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Design Phase Financial Organizational Structure Confirmation Session Jan 16 2008
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02 Financial Structure c

Jul 21, 2016

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Page 1: 02 Financial Structure c

Design Phase

FinancialOrganizational StructureConfirmation SessionJan 16 2008

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Confirmation session objectives

• Analyze the results of the Organizational Structure Workshop Sessions• Analyze issues and define action items if necessary.

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Agenda

• Introductions• Objectives• Agenda

• SAP Org structure Overview

• Logistics– Overview– Purchasing Organizations, purchasing groups– Plants & Storage Locations.– Issues/Action-Items Summary

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Agenda

• Accounting– Company Code, Controlling Area, FM Area.– Accounting String

• Object - GL account• Location - Cost center• Fund• Project• Function• Program - Grant• Issues/Action-Items Summary

• Project Systems– Overview– Projects & WBS Elements– Integration with Accounting/Budgeting– Issues/Action-Items Summary

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SAP Org structure OverviewThe SAP System: Modularity and Integration

Integration - Integrity - Standardization - Accountability

• SAPs perhaps most important benefit: INTEGRATION

– Components or solutions in SAP are real-time integrated

– This increases users efficiency significantly, because data only needs to be entered one time, you can re-use data, you have high data validity and so on. . . . Banking

Externalreporting

AvailControl

COCost

Centers

COOrders

CO

GL

AA

PS

FM

GMMM

Inventory

SDMMPurchasing

Payroll

TravelMgmt.

TV

MM

HR

AP

AR

TRCashFlow

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SAP Org structure OverviewSAP Data structure

Drives the fundamental data framework within the SAP system

SAP’s static informational and processing data

Tasks which combine to form integratedbusiness processes

Master Data

Transactions

Org Structure

SAPClient

CONFIGURATION SIDE

FUNCTIONAL SIDE

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Logistics

– Overview– Purchasing Organizations, purchasing groups– Plants & Storage Locations.– Issues/Action-Items Summary

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Purchasing Organization (ECC) - Key Considerations

Purchase organization for each department (TMT, S&D, Maintenance etc) vs. one central purchase organization. The decision has been made to have one central purchasing organization since:

Vendor master records are maintained centrallyContracts are maintained centrally

Purchasing Groups will mirror the existing buyer groups to:Facilitate efficient reportingEase conversion and cutover activities

Note: Other purchasing groups can be added to enable separate reporting capability

Note: One separate purchase organization can be created for purchases with internal funds

Key considerationsKey considerations

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Proposed SAP Purchase Organization (ECC)

Client X Company Code

Client XCentral Pur. Org.

Purchasing Group A

Purchasing Group C

Purchasing Group B

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Purchasing Organization (SRM) - Key Considerations

SRM Purchasing organization hierarchy would have the company code, purchasing organization, departments, purchasing group (as required) and user in that order. One single company code and one central purchasing organization will be used

Departments will mirror existing departments such as S&D, Schools, Textbooks, Food & Nutrition, Maintenance and TMT

Purchasing Groups will mirror the existing buyer groups toFacilitate efficient reportingEase conversion and cutover activities

SRM attributes will be used to provide some level of automation with: Delivery address for school buyers generated automaticallyDefault cost center information populated automatically

Key considerationsKey considerations

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Proposed SAP Purchase Organization (SRM)

Client X Company Code

Client XPurchasing Org.

Department S&D

Department Schools

Purchasing Group A

Location X Springs High School

User 2

S. Location X High School

User 3

User 1

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Plants & Storage Locations - Key Considerations

Driving factors:Physical addressFuture scalabilityEfficient ReportingConfiguration/ Default values

In order to accommodate the Stock Transport Order (STO) process, we will create 1 plant representing all the schools

Separate plants will be created for Departments – Food & Nutrition, TMT & Maintenance

Separate storage locations will be created to representEach individual schoolS&D aisles which are used to store products. There will be no location

tracking below aisle.

Key considerationsKey considerations

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Proposed SAP Organization StructurePlants and Storage Locations

Client XCompany Code

Plant 1000S&D Warehouse

Plant 2000Schools

Plant 3000Food & Nutrition

Stor Loc 0001Aisle 1

Stor Loc 0002Aisle 2

Stor Loc 0003Aisle 3

Stor Loc 7151Location X Springs

High School

Stor Loc 7152S. Location X High School

Stor Loc 1

Plant 4000TMT

Stor Loc 1

Plant 5000Maintenance

Stor Loc 1

Stor Loc 7153N. Location X High School

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Procurement Issues/Action Items Summary

• Security model between ECC and SRM can be different. User access maintenance is an issue that need to be discussed with HR – Position

• Conversion. As there are two different structures, will it mean two different conversion programs: one for SRM, the other for ECC (MM)?

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Finance

• Overview• Company Code, Controlling Area, FM Area.• Accounting String

– Object - GL account– Location - Cost center– Fund– Project– Function– Program - Grant

• Issues/Action-Items Summary

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Financial Organizational Structure

CompanyCode

Highest organizational structure for financial accounting and control purposes. A company code is an independent unit that represents a legal entity or balanced set of books.All structures within a company code have similar financial processes and use the same chart of accounts. Client X will only use ONE company code.

DECISIONS AND KEY CONSIDERATIONS

– One company code for all Client X; Four Digit Code

– One company code is the leading practice for public sector• Full management of financial operations under one single umbrella: Full visibility• Simplifies the maintenance of G/L accounts, vendors and customers: Using one single

company code eliminates the need for a consolidation process and avoid data redundancy.

• Eliminates the need for substantial configuration to add, integrate and maintain new company codes.

M D P S

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Financial Organizational Structure

ControllingArea

Controlling area is the umbrella in which expense management activities are performed. Controls boundaries in cost center accounting.The controlling area is an organizational unit delimiting the company's managerial accounting operations

KEY CONSIDERATIONS

– One Controlling Area for all Client X; Four Digit Code:– One FM Area for all Client X; Four Digit Code:– One company code can have only one controlling area and one FM area assigned

– All Client X expenditures and budgets are managed within a single structure.

M D P S

FMArea

The FM area is derived from Financial Accounting organizational unit, the Company Code by assigning the company code relevant for Funds Management in your organization to an FM area.

M D P S

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Financial Organizational Structure

Business Area

A business area is an organizational unit within accounting that represents a separate area of operations or responsibilities in a business organization. It permits the generation of independent Balance Sheet and P/L statements, and, a more sophisticated security model.

DECISIONS AND KEY CONSIDERATIONS

– SAP recommends the use of business areas to represent fully reportable organizational levels (Full financial statements) necessary below the main reporting entity:

– Business Areas will represent agencies, lines of business, or locations where complete (or even partial) financial statements or cost accounting information is required. Client X includes one agency or organizational unit but has several locations/schools that can be represented with business areas

– If only one agency/line of business/location is necessary, it’s a leading practice to activate business areas with a generic defaulted value. That option allows its use in the future

– The team to determine if Business Area is necessary for Schools or any other subdivision of Client X

– Access can be controlled per Business Area as it can be made mandatory.

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Master Data Relationship Overview at Client X

FIFinancial

Accounting(external accounting)

GMGrantee

Management(sponsor’s view/reporting

requirements)

FMFunds Management(budgetary accounting)

COControlling

(managerial/cost accounting)

GL Account

Grant

Functional Area

Business Area

Fund

Fiscal Year

Cost ElementPrimary & Secondary

Grant

Functional Area

Internal OrderWBS Element

Cost Center

Fund

Fiscal Year

Commitment Item

Grant

Functional Area

Funded Program

Funds Center

Fund

Fiscal Year

Sponsor Class

Grant

Sponsored Program

Fund

Budget Validity Period

Object

Grant

Location

Function

Fund

Program &Project

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Client X Object Code

Recommended G/L Account

Recommended Commitment Item

Recommended Cost Element

Object

GL Account

Cost Element

CommitmentItem

KEY CONSIDERATIONS– One to one relationship between GL account, Cost Element and Commitment Item

simplifying reporting, reconciliation and conversion– All object codes aligned with the red book to the greatest extend possible– Provide space for possible future growth or subdivision of an object code

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Issue: Salary Objects/GL accounts

• Recommend consistency with Florida DOE guidelines for Salary Expenditure Objects

(5)100 Salaries – Currently agrees to DOE (5)110 Administrator (5)120 Classroom Teacher (5)130 Other Certified (5)140 Substitute Teacher (5)150 Aide (5)160 Other support Personnel (5)170 Board Members and Attorneys

KEY CONSIDERATIONS– Consistency with Florida DOE guidelines– Simplifies the system and master data configuration in Finance and Payroll– GL reporting on salary category groups such as Classroom Teachers, Administrators,

Other support Personnel Position information is retained in HR, not in the General Ledger. Details can be reported through Business Intelligence

– System response time can degrade when multiple GL accounts are assigned for each individual employee

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Client X Current Fund Strategy

Option 2 : 6 Digit Fund With Room for Growth

Client X Current Fund Strategy

Option 1: 4 Digit Fund Realigned

KEY CONSIDERATIONS– Keep funds aligned with the red book – Provide extension for future growth – Provide Client X with the ability to classify Funds by multiple fund sources by extending

the field and allowing roll up

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Client X Location Code

Palm Springs Elementary

Recommended Cost Center

Recommended Fund Center

Location

Cost Center

Fund Center

KEY CONSIDERATIONS– Keep funds aligned with the red book – Provide space for possible future growth, as:

• The is currently no space for growth in the district centers assigned to the 9XXX range• Rolling up centers to a higher level of the hierarchy can require additional characters.

For example, subdividing a school into multiple locations can require more than 4 digits

• Cost Centers and Funds Centers are time dependent information, and can be changed but with historical data remaining accessible

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Client X Locations - SAP Cost Centers

• Client X Chargeable Location Codes - SAP Cost Centers• Chargeable location codes are the ones relevant to accounting• Cost Center Accounting enables analysis of overhead costs according to where they

were incurred• Client X Chargeable Location Codes are represented as Cost Centers and Fund

Centers in SAP• Cost Centers generally correspond to internal departments like HR, Finance, IT, etc. In

K-12 environment, a school can be represented as a cost center or group of cost centers

• Each Cost Center must be assigned to a “Standard Hierarchy” of Cost Centers• Standard Hierarchy is a grouping of all Cost Centers within the Controlling Area (which

can include multiple Company Codes) providing a default view of the departmental structure – Alternative groups can be created for reporting purposes

• Alternate Hierarchies are optional and can be used to group location codes as needed by the district for reporting purposes.

• These Alternate Hierarchies for Client X can be focused on representing structures related to District Code, Location Type Code, Division, Geography, etc.

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Client X Locations - SAP Cost Centers

• Client X Chargeable Location Codes - SAP Cost Centers

• Examples – Cost Center 9015 - BUILDING OPERATIONSCost Center 9016 - MANAGEMENT PROJECTSCost Center 9022 - LABOR RELATIONSCost Center 9035 - BUILDING OPERATIONS IICost Center 9126 - TREASURERCost Center 9127 - OFFICE OF FINANCIAL OPERATION Cost Center 9128 - FINANCIAL OPS/BUDGETCost Center 9130 - BUSINESS OPERATIONSCost Center 9131 - MANAGEMENT & COMPLIANCE AUDITCost Center 9132 - AUDIT & INVESTIGATIVE AFFAIRSCost Center 9135 - NORTHWEST REGIONAL TRANS CTRCost Center 9141 - ACCOUNTS PAYABLECost Center 9151 - CONTROLLER

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Client X Cost Center Standard Hierarchy: Example

Client X

Regions Curriculum & Instruction

Charter Schools

Private Schools

Rosa ParksCharter

Pine Crest Academy

Region 1 Region 2 Region 3

Elementary

Middle School

High Schools

K-8 Schools

Zone Schools

Elementary

Middle School

High Schools

K-8 Schools

Elementary

Middle School

High Schools

K-8 Schools

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Client X Cost Center Alternate Hierarchy: Example

Client X

School Types Admin

Elementary

Region 1

Region 2

Region 3

Region n

Middle High K-8

Region 1

Region 2

Region 3

Region n

Region 1

Region 2

Region 3

Region n

Region 1

Region 2

Region 3

Region n

9015 - BUILDING OPERATIONS

9016 - MANAGEMENT PROJECTS

9022 - LABOR RELATIONS

9035 - BUILDING OPERATIONS II

9126 - TREASURER

9127 - OFFICE OF FINANCIAL OPERATION

9128 - FINANCIAL OPS/BUDGET

9130 - BUSINESS OPERATIONS

9131 - MANAGEMENT & COMPLIANCE AUDIT

9132 - AUDIT & INVESTIGATIVE AFFAIRS

9135 - NORTHWEST REGIONAL TRANS CTR

9141 - ACCOUNTS PAYABLE

9151 - CONTROLLER

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Client X Function & Program

Function: Basic Instruction

Recommended SAP Functional Area

Program: Title I Reading Coach

Functional Area + Program + 1 digit for Growth

KEY CONSIDERATIONS– Grants strategy will need to integrate with each Function-Program-Fund combination

assigned to the grant– Capital projects strategy will need to integrate the WBS with each Function-Program-

Fund combination used for the capital project – A five digit Program is already utilized but to a limited degree, Client X uses an alpha

character to tag onto the program

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Finance Issues/Action Items Summary

• Because of the change of coding structure, the development of conversion and interface routines will become more complex

• Cleansing of unused location codes and other MSAF information• A strategy to access historical data needs to be developed to support

conversion and reporting• The detailed security model that will be developed during design can

influence the enterprise structure

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Project Systems

• Project Systems– Overview– Projects & WBS Elements– Integration with Accounting/Budgeting– Issues/Action-Items Summary

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Projects Landscape Overview

Primavera

Project Number

Payment Information

Project Number Application

(WPNR )

Original Budget

PO Generation

SAP

Project Systems

Funds Management

PLANNING

Magellan

• Facility• Deficiencies• Planning• Inspect

Project Funding

Project Number

Budget Updates

Budget Preparation Budget Execution

Expedition

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Project Structures

• This example shows a Project Definition with a three level WBS element structure

• Project structures are made up of WBS elements. It is used to control and monitor the schedule, cost, revenues, and funds availability.

WBS WBS WBS

WBS WBS WBS WBS

WBSWBSLevel 1 WBS

Level 3 WBS

Level 2 WBS

Project DefinitionProject Definition

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WBS (project number) Coding Structure

Project number is a 8 digit auto generated sequential number e.g. 00400700

M-DCSP prefers to retain the sequential project number generation in the SAP scenario

The project number generated by WPNR will be used to create WBS elements in Project systems

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WBS (project number) Coding Structure

Middle School Addition

Site ImprovementCosts Cost of EHPA Cost of Site

Purchase Road Improvement Environmental issues

School Addition

Project Definition

A&E Fees

Owners contingency

ContingencyMaterial Testing Survey Construction

Project contingency

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Project Types Capital

New Facilities

Additions

Remodeling/Renovation

Site improvement

Maintenance

Roofing

Major Systems Replacement

Furniture/Equipment/Library books

ITS

These projects can be stand alone or be embedded with the above project types (Capital/Maintenance)

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Project Flow

Project CapitalizationProject Capitalization

WBS Elements

Cost CenterPlanned Values Actual Values

C I P

Asset 1Asset 1

Asset 2Asset 2

Asset 3Asset 3

Final settlementFinal settlement

Asset history sheet

Purchase Order Down payment

InvoiceInternal Activity

Transactions duringTransactions duringconstructionconstruction

Periodic settlement

BudgetBudget

Planned ValuesPlanned Values

CommitmentsCommitments

Actual ValuesActual Values

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Projects / Funds Management Integration

Client

Cost Centers

\Internal Orders

Funded Programs

CO Area Company Code

Functional Areas

Business Areas

Fund Centers

Funds

GL Accounts

FM Area

WBS Elements

Commitment ItemsCost Elements

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Project Issues/Action Items Summary