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SAP FICO Module

Configuration -Primary configuration considerations:

Once a business has decided to use the SAP FI(Financial Accounting) Module, there are several Configurations prerequisite steps that must be completed.Determining the organizational structure is one of the first steps in setting up the business functions in SAP as well as your reporting requirements.

The Organizational structure is created by defining the organizational units consisting of the following:
Client
Company
Company Code
Business Area

Client is the highest unit within an SAP system and contains Master records and Tables. Data entered at this level are valid for all company code data and organizational structures allowing for data consistency. User access and authorizations are assigned to each client created. Users must specify which client they are working in at the point of logon to the SAP system.

Company is the unit to which your financial statements are created and can have one to many company codes assigned to it. A company is equivalent to your legal business organization. Consolidated financial statements are based on the company’s financial statements. Companies are defined in configuration and assigned to company codes. Each company code must use the same COA( Chart of Accounts) and Fiscal Year. Also note that local currency for the company can be different.

Company Codes are the smallest unit within your organizational structure and is used for internal and external reporting purposes. Company Codes are not optional within SAP and are required to be defined. Financial transactions are viewed at the company code level. Company Codes can be created for any business organization whether national or international. It is recommended that once a Company Code has been defined in Configuration with all the required settings then other company codes later created should be copied from the existing company code. You can then make changes as needed. This reduces repetitive input of information that does not change from company code to company code as well as eliminate the possibility of missed data input.

When defining company codes, the following key areas must be updated:
Company Code Key- identifies the company code and consists of four alpha-numeric characters. Master data and business transactions are created by this key.
Company Code Name- identifies the name of the business organization within your organizational structure.
Address- identifies the street address, city, state, zip code for the company code created. This information is also used on correspondence and reports.
Country- identifies the country to which your business is based. Country codes within SAP are based on ISO Standards.
Country currency- identifies the local currency for the company code that you have defined.
Language- identifies the language to be used for you company code and is also used for text in your documents. SAP unlike other applications, offers over thirty languages including EN( English) , ES (Spanish), FR (French), DE (German), EL (Greek), IT(Italian), AR( Arabic), ZH (Chinese) , SV (Swedish) , and JA (Japanese) to name a few.

More FI configuration considerations:

Business Area, COA, GL, Fiscal year and Currencies

Business Area is optional and is equivalent to a specific area of responsibility within your company or business segment. BA (Business Area) also allows for internal and external reporting.

Another configuration requirement for set-up in SAP are the Basic settings consisting of the following:
Chart of Accounts(COA)
Fiscal Year Variants.
Currencies

The COA(Chart of Accounts) lists all General Ledger accounts that are used by the organization. It is assigned in configuration to each company code and allows for daily General Ledger postings.

The General Ledger accounts are made up of such data as account number, company code, a description of the account , classification of whether the account is a P & L Statement Account or a Balance Sheet Account.

Control data of the GL Account is where currency is specified, Tax category (posting without tax allowed) , marking the account as a reconciliation account ( e.g. Customer, Asset, Vendors, Accounts Receivable) or not.
Marking the G/L Account as a “reconciliation” account allows for postings to an Asset Account ( for example) as well as automatic update to the G/L Account.

Configuration prevents direct postings to reconciliation accounts thereby assisting in maintaining integrity of the data.
This allows reconciliation between the sub-ledger and general ledger to always be guaranteed.
Within the General Ledger control data , you can also designate whether line item display is possible in the account. The system then stores an entry per line in an index table which links back to the account. (Display of line item details are then available for reporting purposes ,etc.)

Open Item Indicators can be set on the G/L Account allowing for better management of open items. Examples include: Bank Clearing Accounts, GR/IR Clearing Accounts, Payroll, etc.
Fiscal Year configuration is a must and can be defined to meet your company’s reporting periods whether Fiscal (any period combination that is not calendar) or Calendar( Jan-Dec).
Posting Periods are defined and assigned to the Fiscal Year.Within the periods you specify start dates and finished dates.
SAP allows for 12 posting periods along with specially defined periods that can be used for year-end financial closing.
Currencies are another basic configuration setting requirement which defines your company’s legal means of payment by country.
It is recommended that all Currency set-ups in SAP follow the ISO Standards.
The ISO Standards ensure Global conformity across businesses worldwide utilizing SAP.
Contents taken from SAP In Fico.

In your career, have you face any critical ticket? What is that ? Can explain?
Explain any critical issue faced.

What is difference between company code & business area?
Company Code and Business area are the Organizational units in FI. But Company Code is a must where as Business area is optional. Company code is the Org. unit under which all the activities of the finance takes place where as the Bus. Area can cut across company codes.Company code is a legal entity and the books of accounts are maintained at this level.

What is enterprise structure of your client?
Explain the ES of your client, the structure of the company and the organizational units defined under the client

What is the use of “Relevant cash flow check box?
This check box in the GL account helps u to take the account for cash flow analysis

After run the depreciation. can you reverse of that transcation?
Yes, it is possible

While transcation entry you are given the cost center & internal order so, where it will be effected — both or one?
The posting goes to Internal Order and from there the settlement goes to the Cost Center. The Cost Center gets only the Statistical Posting. We can have any number of statistical Postings, but only one real posting to the CO object

Can you forward the controlling number ranges to next year?
Yes, we can continue the existing number ranges

What is valuation class ? Can you change the valuation class after transcation posting?
The materials are assigned to valuation class through the account determination happens

How many GR/IR a/c’s are created?
They are provision accounts, and the balance becomes zero after the completion of the cycle. This is done in order to care of the good /invoice received in advanceov vice versa

How many retained earning a/c’s are created?
Generally we have one retained earnings account. We can also have more than one also. This is usually done for having different financial statements based on the depreciation areas for tax, Costing etc.     *– Jaggu

What is the significance of Posting Key? (OB41)

Ans: Posting key is a two charecter numberical key, which controls the entry of line items. It specifies the accounting area to which an account belongs to. ex: Customer, Vendor or GL etc, It controls Field Satus (Supress, Recquired and Optional) It also controls its reverse posting key also.

In summary, the Posting Key has control functions within the line items. It controls:
i)  On which type of account the line item can be posted to
ii)  If the item is posted as a debit or credit
iii) The field status of additional  details

What is the use of Account Groups in GL?

Account Group Controls the Master records. It controls the number range of Master record and Field status group (Supress, Required, Optional and Display) also. SAP follows a Grouping principle all throughout SAP to handle the Master Records that may be in GL, AR AP any thing. See to create a GL Account group you define at OBD4 there itself you assign the Number Range or those groups which also controls Field Staus of GL Master Records. And for Creating AR and AP Master Records you create at OBD2 and Vendor at OBD3 which will also controls Field Status Group of And Number range of Master record. The only difference between GL and AR/AP is assigning of number range. For GL will specify at OBD4 itself but for AR/AP we need to create a number range at FBN1 then assign to AR And AP at OBD2 and OBD3 respectively.

One more thing. Remember only Field Status group of Master recard (OBD2, OBD3, OBD4) only contain Display option but not to Posting Key or Field Satus Group (OB41 or OBC4). I am so specifing becoz I commited this mistake in one interview.        *– Satish

In summary, the account group controls:
i) The number ranges of the accounts,
ii) The status of the fields in the company code segment of the master record.  Since a chart of accounts contains many different types of accounts, they can be bundled into different “account groups “. Usually one account group bundles
accounts with the same tasks within the general ledger, e. g. cash accounts, material accounts, asset accounts, profit and loss
accounts,…

Give a summary of Product Costing?

The purpose of Product costing planning is to arrive the total planned cost of the product. It is integrated with the following modules in arriving the Product cost and supplies the information to other modules
1. MM to arrive at the raw material and semifinished goods cost based on the price indicator in Material master record.
2. PP to arrive at the cost of Operations required for producing the Finished product with the planning based in Cost Center Accounting.
3. SD to pass the information of COGS to COPA based on the Value fields linked to condition types.

Two manfacturing scenarios are there in production one is Repetitive manfacturing (e.g Pharma industry) costing type is Product cost by period and Discreet manfacturing (Order based industry) costing type is Product cost by period.
*– Ratna