START OF SAP FINANCIAL ACCOUNTING

Customizing Organizational
Structure in SAP ERP
client
>Define a company
> Define a company code
• Assign a company to a company code
> Define a business area
> Define a segment
> Define and assign fiscal year variants to a company co
> Define open and closing periods variants and assign v

company code 4 digits alpha numeric key

In this exercise, you define your company code. You can define more than one company code if required.
In the SAP ERP, the company code is an organizational unit used in FI to structure a business process for
financial reporting purposes. SAP FI gives you the option to edit (create from scratch) your company code
copy the parameters of an existing company code and modify them to meet your requirements.
In this activity you will create your company code from scratch instead of copying existing company
code parameters. Choose Edit Company Code Data from the displayed list in Figure 1-8. Follow the menu
path: IMG ➤ Enterprise Structure ➤ Definition ➤ Financial Accounting ➤ Edit, Copy, Delete, Check
Company Code or use the transaction code OX02

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Fiscal Year Variant

The fiscal year represents the accounting year or annual accounting period. A fiscal year variant defines
your company’s accounting posting periods. A proper business accounting transaction normally covers a
12-month period. The normal rule is that business transactions are assigned to the period during which th
transaction took place. The fiscal year variant is customized to match your company’s fiscal year, which do
not necessarily have to be the same as the normal calendar year (that is, January to December). SAP ERP
dynamic enough to fit into your company’s calendar or fiscal year.
Fiscal year variant is defined with posting periods. Posting periods are technical terms used to refer to
months. In SAP ERP, the fiscal year is made up of 12 posting periods. Besides the normal 12 posting period
you can define up to four special posting periods, which are used for posting year-end adjustments to clos
 periods. For example, if the normal fiscal period is closed, adjustments can still be posted in one of the fo
special periods.

To assign business transactions to different periods, you have to define a fiscal

year with posting periods. You define the fiscal year as a variant that is assigned
to the company code.
The fiscal year variant contains the definition of posting periods and special
periods.
If each fiscal year of a fiscal year variant uses the same number of periods, and the
posting periods always start and end on the same day of the year, the variant is
year-independent. A year-independent fiscal year variant can be defined as:
• Calendar year
• Non-calendar year
If the fiscal year is defined as the calendar year, the posting periods are equal
to the months of the year. Therefore, a fiscal year that is a calendar year must
have 12 posting periods.

If the fiscal year is defined as a non-calendar year, you have to define the posting
periods by assigning end dates to each period. A non-calendar year can have
between 1 and 16 posting periods. If the non-calendar year does not start on
January 1st, the periods of the year that belong to the former or the coming fiscal
year must have an indicator -1 or +1.
The example above on the right shows a non-calendar year with 6 posting periods
which goes from April to March. The months January to March therefore still
belong to the old fiscal year and have the indicator -1.
If the fiscal year differs from the calendar year, but the posting periods correspond
to calendar months, the day limit for February should be 29 to consider leap years.
Fiscal years are normally year-independent.
customization steps for defining fiscal year

Create a fiscal year variant based on the calendar year.

IMG: Financial Accounting → Financial Accounting Global
Settings → Fiscal Year → Maintain Fiscal Year Variant (Maintain
Shortened Fisc. Year)
transaction code is OB29.

Assign the Fiscal Year Variant to the Compa

It is mandatory that you assign a fiscal year to a company code
your fiscal year variant, the next step is to assign it to your com
standard fiscal year variant supplied by SAP in the system direc
define your own fiscal year variant. Follow this menu path: IMG
Accounting Global Settings (New) ➤ Ledgers ➤ Fiscal Year and
a Fiscal Year Variant or use the transaction code OB37.

Opening and Closing Posting Periods

As mentioned previously, accounting transactions are usually assigned to periods. Posting periods are
defined in fiscal year variants. The benefit of defining variants to open periods is to avoid the problem of
posting accounting transactions to the wrong period. This is achieved by opening current periods and
closing all other periods. At the end of the current period, the period is closed and the next period is open

It is compulsory that at least two posting period intervals be open at any given time. On the oth
can open several posting periods at the same time (that is, more than two posting periods).
Posting periods are independent of the fiscal year; that is, they are not dependent on nor contr
 by the fiscal year. Posting periods are defined at the global level in SAP ERP. This makes them ac
several company codes in the system.
In SAP ERP, opening and closing periods are differentiated by account types. This allows you to
determine which accounts are posted to a specific posting period. For example, posting can be
accounts payable but not to accounts receivable. You can specify several account types simulta
part of your customizing open periods

lists the basic account types in SAP R/3.

+ Valid for All Account types

A Assets
D Debtors
K Creditors
M MATERIAL
S GENERAL LEDGER

In SAP ERP, it is mandatory that for each posting period, you specify the minimum account type ‘+’ for
each open period. This account type is valid for all account types. The benefit of applying account types to
an open period is that the system can determine whether a posting period specified in the posting period
variant you defined can be posted to using the posting date entered in the document header.
As part of customizing opening and closing periods, the following items are defined:
• Define variants for open posting periods
• Assign variants to company codes
• Specify open and close posting periods
Let’s look at each in turn.

Define Variants for Open Posting Periods

To define variants for open posting periods, follow the menu path: IMG: Financial Accounting (New) ➤
Financial Accounting Global Settings (New) ➤ Ledgers ➤ Fiscal Year and posting Periods ➤ Posting Period
➤ Define Variants for Open Posting Periods or use the transaction code OBBO.

Note E very company code must be assigned its own variant for open posting periods

Assign Variants to Company Code

The assignment of posting period variants is a part of customizing variants for opening periods. Every
company code in SAP R/3 must be assigned a posting period variant. To access the screen where you can
assign your company code to a posting period variant, use this menu path: IMG: Financial Accounting
(New) ➤ Financial Accounting Global Settings (New) ➤ Ledgers ➤ Fiscal Year and Posting Periods ➤
Posting Periods ➤ Assign Variants to Company Code. Or use the transaction code OBBP.

Specify Open and Closing Periods

As mentioned, posting periods are opened in fiscal year variants. You can open and close sever
periods simultaneously in SAP R//3. The advantage of opening and closing periods is that it hel
you from posting transactions to the wrong period in the sense that only valid periods are open
not relevant for posting are closed. To go to the screen where you can open and close posting p
follow this menu path: IMG: Financial Accounting (New) ➤ Financial Accounting Global Setting
Ledgers ➤ Fiscal Year and Posting Periods ➤ Posting Periods ➤ Open and Close Posting Periods
transaction code OB52

END AND NEXT TOPIC WILL BE STARTED

Defining the Cha

AND ACCOUNT G
g Organizational
SAP ERP

any code

variants to a company code

iods variants and assign variants to a company code

1 The Client
The client is an independent unit in the SA
at this level is valid for all company codes
In other words, all the company codes in
reason, the client is said to be the highest
data is entered only once, thus eliminatin
storage space. As all company codes in th
need to create individual data for each co
Each client has its own unique log-on key,
client and perform business processes.
In a client, you can define one or more co

2 Define a Company
In SAP, a company is an organizational uni
generated in line with legal requirements
financial accounting component to which
You will define a company at this initial st
code and assign the company to the comp
There are two ways to access the screen w
path: IMG ➤ Enterprise Structure ➤ Defin
the transaction code OX15

3 Business Area

n one company code if required.
tructure a business process for
om scratch) your company code or
eet your requirements.
copying existing company
t in Figure 1-8. Follow the menu
Edit, Copy, Delete, Check
segment A
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d. A fiscal year variant defines
g transaction normally covers a
ned to the period during which the
r company’s fiscal year, which does
January to December). SAP ERP is
hnical terms used to refer to
des the normal 12 posting periods,
ting year-end adjustments to closed
A business area is an organizational unit t
a functional area of operation, a plant, or
product the company sells, a geographica
purely for internal financial reporting.
You define a business area in SAP ERP usin
company code or several company codes.
area or several business areas. The advan
internal financial reports on a business fu
management in decision-making, because
Defining a business area enables you to co
financial statements by function, sales are
for Manchester and London. Follow the m
or use transaction code OX03.
4 Segment
segment B A segment is used to highlight items discl
television and lcds area, which forms part of an organization
Accounting principles and standards (U.S.
segmental reporting in certain situations
geographic location. Segmental reporting
risk situations of segments within an ente
users of the financial information to make
Segment accounting allows a company to
importance of segment reporting is that i
In the SAP ERP, you can carry o
requirements. To define a segm
Financial Accounting ➤ Define
n still be posted in one of the four
A fiscal year variant has to be defined as year-specific if one of the following
conditions is fulfilled: The start and end dates of the posting periods for some
fiscal years are different to the dates for other fiscal years. Some fiscal years use a
different number of posting periods.
If all of the fiscal years of a fiscal year variant have the same number of posting
 periods, only the different period dates for the different years have to be defined
(see example on the left).
If one year of a fiscal year variant has less posting periods than the others, it is
called a shortened fiscal year (see example on the right). This could be required,
for example, if closing has to be carried out before the end of the normal fiscal
year; (for example, if the beginning of the fiscal year should be changed or if the
company was sold). You have to define the shortened fiscal year and its number of
posting periods before you can define the period dates. For this year, you can only
assign a lower number of posting periods.

Variant to the Company Code

a fiscal year to a company code in SAP. Since you have defined or copied
xt step is to assign it to your company code. It is also possible to assign the
pplied by SAP in the system directly to your company code without having to
iant. Follow this menu path: IMG ➤ Financial Accounting (New) ➤ Financial
w) ➤ Ledgers ➤ Fiscal Year and Posting Period ➤ Assign Company Code to
transaction code OB37.

periods. Posting periods are

riods is to avoid the problem of
opening current periods and
osed and the next period is opened.

pen at any given time. On the other hand, you

re than two posting periods).
are not dependent on nor controlled
el in SAP ERP. This makes them accessible to

ccount types. This allows you to

od. For example, posting can be permitted for
ify several account types simultaneously as

minimum account type ‘+’ for

nefit of applying account types to
d specified in the posting period
e document header.

Financial Accounting (New) ➤

posting Periods ➤ Posting Periods

r open posting periods

s for opening periods. Every

ccess the screen where you can
h: IMG: Financial Accounting
ear and Posting Periods ➤
on code OBBP.

ts. You can open and close several posting

and closing periods is that it helps prevent
e that only valid periods are open. Any periods
you can open and close posting periods,
ancial Accounting Global Settings (New) ➤
Open and Close Posting Periods or use the

fining the Chart of Accounts

D ACCOUNT GROUPS
t is an independent unit in the SAP ERP with its own master records and sets of tables. Data entered
el is valid for all company codes (defined in the next section) and organizational units in the client.
words, all the company codes in the client will have access to data created at this level. For that
he client is said to be the highest level in a SAP system hierarchy. The benefit of the client is that
tered only once, thus eliminating duplication, reducing redundancies, and saving resources like
pace. As all company codes in the client can have access to the same data created at this level, the
reate individual data for each company code is eliminated.
nt has its own unique log-on key, which must be entered by the user in order to access the
d perform business processes.
t, you can define one or more company codes.

a Company 6 DIGITS CAA001

company is an organizational unit treated as a legal entity from which a financial statement is
d in line with legal requirements. It is mandatory that a company be defined at least as part of
accounting component to which one or more company codes are assigned in the SAP ERP system.
efine a company at this initial stage and then later in this chapter you will also define a company
assign the company to the company code.
two ways to access the screen where company is defined in SAP R/3. You can follow this menu
G ➤ Enterprise Structure ➤ Definition ➤ Financial Accounting ➤ Define Company or you can use
action code OX15
 s area is an organizational unit that represents a specific business segment in SAP that defines
nal area of operation, a plant, or an area of responsibility. For example, business areas can be a
he company sells, a geographical location, and so on. Business area is optional and is intended
r internal financial reporting.

e a business area in SAP ERP using four characters. A business area can be assigned to a
code or several company codes. Likewise, it is also possible to assign a company code to a business
everal business areas. The advantage of using a business area is that it allows management to generate
nancial reports on a business function or a combination of business functions. These reports aid
ment in decision-making, because they make it easy to tell how well a business area is performing.

a business area enables you to complete the settings that will allow your company to maintain
statements by function, sales area, plant, or geographical location. Let’s define the business areas
hester and London. Follow the menu path: IMG ➤ Enterprise Structure ➤ Definition ➤ Financial
nsaction code OX03.

nt is used to highlight items disclosed in financial reporting by segment. This is opposed to a business
ch forms part of an organizational unit for which a financial statement is drawn for internal purposes.
ng principles and standards (U.S. GAAP, IFRS, IAS, and so on) mandate that companies produce
al reporting in certain situations for external purposes. A segment may be a department, product, or
ic location. Segmental reporting is purely for transparency purposes when reporting the profit and
tions of segments within an enterprise. The underlying reason behind this requirement is to assist
he financial information to make better judgments about an entity’s involvement in different activities.
accounting allows a company to report the performance of their segment’s activities individually. The
ce of segment reporting is that it places more emphasis on segment performance.

In the SAP ERP, you can carry out customization that allows you to meet segmental reporting
requirements. To define a segment, follow this menu path: IMG ➤ Enterprise Structure ➤ Definition ➤
Financial Accounting ➤ Define Segment.