An Overview - Process Journal Entries

Why are we here ?

Purpose

Provide an overview of existing SAP functionality to gain knowledge of SAP functionality while thinking how it varies from current functionality. These sessions will occur prior to business engagement.

What these sessions are not?

These sessions are not intended to design the end-state SAP solution. These sessions will not provide detailed explanation of current business processes. This will be completed during Preparation Sessions.

Intended Audience

Business representatives from all ledgers who will be engaged in Prep Sessions as part of the Working Group

Table of Contents
Document Principle Structural Elements of a Journal Entry Type of Journal Entries Standard Journal Entries Interface Journal Entries
Process Flow of Interface Journal Entries

Parked Journal Entries

Process Flow of Standard Journal Entries

Accrual Journal Entries

Process Flow of Accrual Journal Entries

Recurring Journal Entries

Process Flow of Recurring Journal Entries

Reversal Journal Entries

Process Flow of Reversal Journal Entries

Inter-company Journal Entries Work flow for Journal Entries

Document principles
Definition All postings are always stored as a Document. A Document must be complete before it is posted. Each Document receives a unique Document Number by Company Code and Fiscal Year. Line items in each Document must be balanced, i.e. debits equal credits and have at least two items, prior to posting. Each Document must contain the required minimum information (e.g. Document Date, Document Type, Posting Key, Account Numbers and Amounts). Incomplete or inconsistent documents cannot be posted. A business transaction can create one or more Documents A Document remains as a complete unit in the system until it is archived. Approach Target follows these standard SAP document principles.

Structural Elements of Journal Entry

Definitions Header Data Header data applies to the whole document, such as Company Code, Posting Date and Document Type. Line Item Information Line Items of the document are entered. Information Area The Debit and Credit balance are displayed. Templates Templates allow the user to select screen variants, account assignment models, or held documents as references for postings. Approach Target uses a standard SAP single screen transaction to post a GL document. Templates were not used with Release 1, but may be used with recurring entries in Release 1.5.
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Types of Journal Entries

Standard Journal Entries

Standard Journal Entries

A Journal Entry in SAP is used for any accounting activity that does not impact a sub-ledger/sub-system. These entries are made directly to the General Ledger Module. The system checks consistency before saving the data. If errors exist, the data is not saved, and the system proposes adjustments. Typical Methods of Creating Journal Entries include:

On-Line Entry using FV50 Excel Upload using WinShuttle Interface direct postings from external applications Template Document in SAP (Account Assignment Model)

Key elements required for posting a document are Header Data

- Company Code - Document Data - Transaction Currency - Document Type - Posting Data (effective date)

Line Item Data

- Posting key - GL account - Amount - CO Object (if required) - Assignment Field (Optional)

Standard Journal Entries - Continued

Document Types are used to distinguish various business transactions. Each document is assigned to one document type, which is entered in the document header. The document type controls the header which is valid for an entire document. Posting Key is another important document control factor that controls the line item such as account type relevant for posting, Debit or Credit indicator and fields relevant for postings.

Approach
Target uses Park and Post functionality. The Park and Post functionality exists to ensure segregation of duties for entering and posting. The ability to Park or Post is maintained through appropriate security access. Once a journal entry is completed, it is in a Parked status, waiting for proper approval for posting. Parked journal entries are reviewed by the appropriate approver and changed to a Posted status, generally through the Workflow approval process. Target uses a third party tool WinShuttle that allows for Excel uploads and facilitates the creation of Journal Entries.

Interface Journal Entries

Interfaced Journal Entries In Release 1.0, Lawson, Navision, Masterpiece and Hedberg General Ledgers are the source for all interfaced journal entries. SAP ECC system takes daily JE extract from Lawson and Navision SAP ECC system takes Summarized JE extract from Hedberg on monthly basis All JE entries are sent in USD except from Navision which sends it in INR for which daily exchange rates are used for conversion process. Any changes to the posted Journal Entrys in source Ledgers will be adjusted via an adjustment entry in source.

***Keith to update this slide

Parked Journal Entries

Definition
Parked Document
Parked documents provide the user with the ability to enter and store a journal entry prior to actual posting, primarily to facilitate additional processes such as manager approval. When a document is parked, data is not updated, however the system issues a document number . The advantage of parking documents is that the data can be evaluated for reporting purposes from the moment they are parked, rather than having to wait until they have been completed and posted. All data relating to customer, vendor, G/L and asset accounts can be parked. However, special sales resulting from bills of exchange or down payments cannot be parked. Substitution is not supported in document parking.

Parked Documents are used to enter and store complete or incomplete documents in the system with the intent that a user will approve or complete and post the document later. Parked Documents do not update any data in the system such as an account balance.

Approach
Target uses a standard parking functionality along with SAP workflow for approval and posting.

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Work Flow for Park and Post

Definition
Workflow functionality streamlines the manual process of approving and posting a General Ledger journal entry. Target uses two-step process for all financial documents being manually posted into General Ledger. The intent of the Work Flow requirement is that the initiator (Accountant or the person who initially created the JE) should not be able to post a JE directly. The initiator should only be able to save or park the document created. Workflow automates the process by notifying the approver that an entry is parked and ready for approval/posting. Once approved, the manager/approver posts the document through workflow. The transaction FBV0 can also be used in place of Workflow to post the document. In the event a journal entry is rejected, a notification would be sent to the General Ledger User/Workflow Initiator.

Approach
Standard SAP Workflow is configured. All manual journal entries require a two step approval process. Workflow approval for parked documents is only required for manually parked journal entries and manual Excel uploads in SAP-ECC. It is not required for automated journal entry interfaced from Legacy systems. Dollar thresholds are not be used.

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Process Flow for Standard Journal Entries Tab 1

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Process Flow for Standard Journal Entries Tab 2

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Process Flow for Standard Journal Entries Tab 3

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Accrual Journal Entries

Definition
Accrual Journal entries are posted in SAP using a sequence of standard journal entry screens with specification of reversal reason and date (which facilitates auto reversal) along with other key elements such as document type, posting keys, currency etc. Accrual Journal Entries are used in SAP typically as repetitive, reversing entries with amounts that may or may not vary from period to period.

Approach
In Release 1.0, Target is not using this functionality.

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Process Flow for Accrual Entries Tab 1

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Process Flow for Accrual Entries Tab 2

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Process Flow for Accrual Entries Tab 3

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Recurring Journal Entries

Definition
Recurring entries in SAP are business transactions that are repeated periodically for the same amount. Recurring data is entered in a recurring entry original document. It is not an accounting document and therefore does not affect the account balance. The recurring entry program uses it as a basis for creating accounting documents. The following data never changes in recurring entries posted by a recurring program
Posting key Account Amounts

Recurring documents can be created with two options of scheduling:

Periodic or On Specific date

Cross-company code transactions cannot be posted with the recurring entry program

Approach
In Release 1.0, Target is not using this functionality.

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Process Flow for Recurring Entries Tab 1

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Process Flow for Recurring Entries Tab 2

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Reversal Journal Entries

Definition
Incorrect manual or interfaced documents can be reversed in the current, open period. A document can only be reversed in SAP if: It contains no cleared items It was posted within Financial Accounting All entered values (such as cost center and tax code) are still valid The period is not closed All interface postings must be reversed at the source or adjustment postings must be entered. There are two ways in which a document can be reversed in SAP
Standard Reversals Negative Postings

Approach
Target uses Standard Reversals for Journal Entries initiated in SAP ***Keith to update this slide

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Process Flow for Reversing Entries Tab 1

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Process Flow for Reversing Entries Tab 2

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Open Items to be addressed in Up-Coming Prep/Work Sessions

1 Discuss and revisit processing standard journal entry functionality and its usage 2 3 4 5 6 7 8 9 10 11 Additional currencies that need to be added to Thomson interface / configured in SAP Plan for attaching and saving documentation to manual JEs Standards for long text and short text Win shuttle licensing and use Parallel Ledger Accounting including USGAAP, IFRS and Indian GAAP (IFRS out of Scope - Confirmation) Revisit Ledger Maintenance, Document splitting rules, document types for additional business requirements Discuss automated workflow for Standard JEs & Ledger specific with active X and Security processes. Revisit Summarization Requirements of Financial transactions at appropriate attribute levels Review standard OB52 functionality and use Enhancements to ZDIM / ZIEM to display source systems

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Error Handling for interfaces from external applications (requires updates to process flow)

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Open Items - Continued

13 Review list of current accruals

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Revisit guidelines set

Discuss recurring entries functionality and its usage Communicate "limitations" of recurring entries same dollar amount has to be used for each entry The use of standard JEs to satisfy recurring entry requirements Discuss and establish guidelines for recurring entries and list all types recurring business processes Discuss document reversal functionality Revisit Document Reversal usage and current issues Reconcile SAP functionality with Target two stage process

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Appendix

Process Flow for Interface Journal Entries

TCI/ Hedberg

Summarized JE

CIF

Summarized JE

SAP

HFM

HFM Data Flow

Lawson ECM

PeopleSoft

Weekly Master Data

Navision

JE Extract

CIF

JE Posting

SAP

HFM

Navision Data Flow

Lawson Data Flow

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Other Type of Preliminary Posting

Held Document
In contrast to document parking, the held document functionality is merely designed to allow interruption during data entry work on a document and temporarily save the data entered so far until later resumed for parking or posting. No document number is issued however, and the data so entered is not available for evaluations. Hold documents are user defined and managed. Hold documents can only be displayed and posted by the user that created them. Hold documents should be cleared as part of the monthly close process.

Approach
Target is not currently using this functionality for journal entry process.

May be deleted??? Keith to determine based on R1.0 decisions

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Intercompany Journal Entries

Definition
Documents posted across more than one company code are called cross-company code documents or Intercompany journal entries In a cross-company code transaction, the system posts a separate document with a unique document number in each of the company codes. However, individual documents are linked by a common cross-company code number. From a financial accounting viewpoint, the balance in each company code involved has to be zero in addition to the total balance in a document being zero. This is achieved by offsetting items that are automatically added to the document. These offsetting items reflect the receivables and payables between the company codes that result from the cross-company code transaction Trading Partner needs to be assigned for all transactions arising out of inter-company relationships so that these companies can be reconciled

Approach
Target has defined Trading Partners with a unique six(6) character alpha-numeric key(TPXXXX where XXXX is the company code) Target adopted one to one relationship between a Trading Partner and a Company Code to enable inter-company transactions between all company codes Every Company code has also been created as a customer and Vendor in every other Company code. Trading Partner has been assigned in the customer and vendor master record.

Values
Following document types are configured and used for inter-company transactions
- ZI - Inter-company transactions - DG Customer credit memo - DR Customer Invoice - KR Vendor Invoice - KG Vendor credit memo

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