahindra Consulting (a Division of Bristlecone India Ltd.) (MCL) has been selected as the external service provider for providing services to JBM for this project.

The following modules of SAP ERP are being implemented as part of this project: Sales & Distribution Materials Management Finance & Controlling Production Planning Plant Maintenance Quality Management Project Systems Human Resources / Payroll

The business blueprint document (this document) captures the high level requirement, and its solution into SAP for the Financials function as applicable in the JBM Group.

2 Introduction to Financials in SAPThe SAP FI Module has the capability of meeting all the accounting and financial needs of an organization. It is within this module that Financial Managers as well as other Managers within your business can review the financial position of the company in real time as compared to legacy systems which often times require overnight updates before financial statements can be generated and run for management review.

The real-time functionality of the SAP modules allows for better decision making and strategic planning. The FI (Financial Accounting) Module integrates with other SAP Modules such as MM (Materials Management), PP (Production Planning), SD (Sales and Distribution), PM (Plant Maintenance), and PS (Project Systems).

Document transactions occurring within the specific modules generate account postings via account determination tables.

FI module comprises several sub-modules is Financial Accounting. Sub-modules are General Ledger (GL), Bank Accounting (BL), Accounts Receivable (AR), Accounts Payable (AP) and Asset Accounting (AA).

General Ledger is fully integrated with the other SAP Modules. It is within the General Ledger that all accounting postings are recorded. These postings are displayed in real-time providing up-to-date visibility of the financial accounts.

Bank Accounting allows for management of bank transactions in the system including cash management.

Accounts Receivables records all account postings generated as a result of Customer sales activity.




Accounts Payable records account postings generated as a result of Vendor purchasing activity. Automatic postings are generated in the General Ledger as well. Payment programs within SAP enable the payment of payable documents by payment medium like check, bills of exchange, etc.

Asset Accounting is utilized for managing your company’s Fixed Assets. SAP allows you to categorize assets and to set values for depreciation calculations in each asset class.




3 Organizational StructureJBM Group is incorporated with twelve legal entities, which includes two public limited companies, five closely held companies and five Joint ventures with 21 plants in eleven locations. All plants are located within the Geographical location of India.

For Management reporting purpose these twelve legal entities are further divided into five responsible Business groups.

3.1Reporting Requirements:Reporting needs within the JBM Group includes of the following two categories.

Statutory / Legal Requirements: These are the statutory requirements according to Indian Company Law.

Management Requirements: These are Executive Management requirements for measuring the Business group’s performance.

3.1.1 Legal Requirements: Single Set of Statutory Financial Statement for each legal entity: Segment report compliance as per International Accounting Standard (IAS 14) for IFRS reporting. Geographical Segment reporting as per Indian Accounting standard. Stock Statement along with Book Debt at each plant level Cash Flow Statement at each legal entity level/Business group level Consumption of Material details at Excise Group level In case of Public limited companies, Financial Statement Result for Share Holders Reconciliation of Segment Report with Legal entity result Details of Inter-company transactions 100% Consolidation in case of 100% subsidiary companies. Financial Analysis Chart as per JBM requirement In case of Joint Venture Company, Balance Sheet to be merged on the basis of equity participation. In particular case of JBM MA Automotive Private Limited balance sheet required on calendar Year

basis Quarterly Balance Sheet with comparisons

3.1.2 Management Requirements: Component unit financial statements based on Divisions. Business Group wise financial statements Business Group wise/Division wise Budget/Actual details with variances Plant /Division /Business Group wise Score cards Weekly Review reports at Business group level Business Group wise Flash Report. Break Even Analysis




3.2Proposed Enterprise Structure:SAP enterprise structure is an organizational structure that represents an enterprise in the SAP ERP system. It consist of some organizational units which, for legal reasons or for other specific business related reasons are grouped together. Organizational units include legal company entities, profit centers, segments, plants etc.

JBM enterprise structure is mainly determined by the business scenarios performed in each organizational unit.

3.2.1 Client (Cross Application):A client in SAP ERP is a technical entity containing configuration, master data and transactions for an organization. For example the organization may designate Client 100 in the production system PRD as the client in which data may be entered. Other clients may be used for development, testing and training.

Proposal: The JBM Group will have only one production client in the productive system.

3.2.2 Company Code:The Company Code is the smallest organizational unit for which a complete self-contained set of accounts can be drawn up for purposes of external reporting.

Proposal: Financial statements are required for each legal entity according to company Law. Hence each legal entity will have one company code in SAP. Below mentioned company codes has been proposed for JBM Group.

Company Code Company Code Description1000 Jay Bharat Maruti Limited1500 JBM Auto Limited2000 Neel Metal Products Limited2500 JBM Industries Limited3000 Jaico Steel Fasteners Pvt. Limited3500 Jay Bharat Exhaust Systems Limited4000 Neel Industries Pvt. Limited5000 Satellite Forging Pvt. Limited5500 ANS Steel Tubes Pvt. Limited6000 JBM MA Automotive Pvt. Limited6500 Indo Tooling Pvt. Limited7000 Arcelor Neel Tailored Blank Pvt. Limited

3.2.3 Profit center:Profit center are units, within an Organization, for which a balance sheet and income statement can be produced. In JBM, Profit centers are typically used to represent sub divisions such as Sheet metal components, Real Axle, BIW, Fuel Neck, JIGS & Fix, and Tube Manufacturing etc. for which separate set of balance sheets and income statements are required.




The profit center view shows the various internal areas of responsibilities. Objects such as cost centers, materials, etc can be used for profit center analysis. Profit center can be used to determine the revenues, costs, and profitability for specific areas of responsibility

Proposal: JBM Group will have Profit centers, which represent sub divisions in business plant. Below mentioned Profit centers are proposed for JBM group for getting the sub-division level financial statements.

3.2.4 Profit center Group:In addition to balance sheets by Sub divisions, the JBM Group requires a separate internal balance sheet and income statement for each Division such as Sheet Metal Division, Tool Room Division etc.

Profit Center Group reports are an important part of Management reporting. Business Division level analysis of various segments, products, regions etc is possible using Profit center groups.

Proposal: Profit center group represent Divisions in Business plant. Below mentioned Profit center groups are proposed for JBM Group.

3.2.5 Segments:Segment is the division of a company for which you can create financial statements for external/ internal reporting.

US GAAP requires a virtually complete balance sheet at the segment level for segment reporting (essentially everything apart from stockholders' equity). The segment is defined as a sub area of a company with activities that generate expenses and revenues, with an operating result that is regularly used by management for profit assessment and resource allocation purposes, and for which separate financial data is available

Proposal: Segment will represent Geographical plant. So that we can get primary segment dimension report and physical plant wise financial statements and consumption details at excise group.

Basic Requirements:General Ledger Account Group : When creating a G/L account, you must specify an account group. The account group determines:




The interval in which the account number must be Which fields are required, optional entries or suppressed when creating and changing master records.

You use account groups to combine accounts according to the above criteria (for example, a P&L account group, asset account group and material account group).

Chart of Account: The Chart of Account contains the list of GL accounts. The common chart of account will be used by the all Company codes in JBM Group. JBM Group will use Chart of Account 100, maintained in English with a maximum length of 8 digits per GL Account. Following attached excel sheet is the GL List of chart of account.

Currency: The local currency will be used for reporting purpose is INR (Indian Rupee) and USD (US Dollar) will be used for IFRS reporting purpose. The company code will be attached to local currency INR (Indian Rupee). The system uses the type M exchange rates for foreign currency translation when posting and clearing documents. M is the Monthly average rate. An entry must exist in the system for this exchange rate type.

Global Settings:Fiscal Year: A Fiscal Year is the normal accounting period for which the working results and balance sheet is compiled and published every year. The fiscal year variant is used to define the fiscal year.

JBM Group will use the fiscal year variant V3 which contains 12 regular periods and 4 special periods (to be used for posting year end entries). Every year will fall between 01.Apr.XXXX to 31.Mar.XXXX.

Posting Periods:The Posting period variant determines the period for which accounts are available for postings. This is used for closing the completed periods and opening new periods.

JBM Group will use 12 posting period variant and will be assigned to each company codes. Following are the posting period variant to be used:

Posting Period Variant Naming ConventionJay Bharat Maruti Limited 1000JBM Auto Limited 1500Neel Metal Products Limited 2000JBM Industries Limited 2500Jaico Steel Fastners Pvt. Limited 3000Jay Bharat Exhaust Systems Limited 3500Neel Industries Private Limited 4000




Satellite Forging Pvt. Limited 5000ANS Steel Tubes Pvt. Limited 5500JBM MA Automotive Private Limited 6000Indo Tooling Private Limited 6500Arcelor Neel Tailored Blank Private Limited 7000

Document Types and Number RangesThe document type determines the nature of FI entry. Number ranges are assigned to the document type. Number ranges determine the numbering of the document created with a document type.

JBM Group will use the standard document types and number ranges for FI related postings. The number ranges will be internal (system generated). If require new document types will be created.Standard Document types will be used. Same is attached in excel sheet format.

Field Status VariantA field status variant groups together several field status groups. A field status variant is assigned to each company code.Field status groups are defined in the company code-specific area of each G/L account. The field status group determines which fields are ready for input, which is required during entry fields, and which are suppressed during document entry. This specification is known as the field status. Any additional account assignments (i.e. cost centers or orders) are only possible if data can be entered in the corresponding fields.

Following are field status variant, which will be created separately by copying 0001 (standard) assigned to the each Company code.

Field Status Variant Naming ConventionJay Bharat Maruti Limited 1001JBM Auto Limited 1002Neel Metal Products Limited 1003JBM Industries Limited 1004Jaico Steel Fasteners Pvt. Limited 1005Jay Bharat Exhaust Systems Limited 1006Neel Industries Private Limited 1007Satellite Forging Pvt. Limited 1008ANS Steel Tubes Pvt. Limited 1009JBM MA Automotive Private Limited 1010Indo Tooling Private Limited 1011Arcelor Neel Tailored Blank Private Limited 1012

The list of field status groups available are as follows:




Group DescriptionG001 General (with text, allocation)G003 Material consumption accountsG004 Cost accountsG005 Bank accounts (obligatory value date)G006 Material accountsG007 Asset accts (w/o accumulated depreciation)G008 Assets area clearing accountsG009 Bank accounts (obligatory due date)G011 Clearing accounts (with settlement per.)G012 Receivables/payables clearingG013 General (obligatory text)G014 MM adjustment accountsG017 Freight/customs provisions/clearing (MM)G018 Scrapping (MM)G019 Other receivables/payablesG023 Plant maintenance accountsG025 Inventory adjustment accountsG026 Accounts for down payments madeG029 Revenue accountsG030 Change in stock accountsG031 Accounts for down payments receivedG032 Bank accounts (obligate.value/due dates)G033 Cost accounts for external servicesG036 Revenue accts (with profit center)G039 Accts for pmnts on acct made for assetsG040 Personnel clearing accountsG041 Tax office clearing accountsG045 Goods/invoice received clearing accountsG049 Manufacturing costs accountsG050 Customer commission clearing accountsG052 Accounts for fixed asset retirementG056 Amortization accountsG059 Inventory accounting material stock acctG062 Investment support accountsG064 Other cost accounts (obligatory text)G067 Reconciliation accountsG068 Reconciliatn accts (payables – Austria)G069 Cost accounts (travel expenses)G070 Clearing accounts (travel expenses)G071 Reconcil.accts (KIDNO/foreign payment)ICCF CO <-> FI reconciliation posting




4 General Process Details

4.1<JBM-FI-01>: IFRS Requirement (AS-IS Ref: FICO_P-39 & FICO_P-23) International Financial Reporting Standards (IFRS), together with International Accounting Standards (IAS), are a "principles-based" set of standards that establish broad rules rather than dictating specific accounting treatments. IFRS Reporting will be for the financial year January to December which is mandatory from year 2011 onwards in currency USD.

4.1.1 General ExplanationsSAP has a ledger concept, where automatically SAP stores the data centrally for reporting purpose. This generates financial report Profit and Loss Account and Balance Sheet in INR currency for the financial year.

4.1.2 Explanations of Functions and EventsNot Applicable

4.1.3 Special Organizational ConsiderationsJBM Group requires financial report for the year from January to December in USD currency for IFRS reporting purpose.General Ledger system should support reporting for multiple GAAPs. Since JBM Group has requirement for reporting under Local GAAP, additional general ledger should support US GAAP for IFRS reporting and simultaneously support local GAAP and Tax requirements. Local and Tax GAAP would need to cater to different fiscal year reporting requirement.

System should enable posting for particular GAAP requirement only and prevent specific document types to be posted to other GAAP accounting.

During month end process, system should allow posting only to specific users and prevent posting for the period for general users.

Profit center level financial statements are required for reporting to Corporate and also for Local management analysis.




4.1.4 Process Diagrams




4.1.5 Changes to Existing Organization processes Separate accounting for different GAAPs Selection for posting to specific GAAP accounting

4.1.6 Description of ImprovementsWith new GL functionality, Balance Sheet can be taken at profit center level.




4.1.7 Solution in SAPLedgers: A ledger is a section of database table. A ledger only contains those dimensions (like profit center, business area etc.) of the totals table that the ledger is based on and that are required for reporting. In General ledger accounting you can have several ledgers in parallel. This allows you to produce financial statements according to different accounting principles.

Leading Ledger: This leading ledger is integrated with all subsidiary ledgers and is updated in all company codes. This means that it is automatically assigned to all company codes in the client. The leading ledger gets the same settings that apply to the company code like fiscal year variant, currency, posting period variant.

Non-Leading Ledgers: Non-leading ledgers are parallel to leading ledger. They can be based on different accounting principal to the leading ledger. Non-leading ledgers have to be activated for specific company codes. Non-leading ledgers can have different settings to that of company codes assigned to them like fiscal year variant, currency, posting period variant.

For posting to specific ledgers, ledger group needs to be selected.

Note: Any account managed on open item basis can’t be posted to only specific ledgers.

In JBM Group it is envisaged to have one leading ledger (0L) (as client is single) for entire JBM Group. Non-leading ledgers would be defined for meeting the US GAAP and local tax requirements. All company codes would have V3 fiscal year (April - March), and local currency INR as per the country. These settings would be copied to the leading ledger for the specific company codes.

Ledger groups: A ledger group is to be used if there are certain entries which are to be posted to only specific ledgers.

In JBM Group, it is envisaged that there would be Local GAAP and US GAAP reporting and hence there would be two additional ledger groups (one for Local GAAP and other for US GAAP) for enabling specific entries for these to GAAP reporting requirement. Local GAAP ledger group would be 0L containing only the lead ledger 0L. Other US GAAP ledger group L1 and L2 would be created as per the legal requirement.

For the additional parallel ledgers the fiscal year variant and posting period variant would be defined separately to meet the Local GAAP and Tax reporting.SAP provides standard reports for Profit and loss Account and Balance Sheet.

Functionality of New GL concept: New GL concept is about document splitting, details are as follows:

Definition and Meaning:

Document splitting allows you to display documents using differentiated representation. In this representation line items are split according to selected dimensions. This means you can draw up balance sheet for the selected dimensions at any time without going through any specific activities in the system. This document splitting would happen on-line.




Following functions are part of document splitting: Passive document splitting: This process is used in clearing and similar process where a reference to

an existing account assignment is made. These account assignments are used as the basis for document splitting.

Active document splitting: In this function line items are split as per the settings in the system. Various GL accounts are classified for example expense, revenue etc. Document types are also classified and assigned to different transaction and screen variant. The dimension which are to be used as splitting characteristics have to be set up and this you can decide whether the dimensions should have Zero balance while posting and whether they are mandatory. There are predefined document splitting methods. There are also predefined document splitting rules in for each method you assign transaction and screen variant. Finally the document splitting methods are assigned to company codes.

Subsequent Operations: Like clearing such as realized gain or loss. In this case system would post the realized gain or loss to the original cost object in the original cleared document. Other function is closing operations like foreign exchange valuation; in this case system would post the unrealized gain or loss to the cost object in the valuated line item.

In JBM Group it is envisaged to activate document splitting for all company codes. Since there is a requirement of profit center level financial statements, Zero balance and Mandatory requirement would be selected for profit center dimension. Also since cost of sales accounting is envisaged, Functional area would be enabled. Leading ledger would have profit center and functional area scenario assigned and non-lead ledgers scenario assignment would be decided during country roll outs. There is no requirement for business area and segment and hence these scenarios wouldn’t be assigned to any of the ledgers.

1. Business Process in GL accounting1.1. General Ledger Postings:SAP FI General Ledger would enable the following:

Automatic and simultaneous posting of all sub-ledger items in the appropriate general ledger accounts (reconciliation accounts)

Simultaneous updating of general ledger and controlling area Real-time evaluation and reporting of current accounting data, in the form of account displays,

financial statements with different financial statement versions and additional analyses.

Essentially, the general ledger serves as a complete record of all business transactions. It is the centralized, up-to-date reference for the rendering of accounts. Actual individual transactions can be checked at any time in real-time processing by displaying the original documents, line items, and transaction figures at various levels such as:

Account information Journals Totals/transaction figures Balance sheet/profit and loss evaluations

GL postings would be through the following Modes: Manual Entry. ( with or without posting aids ) Manual Entry with Parking and workflow for posting




Automatic Updating through Integration with other SAP Modules like MM Module for all Purchases, Material Issues, Transfers, Inventory Valuation etc. SD module for Billings, Stock transfers to depots etc. PP Module for Production Quantities, Cost etc. PM module for Maintenance Cost Booking or Capitalization of Maintenance Expenses etc. The Data will flow from other modules into FI Module thereby updating all the required Books of Accounts.

Various Posting tools are also provided by SAP for Manual Entries. These are mentioned as below:

Recurring Entry: Periodically recurring entries can be posted by the recurring entries program depending upon the accounting requirement. This process is comparable to the standing order you give to your bank to deduct your rent, premium payments, or loan repayments. Similar requirements can be handled using this option. The following data never changes in recurring entries:

Posting key Account Amounts

You enter this recurring data in a recurring entry original document. This document does not update the transaction figures. The recurring entry program uses it as a basis for creating accounting documents depending on the specifications given for executing the recurring entry program.

Document Reversal: There are two methods of reversing a document Single Reversal: Document reversal for posted documents, allows the user to reverse the documents

based on the document numbers as opposed to making a manual entry and neutralizing the effect of unwanted entry. The original document is updated with the information of the reversal doc and both of them can be viewed sequentially through the established link.

A document can only be reversed if: It contains no cleared items It contains only customer, vendor, and G/L account items It was posted within Financial Accounting

Mass Reversal: There might be situations where documents have been punched in with wrong data and a facility is required to reverse documents collectively. Such situations can be overcome in SAP by reversing documents collectively.It’s necessary to specify the reasons for the reversal transaction.

1.2. GL Account ClearingAccount Clearing:

The clearing function is required for all vendors and customers accounts so that transactions can be tracked by their status as "open" or "cleared”. This enables amongst other things analysis of out standings from, or to other parties and linking payments /credit/ debit memos from, or to other parties with the relevant invoicing and billing transactions.

For other GL accounts like bank receipt clearing and bank payments clearing accounts which would receive offsetting entries at the time the bank statement is being uploaded.

The basic prerequisite for clearing is that the accounts must be kept on an open item basis.




Customer and Vendor accounts are by default open item managed. This allows monitoring of outstanding receivables and payables at any time. The open item management option, however, must be defined for general ledger accounts.

This option must be set for example, for all clearing accounts and bank sub-accounts in order to be able to track whether the business transactions posted to these accounts are closed yet.

With the manual clearing option clearing is possible against any GL Accounts that are maintained as Open Item Managed. These are relevant specifically for Balance Sheet items e.g. Payables (as in the case of TDS payables, Taxes Payable etc.)

In JBM Group context the clearing function is of great importance and there’s a requirement to enable both “Post with clearing” and “Manual account clearing”.

Automatic Clearing:Automatic clearing is predominantly used in case of entries posted in FI from other SAP modules like MM and SD. for ex: clearing of GRIR clearing accounts etc.

1.3. GL Account Analysis

The following tools are available in SAP for GL Account Analysis: Line item Display. Balance Display. Various reports based on GL Accounts (GL Evaluations)

All available GL Account Analysis as provided in standard SAP would be available. Various standard reports based upon periodic comparison, structured list of GL Accounts can be used for GL Analysis.In addition to the above mentioned, SAP has the functionality to maintain accounts on open item management basis. This enables segregation of transactions based on their status as to open or cleared.All the above mentioned analysis would be available for JBM Group. Each process is mentioned below in detail:

1.3.1. General Ledger Line item Analysis: GL Line Item Display is provided for all GL Accounts except reconciliation GL Accounts. Since Posting entries are coming both from FI as well as other SAP modules, the drill down facility would also be possible whereby a user will be able to drill down to the last node. The user through this functionality would be able to view all the entries posted to any General Ledger Account.

All the customer & vendor accounts are by default Line Item as well as open item managed.Special fields will be activated for the limited purpose of MIS against certain GL Accounts where the users need to analyze value posted in GL Accounts for a specific reason. This can be in case of consumption or inventory related GL Accounts.

Line items can be displayed as follows:




Open items Cleared items Noted items Parked items Items with special G/L transactions (in Accounts Receivable and Accounts Payable) Items with customer or vendor items (in Accounts Receivable and Accounts Payable)

You can display the line items for the following account types: Customer accounts Vendor accounts G/L accounts

1.3.2. General Ledger Balance Analysis:SAP Standard GL Balance Analysis will be available for all GL's. The summary of Postings made during a posting period can be analyzed using this functionality. Yearly Closing procedure and balance transfer activity will have to be run for transferring closing balances from one fiscal year to the next.

The account balance displays the following: The opening balance (the balance carried forward from the previous year) The total of all transactions for each posting period, broken down into debit and credit

postings (transaction figures) From these figures the system also calculates the following for the account balance display: The balance per posting period The accumulated account balance

1.3.3. General Ledger Evaluations:Various standard SAP standard reports are available for GL Evaluations. These are of following types:

Periodic reports with Actual Comparisons. Structured List of GL Balances. Financial Statement Version - specifically designed to suffice organizational reporting

requirement. Segment wise reports.

Financial statement analyses can be for any of the following periods: Year comparison Half-year comparisons Quarterly comparisons Monthly comparisons

4.1.8 Description of Functional DeficitsNot Applicable

4.1.9 Approaches to Covering Functional DeficitsNot Applicable




4.1.10 Integration considerationsNot Applicable

4.1.11Reporting RequirementsReports are acknowledged and have been included in the report list.

4.1.12Authorization RequirementsNot Applicable

4.1.13File Conversion / Interface ConsiderationsNot Applicable




4.2< JBM-FI-02>: General Ledger Planning (AS-IS Ref: FICO_P-27)

Please refer CO- BBP No. JBM-CO-15: Budgeting

4.2.1 General ExplanationsThe following options are available for creating plan data:

You can enter plan totals and distribute them to the individual plan periods using a distribution key. You can enter plan data for the individual plan periods and have the system total these amounts.

4.2.2 Explanations of Functions and Events A planner profile is assigned for variance tracking. In the planner profile selected planned amounts are entered for each GL code for the particular period

and saved. One or more planning layouts can be defined. For each planning layout, it is to be determined which

totals table (usually FAGLFLEXT) the planning is to be based on, which characteristics and key figures are to be used, and the layout of the entry screen.

We can also enter specific values for the selected characteristics and key figures. You define a planning layout for each variant of your planning. In the standard system, SAP delivers several planning layouts that you can use as a template for your own planning layouts.

4.2.3 Special Organizational ConsiderationsThe planned figures are entered manually.

4.2.4 Process Diagrams Not Applicable

4.2.5 Changes to Existing Organization processesChange management issues as appropriate.

4.2.6 Description of ImprovementsIt will be possible to get variance between planned GL figures and actual figures

4.2.7 Solution in SAPGL planning will be done profit center wise. The GL planning starts with the extraction of previous period actual GL data. Plan depreciation for next year, will be executed in FI- Asset management. This would be extracted cost center wise.

The GL planning owner will be able to change plan amounts on absolute as well as on % basis on a profit center group.




Cash Flow Budget & Financial Statement Budget:1. Balance sheet items will be planned with the using of suitable planning layout.2. Income statement planning and Balance Sheet planning applications provide the input for Cash flow

planning3. Changes in all cash flow items will be calculated on the basis of previous period actual and the plan

values flowing from Income Statement and Balance Sheet planning.

4.2.8 Description of Functional DeficitsRequired reports are not available in SAP standard system.

4.2.9 Approaches to Covering Functional DeficitsJBM Budgeting requirements can be handled in SEM – Business Planning and Simulating module and reports can be taken through B/W module.

4.2.10Integration considerationsFinancial Accounting – General ledger and Controlling


4.2.12Authorization RequirementsAuthorization will be provided to the proper user under client direction.





4.3< JBM-FI-03>: Cash Transactions (AS-IS Ref: FICO_P-03 & FICO_P-08) Cash transactions takes place on daily basis, it includes all type of cash transactions like cash receipt, cash payment, cash expenses etc.

4.3.1 General ExplanationsCash account, which is a compact double entry journal, managed in account form that records the posting for cash transactions. JBM group have a requirement of advance payment to employees and vendors etc., TDS deductions and tax calculations.


4.3.3 Special Organizational ConsiderationsSeparate Cash Account will be maintained. as per physical plant location wise. In case of JBML one cash account will be maintained.


4.3.5 Changes to Existing Organization processesDifferent General Ledger account will be maintained for cash transactions for each physical plants.

4.3.6 Description of ImprovementsCash transaction reports can be taken at any time.

4.3.7 Solution in SAPCash transactions will be posted as journal voucher. So that it could support requirements of JBM Group like advances to employees, TDS deductions from liable vendors etc, Inter Company transfer. As per the JBM requirement negative cash balance and more than Rs. 20,000 should not be allowed for a single transaction for a single user.

Bank Accounts:Scheme of entries

a) On Payment: Vendor A/c……………………..……..Dr.Cash in Hand A/c………………………Cr.

b) On Receipts: Cash in Hand A/c……..………......Dr.Customer A/c…….…………..……..Cr.




c) On cash withdrawal: Cash in Hand A/c…………..……..Dr.Main Bank Account………..………Cr.

d) Cash deposited in Bank: Bank A/c…………………..…..……Dr.To Cash A/c………………….……….Cr.

While transferring the cash from one company to another company code, inter company clearing account postings will happen in both the company codes.

Transferring Company Code:

Inter company clearing A/c………….Dr. (Receiving company code) Cash A/C…………………………….………..Cr.

Receiving Company code:

Cash A/C………………………………………Dr. Inter company clearing A/c…………Cr. (sending Company Code)

e) Cash Transfer within company code: Cash A/c……………………………………….Dr. Profit Center 1Cash A/c……………………………………………Cr. Profit Center 2

SAP provides standard report for General Ledger Analysis. Standard cash receipt voucher printing is available.

4.3.8 Description of Functional DeficitsTo stop the negative posting cash transactions, system should not allow to users, if cash balance goes negative.

4.3.9 Approaches to Covering Functional DeficitsA user exit will be used to check the balance and to stop for payment if cash is not sufficient with an error message. Cash Book report will require a development as per the format.

4.3.10Integration considerationsNot Applicable

4.3.11Reporting RequirementsReports has been acknowledged and included in the report list.





4.4<JBM-FI-04>: Purchase Invoice Booking (AS-IS Ref: FICO_P-01, P-04, P-05, P-14, P-15, P-17, P-18, P-19, P-25, P-26, P-28, P-30 & P-31)

Logistic Invoice verification is a process of accounting vendor invoice that has an underlying purchase order for goods received. This form is the part of procurement cycle.

4.4.1 General ExplanationsAll vendor invoices received against purchase of goods or services are posted to respective vendor accounts. These vendor accounts are integrated to the General Ledger through a reconciliation a/c. Postings made in Accounts Payable are simultaneously recorded in the General Ledger. Separate G/L accounts are updated based on the type of transaction involved (for e.g. payables and advance payments). After entry of the document details but before posting, the system carries out consistency checks before saving the data. When the debits equal the credits, and the data is complete, the system posts the document. If errors exist, the data is not saved, and the system proposes adjustments.

There are basically two methods of purchasing for which Invoices or credit notes needs to be accounted for: Purchase order related: Invoice processing by purchase order, Goods receipt and delivery note. Credit

Note\ Debit note can be passed to adjust the vendor’s value. Without a purchase order: These can primarily be classified as financial entries. Normally no

purchases are involved. Credit Note\ Debit note can be passed to adjust the vendor’s value.

4.4.2 Explanations of Functions and EventsBill booking process will be based on the agreed terms and conditions where in the rate and the scheduled delivery dates are fixed up. Once the goods are received at location, they are subject to quality check. Goods after quality clearance and after the receipt of actual vendor invoice directly at accounting location the bill booking process are initiated.

The following are the process scenarios to be addressed:I. Accounting of Invoices from domestic vendors.

II. Accounting of Invoices from Foreign vendors.III. Accounting of Invoices from Service Providers. IV. Accounting of Invoices without formal SAP Purchase Orders.

4.4.3 Special Organizational Considerations The Invoice Verification Process will be carried out at the Accounting locations. JBM Group will use Invoice verification and posting two step processes. After invoice verification document will be parked by the user. All parked invoices will be posted under the supervision of super user.





4.4.5 Changes to Existing Organization processesNot Applicable

4.4.6 Description of ImprovementsFollowing are benefits:

Paperless processes Information captured once only at source Automatic update of AP and GL related accounts Match against purchase order and receipt No need for re-entering the data (supplier, quantity, price, amount is on the PO) Purchase order pre-approves invoice Automatic accrual if invoice has not arrived




4.4.7 Solution in SAPInvoice Verification generally happens at the end of the material procurement process. Vendor presents invoice for delivery made on the basis of a purchase order.

Accounts Payable Invoice AccountingVendor Group:Vendor Group is the categorization of similar type of vendor. JBM Group is decided to go with following type of vendor group:

Vendor Group Internal No. Ranges

G/L Reconciliation A/C No. – Domestic

G/L Reconciliation A/C no. – Import

From ToRaw Materials Vendor 100001 109999 Trade Creditors - Domestic Trade Creditors – ImportBought Out Parts vendor

200001 209999 Trade Creditors - Domestic Trade Creditors – Import

Maintenance 300001 309999 Trade Creditors - Domestic Trade Creditors – ImportConsumables 400001 409999 Trade Creditors - Domestic Trade Creditors – ImportService Contractors 500001 509999 Service Creditors - Domestic Service Creditors – ImportCapitals Goods Vendors 600001 609999 Capital Creditors – Domestic Capital Creditors – ImportEmployees 700001 709999 Employee Creditors Not ApplicableInter Group Plants 800001 809999 Inter Group creditors Not ApplicableOne Time Vendors 900001 909999 Trade Creditors - Domestic Trade Creditors – Import

1. Organization StructurePlease refer to MM – BBP, Page-14.

2. Master Data2.1. Accounts Payable Master Record

The Accounts Payable application component records and administers accounting data for all vendors. It is integrated with FI - GL module. The system automatically makes postings in response to the operative transactions.

The accounts payable master data controls the posting of accounting transactions to G/L reconciliation accounts and the processing of the posting data. Direct postings to a G/L account (reconciliation account) cannot be made, but individual Vendor accounts need to be created which will be assigned to a GL account based on the nature of payment like advance payment or capital equipment payment etc. It has been decided that three reconciliation accounts will be maintained. Additional reconciliation accounts will be created for special GL transactions such as down payments, etc.

The prerequisite of Accounts Payable module is the existence of Vendor Master Data. The Vendor Masters Creation process can be triggered from both MM and FI module. For creation of Vendor Master, following inputs are required:

A. Specify Company Code & Purchase Organization: If the vendor master is created centrally, besides company code, a purchase Organization is also required. We can primarily organize the entire vendors into two categories- Vendors for purchases and Financial Vendors. In case of




Vendors for purchases we need to assign all the vendors to a purchase organization and need to maintain at the central Level, whereas for financial vendors they can be maintained without a purchase organization and can be maintained through Accounts Payable Module only, because they do not require any purchasing view.

B. Specify Account Group: Specify the account group of the new vendor master is to be created in. Creation of vendor master can also be referenced to an existing vendor. By doing so, general data will be copied whereas information that are specific to a particular vendor such as name & address will not be copied.

C. Vendor Account Number Assignment: Each vendor account group is assigned a number range. This range maybe internally assigned by the system or externally assigned by the user upon creation of the master. Internally assigned number has to be numeric only whereas externally assigned number maybe numeric or alphanumeric. Please note that, all the vendors belonging to same Account Group would have a common Numbering pattern i.e. either Internal or External.

D. Input vendor Address: Name and address of the vendor has to be specified. This will be used in correspondence to the vendor. Other information for correspondence such as telephone and facsimile numbers can also be stored for information purpose. Maintain the search term for easy of finding the vendor master.

E. Input Purchasing Organization Data: Maintain purchasing data and partner data for the vendor masters created centrally.

F. Input General and Company Code Data: This section of the vendor Master Record primarily belongs to input related to Accounting Function. This section can be bifurcated into the following:

a. Specify Account Control: If the vendor is also a customer and if netting between customer balances is allowed, the name of the customer must be stated. This mean when inquiring the vendor balances, it will net off the amount owing to the customer.

b. Specify Payment Transactions: Bank details for vendors are maintained here. These details will be extracted for use by the payment program. Use of these bank details is dependent on the payment method used.

c. Specify Accounting Information: An important field is the reconciliation account number, which is the GL control account. Vendors from the same account group should be assigned to same General Ledger Control Account. These GL Control Accounts cannot be posted into directly. Few examples of these control accounts could be: Vendor for Domestic Purchases, Vendors for Imports, Financial Vendors, Employee Vendors, and Vendors for Capital Goods. The required control Accounts would be defined in the due course:

d. Specify Payment Transactions (Terms, Methods etc.): Maintain the payment terms for the vendor. Payment terms determine when payment is due and whether or not any Cash Discount is given. Based on this the automatic payment program will propose to maximize cash discount. This term will be defaulted in all accounts payable postings to the vendor account. These payment terms maybe installment in nature, where amounts are proportioned to the respective due dates. Each payment method calculates the due dates from the baseline date. The Payment methods also need to be defined in the vendor master.

One time Vendor: One-time vendor functionality would be enabled for capturing transactions for non frequent vendor.




With all the above-mentioned inputs the user can save the Vendor Master. This would create the vendor master and generate the Number in case of Internal Number Assignment.

3. Business ProcessesInvoice Verification generally happens at the end of the material procurement process. The vendor presents an invoice for a delivery made on the basis of a purchase order.

In SAP, the goods receipt and invoice receipt are managed via a GR/IR clearing account. When a goods receipt is entered, an open item is created in the GR/IR clearing account. The posting of invoice clears the GR/IR clearing account. If there are price differences between the purchase order and the invoice, the account movements vary depending on the sequence of goods receipt and invoice receipt.

The stock account is posted with the receipt value based on the purchase order price.The purchase order price is different to the moving average price: At the time of posting the moving average price changes.Invoice Verification GR/IR clearing account will be debited on the basis of the purchase order price. Corresponding entry is posted to the vendor account based on the invoice price.

If the invoice price is different to the purchase order price, the variance between the purchase order value and the invoice value is posted to the inventory/ price difference account.

3.1. Accounting entries Following entries would be generated for the entire Procurement process at various stages:

3.1.1. Creation of Purchase order: No Accounting Entry would be generated. 3.1.2. Creation of GRN (GOODS RECEIPT NOTE): Following Entry would be generated

3.1.2.1. Inventory Related:Inventory Raw Material/Pkg. Material/Stores ............Dr.GR/IR Account (Clearing Account)………....................Cr.

3.1.2.2. Services Related:Expense Account …………………………………...........Dr.SR/IR Account (Clearing Account)……….......…..........Cr.

3.1.3. Posting of Vendor Invoice: Following Entry would be generated

3.1.3.1. Inventory Related:GR/IR Account (Clearing Account)……….....................Dr Vendor Account ……………………………………..........Cr.

3.1.3.2. Services Related:SR/IR Account (Clearing Account)……….....................Dr Vendor Account …………………………………….........Cr.

All accounting entries will be for a company code with appropriate profit centre assignment.

Taxes like TDS, Service tax, Sales tax will be considered while booking the invoice.




3.2. Business Process Scenarios: Various scenarios involved in the Invoice Verification process:3.2.1. Purchase Order related, GR (Goods Receipt)-based Invoice verification Process – Domestic

Purchases: This adopts a 3-way matching concept for all purchase order based invoice documents. The system matches the Invoice with the Goods receipt document and the Purchase Order before posting. Variances encountered in the matching process are controlled by the used of Tolerance limits set for each company code.

3.2.1.1. Quality Check:

All externally procured Materials will have the indicator ‘Post to Inspection Stock’ checked in the Material Master, Quality Management view. This will result in all Goods Received for those materials relevant for quality inspection.

3.2.1.2. Manual Invoice Verification: SAP standard Invoice verification transaction will be used for manual Invoice booking after the goods

have cleared quality inspection. Pricing conditions will be maintained in the Purchase Order for other planned delivery costs. These conditions can have different vendor than the material supplying vendor. Separate Invoice verification documents can be posted for separate vendors for material and delivery

costs. All relevant parameters relating to vendor payment terms and method, withholding tax etc. will be

defaulted from the Vendor Master record. Invoice document will be posted with reference to a Goods Receipt document posted for a Purchase

Order. Invoice will be blocked for payment if the Invoice value exceeds the tolerance limits set for the Company Code.

3.2.1.3. Purchase Order based Invoice Verification Process – Import Purchases:Manual Invoice verification procedure will be adopted for Import Purchases. Purchase Order currency is defaulted into the invoice verification document.

Separate conditions for customs duty, freight etc. will be maintained in the Purchase Order with different vendors, as applicable.

Please refer to MM-BBP process no. JBM-MM-15 for more information.

3.2.1.4. Non-Purchase Order based Accounting of Miscellaneous Vendor Invoices :These Invoices are for miscellaneous procurement expenses that do not warrant creation of Purchase Orders and thus no inventory is maintained in the system.

Accounting locations will post other miscellaneous expense items like electricity bills, telephone bills etc. via SAP standard Vendor Invoice document parking functionality that will trigger for approval by parking and posting.

3.2.2. Purchase Order based Accounting for Services : SAP Standard Functionality of creation and approval of Service Entry Sheets for services

received will be used.




Purchase Orders will be raised and Service Entry sheets will be created once services are rendered.

Please refer to MM-BBP process no. JBM-MM-04 for more information regarding service PO.

Tax codes will be made with different rates for PF, ESI etc. Tax will be calculated on base amount and the same will be deducted from the credited to respective account.

3.2.3. Advance Adjustment:When the invoice is posted, down payment adjustment would be manually against the respective invoices and deduct the advance at the appropriate value of advance paid.

Different creditors can have one special indicator.JBM Group has decided to use following advance indicators for different creditors:

Creditors Special GL IndicatorAdvance to Supplier- Domestic AAdvance to Capital Supplier – Domestic AAdvance to Supplier Imported AAdvance to Capital Supplier Imported AEmployees Advance Against LTA LEmployees Advance Against Imprest IEmployees Advance Against Loan O

Following accounting entries will take place during advance processing:

During advance payment:

Vendor A/c………………..Dr….…(A)To Bank A/c………………Cr.

During invoice booking:

GR/IR Clearing A/c……..….Dr.To Vendor A/c……………...Cr

During advance adjustment:

Vendor A/c…………………Dr. To Vendor A/c..……………Cr..…(A)

During payment to vendor (if balance is left to be paid):

Vendor A/c……………………Dr.To Bank A/c…………………..Cr.




Advances can be adjusted with the reference of invoices, such process gives report which advance is adjusted against which invoice.

Vendor advance amount gets transferred from Special transaction balance to normal account balance.

Advances can be adjusted partially also. System gives the report for the same.

3.2.4. Vendor specific payment terms / tax considerations:Accounting documents will be posted with vendor related payment terms, taxes, withholding taxes. As defined in the vendor master record for the company code and the relevant purchasing organization, if not defined in the purchase order.

3.2.5. Credit and Debit Notes, Returns:Debit and Credit notes are accounted for as subsequent debit or credit transactions in case of purchase order related invoice verification transactions. For non-purchase order related transactions, a pure finance debit / credit note transaction is posted at the accounting centre based on the physical document.

3.2.6. Purchase order Amendment: In case of price increase/decrease, amendment is required in purchase order. If purchase order is amended before doing the GR, SAP system allow to post the invoice document with updated value. If purchase order is amended after doing the GR, changes does not reflect in GR. So, while posting the invoice document subsequent credit/debit will be done.

3.2.7. Stock Transfer:

Please refer to MM-BBP no. <JBM-MM-10> for more information.

Stock transfer takes place at three levels: 3.2.7.1. Plant to Plant transfer within excise group.Excise invoice is not required while transferring the goods from one plant to another plant, if excise group is same.

Following finance entry will be created:Inventory a/c………………………………..Dr. Profit Center1Inventory a/c ……………………….………Cr. Profit Center2

Sender PlantInter plant Clearing A/c Dr. 100Inventory A/c Cr. 100

Receiver Plant Inventory A/c Dr. 100Inter Plant Clearing A/c Cr. 100




Pass manual JV for profit loading :

Revenue from Stock Transfer A/C Dr. 50 (Receiving Plant) Revenue from stock Transfer A/C Cr. 50 (Sender Plant)

3.2.7.2. Plant to Plant transfer from one excise group to another excise group.Excise invoice is required while transferring the goods from one plant to another plant in case of one excise group to another excise group.

Following finance entry will be created.

Inventory A/c…………………………………….Dr. (receiving plant) RG23A Basic Excise duty A/c…………….Dr. (receiving plant) RG23A Education Cess A/c……………….Dr. (receiving plant)

RG23A SHE a/c …………………..……….Dr. (receving plant) To. Inventory a/c …………………………Cr. (sending plant) To. Cenvat payable account (basic+ Education cess + SHE) (sending plant)

Note: If material valuation is same for both the plants then no price difference. If material valuation is different at sending price and receiving plant, price difference will hit price difference GL account.

Inter-company transfer.Goods transfer from one company code to another company code. This will be treated as Sales and Purchases.

3.2.8. Subcontracting.

Please refer to MM-BBP no. <JBM-MM-07> for more information.

Following FI entries will take place while doing the subcontracting process.

3.2.8.1.1. On issue of material for subcontracting: No accounting impact. Materials shown as “in vendor location” in MM reports.

3.2.8.1.2. On receipt of subcontracted material:SFG/FG Inventory (for incoming material)……………………..…..……….…...Dr.Subcontracting charges (subcontracting charges)……………………………..Dr.RM/SFG Consumption (for materials issued to subcontractor)………….Dr.To SFG change in stock (for incoming material)…………..…………………….Cr.To GR/IR Account (for subcontracting charges)……………..………………....CrTo RM/SFG Inventory (for materials issued to subcontractor)……..…...Cr.

3.2.9. Taxes:




Tax Deducted at Source (TDS) Service Tax Processing Excise Processing FBT Work Contract Tax (WCT) GTA VAT/CST Processing.

3.2.9.1. Tax Deducted at source (TDS): As per Indian income tax act 1961, for all the sections like 194C (contractors), 194J (Professional services) and 194I (Rent) tax codes will be created in the system. Tax codes will be created separately for invoice deduction and advance payment deduction.Tax codes will be attached to vendor master. A vendor master can have multiple tax codes based on the requirement.

At the month end all the tax deducted to be posted for creating internal challan. With reference to the internal challan, bank details will be updated in the system. Tax deduction certificates can be issued once the bank challans are updated in the system.As per the income tax act requirement, through a standard transaction the quarterly return in the electronic form can be taken and filed with the statutory authorities.

The following entries take place at the time of capture of Vendor Invoice: Service Expense A/c……………..…Dr. 102.27To TDS Payable A/c..………..……..Cr. 02.00To TDS SC Payable A/c………………Cr. 00.20To TDS Edu. Cess A/c…………………Cr. 00.07To Vendor A/c…..…………..….....….Cr. 100.00

Create TDS remittance Challans:

This process records the remittance of liability for TDS, i.e. actual payment of TDS. The transaction code is J1INCHLN for Vendors, Company Code, Financial year, Section Codes to be entered.

In Posting Dates From - to – period of TDS deduction e.g. month for which TDS is to be paid, is to be given.

In Payment Due Dates – To date will be 7th of the next month i.e. month following the month for which TDS is being deposited.

In Recipient Type (like Company and Others) give Company or Non Company. As the payment for both type of recipients is made in separate Challans these should be processed separately.

In Tax remittance details document & posting date should be the date the process is being run.

At the time of payment of TDS to tax authorities:TDS Payable account…………………………..Dr. 02.27To Bank Account….…....……………………….Cr. 02.27

In case of AdvanceAdvance is paid in current month and invoice is booked in next month. So, challan is filed in same month.To avoid the TDS calculation double time we need to process like this.




Vendor A/c……………………………………………Dr. 51.13To TDS Payable A/c………………………….……Cr. 01.00To TDS SC Payable A/c ………………………….Cr. 00.10To TDS Edu. Cess A/c ……………………………Cr. 00.03To Bank…………………………………………………Cr. 50.00

TDS rates depend on different type of criteria like Individual, Company, Firm, >1000000 income

While booking invoice system asks for base amount (if any) on which TDS is to be calculated. In this case we need to enter the balance amount (Balance Amount = Invoice amount – Advance amount) on which TDS is required to be calculated.

In case, TDS is deducted in current month and invoice is also booked in the same month. While posting the invoice system asks for base amount, here no need to give any base amount system takes it automatically.Before filing the tax, down payment adjustment must be done. When advance adjustment is done system will reverse the TDS entry.

Post Bank Challan:This process records the actual payment of TDS and updates remittance entries created in the earlier process with actual challan number assigned by the bank and details of bank from which the payment is effected.In Bank Challan details, the physical paid challan number e.g. XXXX etc. is to be entered and date of payment in bank is to be entered.

Print Vendor/Customer TDS Certificate:Form 16A is the TDS certificate which can be printed when all the data is updated in system.

In case the certificate is printed wrongly and needs to be cancelled, the cancellation process requires to be done. In such an instance, the number given to that certificate stands cancelled and cannot be used again.

In case of specific requests from vendors, TDS Certificates already issued can be reprinted with “DUPLICATE” clearly printed on the face of the certificate.

Print Quarterly Return:E-TDS Return Filing – It is a standard SAP functionality and a text file will get generated which can be uploaded in Compact disc for E-return Filing. Interface is required with outside software , so that text file upload automatically.

Tax Collected at Source (TCS): (Tax Deducted by Customer)In case of TCS, it will be mapped like TDS and the same will be applicable only for customers.TCS is always applicable at the time of payment from customer.

Bank A/c…………………………….…..…Dr. 100.00TDS Receivable A/c…….........……..Dr. 02.00TDS SC Receivable A/c……....……..Dr. 00.20TDS Edu. Cess Receivable A/c.……Dr. 00.07To Customer A/c………..……………...Cr. 102.27




3.2.9.2. Service Tax:

Service tax is a tax levied on services received or rendered for services notified under the Service Tax Act. Input Service tax credit can be availed against tax payable. Service tax is levied on the gross amount of taxable services rendered to the client.

Following Entries will take place:

When Service Tax is included in the Vendor Invoice

Expenses A/C…………………..……………... Dr. 100.00Service Tax Accrued A/C……………..…..………….… Dr. 12.50Service Tax Cess Accrued A/C……………………..….Dr. 01.25 Service Tax H. Ed. Cess Accrued A/C……………….Dr. 00.41To Vendor A/C………..…………...………....Cr. 114.16

When Service Tax is not mentioned in the vendor Invoices:

Expenses A/C………………………………..….Dr. 100.00Service Tax Accrued A/C……………………………...…Dr. 12.50Service Tax Cess Accrued A/C……………………..….Dr. 01.25Service Tax H. Ed. Cess Accrued A/C……………….Dr. 00.41To Vendor A/C……………………………..…..Cr. 100.16To Service Tax Payable……………………..Cr. 14.16

Payment to Vendor:

Vendor A/c……………………...……Dr.To Bank A/c…………………….…….Cr.

Entry to be passed while taking service tax credit:

Service Tax (input) Credit A/c………Dr.To Service Tax Accrued A/c………….Cr.

Entry to be passed at the month end while duty will be adjusted

Service Tax Payable A/c…………Dr.To Service Tax Accrued A/c …….Cr.

3.2.9.3. Excise Processing:

Please refer to MM-BBP no. <JBM-MM-13 and 15> for more information.




Whenever GRNs are prepared, the excise invoice details – supplier invoice number, date and excise amount are to be entered based on which the CENVAT availment will take place.

In the case of capital goods only 50% of CENVAT is to be availed in the year of capitalization and in the following year the balance 50% will be availed. In case, assets have been sold or destroyed, in the year of installation, the balance availment in the following year should not take place, since the total CENVAT would have been taken at the time of sale.

In case of imported GRNs, the CENVAT availment is based on the receipt of bill of entry.

For Domestic Procurement of Raw Material:During Goods Receipt

Material Stock A/c.…………………......Dr. 100.00VAT (First point of Benefit) A/c…....Dr. 5.00To GR/IR Clearing A/c…………………..Cr. 105.00

During Excise Invoice CreditRG23A BED A/c……………………...….Dr. 16.00RG23A BED ECess A/c…………………Dr. 00.32 RG23A BED HSECess A/c………..…..Dr. 0.16

To Cenvat Clearing A/c…..……………………….……Cr. 16.48

During Invoice VerificationCenvat Clearing A/c……….……..Dr. 016.48GR/IR Clearing A/c…..……………Dr. 105.00

To Vendor Payable……………....Cr. 121.48

During GR with inventorising CST (Basic 100 + 5 (CST/VAT))Material Stock A/c………………Dr. 105.00To GR/IR clearing……….……….Cr. 105.00

For Domestic procurement of Capital Goods (CST/VAT as applicable will be calculated as shown above)During Goods Receipts:

Asset A/c……………….Dr.To GR/IR Clearing A/c…….……Cr.

During Excise Invoice Credit:RG23C Receivable Account….Dr. (50%)

Cenvat On-hold…………………. Dr. (50%)To Cenvat Clearing.…..…….….Cr. (100%)

During Invoice Verification: Cenvat Clearing………….……….Dr.

GR/IR Clearing……………..……..Dr.Vendor Payable…………..……...Cr.

Subsequent of Capital Goods:




Balance 50% will be Credited to RG23 C receivable account in the subsequent year.

RG23C Account ..Dr. (50%)Cenvat On-hold……………….… Cr. (50%)

For Import Procurement of Raw Material:

Please refer to MM BBP Process Number - JBM-MM-15 for more information.

During Customs Duty Clearing invoice:

Custom Clearing (Basic Custom Duty) A/c……..Dr.Custom Clearing (ECess on BCD) A/c……………..Dr.Custom Clearing (HSECess on BCD) A/c…….…..Dr.CVD Clearing (Basic CVD)A/c………………………….Dr.CVD Clearing (ECess on CVD) A/c…………………..Dr.CVD Clearing (HSECess on CVD) A/c……………….Dr.CVD Clearing (SAD) A/c………….…………..…….……Dr. To Custom Agent (Vendor) A/c ……………………..Cr.

During Goods ReceiptMaterial Stock…………….……... Dr. (Material Value + Custom Value)To GR/IR Clearing…………………Cr. (Total Value)

Note: Custom duty can not be availed, so it will be loaded on inventory.

During Excise invoice CreditRG23A BED A/c…………………………………...Dr.RG23A ECess on BED A/c………….............Dr.RG23A HSECess on BED A/c….................Dr.RG23A SAD (Spl. Additional Duty) A/c ….Dr.

CVD Clearing (Basic CVD)A/c………………………………….Cr.CVD Clearing (ECess on CVD) A/c…………………………...Cr.CVD Clearing (HSECess on CVD) A/c……………………….Cr.CVD Clearing (SAD) A/c………………..…………………………Cr.

During Invoice VerificationGR/IR Clearing Account……….Dr. 100.00Vendor Payable……………………Cr. 100.00

For Excise Duty Credit of Raw Material without P.O.RG23A BED A/c…………………………...Dr.RG23A ECess on BED A/c…………....Dr.RG23A HSECess on BED A/c…........Dr.




Cenvat Clearing………………………………..……………Cr.

For Excise Duty Reversal through Excise JVCenvat Clearing Account …………………………...…Dr.RG23A BED A/c…………………………...Cr.RG23A ECess on BED A/c…………....Cr.RG23A HSECess on BED A/c…........Cr.

Excise entries in sales: Sales process will be covered under sales and distribution.During Billing Document

Customer Account Dr……………...Dr.Sales Account………………………….Cr.Cenvat Clearing Output Account …………….Cr.

During Excise Invoice CreationCenvat Clearing Output Account…………… Dr.Cenvat BED Payable A/c……………………….....Cr.Cenvat ECess on BED Payable A/c…………....Cr.Cenvat HSECess on BED Payable A/c…........Cr.

For TR6 ChallanPLA on Hold Account………………. Dr.To Bank Account…………………..….Cr.

Transfer to PLA Account:PLA Account…………………………..Dr.PLA on hold Account………………Cr.

During Monthly UtilizationCenvat BED Payable A/c……..………………………………..Dr.Cenvat ECess on BED Payable A/c………………………...Dr.Cenvat HSECess on BED Payable A/c……………………..DrTo RG23A BED A/c..……………...…………....Cr.To RG23A ECess on BED A/c………….….…Cr.To RG23A HSECess on BED A/c…………...Cr.

For stock transfer through SD, No accounting entries for performa billing document.

3.2.9.4. Fringe Benefit Tax (FBT):FBT is paid by the employer against facilities provided to employees. JBM Group has identified General Ledger accounts for such type of expenses made for employees. In month end tax will be calculated on the total value of GL with prevailing rate and provision will taken and paid to government. A journal voucher will be passed with applicable tax code manually.




Journal entry for expenses:Employee Welfare A/c……………..Dr. 100.00FBT A/c(100*20%)*33.66%………Dr. 7.00To Bank A/c………………………………Cr. 100.00To FBT Payable A/c……………Cr. 7.00

Note: Tax will be calculated in SAP and separate line item will be generated for tax. FBT provision will not be picked by System automatically. User need to provide respective account.

Journal entry for FBT payment to Govt.:FBT Payable A/c……………………… Dr. 7.00To Bank A/c………………………...…….Cr. 7.00

3.2.9.5. Work Contract Tax (WCT):Work contract tax is deducted on invoice or payment whichever is earlier. While making payment WCT is deducted by the vendor and tax amount is paid to government. It works on similar lines of TDS process. WCT will be considered at the time of payment and advance payment also.

Journal entry while booking the invoice:Service rendered A/c……………...Dr. To WCT A/c…………………………...Cr.To Vendor A/c………………..…….…Cr.

3.2.9.6. GTA:GTA is calculated on transport inward and outward transportation. If the total fright bill amount is greater than or equal to Rs.750.00 on single GR amount. GTA tax is calculated with following rate on 25% of freight.

Service Tax - 10% of Service Charges Edu Cess - 2% of Service TaxSHE Cess - 1% of Service Tax

GTA calculation will be done in similar line of TDS. A provision entry will be passed while booking the transporter invoice.

In case of freight inward/outward, GTA will be calculated on transporter bill. Freight can be paid in cash/cheque directly to transporter without bill booking. There may be the case transporter is paid after booking the bill.

In any case, GTA will be calculated on transporter bill. GTA may be cenvat able or Non-cenvat able.

Following journal entry will take place after GTA calculationIn case of Non-Cenvat able:

Freight A/c……………………………………...Dr. (P&L)




GTA Service Tax on Transport A/c……Dr. (P&L) To Transporter Vendor A/c…………..….Cr. (BS)

To GTA Service Tax Payable A/c……….Cr. (BS)

In case of Cenvat able:Freight A/c……………………………….…..Dr. (P&L)Service Tax Accrued A/c…….………….…...Dr. (BS)

To Transporter Vendor A/c…….…….Cr. (BS)To GTA Service Tax Payable A/c…...Cr. (BS)

To map this process Tax codes will be created and same will be assigned to transport vendor master.Note: GTA calculation should not take place if transporter invoice is of Rs.750.00 or less than Rs.750.00.To fulfill this criteria system checks vendor invoice amount. If vendor amount is 751 system starts calculating GTA on that.When single invoice is booked against multiple invoices with different amounts, system does not check the individual items for minimum amount for GTA calculation as total value of multiple invoices gets credit to vendor. If total credited amount is more than Rs.750.00 system will calculate GTA irrespective of individual items.

Note: Invoices need to be booked with individual items to fulfill the criteria.

When vendor is bearing the freight and presents the bill with GTA. GTA will not be calculated on transporter bill. It will be posted as per the vendor invoice.

In case of Non-Cenvat able:Freight A/c (Including Service Tax)...Dr. (P&L)

To Vendor A/c………………………………...Cr. (BS)

In case of Cenvat able:Freight A/c……………………………….…..Dr. (P&L)GTA Service Tax Accrued A/c…….………….…...Dr. (BS) GTA Serv.Tax SC Accrued A/c…….………….…...Dr. (BS)GTA Serv.Tax Ed.Cess Accrued A/c……….…...Dr. (BS)GTA Serv.Tax HSEd.Cess Accrued A/c…..…...Dr. (BS)

To Vendor A/c…….………………………..Cr. (BS)

GTA condition will not reflect in purchase order. GTA will be booked while doing the invoice verification. A tax code will be created to calculate the GTA.

3.2.9.7. VAT/CST Processing:

Please refer to MM BBP Process Number - JBM-MM-13 for more information.




Vat is applicable if purchase takes place within the state. If material is CENVAT able vat is getting calculated separately and posted to GL account. If material is not CENVAT able vat will be loaded on material. CST is applicable in case of interstate purchases. Credit cannot be taken against CST. So, CST is loaded on material.

Procurement is done by raising the purchase orders accordingly tax is levied as per applicability. It may be VAT or CST. While doing GR systems picks all the data from purchase order.

Journal entry will be passed in case of CENVAT able.Goods Receipt:

Inventory A/c……………….Dr. 100.00 VAT A/c……………….…….…Dr. 4.00To GR/IR Clearing A/c…..Cr. 104.00

Journal entry will be passed in case of non cenvatable. Similarly for CST.Goods Receipt:

Inventory A/c……………….Dr. (100.00+ 4.00 VAT/CST) To GR/IR Clearing A/c…..Cr. (104.00 Total Value)

3.2.10. Insurance:JBM Group pays premium for Insurance taken and wants provision to update the required information to enter the data for MIS report.

Journal voucher will be passed for paid premium with required information like policy coverage number or policy number whichever is available in provided reference field.

E.g. Premium Paid A/c………….Dr.To Bank A/c………………..Cr.

A separate module pool development is required for Insurance MIS report.

3.2.11. Bank Guarantee:JBM Group requires bank guarantee MIS report and wants provision to update their required information.

A separate module pool development is required for Insurance MIS report.

Reporting:Vendor Account Analysis:The following tools are available in SAP for Vendor Account Analysis.

Line item Display. Balance Display. Various reports based on Vendor Accounts (Vendor Evaluations)

All kind of Vendor Account Analysis as provided by standard SAP solution will be available. Various standard reports based upon periodic comparison, structured list of vendor Accounts can be used for the Analysis.




Vendor Line item Analysis: Vendor Line Item Display is provided for all vendor accounts. Since Posting entries will come both from FI as well as other SAP modules, the drill down facility would also be possible whereby a user will be able to drill down to the original document. All the Vendor Accounts are by default Line Item as well as open item managed.

Vendor Balance Analysis:SAP Standard Vendor Balance Analysis will be available for all Vendor Accounts. The summary of Postings made during a posting period can be analyzed using this functionality.

The account balance displays the following: The opening balance (the balance carried forward from the previous year) The total of all transactions for each posting period, broken down into debit and credit postings

(transaction figures) From these figures the system also calculates the following for the account balance display: The balance per posting period The accumulated account balance Account Balance of Special GL transactions.

Vendor Evaluations:Various standard SAP standard reports are available for Vendor Evaluations. These are of following types:

Due Date Analysis. Vendor Payment History. List of down payments made to vendors.

4.4.8 Description of Functional Deficits JBM Group requires FI document at plant level for Goods Receipt (external procurement) process.

FI documents at plant level are not available in standard SAP. JBM Group wants MIS report for Insurance. In standard SAP does not support such type of

requirement. JBM Group wants MIS for Bank Guarantee. In standard SAP does not support such type of

requirement.

4.4.9 Approaches to Covering Functional Deficits SAP provides FI document at company code level. To get the FI document for goods receipt and

delivery document user exit will be used. A module pool development is required to maintain for bank guarantee information. A module pool development is required maintain the MIS information and open policy

information for insurance.

4.4.10Integration considerationsThere is a requirement that the entries need to flow into the FI-GL module through an integration process. In Addition to this there is a requirement to input miscellaneous purchase invoices directly into FI Module.




This process needs to address the following: Supplier invoice Accounting with MM Interface through PR/PO/GRN. Enabling invoice verification process with clear segregation of duties and control. Separate strategies for different business scenarios like domestic purchases, Import purchases and

procurement of services. Process for addressing the variations above the tolerance limit between the PO terms and the actual

vendor invoice Advance adjustment







4.5< JBM-FI-05>: Bank Payment Voucher (AS-IS Ref: FICO_P-02) Outgoing payment is a part of procurement cycle. This is required to complete the cycle. After booking of invoice, creditors are liable to take their payments.

Invoices affect directly to vendors account. All the posted data from different Accounting locations into the SAP system and the same can be access for reporting from different Accounting locations as the data is saved under a common database. So vendor reconciliation is not required separately. Invoice values credited in vendors account simultaneously recorded in GL (sub-ledger). While paying to vendor SAP will update the same accordingly.

Reports are required to have a watch on the outstanding balances of vendors (purchase order related vendors and without purchase order). Posting date will be considered as the baseline date for due date and the same will be the base for creditor age analysis report it means posting date will be considered as baseline date for due date of payment.

Payment is made to vendor category wise like vendors for raw material, vendors for bought out (BOP) material etc. While booking the invoices TDS will be deducted from liable vendors and will be liable to get the payment after deducting the TDS from the actual credited amount. If any down payment is available against the vendor, same will be adjusted with invoice. Any cash discount is available it will be adjusted during the payment.

In case of same vendor is customer also. Invoices will be booked separately for as Vendor and as customer. For clearing the payments bills can be knock off against each other bills. Finance transactions like cash withdrawal from bank, inter-bank transfer debit note and credit note, direct payment to expenses, for letter of credit etc. will be captured by passing the journal voucher.GTA will be calculated on the freight at time of booking the invoices. While making the payment from bank “journal voucher” will be passed.

4.5.1 General ExplanationsThe followings are the scenarios / possibilities of payment process in JBM:

Automatic Outgoing Paymento Cheques

Manual Outgoing Paymento Manual Chequeso Cheques

Foreign Currency Payments Partial Payments Advance Payments Letter of Credit/Foreign Letter of Credit

4.5.2 Explanations of Functions and EventsLetter of credit process is a physical process. Only finance accounting entry will take place in the system with the required information.




4.5.3 Special Organizational ConsiderationsPayments will take place plant wise.






4.5.6 Description of ImprovementsConfiguration and use of automatic payment program will be helpful in reducing manual error, intervention and discretion. It will be helpful in optimizing the payment process system to pay vendors on priority of the due date.Individual scrutiny of vendors for payments based on due date would be avoided.

4.5.7 Solution in SAPOutgoing Payments:All vendor payments are paid based on the Due date (As per the JBM requirement the due date should be GRN date in case of vendor invoice). In addition to this JBM makes advance payment to vendors. The Vendor payment process involves selecting open items in the vendor account for payment and post the payment document.

Accounts Payable Payment Accounting1. Organization Structure

Please refer to MM BBP Process – Page 14.

2. Master DataPlease refer above process “JBM-FI-04” for detail information.

3. Business Processes




Vendor Payment generally happens as a last step of procure to pay process. The vendor presents an invoice for a delivery made on the basis of a purchase order and the payment is made in accordance with the payment terms and payment methods defined in the vendor line item or that are copied from the master record.JBM wants an automatic payment processing functionality to process vendor open invoices and pay them as per payment terms on the due date.

a. Accounting entries:For all outgoing payments, the following accounting entry will be posted:

Vendor account Dr.Bank Outgoing payment account Cr.

b. Features of proposed solution in SAP: Distinct document types will be used for posting payments. Separate payment methods will be created for different modes of payment. Payment will be made for items that do not have a payment block. Special G/L indicators will be created for payment requests and down payments. The payment item clears invoice item. Use of standard SAP authorization keys to control automatic payment program for creation, display, editing, deleting, execution and printing. Automatic payment program can be scheduled in background at pre-defined periodicity With different parameters and identification for separate runs. Automatic payment program will be executed manually. All outgoing payments will be posted to bank outgoing account. Payment with clearing: Payments posted with reference to vendor invoices clear the Invoice items and the payment details get attached to the invoice items automatically.

c. Business Process Scenarios: Various scenarios involved in the Outgoing Payment process is discussed hereinafter:

i. Automatic Payment Program: Common Payment Methods will be created for each Company Codes. Specific payment medium forms e.g. cheque forms, payment advices will be developed to

cater to Company Code specific requirements. Automatic Payment program will make payments for all payable items that are not

blocked for payment and are due for payment. Payment will be made with the specified Payment Method that is identified from the line item or defaulted from Vendor Master record.

Standard SAP has various Authorization levels to control creation, display, editing and execution of the automatic payment program.

The program processes open items in five steps:a. The payment program determines the open items to be paid and creates a proposal list. b. The proposal list can be processed on-line. The payments can be blocked and the payment

blocks can also be cancelled. c. The payment program carries out payment using the proposal list. d. The payment run includes only the open items contained in the proposal list.




e. The payment program posts documents and generates the payment medium.

ii. Manual Payment transaction: Standard SAP transactions for posting manual payments can be used by authorized users

to post and generate manual payments.

iii. Foreign Currency Payments: Foreign Currency Payments can be made via automatic payment procedure. Common Payment Method will be used for such payments.

iv. Partial Payments: SAP standard Manual payment transaction may be used to post partial payments. Residual payment would also be allowed. Installment payment terms may also be configured as per requirements to facilitate partial

payment.

v. Advance Payments: Down Payment (Advance Payment) requests are created in the system as noted items that

are picked up by the automatic payment program for making an advance payment. Such Advance items will have a special G/L indicator attached to it that will distinguish the

items from other postings in the sub-ledger account. These items are also posted to an alternate reconciliation account attached to the special G/L indicator to track all such advances in one account.

Advances may be adjusted against invoice/s when they become due for recovery.

Following Special GL Indicator will be used for vendors:Advance to Supplier- Domestic AAdvance to Capital Supplier - Domestic AAdvance to Supplier Imported AAdvance to Capital Supplier Imported A

Following Special GL Indicator will be used for Employees:Advance Against LTA LAdvance Against Imprest IAdvance Against Loan O

vi. Letter of Credit/Foreign Letter of Credit: Letter of credit process takes place physically and journal voucher will be posted for the

same. Journal voucher will be posted as per the case for foreign letter of credit for accounting

purpose. JBM requires to enter the information of LC/FLC in SAP system. In standard SAP does not

facilitate such function. To fulfill this requirement a separate module pool development is required.




vii. Online Bank transfer (RTGS): This process is based on RTGS. Vendor payment is done through bank. A payment

statement of vendors are made in specific format with specific information and uploaded into banks portal. When bank confirms vendor information is missing and payment is not successful, then reversal entry is made for that vendor. In standard SAP does not support and will be done through development.

Vendor master should must be updated with vendor’s bank information.

viii. Post Dated Cheque In case of post dated cheque manual check update transaction will be used and the cheque

will be issued manually.

Vendor and Customer account reconciliation is not possible in SAP.

4.5.8 Description of Functional Deficits SAP provides the report with carry forward balance. JBM Group requires bank report in following

manner with offsetting account.Report gives: Opening balance -/+ transactions = Closing Balance

Standard Cheque printing is available in SAP. Cheque printing requirement varies from company to company. To fulfill JBM Group requirement development is required for the same.

Payment advice printing is required in JBM Group format. SAP does not provide in standard to update the LC/FLC information in system. SAP does not provide in standard to update the Bank guarantee information in system. SAP does not provide in standard to update the Insurance information in system. SAP does not provide in standard to update the Buyers Credit information in system.

4.5.9 Approaches to Covering Functional Deficits A bank book report will be developed in required format. Cheque printing will be developed in JBM Group format. Payment advice needs to be developed in required of JBM Group. A module pool development is required to maintain for LC/ FLC. On the base of this MIS report will

created. A module pool development is required to maintain for bank guarantee information. On the base of

this MIS report will created. A module pool development is required to maintain for Insurance. On the base of this MIS report will

created. A module pool development is required to maintain for buyers Credit. Where they will enter their

Buyers credit information and the same will stored in Z table. On the base of this MIS report will created.





4.6< JBM-FI-06>: Sales Invoice Booking (As-Is Ref: FICO_P-06, FICO_P-09, & FICO_P-10)

JBM Group needs a common and uniform Accounts Receivable Process.

4.6.1 General ExplanationsThe following processes should be addressed: Customer Invoicing Issuance of Credit Note Special GL Transactions Communication Reporting, including Customer Statement.


4.6.3 Special Organizational ConsiderationsNot Applicable






4.6.6 Description of ImprovementsUniform and common process across all company codes

4.6.7 Solution in SAPCustomer Group:Customer Group is the categorization of similar type of customer, which controls the customer master number. JBM Group has decided to go with following type of customer group:

Customer Group Internal No. Ranges G/L Reconciliation A/C No.From To

Sundry Debtors – Domestic 10000 10999 Sundry Debtors – Domestic




Customer Group Internal No. Ranges G/L Reconciliation A/C No.Sundry Debtors – Export 20000 20999 Sundry Debtors – ExportSundry Debtors - Inter Group 30000 30999 Sundry Debtors - Inter Group

Accounts ReceivableAccounting for Customer Invoice is the last step in completing the sales cycle. Once the goods are billed to the customer and the billing document is released to accounting, an accounting document is generated recognizing revenue and receivable in the books of account.

Accounts Receivable Accounting1. Organization StructurePlease refer to SD – BBP- Page No.-12

2. Master Data2.1 Accounts Receivable Master RecordThe Accounts Receivable application component records and administers accounting data for all customers. It is integrated with FI - GL module. The system automatically makes postings in response to the operative transactions. Separate Reconciliation Accounts to be maintained for each group of customers for e.g. Domestic, Exports, Inter Company etc.

The prerequisite of Accounts Receivable module is the existence of Customer Master Data. Customer Master creation can be triggered from both SD and FI module. Customer master would be created and maintained centrally. Centralized master creation would provide better control over master creation in the system and prevent duplication in master data creation. However display authorization could be given to all in concerned department. The customer master record will be extended to other company codes dealing with the same customer.

Customer masters can be created from the following ways: Maintain centrally. This transaction can be accessed through the Sales and Distribution path and

Accounts Receivable path. Sales and Distribution manual creation. Accounts Receivable manual creation.

2.1.1 For creation of Customer Master, following inputs are required:2.1.1.1 Specify Company Code & Sales Organization: If the Customer master is created centrally,

besides company code a Sales organization is also required. We can primarily organize the entire Customers into two categories- Customers for General Sales and Miscellaneous Customers. In case of Customers for Sale of Goods we need to assign all the Customers to a sales organization and need to maintain at the central Level, whereas for Miscellaneous Customers they can be maintained without any assignment to a Sales organization plus can be maintained through Accounts Receivable Module only.

2.1.1.2 Specify Account Group: Specify the account group of the new Customer master is to be created in. Creation of customer master can be also be referenced to an existing customer. By doing so, general data will be copied whereas information that are specific to a particular customer such as name & address will not be copied.




2.1.1.3 Customer Account Number Assignment: Each customer account group is assigned a number range. This range maybe internally assigned by the system or externally assigned by the user at the time of Master creation. Internally assigned number has to be numeric only whereas externally assigned number maybe numeric or alphanumeric. Please note that, all the customers belonging to same Account Group would have a common Numbering pattern i.e. either Internal or External.

2.1.1.4 Input Customer Address: Name and address of the Customer has to be specified. This will be used in correspondence to the Customer. Other information for correspondence such as telephone and facsimile numbers can also be stored for information purpose. Maintain the search term for easy of finding the customer master.

2.1.1.5 Input General and Company Code Data: This section of the Customer Master Record belongs to input related to Accounting Function. This section can be bifurcated into the following :

2.1.1.5.1 Specify Account Control: If the customer is also a customer and if netting between customer balances is allowed, the name of the customer must be stated. This mean when inquiring the customer balances, it will net off the amount owing to the customer. Apart for other relevant fields in the general data section of the Customer Master record, the following mandatory custom fields also need to be maintained:

2.1.1.5.2 Specify Payment Transactions: Bank details for customers are maintained here. These details will be extracted for use incase of any refunds.

2.1.1.5.3 Specify Accounting Information: An important field is the reconciliation account number, which is the GL control account. Customers from the same account group should be assigned to same General Ledger Control Account. These GL Control Accounts cannot be posted into directly. Few examples of these control accounts could be: Domestic Customers, Foreign Customers, and Miscellaneous Customers etc.

2.1.1.5.4 Specify Payment Transactions (Terms, Methods etc.): Maintain the payment terms for the customer. Payment terms determine when payment is due and whether or not any trade discount (Cash Discount) is given. Based on this the system will propose to maximize trade discount (cash Discount) at the time of account clearing. This term will be defaulted in all accounts receivable postings to the customer account. Each payment method calculates the due dates from the baseline date.

2.1.1.6 Specify Payment Transactions (Terms, Methods etc.): Maintain the payment terms for the customer. Payment terms determine when payment is due and whether or not any trade discount (Cash Discount) is given. Based on this the system will propose to maximize trade discount (cash Discount) at the time of account clearing. This term will be defaulted in all accounts receivable postings to the customer account. Each payment method calculates the due dates from the baseline date.

3. Business ProcessesThe Accounts Receivable application component records and administers accounting data for all customers. All customer invoices issued against sale of goods or services are posted to respective customer accounts. These customer accounts are integrated to the General Ledger through a reconciliation a/c. Postings made in Accounts Receivable are simultaneously recorded in the General Ledger. Separate G/L accounts are updated




based on the type of transaction involved (for e.g. Receivables and down payments). The system contains due date Analysis and other standard reports that you can use to help you monitor open items.Balance confirmations, account statements, and other forms of reports are there to suit the various requirements in business correspondence with customers. There are balance lists, journals, balance audit trails and other internal evaluations available for documenting transactions in Accounts Receivable.

Cheques received from customers with respect to invoices raised will be cleared as per reference of invoice no. given by the customer by post and clear method. There are standard reports in SAP used to monitor open items. There are balances lists, journals, balance audit trails and other internal evaluations available for documenting transactions in Accounts Receivable.

Job work process is covered under SD. Please refer to SD-BBP process numbers: JBM-SD-06

3.1 Accounting Entries:Accounting documents will be triggered at 2 instances in the Sales process in SAP:

3.1.1 At the time of goods issue:The Goods issue document will trigger an accounting entry with a debit to the Delivered but not billed’ account and crediting the finished goods stock account.

Cost of Goods Sold Account …………......….......Dr.Finished Goods stock Account ………........................Cr.

3.1.2 At the time of billing:The billing document when released to accounting will recognize the revenue by debiting the Customer account and crediting the revenue account. At the same time it will also square up the provision account created at the time of goods issue by debiting the cost of goods sold and crediting the ‘Delivered but not billed’ account.

Customer Account…………………….....…....Dr.Sales Revenue Account …..…………………........Cr.

3.2 Revenue account determination:Separate GL accounts will be mapped for different sales like domestic sales, export sales and stock transfer etc. By using a combination of Chart of Account, Sales Organization, Customer account assignment Group and material assignment group in sales & distribution module related revenue.

3.2.1 SAP Standard delivered Correspondence Types will be assigned to every Company Code to facilitate this requirement.

3.3 Non-Sales Order based Accounting of Miscellaneous Customer Invoices:These Invoices are for miscellaneous sales that do not warrant creation of sales order and thus no inventory effect comes.Accounting location will post other sales revenue items. SAP standard Customer invoice document parking functionality that will trigger for approval by parking and posting.

3.4 Advance Adjustment:Advance transactions are treated as Special GL indicators which are adjusted against the respective invoices manually. Special GL transactions tracked by single character key.




JBM Group will use “A” as special GL transaction for advances.

Following journal entry will take place during advance processing:During advance from customer:

Bank A/c ……………….Dr.To Customer A/c………..Cr……....(A)

During Sales Invoice bookingCustomer A/c……………Dr.To Sale Revenue…………Cr.

During Advance Adjustment with Invoice:Customer A/c……………..Dr……..(A)To Customer A/c…………Cr.

During Customer payment receipt:Bank A/c………………….Dr.To Customer A/c………….Cr.

Notes: Customer advance amount gets transferred from Special transaction balance to normal account

balance. Advances can be adjusted partially also.

3.5 Credit and Debit Notes, Returns:Debit and Credit notes are accounted for as subsequent debit or credit transactions in case of sales order related invoice transactions. For non-sales order related transactions, a pure finance debit / credit note transaction is posted at the accounting location based on the physical document through journal voucher.3.6 Dunning:A dunning area is an organizational unit within a company code used for the dunning process.

Customer dunning for outstanding will be done based on Dunning Procedure assigned to the Company code segment of the Customer Master Data.

Different dunning levels and various letter formats will be maintained as per Company Code requirements.

Following dunning area will be used for all company codes:Name of the Company Dunning Procedure Code

Jay Bharat Maruti Limited 1000JBM Auto Limited 1500Neel Metal Products Limited 2000JBM Industries Limited 2500Jaico Steel Fastners Pvt. Limited 3000Jay Bharat Exhaust Systems Limited 3500Neel Industries Private Limited 4000Satellite Forging Pvt. Limited 5000ANS Steel Tubes Pvt. Limited 5500JBM MA Automotive Private Limited 6000Indo Tooling Private Limited 6500Arcelor Neel Tailored Blank Private Limited 7000




3.7 Credit Control:The credit control area is an organizational entity which grants and monitors a credit limit for customers. A credit control area can include one or more company codes.

3.7.1 Distinct Credit Control Areas will be maintained and assigned to Sales Areas (business units) for controlling credit exposure to Customer at Business Unit level.

Name of the Company Credit Control AreaJay Bharat Maruti Limited 1000JBM Auto Limited 1500Neel Metal Products Limited 2000JBM Industries Limited 2500Jaico Steel Fastners Pvt. Limited 3000Jay Bharat Exhaust Systems Limited 3500Neel Industries Private Limited 4000Satellite Forging Pvt. Limited 5000ANS Steel Tubes Pvt. Limited 5500JBM MA Automotive Private Limited 6000Indo Tooling Private Limited 6500Arcelor Neel Tailored Blank Private Limited 7000

3.7.2 Interest calculation: Interest calculation on arrears will be enabled.

3.8 Following tools are available in SAP to assist in Customer Account Analysis. Line item Display. Balance Display. Various reports based on Customer Accounts (Customer Evaluations)

Various standard reports based upon periodic balance comparison, ageing reports etc. for customer Accounts can be used for the Analysis.

3.8.1 Customer Line item Analysis: Customer Line Item Display is provided for all customer accounts. Since Posting entries are coming both from FI as well as other SAP modules, the drill down facility would also be possible whereby a user will be able to drill down to the original document. The user through this functionality would be able to view all the entries posted to Customer Accounts.All Customer Accounts are by default Line Item as well as open item managed.Line Items would also comprise of postings resulting from special G/L transactions such as bills of exchange and down payments etc.

Line items can be displayed as follows: Open items




Cleared items Noted items Parked items Items with special G/L Customer Items.

3.8.2 Customer Balance Analysis:SAP Standard Customer Balance Analysis will be available for all Customer Accounts. The summary of Postings made during a posting period can be analyzed using this functionality. Yearly Closing procedure and balance transfer activity will have to be run for transferring closing balances from one accounting period to the next.

The account balance displays the following: The opening balance (the balance carried forward from the previous year) The total of all transactions for each posting period, broken down into debit and credit postings


3.8.3 Customer Evaluations:Various standard SAP standard reports are available for Customer Evaluations. These are of following types:

Due Date Analysis. Customer Payment History. List of down payments made to customers. Special GL transaction balances

4.6.8 Description of Functional DeficitsJBM Group has specific reports in their format.

4.6.9 Approaches to Covering Functional DeficitsDevelopments will be required as per attached sheet at the end of the document.

4.6.10Integration considerationsSales and Distribution Module:

Revenue Account determination Credit control

4.6.11Reporting RequirementsReports are acknowledged and has been included in the report list.

4.6.12Authorization RequirementsAuthorization will be provided to proper user under client direction.




4.6.13 File Conversion / Interface ConsiderationsNot Applicable

4.7< JBM-FI-07>: Bank Receipt Voucher (As-Is Ref: FICO_P-07) It covers both the normal inward payments and advances received from all customers including local and outstation. The Customer inward payment process involves selecting open items from the customer account for incoming cheques and post the inward payment document.

4.7.1 General Explanations Distinct document types will be used for posting incoming payments. Payment with clearing: Generally whenever a payment is being received from a customer an invoice is

being assigned to the inward payment. The payment item clears invoice item. Special G/L indicators will be created for down payments. Incoming payment can be posted manually








4.7.6 Description of ImprovementsNot Applicable

4.7.7 Solution in SAPIncoming Payments:In coming payments can be received in cash, cheque etc. Advances are also taken from the customer. The Customer payment process involves selecting open items (outstanding balances) in the customer account for payment and post the received document. Payments may be received in partly or fully. In partly payment account would not be knocked off till we receive full payment clear it against the same invoice. Entry will be passed manually.

JBM Group is having vendors as customers. Vendor invoices and customer invoices will be knocked off against each others. Note: In case of Vendor as Customer. Vendor number should be assigned in the Customer master data and select the check box clear with vendor vice versa for customer master data.

When payment is received reference field can be used to refer the physical document number.Bank A/c……………………………….Dr.To Customer A/c…………………..Cr.

In case of export realization, Bank issues IFRC and BRC code and the same is required to be enter in payment received document after getting the number. SAP does not allow any change after posting the document except Assignment field and Text field. Assignment and Text field can be used to enter the IFRC number and BRC number.

4.9.6.1. Following tools are available in SAP to assist in Customer Account Analysis. Line item Display. Balance Display. Various reports based on Customer Accounts (Customer Evaluations)

Various standard reports based upon periodic balance comparison, ageing reports etc. for customer Accounts can be used for the Analysis.

4.9.6.2. Customer Line item Analysis: Customer Line Item Display is provided for all customer accounts. Since Posting entries are coming both from FI as well as other SAP modules, the drill down facility would also be possible whereby a user will be able to drill down to the original document. The user through this functionality would be able to view all the entries posted to Customer Accounts.

All Customer Accounts are by default Line Item as well as open item managed.Line Items would also comprise of postings resulting from special G/L transactions such as bills of exchange and down payments etc.

Line items can be displayed as follows: Open items Cleared items




Noted items Parked items Items with special G/L Customer Items.

4.9.6.3. Customer Balance Analysis: SAP Standard Customer Balance Analysis will be available for all Customer Accounts. The summary of Postings made during a posting period can be analyzed using this functionality. Yearly Closing procedure and balance transfer activity will have to be run for transferring closing balances from one accounting period to the next.The account balance displays the following:

The opening balance (the balance carried forward from the previous year) The total of all transactions for each posting period, broken down into debit and credit postings


4.9.6.4. Customer Evaluations:Various standard SAP standard reports are available for Customer Evaluations. These are of following types:

Due Date Analysis. Customer Payment History. List of down payments made to customers. Special GL transaction balances

Customer/Vendor reconciliation is not possible.

4.7.8 Description of Functional DeficitsAge analysis report not available in required format in SAP

4.7.9 Approaches to Covering Functional DeficitsABAP development is required as per above requirement.



4.7.12Authorization RequirementsAuthorization will be provided to proper user under client direction.





4.8< JBM-FI-08>: Asset Accounting (As-Is Ref: FICO_P-12) Asset account should be possible to ensure the following JBM requirements.

1. Asset Purchases should be from source data, i.e. PO, receipt and capitalisation 2. Capex & fixed asset Budget3. Profits or losses on disposal calculated automatically 4. Depreciation should be calculated automatically according to Company Law & Income Tax Law.

Fixed asset module should enable the following to fulfil the responsibilities of JBM Group.

4.8.1 General ExplanationsSystem should allow both capitalizations as well expense off, items from the capital work in progress account. System should provide history for the amount in the CWIP account.


4.8.3 Special Organizational ConsiderationsOne chart of depreciation area has been decided for entire JBM Group.





4.8.5 Changes to Existing Organization processesAll transactions like asset purchase, sale, transfer, sale of asset, and depreciation postings to be handled through SAP.

4.8.6 Description of ImprovementsSystem would provide required control in the capital asset under utilization for monitoring and controlling along with line item history. System would allow both capitalization and expensing off from capital work in progress

4.8.7 Solution in SAP1. Organizational Structure for Fixed Asset Accounting: In general fixed asset accounting uses the same

organizational structure as per financial accounting. Apart from these, the following is the organization structure that is required for fixed asset accounting.

1.1. Chart of Depreciation:Definition and MeaningChart of Depreciation is an object that contains the defined depreciation areas.It also contains the rules for the evaluation of assets that are valid in a specific country or an economic area.Each company code is allocated to one chart of depreciation. Several company codes can work with the same chart of depreciation.




We can even say that the chart of depreciation is a directory of depreciation areas organized according to business management requirements.In JBM it has been decided to create one chart of depreciation for JBM group. All company codes within the JBM group would be assigned to this chart of depreciation.

Below mentioned Chart of Depreciation has been decided for JBM groupChart of Depreciation Description

0100 JBM Group Chart of Depreciation

1.2. Depreciation Area:An area showing the valuation of a fixed asset for a particular purpose (for example, for individual financial statements, balance sheets for tax purposes, management accounting values, and so on). You can manage various depreciation areas in the FI-AA component.It has been decided to have one depreciation area for Local GAAP accounting and one for Income Tax purpose. These two areas are specific to meeting the group requirement.Below mentioned depreciation areas are decided to have in JBM chart of depreciation.

Depreciation Areas Description1 Book Depreciation

15 Depreciation as per Income Tax Act 1961

2. Master Data:There are various master data requirement in asset accounting like, asset classes, asset master, plant, cost center etc.

Asset Class Description1000 Land1100 Buildings1200 Plant & Machinery1300 Fixture and fitting1400 Vehicles1500 Electrical & Electronic equipments1600 Tools & Dies1700 Assets under Construction1800 Leased assets1900 Low Value Assets

3. Business Process in Fixed Asset accounting:

3.1. Acquisition through MM:3.1.1. For asset procured through Material Management appropriate account assignment category

would be used in the Purchase order3.1.2. When GR is made for the purchase order, system would record the acquisition to the CWIP or

Asset assigned in the purchase order

3.2. Acquisition through FI:3.2.1. Where assets are acquired directly without a purchase order, invoice entry for the same

would be done directly in FI




3.2.2. The transaction would be posted to either CWIP or the Asset as required

3.3. Acquisition through Own Manufacture:3.3.1. Production order would be created for the asset manufacturing3.3.2. Production order would have the settlement to WBS element to which the specific CWIP is

assigned 3.3.3. All material issues and activity consumption would be posted to the production order3.3.4. During month end processing the cost would be transferred to WBS element /finished

material from the production order3.3.5. Once the production is completed, CWIP would be transferred to Asset

3.4. Retirements:3.4.1. Retirement by scraping:

3.4.1.1. Asset can be retired by scrapping 3.4.1.2. Standard transaction type for retirement without revenue would be used3.4.1.3. Loss be will be transferred to Loss on disposal account.

3.4.2. Retirement with Revenue:3.4.2.1. Asset can be retired with Revenue3.4.2.2. Standard transaction type for retirement with revenue would be used3.4.2.3. Loss/profit on sale will be transferred to profit/loss on sale of asset account.

3.5. Transfers:3.5.1. Assets can be transferred between business units3.5.2. Standard transaction type would be used for effecting the transfer (inter company and

intra company).

3.6. Period end:3.6.1. Depreciation would be posted using the depreciation program3.6.2. All parallel ledger would be posted automatically during the depreciation program3.6.3. Standard year end processing would be enabled.

Depreciation will be calculated based on the below methods:

Depreciation Area Depreciation Method01- Book Depreciation SLM & WDV15 - Tax Depreciation WDV

4.8.8 Description of Functional DeficitsPhysical verification data upload to system for comparing with inventory list





4.8.10Integration considerationsFinancial Accounting: GL account for posting acquisition and depreciation. GL account for retirement, loss/gain.

Controlling: Asset master assigned to cost object (cost center, internal order etc) Posting of depreciation expenses to the cost objects in the asset master

Material Management: Account assignment logic for creating PR/PO/GR for asset purchases


4.8.12Authorization Requirements Appropriate authorization should be available at profit center level Authorized person will run the depreciation at company code level.





4.9< JBM-FI-09>: Bank Reconciliation (As-Is Ref: FICO_P-12) At the month end there always will be transactions which may not have been cleared in the bank. Because of this Bank Balance as per Bank and as per our Bank Book will differ. Various reasons could be cheques issued but not presented in the Bank, cheques deposited but not credited, Bank charges debited by bank on outstation cheques or Interest on various credit limits etc. To match balances of our bank book with the statement received there is always a need for bank reconciliation.

4.9.1 General ExplanationsBank reconciliation is prepared to reconcile the difference between the bank passbook and the bankbook of the company. This exercise is done to find out the correct balance as per bank passbook as on a date. This process involves reconciliation of Bank Accounts and relevant for all location. This process can be done at Regular interval as desired by the user.

4.9.2 Explanations of Functions and EventsThe followings should be addressed:The bank reconciliation process will be carried out through manual input.All the items which are deposited directly into bank with a reference (JBM document number) or directly paid by bank .Items paid by bank either through cheque, EFT, any other reference, charges levied by bank and not accounted by us, all these items will be appearing in the bank statement.

Necessary entries have to be passed based on the bank statement for accounting charges, clearing vendor or customer invoices where ever necessary.







4.9.6 Description of ImprovementsIt improves the bank reconciliation process.

4.9.7 Solution in SAPBank Accounting and Reconciliation:Bank accounting involves manual and semi automatic accounting of payments and receipts into Bank account and providing with a reconciliation statement that classifies unaccounted items which could be taken up for further necessary action.

Bank Accounting1 Master Data: 1.1 House Bank and Account IDThe Bank Accounting application component records and administers accounting data for all accounts maintained with several banks. It is integrated with FI - GL module. The system automatically makes postings in response to the operative transactions.

A House Bank ID represents a bank that the business deals with. Every account at such a bank is represented by a Bank Account ID in the SAP system wherein bank details are specified. These specifications are used, for




example, by the automatic payment transactions to determine the bank details for payment and for bank reconciliation purposes.For creation of a House Bank and account ID, following inputs are required:

1. Specify Company Code: Although a Bank created is created in a client within the SAP system, a 5 character alpha-numeric key that identifies this bank, which is to be used by a company code, is a House Bank. The parameters specified in a House Bank configuration are valid only for the company code for which the house bank is created. House Bank data: Specify the country and the Bank Key. This automatically selects a bank already created in the system and assigns it to the house bank. All bank related address information etc. gets copied into House Bank.If the bank does not exist in the system, it can be created by clicking the create button. Here you can specify bank name, address, IBAN etc. for a unique combination of Bank Key and the country.

1.1 Bank Account Data: Within each House Bank, a 5-character alphanumeric key for a Bank Account ID needs to be configured. The Bank Account ID reflects the details of an account maintained within a House Bank. Here you need to specify the Bank account number, currency and the GL account to be used for the bank account.

2. Business ProcessesThe entire Bank Receipts would be tracked through separate clearing Accounts, say, Incoming Bank clearing account, Outgoing Bank clearing account and the Main Bank account. The Bank statement when uploaded into the system, it creates entries in the Main Bank account with corresponding debit or credit to a separate accounts depending upon nature of the transaction.The Main bank account reflects all entries in the Bank statement and all reconciliation items are a part of clearing accounts i.e. Incoming or Outgoing Bank clearing accounts.Accounting entries:

Whenever an Incoming remittance occurs, the following entry will be generated:

Incoming Bank clearing account……………..Dr. Customer Account……………..…………………..Cr.

The actual (Main) Bank Account would be updated when the entry appears in the Bank Statement. This process is handled through Bank Reconciliation Process where in the following entry would be automatically generated at the time of Bank Statement Upload:

Main Bank Account……………………....…….…..Dr Incoming Bank clearing Account……………...Cr.

Whenever an Outgoing remittance occurs, the following entry will be generated: Vendor Account………………………………………..Dr.

Outgoing Bank clearing account…………….….Cr.

The actual (Main) Bank Account would be updated when the entry appears in the Bank Statement. This process is handled through Bank Reconciliation Process where in the following entry would be automatically generated at the time of Bank Statement Upload:




Outgoing Bank clearing account…………………Dr. Main Bank Account………………………………..….Cr.

For Bank charges etc., the following entry will be generated:

Bank charges expense account…………………..Dr.Main Bank Account……………………………...……Cr.

Bank Accounting in SAPFor each Account with a Bank, there will be 3 GL accounts operated in the system.

Main Bank Account – Entries in this account flow automatically at the time of Bank Statement upload with a corresponding debit or credit to expense account or Customer / Vendor Account.

Bank Incoming Account – All Incoming Payment Receipt accounting will be done in this GL account. These items will be cleared at the time of Bank Statement Upload, if the proceeds are realized. The balance in this GL account will consist of ‘items deposited into Bank but not credited’.

Bank Outgoing Account - All Outgoing Payments’ accounting will be done in this GL account. These will be cleared at the time of Bank Statement Upload, if the money is actually paid by bank. The balance in this account will consist of ‘payment made to suppliers but not cleared’.

Manual Bank Statement processing Bank statements are manually keyed into the system via a standard transaction. For all payment instructions honored by bank the Bank, an entry will be created in the Main Bank

Account and the corresponding item in the Bank Outgoing Account will be cleared. For all direct payments by Banks to Vendors, an entry will be created in the Main Bank Account with

corresponding debit to the respective Vendor account automatically. For all cheques honored by Customers, an entry will be created in the Main Bank Account and the

corresponding item in the Bank Incoming Account will be cleared. For all direct deposits into Bank by Customers, an entry will be created in the Main bank account with

a corresponding credit to the respective Customer. All Bank charges will be booked automatically by the System Items that do not get processed by the system will remain in errors. Post Processing functionality will be used for subsequent analysis of such items followed by

accounting.

Bank Reconciliation Automatic Bank Statement Upload and accounting No further action necessary in relation to the Bank statement if the Main Bank Account Balance

matches the Bank Statement Balance Bank reconciliation is available immediately on Bank Statement upload No need to manually reconcile Bank statements Item-wise details readily available of all items not accounted by Bank Post Processing Office provides for error analysis during Bank Statement upload




Incoming and Outgoing Bank Accounts provides for details of items that form part of reconciliation.

4.9.8 Description of Functional DeficitsNot Applicable


4.9.10Integration considerationsFI-GL – GL Accounts for Bank.FI-AP – Automatic payment configuration and bank determination.


4.9.12Authorization RequirementsAuthorization will be provided to proper users under client direction.





4.10 <JBM-FI-10 > Inventory Valuation: (As-Is Ref: FICO_P-29 & FICO_P-37)

JBM Group follows FIFO method for material valuation for raw material, semi-finished goods and finished goods.

4.10.1General ExplanationsFIFO method is supported by SAP only for valuation of material. While for consumption of material, prices will be calculated on weighted average method.

4.10.2Explanations of Functions and EventsNot Applicable

4.10.3Special Organizational ConsiderationsWeighted Average Method will be followed. Opening/Closing stock and Purchase account concept will not be used. As the material will be updated online while doing the material procurement, Purchase of material is GR (goods receipt) based, so purchase account concept will not come in to consideration.

4.10.4Process Diagrams Not Applicable

4.10.5Changes to Existing Organization processesIt has been proposed to valuate the raw material inventory based on moving average price and semi-finished and finished material based on standard price.

4.10.6Description of ImprovementsValuation of material will take place automatically. G/L stock account will be updated automatically and will reflect actual stock value in Balance Sheet.

4.10.7Solution in SAPSAP provides two types of price control as Moving Average Price (weighted average method) which is denoted by “V” and Standard Price “S”.

Moving average price is always changing with goods receipts value and updates the material master. It is calculated as Total Value/Total Quantity. When consumption happens again value gets updated in material master. Moving average price is maintained for raw materials. In case of price difference value gets loaded on material if stock is available. If stock is not available goes to price difference G/L account.

Standard price is always constant with rate of material and is maintained for Semi-finished goods and Finished Goods. While procurement of semi-finished material value will not change in material master. In case of price difference it will be posted in price difference G/L account. In future if material vale is revised or changed, then value can be updated by the proper authorized person.




Value of materials flow to GL account through valuation class, which is maintained in material master. Valuation class is the identification code which determines the GL account.

Following valuation classes will be used:Type of Material Description Valuation Class Code Valuation Class - Description

ROH Raw Material 3001 Raw Material-BOP3002 Raw Material-Sheet3003 Raw Material-Pipe3004 Raw Material-Others3005 Raw Material-Die Material

FERT Finished Goods 7920 Finished GoodsERSA Spare Parts 3040 Spare PartsHIBE Operating Supplies 3030 Operating Supplies-Consumables

3031 Operating Supplies-FuelsZWAS Waste 3071 Waste-Steel

3072 Waste-OthersHALB Semi Finished 7900 Semi FinishedDIEN Services 3200 ServicesVERP Packaging 3050 Packaging -MaterialFHMI Production

resources/tools3002 Production resources/tools

LEIH Returnable Packaging 3050 Returnable Packaging Journal Entries for Materials:

Raw Material procurement:Raw Material Stock A/c………………………… Dr.To GR/IR Clearing A/c………………..…………..Cr.

When invoice is receipt:GR/IR Clearing A/c…………………………………Dr.To Vendor A/c……………………………………....Cr.

Raw Material Issued for Production:Raw Material Consumption A/c……………………Dr.To Raw Material Stock A/c……………………..…...Cr.

For WIP Calculation:WIP A/c.……………………………………………..Dr.To Change in WIP A/C………………………..Cr.

Semi Finished Goods Receipt from plant after production:Semi Finished Stock A/c…………………………..….Dr.To Change in Stock A/c………………………………..Cr.

Semi-Finished Goods issued for production:Semi-Finished Consumption A/c…………………...Dr.




To Semi-Finished Stock A/c…………………………..Cr.

Finished Goods Receipt from plant for production:Finished Goods Stock A/c……………………………...Dr.To Change in Stock A/c……………………………….Cr.

Reports: AS-IS Ref: FICO_P-37 SAP provides following standard reports: Different Reports are available in Materials Management Quantity related reports Physical Inventory report. Stock report at company code/plant / purchase organization. WIP Details. Material Consumption Details.

4.10.8Description of Functional DeficitsNot Applicable

4.10.9Approaches to Covering Functional DeficitsNot Applicable

4.10.10 Integration considerationsFI- GL –MM and SD Material Value flow from MM and SD to GL

4.10.11 Reporting RequirementsReports are acknowledged and has been included in the report list.

4.10.12 Authorization RequirementsDocument the level of authorizations that you need for each process in the system





4.11 <JBM-FI-11>Buyers Credit: As-Is Ref: FICO_P-40JBM Group wants to feed the buyers credit formation into the system and want to generate MIS report on the base of that.

4.11.1 General ExplanationsBuyers’ credit is taken against only raw materials or capital goods from the foreign banks. It works like foreign letter of credit. This credit is taken due to low rate of interest.





4.11.6 Description of ImprovementsNot Applicable

4.11.7 Solution in SAPSAP does not support such type of requirement in Standard process. This requirement is specific to JBM Group. To fulfill the above requirement “Z” development is required.

4.11.8 Description of Functional DeficitsSAP does not support above requirement in standard.

4.11.9 Approaches to Covering Functional DeficitsFor above requirement, a Module Pool Development is required.On the base of this development MIS report can be generated.

4.11.10 Integration considerationsNot Applicable

4.11.11 Reporting RequirementsReports are acknowledged and have been included in the report list.




4.11.12 Authorization RequirementsProper authorization will be provided under client supervision.


Reviewed Comments is attached in excel sheet.

Note:-All Reports that are mentioned in the AS-IS document are acknowledged and same is mentioned in report list, out of which some are standard reports and some reports are required to be developed (by Bristlecone / JBM Technical team). The details of all the reports shall be submitted later on. The same is not the part of this Blueprint document.



BBP_FI_JBM_v10

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