This segment from our 454 page SAP Financials manual is being made available as

a sample of our training manuals. Please contact David.Haynes@ERPtips.com if

you have any SAP training needs, or visit www.ERPtips.com for more information.

Written by Pamela Adams with Updates by Michael Bertsch

Published by Klee Associates, Inc.
Copyright Klee Associates, Inc., 2008, 2011

Unit 2: Financial Accounting Organizational

Structures

Assignment of Financial Organizational Units

Once the desired organizational units have been defined, they need to be
assigned to build the necessary structure for representing and operating the
entire business organization. All remaining functionality and reporting in the FI
module is based on the organizational structures defined and assigned in
configuration so careful thought should be given to how organizational structures
are defined and assigned. These structures should mirror the actual organization
as closely as possible for accurate reporting.
Assignments are generally simple configuration steps linking two organizational
structures together. The key potential assignments, depending on an
organizations structure and requirements are as follows:
Assign Company Code to Company
Assign Company Code to Credit Control Area
Assignment of Business Area to Plants & Sales Organizations
Assign Business Area to Consolidated Business Area

Assign Company Code to Company

The company and company code are now established. These two components
now must be related to each other as required by the actual business
organization. Each affiliated company code should be assigned to the same
Company. To relate the Company to the Company code, you must set the IMG
setting that Assign Company Code to Company.

Follow along with the instructor.

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1. At the IMG menu, click on the following (as shown in the screen shot below):
Enterprise Structure Assignment Financial Accounting Assign
company code to company.

This menu option assigns the company codes to the company.

If multiple company codes report to one company (the name of the corporate
entity), those company codes would then be assigned to the same Company.
The sample screenshot below demonstrates assignment of several company
codes to a single Company.

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As can be seen above, New York (Company Code 3000), Denver (Company
Code 3005) and Brussels (Company Code 3010) are all affiliated under
Company 3000.

1. Click and type 1000. Company Code 1000 is one

of the SAP supplied Companies; it is also linked to Company 1000.

2. Click the green arrow to return to the IMG menu.

Assign Company Code to Credit Control Area

Once the credit control area is defined, a company code or Company Codes
must be assigned to the Credit Control area in order for the parameters and
restrictions defined in the credit control area to become applicable for a specific
company code.

1. At the main IMG menu, select: Enterprise Structure Assignment

Financial Accounting Assign company code to credit control area.

One company code can have only one credit control area. Multiple
companies can be assigned the same credit control area.

The screen shot below illustrates company code 1000 assigned to Credit
Control area ZZ01. Checkbox Overwrite CC, if you want to be able to
change the credit control area at the document level at the time of
creation.

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Credit management in SAP helps monitor open sales orders, open deliveries and
open billing documents (invoices) to make sure that the organization has not
extended too much credit to its customers. The integration between the
financials and sales occurs at sales order entry when customers place orders for
products; these customers may have credit arrangements with the organization.
Credit management is an integration point between FI and SD; it is discussed in
greater detail in Unit 7, Accounts Receivable, where credit monitoring occurs.

Assign Business Area to Plants & Sales

Organizations
The Assignment of Business Area is necessary to determine the business area
for transactions that are fed to financial accounting from other modules. These
assignments can be made for material movements by Plant/Sales Division
(Materials Management) or for by Sales Area (Sales and Distribution). By
performing these assignments, business area assignments are made
automatically based on predefined rules.

Business Area Assignment by Plant/Division

There are two choices in assigning the Business Area based upon whether or not
valuation areas differ. A valuation area is the level at which the materials stocks
are valuated (value basis). The valuation level is established by defining the
valuation area at Company code or Plant level. That definition is at the Logistics
General level under Enterprise Structure. If the valuation area is set at the plant
level, then the valuation area is the plant code. Valuation is explained in more
detail in the Klee Materials Management course.

Business by Assignment with Sales Area

Once the Business area is established in FI and allocated in the Logistics
General area, the Business area rules (where the transactional data will occur)
must be defined in the Sales and Distribution module. This is an integration point
between FI and SD. The Sales and Distribution analyst works with the Financial
analyst to set up the sales side of the Business Area requirements in the IMG.
For the purpose of this course, we look briefly at the Business area setup on the
Sales side of the IMG. Observe with the Instructor.

1. Click the IMG folders to: Enterprise Structure Assignment Business

Area Account Assignment Define Rules By Sales Area.

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Klee Associates, Inc. Unit 2: Financial Accounting Organizational Structures

Sales area is the combination of the Sales organization, Distribution Channel

and Division. Sales area is discussed in more detail in the Klee Sales and
Distribution course. The Rule by Sales area tells the system what data to
include in the reporting on the Financial side.

2. Click the dropdown at the Rule field. Rule 1, 2, or 3 must be selected

(assigned) and saved.

3. Click the green arrow to return the IMG main menu.

Once the rules for assignment of the Business Area have been defined at the
Sales area, the Business area has to be assigned to the Plant and Division.
Observe the Instructor.

1. Click on the IMG folders to: Assignment Sales and Distribution

Business Area Account Assignment Assign Business Area to
Plant/Division.

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 Unit 2: Financial Accounting Organizational Structures Klee Associates, Inc.

2. The Change View "Org. Unit: Business Area Determination": Overview

screen displays. An example is below:

In this example, plant 0001 has multiple product divisions, which are different
Pumps that all aggregate to business 0001.

3. Click the green arrow to return to the main IMG menu.

The Business Area assignment has now occurred on the Sales and Distribution
side and can run financial reporting by Business Area on the Financial side of
SAP.

The next optional step configure regarding Business Area is called

Consolidation Business Area; it is established to aggregate multiple business
areas into a single consolidated business area. The first step is establishing the
Consolidation Business Area itself.

Assign Business Area to Consolidated Business Area

Business Areas can be allocated to a "Consolidated Business Area" to
consolidate Business Area Reporting across the organizational structure.
Consolidated business areas do not handle Legal Consolidations. That is a
separate module and area of functionality in SAP.
Multiple business areas can be assigned to a single consolidated business area
and the configuration is relatively easy. It consists of a listing of all business
areas with a field to be populated with the consolidated business to which the
business area is to be assigned.

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Klee Associates, Inc. Unit 2: Financial Accounting Organizational Structures

Other Financial Accounting Organizational Structure

and Settings
There are three other main areas of configuration that are not in the Enterprise
Structure section of the IMG. These areas are:
Global Parameters for the Company Code
Defining the Fiscal Year Variant
Establishing the Chart of Accounts

Global Parameters for the Company Code

The company code is a key organizational element that was configured to
establish the economic entity electronically in SAP. There are other key
parameters related to the company code that need to be configured.

Observe the instructor.

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1. Click the IMG folders to: Financial Accounting Financial Accounting

Global Settings Company Code Enter Global Parameters.

Global parameters are furnished by SAP for certain countries and some will
default in the company code established. These parameters include the
following:
ACCOUNTING ORGANIZATION This is a summary of the assignments
made and some other organizational parameters.
Chart of Accounts Every Company code must have a Chart of
Accounts to use for its general ledger. This is assigned here and will be
discussed in more detail later in this chapter.
Company This was defined above as representing the total
organization. It can be assigned here as well as in the configuration
previously discussed.
Credit Control Area Again, the Credit Control Area was previously
discussed and can be assigned here as well as in the assignment
configuration.
Ext. co. code This defines company as an external company code and
is needed only of the external document entry functions are to be used.
Company Code is Productive Marks Company Code as productive
preventing deletion programs from deleting the company code.
Country Chart/Accts This is the chart of accounts required by national
regulations if the country regulatory authorities have made this
requirement.
FM Area Defines the financial management area generally used for
Funds Management (governmental accounting).

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Fiscal Year Variant Defines the fiscal year and accounting periods of
the company code. (To be discussed more later in this course.)
Global CoCode This is used for external SAP company codes and ALE
document distribution.
VAT Registration No. Used for "Value Added Tax" (not used in the
USA).
PROCESSING PARAMETERES These are numerous parameters that
control how the company code operated. The most common selections are
detailed below.
Field Status Variant Variant that controls what fields are available when
posting documents. This will be discussed in more detail later.
Posting Period Variant The period control variant that defines what
periods are open for posting for specified accounts.
CoCode CO Area Defines whether the Controlling Area relationship
to the company code is one to one or if the controlling area spans across
several company codes.
Cash Management Activated Indicates that cash management and
treasury functions are utilized for this company code.
Business Area fin. Statements Indicates that business area balance
sheets and P&L are to be generated internally for this company code.
Propose Fiscal Year Controls whether the fiscal year is defaulted
during transaction entry, change and display.
Define default value date Indicates that the current date is used as the
default value date when entering documents.
Tax base is net value Sets the base amount for sales tax purposes to
be net of discounts.
Discount base is net value Indicates that sales tax is not included in the
base amount of calculations for sales discounts.

2. Click and type 1000. At the Change View

"Company Code Global Data": Overview screen, click and highlight 1000;

then click . The Change View "Company Code Global Data": Details
screen displays.

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Fiscal Year Variant

The fiscal year variant is an SAP object that defines the reporting period(s) to be
utilized by the organization. That defined period must be identified by the
organization for information to be prepared and reported periodically. The fiscal
year variant is the electronic definition of the business entity's accounting
periods. An annual accounting cycle can be the calendar year or a fiscal year.

A calendar year starts in January and ends in December.

A fiscal year is twelve consecutive months ending on the last day of any
month except December.
A shortened fiscal year is a tax year of fewer than 12 months. This may
occur when the business is a new business.

The fiscal year variant actually tells the system whether or not the accounting
periods are calendar or fiscal, the number of days per period, and it allows for
additional periods to be set up for additional processing within the calendar or
fiscal year. The fiscal year variant must be set up (defined) and then (assigned)
in the IMG.

Observe the Instructor.

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1. At the main IMG menu, click the IMG folders to: Financial Accounting
Financial Accounting Global Settings Fiscal Year Maintain Fiscal Year
Variant.

The fiscal year variant has a two character code associated with it, along with
a description. Settings must define whether the Fiscal Year Variant is based
upon a calendar year or not and the associated number of periods and
special periods.

2. To create a new fiscal year variant, click .

Calendar Year Fiscal Year Variant

At the New Entries: Overview of Added Entries, insert the following:

Field Values
FV PA
Description Jan-Dec
Year-depend Leave blank
Calendar yr checkmark
Number of posting periods 12
No. of special periods 4

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The settings for this PA example are for a calendar year. There are specific
settings that must be defined when the fiscal year variant is year-dependent.

Year Dependent Fiscal Year Variant

At the New Entries: Overview of Added Entries, insert the following:

Field Values
FV PZ
Description April-March
Year-depend checkbox
Calendar yr Leave blank
Number of posting periods 12
No. of special periods 4

When the Year-dependent indicator is checked, the accounting periods must

be defined, along with the accounting periods text.

3. Click and highlight the PZ entry; then click folder Periods.

At the Calendar yr popup, click the green checkmark.

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4. Click . Insert the following data, as indicated in the table below.

When the Year-dependent indicator is set, the year shift must be entered and
be effective for the year you are doing the entry. The example below
illustrates creating the periods in the current calendar year. An entry for the
fiscal year that exceeds the current calendar year requires a year shift of +1.

Month Day Period Year Shift

1 31 10 -1
2 28 11 -1
3 31 12 -1
4 30 1 0
5 31 2 0
6 30 3 0
7 31 4 0
8 31 5 0
9 30 6 0
10 31 7 0
11 30 8 0
12 31 9 0

5. Click and highlight the first month (period) and double click the folder Period
Texts. Enter the language, period number, three character text representing
the period and a description.

6. Click the green arrow to return to the "Change View "Fiscal year variants:
Overview screen.

7. Save the entries. A transport popup will display. Create the transport as a
local object.

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The fiscal year variant is now defined. This variant must be assigned at the
company code level. This requires an additional configuration step. Observe the
Instructor.

1. Click on the IMG folder: Financial Accounting Global Settings Fiscal Year
Assign Company Code to a Fiscal Year Variant.

The Change View "Assign Comp. Code Fiscal Year Variant" screen
displays.

2. Click and type 1000. Company code 1000 already

has a fiscal year variant assigned.

3. Click on the Fiscal Year Variant field and remove the entry.

4. Type PA and save the entry.

5. Click the green arrow to return to the main IMG menu.

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Klee Associates, Inc. Unit 2: Financial Accounting Organizational Structures

Chart of Accounts

The financial events must be tracked into accounts. The accounts reside in the
Chart of Accounts. The Chart of Accounts is a listing of all the accounts that can
be used in the General Ledger.
The Chart of Accounts is considered a General Ledger IMG setting that is
required before transactional data can be done. The Chart of Accounts exists
independently of a Company Code. A Chart of Accounts must be assigned to a
Company Code.
A business that has multiple companies may have multiple Charts of Accounts, if
separate reporting requirements exist and there is no need for consolidated
reporting. For consolidated reporting, companies may require that all companies
in the organization have the same chart of accounts so that consolidated
reporting is easy to accomplish.

The Chart of Accounts does the following:

Defines a list of GL accounts for a Company Code; used for daily postings.
Specifies languages of the accounts.
Specifies the GL Account number; number of characters.
Contains the names of the GL Accounts.
Operating Chart of Accounts is shared with Controlling.

Define Chart of Accounts

Defining the Chart of Accounts does not include creating the individual general
ledger accounts until a later step in configuring the system. If an existing chart of
accounts is copied, those accounts will be copied into the new chart of accounts.
This step is for naming and setting some of the basic parameters for how the
Chart of Accounts to be used by the company code will behave. If the system
delivered Chart of Accounts is not acceptable for the organization, a new Chart
should be created instead of copying an existing chart.
The definition of the Chart of Accounts in the IMG contains:

A 3 to 4 character identifier
Description
Default language for accounts
Maximum length of GL Account number
Integration to controlling
Name of Consolidation Chart of Accounts
Status

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Observe the Instructor.

1. Click the IMG menu to: Financial Accounting General Ledger Accounting
G/L/Accounts Master Data Preparations Edit Chart of Accounts
List.

2. Click and type INT. The SAP supplied data related

to the Chart of Accounts displays.

This example shows that the chart allows 6 character GL account codes with
the default language as English and no Group Chart of Accts for
consolidation. The Chart of Accounts is active.

3. Click the green arrow back.

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4. Click and type CAUS. CAUS is the SAP supplied

sample chart for the US.

5. Click the green arrow back to the main IMG menu.

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Creating your own Chart of Accounts

The Chart of Accounts that your company or organization use has to be included
in the Chart of Accounts list. You can copy an existing chart of accounts and
name your own Chart of Accounts.

1. Click Edit Chart of Accounts List.

2.

Field Value
Chart of Accts JC
Description Sample chart of accounts
Maint. Language English
Length of GL account number 6
Controlling Integration Manual creation of cost elements
Group chart of accounts blank
Status blank

3. Click Save.

4. Click the green arrow to return to the IMG menu.

Once your Chart of Accounts is created, the Chart of Accounts must be assigned
to the Company code.
Observe the Instructor.

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1. Click on the IMG folder Assign Company Code to Chart of Accounts.

2. At the Change View "Assign Company Code to Chart of Accounts, click the
mouse cursor and remove the existing entry.

An existing assignment to a Chart of Accounts cannot be removed. The

entire Chart and all the data assigned must be reorganized before the
system will allow reassignment of a different Chart of Accounts.

When a new company code is created, the Chart of Accounts is assigned in the
Global Settings.

1. Click on the green arrow to return to the Main IMG menu.

2. Click to: Financial Accounting Financial Accounting Global Settings

Company code Enter Global Parameters.

3. The Instructor will click and highlight JC; students will click and highlight their

own entries and click .

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Field Value
Chart of Accts JC (instructor); students JCxx
Fiscal Year Variant PA or student defined in previous exercise

4. Save the entries.

Modifying the Chart of Accounts

Many organizations adopt the SAP chart of accounts and modify the GL
accounts to match their own. SAP provides three different ways to modify the
Chart of Accounts:

Create your own chart from scratch

Copy the chart and create your own using Z naming convention
Use the SAP chart and modify the GL accounts
Edit individual accounts
Create your own GL accounts with reference or template

Create your own chart of accounts. This method of creating your GL accounts
within the Chart of Accounts is manual and quite time consuming. It is
recommended that an organization only use this if neither the standard SAP
system nor any other system contains a chart of accounts that you can use as a
reference.

Prior to creating your own GL accounts for your Chart of Accounts, the Account
Groups that represent your own numbering of your accounts must be created.
The easiest way to create your own account group is to copy an existing account
group. Observe the Instructor.

1. Click on the IMG setting: Financial Accounting General Ledger

Accounting G/L Accounts Preparations Define Account Group, if you
are not already there.

2. Click and highlight INT ASST and click .

3. Click the Chrt/Accts field, remove the copied entry and type JC.

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4. Click the From acct and To acct and type the following:

Field Value
From acct 1060
To account 1390

At the Change View "G/L Account Groups": Overview screen, create the
following entries:

Chrt/Accts Acct Group From Acct To Acct

JC GL blank 999999
JC MAT blank 999999
JC PL blank 999999

5. Save and green arrow back to the IMG menu. Once the Account Groups are
created, the GL account masters will be created in the IMG.

6. Click to the IMG setting:

This IMG setting requires a lot of thought and planning, and it leads to
creation of G/L account master records. Master records are quite involved;
so before we delve into creation of master records and their functionality,
let's move to our next Unit, which covers the Master records and how we
may want to configure them.

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 Unit 2: Financial Accounting Organizational Structures Klee Associates, Inc.

Final Overview of the Main Organizational Structures

Once all the organizational structures have been defined and assigned, the
preparations for creating master data is the next step in setting up the financial
portion of the system.
To summarize the organizational structures in the FI module the main required
organizational elements are the Chart of Accounts and the Company Code.
Without these financial transactions cannot be processed.
The Chart of Accounts is basically a listing of all the G/L accounts
available for a particular Company Code. The accounts in the Chart of
Accounts must be "extended" into the company code as desired and not
all accounts from the chart must be used. Multiple Company Codes may
be assigned to the same Chart of Accounts, but only one Chart of
Accounts can be assigned to a Company Code.
The Company Code (defined above) is the entity that contains the
booking within the accounts assigned from the Chart Accounts tied to
that specific Company code.
Below is a basic organizational structure diagram of the FI module.

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Inclusion of the concepts in this book in any internal client training material is
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Copyright 2008, 2011

All rights reserved.
Used with permission.
Klee Associates, Inc.

NO WARRANTY: This documentation is delivered as is, and Klee Associates

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