This post is a continuation of my series on “SAP Financials: Integration with Other SAP Modules” It is the fourth in the series. You may have to read the first three series if you are new to this subject matter. As a result of my decision to treat the “SAP Integration objects” in one blog post, this post is unusually lengthy, my apologies.
1.1 SAP Financials Integration Objects
The objects used in integrating SAP Financials with other modules can be grouped under the following categories.
1.1.1 Company Code
In SAP Finance, the Company Code is the smallest organizational unit for which a complete, self-contained set of accounts is created for external reporting. It is a legal operating entity, and its definition in the financial accounting enterprise structure is a mandatory configuration step. Meaning that you must define at least one company code in your structure if you are implementing the SAP Financial accounting component.
In the SAP System, the company code is defined at the enterprise structure level, through the following configuration path.
IMG — Enterprise Structure – Definition — Financial Accounting — Edit, Copy, Delete, Check Company Code
The company code, as the central organizational unit of Financial Accounting, is the foremost account determination object. All enterprise structure objects are either directly or indirectly, assigned to a company code(s).
No accounting document can be posted to SAP FI without a company code selection. Whether it is a simple journal voucher that is posted in FI or an invoice document posted from SAP MM, a payroll document posted from SAP Payroll Module or even an interface document posted from a third party system, company code selection is a must.
Consequently, all organization structure objects from all modules are assigned either directly or indirectly to the company code.
Therefore, we have assignment of Plant to company code, Personnel Area to Company Code, Sales Organization to Company Code and so on, as a minimum requirement of any integration exercise.
We will see in the course of our discussion, in all the chapters of this book, how different enterprise structure objects are assigned to Company Codes and vice versa.
Other enterprise structure objects (plant, purchasing organization, sales organization, controlling areas, Fund Management areas and so on) are discussed in detail in the appropriate chapters of the book.
1.1.2 Chart of Accounts
The Chart of Account is simply a listing of all the General Ledger Accounts used by a company code or groups of company codes. It is represented in the system by a four-character alphanumeric key.
The Chart of Account is defined in the SAP System at the client level; hence, several company codes can use the same chart of account.
It is mandatory to have at least one chart of account assigned to a company code.
A chart of account may take three forms based on their function in the system:
1.1.3 Operating Chart of Account
This the main chart of account assign to a company code, and the one used for the daily postings of transactions in your company code.
The financial and management reports of your company code are based on GLs defined under the operating chart of account.
Unless otherwise stated, when we talk about chart of accounts, we are referring to the operating Chart of accounts.
The chart of account is defined in the system by following the configuration path below:
IMG — Financial Accounting (New) — General Ledger Accounting (New) — Master Data — G/L Accounts – Preparations — Edit Chart of Accounts List
As an object of integration, the chart of account is a very important account determination object. All postings to the general ledger irrespective of the source of transaction, happens through one or more general ledger accounts created under the chart of account.
With SAP ERP Financials, all P&L related GL master records, created in FI must be created as a cost element in controlling. The manner of this creation (whether automatic or manual) is controlled by the chart of account. See the screenshot above. Please note that this has changed in the SAP S4HANA Finance.
In addition, we assign the operating chart of account to company codes as well as Controlling Area, and hence used in both financial accounting and controlling. Absolutely no postings can happen in Finance and by extension in controlling without a chart of account assignment to Company code. This therefore, means that assignment of an operating chart of accounts to a company code is mandatory.
The chart of account is assigned to a Company Code in the following configuration path:
IMG — Financial Accounting (New) — General Ledger Accounting (New) — Master Data — G/L Accounts – Preparations — Assign Company Code to Chart of Accounts
To change/display this setting, go to global parameters through the configuration path below:
IMG — Financial Accounting (New) — Financial Accounting Global Settings (New) — Global Parameters for Company Code — Enter Global Parameters
The chart of account is assigned to a Controlling Area in the following configuration path:
IMG — Enterprise Structure – Definition – Controlling — Maintain Controlling Area
1.1.3.1 Group chart of accounts
As the name implies a Group Chart of Account is a chart of account assigned to all company codes within the group for consolidation purposes. It contains lists of general ledger accounts relevant for consolidation purposes.
A group chart of account is used where the individual company codes within the group are using different Operating Chart of Account. In such a situation, the consolidation process will be very difficult without assigning a group chart of account.
Unlike the operating chart of accounts, the assignment of a group chart of account is optional.
You can assign a group chart of account by following the menu path below.
IMG — Financial Accounting (New) — General Ledger Accounting (New) — Master Data — G/L Accounts – Preparations — Edit Chart of Accounts List
1.1.3.2 Country-specific chart of accounts
This chart of account is used to fulfil the country specific legal reporting requirements. It contains the G/L accounts needed to meet the country’s local statutory reporting requirements.
If your company is operating as part of an international group, and the group is using a common operating chart of account, at the same time you have local reporting requirements to meet, the country chart of account may be a useful option for you.
The assignment of a country-specific chart of accounts to a company code is optional.
The Country Chart of Accounts is assigned to a Company Code in the following configuration path:
IMG — Financial Accounting (New) — Financial Accounting Global Settings (New) — Global Parameters for Company Code — Enter Global Parameters
For transaction level integration, the linked between the Operating chart of account and the country chart of account is at the GL master data level. This is in addition to the Country chart of accounts assignment to the company code.
The GL accounts of the country chart of account, equivalent to the one of the Operating Chart of account, is maintained in the GL Master record in the alternative account number field of the control tab.
1.1.4 Master Data as an Integration Object
A master data, whether GL account Master, customer master, Vendor Master, material master, employee master and so on, is a very important SAP Financials integration object. We will discuss below the GL account master as an integration object. The other Master Data objects will be discussed in detail at the appropriate place in the next chapters of this book.
1.1.4.1 General Ledger Account Master Data
A GL account is the vehicle for any postings to SAP Finance. A GL Master Data contains all relevant information of any GL account. Information on any GL master data may be divided into two:
a) Chart of Account Level Information
Information valid for all company codes using a chart of accounts are maintained at the chart of accounts level. These include the GL account description, the account group it belongs to, and whether it is a P&L or Balance sheet account.
b) Company Code Level Information
Information about a GL account that may defer from Company code to company code are maintained at the Company Code level. These include the currency of the GL account, whether the GL is a reconciliation account or not, and whether it is maintained as open item management account and so on.
As regards SAP Financials integration with other SAP modules, the GL account is about the most important account determination object. No account determination exercise can be successful without the assignment of a GL account. Indeed, the whole purpose of any integration or account determination exercise is for transactions of financial relevance (irrespective of which module they generate from) to be posted to the General Ledger.
A general ledger account can be created through the following menu path.
Accounting — Financial Accounting — General Ledger — Master Records — G/L Accounts — Individual Processing – Centrally (or use transaction FS00).
We discuss below the information in the GL Master records, as it is relevant to the subject of integration/account determination.
1.1.4.2 Account Group
The account group is the grouping or classification of an organization’s GL accounts in accordance with its reporting requirements. The account group determines under which heading a particular GL account is created, and whether the GL account is defined as a P&L account or a balance sheet account.
The account group has the following control function:
a) It controls which fields are available (screen layout) for maintenance during the creation/change of a GL master data element.
b) It also controls the number range interval within which a particular GL account is created.
The account group is defined through the following configuration menu path:
IMG — Financial Accounting (New) — General Ledger Accounting (New) — Master Data — G/L Accounts – Preparations — Define Account Group
Click on “new entries” to create your account group from scratch; or click on “copy” to copy from an existing account group.
Select any account group you created and double click on Field Status, to define/display the fields that will be available during the creation or change of a GL Master data under that account group.
The account group has no direct account determination value, but it is indirectly relevant to it. For example, you created an exchange rate difference account during the account determination settings of foreign currency valuation (transaction OBA1, transaction key “KDB”); to assign this to relevant GL accounts, this field (exchange rate difference key) should be available for input in the master record. If it is not, you will have to make changes to the field status of the respective account group in configuration.
1.1.4.3 Profit and Loss Statement Account/Balance Sheet Account
Here GL accounts are further classified into whether they and Profit and Loss or Balance Sheet GLs. The GL accounts of the nature of income and expenses are classified under P&L accounts; and the ones of the nature of Assets and Liabilities are classified under balance sheet accounts.
1.1.4.4 Account Currency
This denotes the currency of the GL account. Usually this is denominated in the Local/ Company Code currency in accordance with the best practice. The exception is the House Bank GLs; those are denominated in the House Bank Account Currency.
This is relevant to FI postings to the extent that all postings to this GL account are stated in this currency in addition to the transaction/document currency.
1.1.4.5 Only Balances in Local Currency
When the “only balances in local currency” indicator is set for a GL account, it means that balances/totals on this account will only be displayed in the local/ company code currency, irrespective of the transaction currency. It means that summary/totals tables (GLT0/FAGLFLEXT) is updated with only the Local Currency even in the transaction currency amount field. Please note that this does not affect the way data is stored in line items tables, as amounts in both the transaction and local currencies are stored in these tables.
From the account determination point of view, this indicator has no direct relationship, however, it may affects the valuation of such GLs accounts if they are included in the foreign currency valuation account determination settings.
If the indicator “Only Balances in Local Currency” is set for a GL account maintained on open item basis, then there is no problem in the valuation, because SAP foreign currency revaluation program for open item managed account uses the line item tables (BSEG, BSIS, and BSAS).
If the indicator “Only Balances in Local Currency” is set for a GL account not maintained as an open item managed account, such GL accounts are not valuated, because the SAP foreign currency revaluation program for none open item managed accounts reads from the summary tables, which in this case are updated only in the local currency.
If this indicator is not selected at all, then the system will translate all foreign currency transactions to the local currency at a given key date, to determine the exchange difference during open item clearing or at the time of running the valuation program
1.1.4.6 Exchange Rate Difference Key
This field in maintained when you decide to Post Exchange rate differences in more than one General Ledger accounts each representing different groups of assets/liabilities. An exchange rate difference key is configured for each type of monetary asset/liability (exchange rate difference key for Operating Assets, Treasury Assets, General exchange rate difference key and so on) which is then populated in this field for all affected GL accounts. When this field is populated, this key determines which valuation difference account is posted to for exchange rate differences arising from transactions posted to this account.
This field is directly relevant in the account determination exercise and it is used as an account determination object in the GL account determination settings of foreign currency valuation. In the settings for the automatic posting of exchange rate differences (transaction OBA1), you assign the exchange rate difference key you created to “transaction key KDB”; and for each combination of transaction key “KDB” and an exchange rate difference key you assign a GL account.
For the creation of Exchange Rate Difference Key, follow the menu path
IMG — Financial Accounting Global Settings (New) — General Ledger Accounting (New) — Periodic Processing – Valuate — Foreign Currency Valuation — Prepare Automatic Postings for Foreign Currency Valuation
1.1.4.7 Tax Category
When you populate this field for a GL master record, it means that the GL is relevant for tax transactions and reporting. By this setting, you decide whether a GL account is a tax relevant account or not, or whether it is to be used for tax postings.
Several values may be selected for the tax category field in the GL Master data. SAP provides the following standard values:
a) (-): If this value is selected, it means that the GL account is permitted only for input tax. That is to say, that only input tax can be charged on this account.
b) (+): If this value is selected, it means that the GL account is permitted only for output tax. That is to say, that only output tax can be charged on this account.
c) (*): If this value is selected, it means that all tax types are permitted for this GL account. Meaning that all tax types can be charged on this account
d) (<): If this value is selected, it means this GL is an input tax account. Meaning this account is ready to receive posting for input tax.
e) (>): If this value is selected, it means this GL is an output tax account. Meaning this account is ready to receive posting for output tax
f) ( ): If left blank it means that this GL account is not tax relevant and cannot be used for tax postings
g) (+B) Output tax for down payment. Usually assigned to reconciliation GL account type “D” (Customer).
h) (-B) Input tax for down payment. Usually assigned to reconciliation GL account type “K” (Vendor).
i) (V0): Input tax 0%
As for the relevance of the tax category on a General Ledger Account to the subject of integration and account determination, it is directly relevant.
The tax category controls whether the tax code field is available for input during document entry. If you leave the tax category filed blank for a particular GL account, (meaning that you decided that it is not tax relevant) then the tax code field will not be available for input during document entry for a line item involving this GL account. Alternatively, if a tax category is assigned to a GL account, the tax code field becomes available for input during document entry and also becomes mandatory for input (unless the indicator “posting without tax allowed” is flagged for the GL account)
1.1.4.8 Reconciliation Account For Account Type
You make this Selection for GL accounts defined as reconciliation accounts. When you decide that a particular GL account will be a reconciliation account, you have to decide on the reconciliation account type. Reconciliation accounts may be of the following account type:
a) K Vendor
b) D Customer
c) Asset
d) Others
This field is directly relevant to the account determination exercise. For example in the account determination exercise for assets, we assign asset reconciliation GL accounts for automatic postings; we also assigned reconciliation accounts (and alternative reconciliation accounts) in the automatic posting settings of Special GL Transactions.
1.1.4.9 Alternative Account Number
Where we assign a country specific chart of accounts to a company code, this field is used to input the GL account corresponding to the Country chart of account.
1.1.4.10 Line Item Management
When the indicator “line item” is selected for a GL account, it means that postings to this account are displayed per transaction and can be drilled own to line item level.
Usually all GL accounts maintained on open item basis should also have the line item indicator flagged, otherwise the system will not allow you to save changes on this GL account. The system will give an error message “Open item management only defined for line item display”. This error message is issued by the system even if the line item field is an optional selection in your field status definition.
Line item display although not directly relevant to account determination process, it indirectly affects it. Any GL account that you assign in your account determination setting (of automatic clearing, for example) should have the line item indicator set for it.
1.1.4.11 Open Item Management
When the “open item” indicator is flagged for a GL account, it means that GL account is managed on an open item basis. Meaning transactions posted in it are expected to be cleared by subsequent offsetting transaction postings. For example, a good receipt posted on a GR/IR account is expected to be cleared by the subsequent invoice receipt posting, through the Logistic Invoice Verification process. Any balance on such accounts therefore, represents open items of unfinished business transactions.
Bank clearing accounts, GR/IR Clearing accounts, and other clearing accounts (like payroll Clearing accounts) are maintained as open item management accounts.
Open item management accounts are directly relevant to the account determination processes. GL accounts maintained as open item managed, are assigned in several automatic posting configurations. From the configuration of clearing differences, automatic clearing configuration, GR/IR Clearing configuration and several other automatic account determination areas, such GL accounts are assigned for automatic postings to take place.
1.1.4.12 Field Status Group
The field status variant controls the fields that are available for input in transaction processing involving a particular GL account. Field status Groups are created in configuration under a defined field status variant assigned to your company code. Each GL account is assigned to an appropriate field status group. GL accounts sharing the same field status group will have the same fields available during transaction processing.
Field Status group is not directly relevant to the account determination process, but it is indirectly relevant to it. For example, if you want to activate an account assignment object (say Internal Order) for say fixed assets transaction postings, part of the process will require you to go and make changes to the Field Status Group of the Asset G/L accounts. This is to ensure that this field, (for the newly added account assignment object), is available for input in asset transactions.
1.1.4.13 Post Automatically Only
Set this indicator, if you do not want manual postings to be made to a particular GL account. Sometimes it is necessary to set this indicator for GL accounts that are posted to from automatic postings or from a third party system through the interface. It is also helpful to set this indicator for GL accounts used in (for example cross company transactions) to avoid reconciliation problems.
Usually GL accounts under this category are relevant in account determination exercises.
1.1.4.14 Reconciliation Account Ready for Input
When this indicator is set for a reconciliation GL account, it means that you are manually able to input the reconciliation account during document postings, instead of the system to automatically determine which reconciliation account to post to, as is normally the case.
This is useful if for any reason, you would like to post transactions of a particular vendor/customer (within a particular account group) to more than one reconciliation GL accounts.
In addition to setting this indicator in the GL account master record, maintain this option through the following configuration path:
IMG — Accounts Receivable and Accounts Payable > Business Transactions >Postings with Alternative Reconciliation Account >> Define Alternative Reconciliation Accounts
Planning Level
Planning level is a summation level configured in the Cash Management module for the Cash Position and Liquidity Forecasting Reports. This is relevant for those organizations that implemented the SAP Cash Management Module. If a GL account is relevant for cash flow (see below), the planning level configured for a summation level relevant to this GL is assigned here.
This field is relevant in the integration of SAP Cash Management and SAP FI.
The planning level is configured through the menu path below:
IMG — Financial Supply Chain Management — Cash and Liquidity Management — Cash Management — Master Data — G/L Accounts — Define Planning Levels
1.1.4.15 Relevant To Cash flow
For those organizations that implemented the SAP Cash Management Module, a GL account is set as relevant for cash flow, if future value dated transactions (planned items) on it will affect the cash position report (FF7A) or the Liquidity Forecasting Report (FF7B).
This indicator is relevant in the integration of SAP Cash Management and SAP FI.
1.1.4.16 House Bank and House Bank Account ID
Just like in the immediate point above, the House Bank and the House Bank Account ID fields are key integration points between the SAP Cash Management and SAP FI. The House Bank and Account ID are symbolic accounts (representing your House Bank and your physical bank account numbers) to which a GL account is assigned in the bank accounting configuration. They are key integration points between the Bank accounting and SAP FI-GL.
1.1.4.17 Commitment Item
For those organizations that implemented the SAP Funds Management Module, a GL account (especially a P&L GL account) is also created as a commitment Item. The created commitment item is then populated in this filed. A commitment item is nothing but the representation of a GL account in SAP Funds Management.
This field is a key integration point between SAP Funds Management and SAP FI.
1.2 Summary
This chapter lays the foundation for subsequent discussions on the next chapters of this book.
So far, we have introduced the process integration of SAP Financials to other SAP Modules that process financial relevant transactions. We identified the processes that trigger such integrations and the SAP modules affected.
We also discussed common SAP Account Determination Techniques used in SAP that facilitates such integrations. Also discussed are the Common Integration objects in SAP Finance used in the process of integrating SAP Modules to SAP Financials.
Please do share your thoughts on this topic. We would love to hear your comments and suggestions.
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