Performing Fixed Asset Physical Inventory in SAP

Cheryl PettusFinancial Systems Consultant

Monsanto Company

AgendaAgenda Monsanto at a GlanceMonsanto at a Glance Purpose of Asset Physical InventoryPurpose of Asset Physical Inventory SAP Delivered FunctionalitySAP Delivered Functionality Monsanto’s Answer to Performing Asset Physical Monsanto’s Answer to Performing Asset Physical

Inventory in SAPInventory in SAP Features of Monsanto’s Physical Inventory ProcessFeatures of Monsanto’s Physical Inventory Process Technical ComponentsTechnical Components How System FunctionsHow System Functions System FlowSystem Flow Q & AQ & A

Monsanto at a GlanceMonsanto at a Glance

Monsanto at a Glance (cont)Monsanto at a Glance (cont)• Leading provider of agricultural products

for growers• $4.7BN in net sales in 2002• 14,500 employees worldwide• 380 locations worldwide in 4 primary

regions – Europe/Africa, Asia Pacific, Latin America and North America

• Headquartered in St. Louis, Missouri• 2.3BN Net Property Plant and Equipment @

12/31/2002; 26% of total company assets

Monsanto at a Glance (cont)Monsanto at a Glance (cont)

                                                             

Purpose Of Asset Physical Purpose Of Asset Physical InventoryInventory

• Protect large capital investments• Validate fixed asset amounts reflected

in the financial statements • Provide for appropriate insurance

coverage• Comply with audit requirements• Establish accountability• Provides basis for sound decision

making

SAP Delivered FunctionalitySAP Delivered Functionality

• Provides Inventory List Reports to assist with physical inventory

• Provides standardized BAPIs (business application programming interfaces) that enable you to interface with outside inventory software

• Does not provide special functions for carrying out a fixed asset physical inventory

Monsanto’s Answer to Performing Monsanto’s Answer to Performing Asset Physical Inventory in SAPAsset Physical Inventory in SAP

• Did not purchase bolt-on inventory software package for several reasons (cost, effectiveness, efficiency & flexibility)

• Built our own Asset Physical Inventory Process in SAP using customized ABAP code

• Process and Programs are owned by Central Property Accounting Dept.

Features of Monsanto’s Physical Features of Monsanto’s Physical Inventory ProcessInventory Process

• Flexibility in selecting asset population • 2 sampling methods (monetary unit statistical sampling &

non-statistical random sampling); sampling method can be different for each asset class

• Flexible confidence levels, precision & sample %’s• Ability to exclude recently inventoried assets from sample

selection by class• Ability to generate Excel Spreadsheet to send to inventory

sites• Ability to load inventory results into SAP for master data

update & results evaluation• Option to update asset master record with new physical

inventory date • Assigns Pass/Fail rating for statistically sampled assets

Technical ComponentsTechnical Components• 4 Seamless SAP ABAP Programs

– Population Selection– Define Sampling Criteria– Selects Assets & outputs selected assets to Excel – Calculation of results and update of asset records (BDC

session - batch data communication)

• 2 SAP customized tables– Captures selection criteria and population and sample

amounts by class (used in results evaluation)– Captures each asset, master data & values of assets selected

for physical inventory & results of physical inventory

• Unix Server Accessed– Provides intermediate storage for population and sample

selection files

How System Functions – How System Functions – Population SelectionPopulation Selection

Population – set of assets about which you want to form a conclusion

Rules/Features• The definition of the population should match the objectives• Population should only include active assets (handled in

programming code)• Population selected should be consistent with how you want

inventory results to be evaluated. - i.e. should results be evaluated by company code, site, person responsible, etc. (selected by end-user)

• Gross BV and Net BV input selection fields allow user to select or exclude assets with specified GBV or NBV.

• Report generated that lists assets selected in population sorted by asset class.

Population Selection Screen

How System Functions – Population How System Functions – Population Selection (cont)Selection (cont)

Population Report Generated

How System Functions – Population How System Functions – Population Selection (cont)Selection (cont)

Must decide which data fields are pertinent to

verify your population

After User Verifies Population, click the Define Inventory Methods to go to the next program (Define Inventory Method & Selection Criteria)

How System Functions –Define Asset How System Functions –Define Asset Selection Criteria Selection Criteria

Sampling Criteria – how should assets be selected from the population for physical inventory

Rules• Assets selected are grouped by class due to the flexibility to

choose a different sampling method for each asset class (i.e. , user may decide to do a 100% count for asset classes with few assets or high risk assets and a statistically sample for asset classes with a significant amount of assets or less risky classes).

• Each asset class represents its own population for purposes of selecting assets to be inventoried and results evaluation.

How System Functions –Define Asset How System Functions –Define Asset Selection Criteria Selection Criteria

Selection/Sampling Methods Offered

• Non-Statistical Random Selection – method can be used when user opts to perform a complete count of assets over a specified time period. Includes the ability to include/exclude assets based on last inventory date

• Monetary Unit Statistical Sampling – assets are statistically chosen based on user entered confidence level and precision error rate

Monetary Unit Statistical SamplingMonetary Unit Statistical Sampling • Also known as “dollar unit sampling” and “proportionate to size

sampling”• With monetary unit sampling the data is treated as a stream of

dollars and each dollar has a chance of being selected. The likelihood that a given record will be selected is directly proportional to the size of the item. Thus, to ensure that the sample does not include just high value items we separate assets into 3 stratums (high, medium and low value) and statistically select assets from each stratum.

• Terms that must be understood to perform monetary unit sampling:– Confidence Level% – the reliability the sample should generate– Precision % - the maximum % of error you are willing to accept in the

population without detection

• Based on the confidence level and precision percentages, the program performs statistical calculations using internal tables and formulas to select assets from each asset class marked for statistical sampling

Non-statistical Random SamplingNon-statistical Random Sampling • Also called “representative” or “proportionate” sampling

because all groups should be proportionately represented

• Each member of the population has an equal chance of being selected

• User specifies % of dollar population they want sampled. % is multiplied by population total to determine dollar limit. System selects a randomly generated number (k) and every kth member of population is selected until dollar limit is reached.

• Considered non-statistical because we do not use statistical calculations to express the results of the audit sample

How System Functions –Define Asset How System Functions –Define Asset Selection CriteriaSelection Criteria

If performing a monetary unit statistical sample the confidence and precision % fields must be completed

If performing a non-statistical random sample, the sample% field should be completed and confidence & precision fields left blank

Click Select Assets button to view assets selected

 

How System Functions –Sample How System Functions –Sample SelectedSelected

Report with assets selected to be inventoried is generated; User can remove columns not necessary for site to perform inventory

User clicks Update tables button to update tables with sampling data

User uploads this report to excel

Sends excel spreadsheet to site

Site completes inventory and sends completed excel sheet back to user

How System Functions – Upload of How System Functions – Upload of Completed Excel Spreadsheet into SAPCompleted Excel Spreadsheet into SAP

The excel file uploaded back into SAP must contain specific columns. The file is compared to the custom table to ensure that each asset sampled is included in the spreadsheet uploaded back into the system

The found column is where the site indicates whether the asset was found. (Y or N)

There is a column to enter error amounts in assets value

Class CoCd Asset SNo.Physical Inv Date FoundError AmountPopulation FileAsset Class Method F

1100 5180 518081000111 0 08/06/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03102100 5180 518082013189 0 08/07/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03102100 5180 518082000027 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03102100 5180 518082000024 0 08/08/2002 no /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103100 5180 518083100006 0 08/08/2002 no /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103100 5180 518083100010 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103100 5110 511003000010 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103100 5110 511003000004 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103100 5110 511003000003 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103100 5180 518083100018 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103100 5180 518083100005 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103200 5180 518087000003 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103200 5180 518087000002 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103300 5180 518088000005 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103300 5180 518088000003 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103300 5180 518088000002 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103300 5180 518088000004 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103600 5180 518089000004 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103600 5180 518089000003 0 08/08/2002 yes /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103600 5180 518089000001 0 08/08/2002 yes -1200000 /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat03103600 5180 518089000000 0 08/08/2002 yes 100000 /dx/outbound/1y_yai0100_230_test7_cfpett*.dat/dx/outbound/1y_yai0200_230_cntfile.dat0310

How System Functions – Upload of How System Functions – Upload of Completed Excel Spreadsheet into SAPCompleted Excel Spreadsheet into SAP

User uploads Excel text file to SAP

If the user is ready to update the tables and last inventory date, check upload box. T-Code AS02 (change asset) is accessed in order to update the last inventory date

Several print options are available

Uses a BDC (Batch DataConversion) session to load data

How System Functions –Results EvaluationHow System Functions –Results Evaluation

What’s needed to perform results evaluation– Customized table 1 that stores each instance by asset

class and includes unique file identification, asset class population value, # of assets in population, # of assets in sample, sampling method, etc.

– Customized table 2 that stores all necessary data for each asset selected for physical inventory (i.e., asset number, class, value, etc.)

– Internal reference tables for calculation of results for asset classes in which monetary unit statistical sampling was chosen (overstatement chart, understatement chart, reliability table, etc.)

How System Functions –Results EvaluationHow System Functions –Results Evaluation

Summary of Output

• Reports of evaluated results – pass/ fail grade assignment for asset classes using monetary statistical sampling; % of dollars incorrect for asset classes using non-statistical random selection

• Last inventory date in the asset master record updated

How System Functions – Results Evaluation How System Functions – Results Evaluation (Example of Overall Non-Statistical Results (Example of Overall Non-Statistical Results

Summary)Summary)

How System Functions – Results Evaluation How System Functions – Results Evaluation (Example of Statistical Monetary Results Summary (Example of Statistical Monetary Results Summary

for Asset Class 2100for Asset Class 2100)

How System Functions – Results Evaluation How System Functions – Results Evaluation (Example of Overall Results for an Entire Population)(Example of Overall Results for an Entire Population)

System FlowSystem Flow

SA

P P

rocess

User Defines Population

Unix Server

File

User defines Sampling method

& Criteria

System selects Sample and generates

report which is exported to excel

No

n S

AP

User is satisfied with

sample & updates table

Excel File

Site performsInventory and Updates Excel

sheet

Completed sheet loaded compared to tables for

completeness

Tables Updated Evaluation reports Generated & asset

master data updatedw/ last inventory date

SAPCustomized

Tables

Any Questions?Any Questions?

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Session Code: 1404