sap bbp fico_gl

OSO

Business Blueprint

BBP_1.1

Financial Accounting – General Ledger

Author: Manish Kale

Effective Date: 2nd February,2011

© Invenio

OSO

Contents1 INTRODUCTION.................................................................................................................................. 3

2 SCOPE................................................................................................................................................. 3

3 DEFINITIONS....................................................................................................................................... 3

4 REFERENCES..................................................................................................................................... 3

5 BUSINESS CONTEXT......................................................................................................................... 4

5.1 PROCESS FLOW............................................................................................................................... 45.2 PROCESS DESCRIPTION....................................................................................................................45.3 BUSINESS RULES AND POLICIES........................................................................................................65.4 BUSINESS DECISIONS....................................................................................................................... 6

6 PROJECT CONTEXT........................................................................................................................... 7

6.1 PROCESS FLOW............................................................................................................................... 76.2 PROCESS DESCRIPTION....................................................................................................................9

7 ORGANISATIONAL CONSIDERATIONS...........................................................................................12

8 CHANGE CONSIDERATIONS...........................................................................................................12

9 AUTHORISATIONS............................................................................................................................ 13

10 ASSUMPTIONS................................................................................................................................. 13

11 ISSUES / RISKS................................................................................................................................ 13

12 DECISIONS........................................................................................................................................ 14

13 PROCESS VOLUMES........................................................................................................................ 14

14 MASTER DATA.................................................................................................................................. 14

15 DEVELOPMENTS / INTERFACES.....................................................................................................14

16 CONFIGURATION CONSIDERATIONS.............................................................................................14

17 REPORTING REQUIREMENTS.........................................................................................................15

18 Version History and Approval..............................................................................................................16

18 February 2011 © Invenio of 20Business Blue Print

OSO

1 Introduction

This document describes the business requirements of EROS with respect to the business process for General Ledger Accounting and the proposed system solution that is to be delivered.

2 Scope

The scope of this document covers the requirements for general settings and General Ledger Accounting including setting up fiscal year variant, document number ranges, chart of accounts, creating master data etc.

Chart of accounts

Ledgers

Fiscal year

Posting periods

Activity types

Currencies

Document types and number ranges

Document entry aids

3 Definitions

The following definitions apply to specialised terms used in this specification:

Term Definition/Explanation

4 References

The following documents are referenced within this document:

Document Location


5 Business Context

5.1 Process Flow

5.2 Process Description

Act. Ref.

Activity Description (including business requirements)

Mechanism Who Where

1 Chart of accounts In existing system general ledger master is created by the F &A.

Grouping of Chart of Accounts is inserted as object.

F & A

2 Foreign exchange rate master Closing rate and transaction/book, rates are maintained in Tally and Average rates are used for consolidation in Excel.

3 Post GL Entry Currently manual JV`s (Excel) are posted after validating.

Authorised person

4 Fiscal Year Financial year of EROS Group is April - March.

5 Processing an Accrual/prepaid Entry. Currently accrual entries are posted on monthly/quarterly basis.

Provision/prepaid entries are reversed on the 1st day of next period.

Concerned Business Unit

© Invenio

OSO

6 Foreign currency accounting and revaluations

Foreign Currency differences are calculated by the Tally system and entries are posted by the user manually.

Closing rate is used to calculate the Exchange gain/loss.


7 Consolidation Currently consolidation of the P&L and Balance Sheet of subsidiary companies is done In Excel on line by line basis.

Consolidation is done in INR for India, and USD for Parent company.

In overseas stepwise consolidation is done. (Ayngaran, Eros India and Eros PLC.)

Conversion of foreign subsidiaries as under:-

P & L items at average rates.

Balance sheet items at historical and closing rate.

Elimination of related party transactions and closing balances.

Goodwill accounting and write off/impairment.

Knock off, of investments in subsidiaries and minority interest calculations.


OSO

8 Banking BP Register, term loans, FD`s and margin money, cash flow and interest calculation and accruals.

9 Corporate Taxation Withholding Taxes and Provision for Taxes.Differed taxes and provision for differed taxes on periodic intervals.

10 Indirect and Taxes Sales tax (CST, VAT, WCT), service tax (Input and output), Custom duty, Octroi.

11 Statutory Payables PF, ESIC, PT, Gratuity/retirement benefit, pension contribution, national insurance or social security, municipal taxes or rates.

12 Payroll Control entry for salary costs,

13 Employees loans and advances Payroll and other adjustments on period end or year end.

14 General deposits(Assets and Liabilities) Security deposits. Period end and year end interest provisions.

15 Investments Investments in subsidiaries and external investments.External investment in the nature of short term and long term, both are revalued either on fair value, on periodic intervals.

16 ESOP Accounting Share based benefits accounting in P & L and Balance sheet.

17 Write offs and write backs Creation of provisions or specific accounts write offs or write backs.

18 Period end or Year-end closing Once all the transactions are


OSO

complete, F & A will pass necessary Year /Period end closing entries. One additional step needs to be performed i.e. extract the balances of last year & create calendar for new fiscal year. Final financial statements are prepared in the Excel.

19 Petty Cash Petty cash is operated on daily basis. (Regularly opening balance + adjustments = Closing balance.) All the accounting is done in Tally. Monthly MIS (Cash flow) is done in Excel.

All Imprest accounts are maintained on the basis of Purchasing method. Advances given to Employees are adjusted against the reimbursement. All the employee expenses are adjusted through the journal entry in Tally.

Cash sale is always deposited into the bank account.


20 MIS & Statutory reports GL Balances

Trial balance

P & L

P & L Filmwise

Balance sheet

Personal and Admin cost



OSO

report

Revenue and Direct cost Report

Cash flow and Fund flow forecasting.

Investments Register.

BP and loan Register

5.3 Business Rules and Policies

Transaction Activity Name Description System Proposed Procedure

5.4 Business Decisions

Ref

Decision Date Who


OSO

6 Project Context

6.1 Process Flow

6.1.1.1 Ledgers (1.1.1)

It is technically possible to have multiple ledgers for parallel accounting wherein each ledger is a separate set of accounting books and could facilitate a business requirement such as transacting differently for different accounting standards. The issue was discussed in detail and it was concluded that EROS will not need multiple ledgers at this stage. Parallel accounting using additional General Ledger codes will still be available as an option.

Though it is possible to activate a separate ledger for Profit Centre Accounting but based on the operational and reporting requirements at EROS, it is envisaged that a separate ledger will not be required for Profit Centre Accounting.

6.1.1.2 Currencies (1.1.2)

SAP is a multi currency system and it the standard currencies for different countries are pre-configured. It is possible to set up users specific currencies but it is envisaged that setting up user specific currencies at EROS will not be required.

The company-code for EROS UK will be assigned currency USD which than becomes the local currency for EROS UK.

Running the localisation process for UK on the EROS system will set the client currency also to USD.

It will be possible to transact a logistics or accounting process in any foreign currency provided the exchange rate is maintained between the transaction currency and the local currency – USD in case of EROS.

Foreign exchange rates (mean rate) will be manually maintained by EROS on periodic basis (say monthly) on the global exchange rate table of SAP. SAP, by default, will use these rates for all logistics and accounting transactions.

The need for additional currency was discussed and it was concluded that additional currency update at transaction level is not required. It will anyway be not relevant as EROS do not plan to update the exchange rates on a daily basis.

Foreign exchange revaluation will be done on Customer/Vendor/ open items and Bank balance at period end. The revaluation entries are reversed on the first of the following month. Details for configuring revaluation key(s) has been discussed in a subsequent section.

6.1.1.3 Fiscal year (1.1.3)

EROS UK follows April to March as the Fiscal Year. A fiscal year, at EROS, is divided into 12 periods.


OSO

A Period independent Fiscal Year Variant will be used for EROS. SAP has a standard Fiscal Year Variant – V3. V3 has 12 normal and 4 special periods which EROS wants for yearend close monitoring. It is proposed to use V3 Fiscal Year Variant at EROS.

6.1.1.4 Posting periods (1.1.4)

Posting periods in SAP are controlled through ‘Posting Period Variant’. A posting period is assigned to a company code. Both from operational flexibility point and system authorisation control view point, it is best to have separate posting period variant for each company code on SAP which decentralises the period control.

Period can also be controlled at account type levels which means the control is at main and sub-ledger levels At any given point The opening and closing of periods for different legal entities must be decentralised firstly at legal entity level and secondly at main and sub-ledgers level.

A separate posting period variant will be maintained for each legal entity in SAP.

6.1.1.5 Chart of accounts (1.1.5)

EROS has agreed to adopt Common chart of account and map the GL accounts on the existing chart of account.

Accounts which are required by EROS but are not available will be added to the adopted chart of account. The new accounts will be added in the relevant sub grouping of the new chart of accounts.

EROS’s chart of accounts will be coded as EROS – ‘EROS’s Chart of Accounts’. The GL account length will be set to 6 digits.

EROS’s current chart of accounts will be mapped to the EROS chart and the missing GL accounts will be identified and numbered at this stage. The master conversion table thus created will be used for converting the old code to new SAP GL code on the transaction data.

Account groups will be created which would logically group different accounts. The account groups validate the number range and determine the field status of the fields on GL master.

6.1.1.6 Document types and number ranges (1.1.6)

Document types classify a transaction type and determine the number range of the posted document. Besides, document types are also effective authorisation control objects in the SAP system. Number ranges are defined at company code level. The number range is year dependent. For EROS most of the number ranges will be 10-digit year dependent with internal number assignment which means SAP will generate a running number for each transaction and such numbers will be reset to the start of the first number every fiscal year.

Document types will mostly be defaulted for different transactions.

At EROS, to start with, SAP standard document types will be used. If at the realisation stage it is felt that more document types are required then new document types will be created. If it is realised that there are a few redundant ones, they will be deleted.


OSO

6.2 Process Description

Act. Ref.

Activity Name Activity Description Additional Info

1 General Ledger master General Ledger accounts will be created under the Chart of Accounts for EROS.

The existing GL accounts will be uploaded in SAP. Any subsequent GL accounts will have to be created and maintained manually.

This activity will be done by accounts personnel and controlled through SAP authorisations.

GL accounts which will be analysed for cost objects will also have to be created as Cost Elements. The Cost Element creation procedure is explained in the CO BBP.

2 Post/Change/Display/Reverse GL document

Journals will be posted using SAP standard transactions. Fields not being used at EROS will be suppressed and hence will not be visible on the table-control of the data entry screen.

Standard posting keys will be used to determine the debit or credit line items.

Journals will have internally generated numbers which will be based on the document type.

SAP has a limitation on what fields it allows modifying once a document is posted. It is possible to further restrict the changeable fields as non-changeable on posted documents. It is worth noting that fields which SAP do not allow changing cannot be made modifiable through customising.

Negative posting will be activated to post document reversals which will negate the original debit or credit on balance display report.

Which SAP users will be allowed to create, change, display or reverse financial documents will be decided through authorisation profile. Document


OSO

Act. Ref.


display authorisation will be required even by SAP users other than SAP finance users.

SAP standard transactions for reversing and resetting reversed documents will be used. The authorisation for Mass Reversal will be restricted to a select few within the accounts team.

3 Display GL balances/line items

SAP standard transaction will be used for display of GL balance and line items.

Ledger balancing characteristic – Profit Centre will be made available on balance display report.

Layouts will be created with relevant columns on the GL line item display report and the layout will be defaulted for the users.

4 Petty cash Maintained company code wise. Any transaction happened in the petty cash will be booked as a accounting entry within that company. Petty cash transaction can be happened in Cash or in Check.

5 Bank accounting Every bank that is used in R/3 has to be created in the bank directory. Banks which hold the company’s own funds are called House Banks. Individual accounts at these banks are defined as Account IDs for each house bank. The G/L account representing the “main” bank account is assigned to the House Bank / Account ID. Bank pay-in slips can be created to facilitate cheque deposits. All cheques received during a day may be entered in one deposit slip. Bank Incoming account is debited, Customer open item is cleared.

Bank reconciliation :

• Bank statement may be entered manually or uploaded periodically

• For cheques issued and cleared, the cheque number and amount is used for clearing open items in the bank outgoing account and


OSO

Act. Ref.


the main bank account is credited.

• For cheques deposited and cleared, the cheque number/ pay-in slip number and amount is used for clearing open items in the bank incoming account and the main bank account is debited.

• The balance in GL account for main bank account shall be equal to the bank statement balance.

• Open items in the bank incoming and outgoing accounts shall represent the reconciliation items.

4 Processing a Recurring Entry Document and other document entry aids

Different document entry aids such as Recurring Journals, Account Assignment Models and Sample documents will be available for use on SAP.

It will be possible to schedule the posting of recurring journals through a periodic batch job.

Similarly, Accrual/Deferral documents will be used for period end adjustments.

The precise application and job scheduling will be discussed in the realisation stage.

5 Profit centre accounting One of the basic reporting requirements at EROS is to have a net contribution report (P&L) for each division. Such reports should be available for a month and YTD, comparing actual with budgets for current and prior year.

The dept. structure for EROS viz. Films, Theatrical, Home, Satellite, Cable TV etc.. will be mapped through Profit Centres.

Though it is possible to have a distinct ledger for Profit Centre Accounting (PCA) but because EROS will not post anything on the PCA and not want it reflected on the main ledger, a separate ledger for PCA would not be required.

Zero balancing and document splitting will


OSO

Act. Ref.


be activated for profit centres.

Profit centres will be assigned to Material Master which automatically will be passed on to transactional data such as Sales Order, Service Order, and Purchase Order etc.

Profit centre has a master data which could be created and maintained based on the authorisation profile of individuals.

6 Foreign currency accounting and revaluations

Revaluation of foreign currency transactions will be done for open items and balances.

The monthly revaluations could be reversed with a reversal date which could be the first of the following month. It will also be possible to revalue the open items and not reverse the revaluation. In such case, SAP automatically will post the difference between revaluated value and realisation value, at the time of realisation or outgoing payment.

Accounting for revaluation gain and loss will get posted to the predefined and configured accounts.

7 Payroll upload Since EROS uses a separate payroll system which will be continued to be used, we will use the generic interface to post journals through Excel to upload payroll journals.

The data on the flat file for payroll journal will have to be compiled at cost centre level so that the journal could be posted and expense analysed at cost centre level.

8 Integration General Ledger is the main integration point between Financial Accounting and other modules of SAP viz. SD, MM, PS etc.

Accounts will be preconfigured for different processes which will be populated through financial posting which would happen in the background.

A separate document will be done for


OSO

Act. Ref.


account assignment at the realisation phase.

9 Upload of subsidiary companies' trial balance

In the absence of the structure for EROS’s subsidiary companies available on the SAP system, the consolidation will have to be done outside the SAP system, similar to what is being done at present.

10 Period-end closing EROS will follow a monthly period-end procedure to close one period and open the next one.

List of activities to be done at period-end for closing will be detailed in a document during the realisation stage.

11 Year-end closing The year end for EROS now will be the end of the Fiscal year i.e. the 31st of March.

Same as period-end closing, EROS will have to follow the year-end procedure.

List of activities to be done at year-end for closing will be detailed in a document during the realisation stage.

7 Organisational Considerations

None

8 Change Considerations

The following key changes are proposed through the SAP implementation:

1. Period end to be the last day of a calendar month and year end to be the end of a Fiscal year.

2. New non-segmented chart of accounts.


OSO

9 Authorisations

Activity/Role GL ClerkAccounts Supervisor

Finance Controller

GL Master - Creation

GL Master - Change

GL Master - Display

Profit Centre Master - Creation

Profit Centre - Change

Profit Centre - Display

Post/Park/Release documents

Change/Display/Reverse document

Document - Mass Reversal

Create, Change, Delete recurring documents

Closing Cockpit maintenance

VAT return process

Maintain FX rates

FX valuation

Open/Close periods

10 Assumptions

11 Issues / Risks

Issue Ref. Issue / Risk Description Severity


OSO

12 Decisions

Ref

Decision Date Who

13 Process Volumes

Object Volume

14 Master Data

Object Description Master Data Document

15 Developments / Interfaces

Object Development Description

Payroll interface General journal upload program is proposed to be used.

16 Configuration Considerations

Object Description


OSO

17 Reporting Requirements

Title Content & Purpose

Audience Frequency

Comments


OSO

18 Version History and Approval

Name Version Reason Date

Initial internal review 1 Review by consultants 16/02/2009

DOCUMENT APPROVED BY:

Name Role Signature Date

Manish Kale Invenio Author

Business Author

Approved By:

Ankur SughaInvenio Project

Manager

Amit MehtaBusiness Project

Manager

Business Solution Architect

Invenio Team Leader

Invenio Team Leader (FICO)

Invenio Team Leader (MM)

Invenio Team Leader (PP)

Invenio Team Leader (SD)

Business Process Owner (process

1)


2)


OSO


3)

Business SAP Integration

Manager

Business Director


sap bbp fico_gl

Documents