Blueprint Document

6/13/2014 Blueprint Document
http://dc378.4shared.com/doc/kOg2_KZ1/preview.html 1/17
GLENMARK SAP ECC 6.0
EVEREST PROJECT
Business Blueprint Document
COCost Center Accounting
Process Number: CO 1.1
TITLE: Cost Center Accounting.
Prepared By: Jos Eduardo Nascimento
INDEX
I Business Process Overview 2
II Customer Expectation 3
III SAP System Functions (Process Flow) 4
Cost Elements 5
Cost Center 7
Processes 12
Internal Processes Controlling 12
Cost Center Accounting 12
IV Transactions / Programs / Reports / User Exits 14
V Description of Functional Deficits 15
VI Approaches to address Functional Deficits 16
II Interfaces 16
VIII Authorisations 16
IX SAP Configuration 16
Reporting Requirements 16
XI Supplementary Information 16
XII Annexure: 16
I Business Process Overview
AS-IS Process:
AS IS COST CENTRE ACCOUNTING
I Current method Cost Centre Accounting
Microsega follows the method of booking of expenses as per cost centers. Following is the information
pertaining to the cost centre accounting in current system :
Overheads are booked cost centre on daily basis.
Provision of overhead done as per cost centre.
In case of common expenses booked to the cost centre, an allocation is done to the receiver
cost centre. This is a period end activity. Some instances of distribution cycles are: Building
rent, Condomini, Cleaning services, Telecommunications (Telecom), Coffe break services,
Printing and stationery, Moto boy services, Equipments Insurance.
Sales and material consumption is not booked to cost center.
In Microsega cost centre is mandatory only for the those accounts for which it is configured. A
list of GL codes for which cost centre is mandatory is attached as per Annexure A.
II Cost Center Budgets
Cost centre budget are maintained in the system by cost centre and GL codes.
There is no mechanism in microsega restricting the spend of actual expenditure within budget.
III Cost Center Reports (Actual x Budget)
Budgets are updated in current Microsega by Cost centre.
Cost centre report Budget vs Actual is available in the system. This report is available for a single
period as well as accumulated. All the department heads have access to this report.
Analysis of the budget vs actual is done by a Finance team member and reasons for variances
asked for.
IV Allocation of one CC cost to other CC
Expenses which are common in nature are booked to a cost centre which is specially created for
common expenses.
At the end of the period these expenses are allocated to the receiver cost centre by distribution
cycle. The basis of distribution cycle is by head count.
This is period end activity.
V Current hierarchy structure
Cost centre are maintained in the current system by hierarchy.
A list of the same is attached as per Annexure B.
II Customer Expectation
Cost Center Controlling
TO BE COST CENTRE ACCOUNTING
Going forward the SAP system to have all the functions as detailed in the AS IS process. To
have more clarity, our forward looking requirements are listed below.
Cost Center Budgets
Cost centre budgets to be maintained in the system using version control.
There budget to be available in the system by cost centre, GL codes, by period and by versions.
Budgets to be updated by the Finance team member.
Upload program to be made available to the core team members for upload of budgets by cost
centre, GL code, by period and version.
Allocation of one CC cost to other CC
A separate cost centre to be created for loading of the common cost.
This cost centre will be used for allocation of expenses to the receiver cost centre.
The allocation of the cost will be by distribution cycle. The allocation logic to be provided by
Finance team based on the head count data.
The allocation logic to be revised on a monthly basis by Finance, based on the head count data
received from HR
Cost centre code and hierarchy structure :
Cost centre codes to be created based on the logic followed in India.
Cost centre hierarchy to be created based on the India cost centre hierarchy structure.
List of cost centre and their hierarchy attached as per the annexure C
Cost Center Reports (Actual x Budget)
Cost centre report to be made available as follows :
By cost centre and gl code For a period and YTD.
By hierarchy / cost centre / gl code For a period and YTD
Downloadable reports in the excel format for analysis.
Cost Centre Budget Control
System to provide mechanism by which the actual expenditure are restricted within the
budgeted expenditure for a period.
Cost Centre Actual Cost:
System to make cost centre mandatory for the list of GL codes provided as per Annexure D.
III SAP System Functions (Process Flow)
Cost Center Controlling
Cost center accounting (CO-CCA) is used to collect department overhead costs such
as operations, finance or sales departments. Cost centers are attached to a company
code and to the controlling area. In addition they are always attached to a profit
center (see below).
Postings to cost centers take place using cost elements, either primary or
secondary. Primary cost elements have a one to one correspondence with general ledger
accounts (a posting to a P&L account, for example Salaries, immediately updates the
primary cost element Salaries also). Secondary cost elements exist only in Controlling and
are used for re-postings or allocations between cost objects such as a settlement of an
internal order at month end or assessments of cost centers .
As with all Controlling master data, cost centers may be easily organized into groups for
reporting or allocation purposes. However, a default or standard hierarchy of cost centers
is required by SAP R/3 in order that no cost center may be omitted from the structure
accidentally.
Actual postings to cost center accounting can be allocated from one cost center to
another with different techniques as periodic reposting, distributions, activity based
allocations and assessments.
With the use of the planning function, budgets or plans may be created for cost centers,
manually or automatically.
Cost center accounting provides a lot of delivered SAP R/3 standard reports to analyze
the cost center costs.
To creation of a cost center structure that represents theorganizational structure
Of the company for responsibility area. The assessment cycles or distribution cycles will
be appropriate the indirect costs to the productive cost centers, in way that all the costs
will be absorbed by the productive activities in according to the Brazilian legal requirements.
The Postings expenses will be classified by account and for cost object.
Master Data Cost Center Controlling
Controlling Master data
Validity Periods
All master data in cost center accounting are created with a validity period. The initial
creation of a cost center master record will be for Glenmark with the validity period:
From 01.01.2008 UNTIL 31.12.9999
Cost Elements
SAP R/3 distinguishes between primary cost / revenue elements and secondary cost
elements. The cost elements must be meet the Glenmark Chart of accounts.
Primary Cost Elements
Primary cost elements correspond to the P/L accounts used in the chart of accounts. One
can only create a primary cost / revenue element if there is first a P/L account created in
the general ledger.
In the Glenmark Controlling Area all P/L accounts must be created as cost elements in
order to guarantee a 100% comparison of FI and CO. The exception is the cost of goods
sold account and material consumption and revenue accounts related to sales, which is a
P&L account but must not be created as a cost element. The financial expense accounts
must not be created as cost element.
The Cost Element Category for primary cost elements posted to cost centers or internal
orders must always be 1. Revenue Elements posted via Sales & Distributions (SD) must
have the cost element category 11 or for sales deductions 12. Cost elements with the
category 1 cannot be posted from SD.
The Glenmark will not create the Revenue accounts as cost element.
Note: The cost of goods sold accounts posted from SD with MM-account assignment
(VAX) must not be created as cost element!
Note: Cost of good sold will be directly posted through the sales process to CO-PCA
(profit center) and COGS is only a account not a cost element.
Default account assignment object recommended method is to use
transaction OKB9 where cost assignment to cost elements can be made
dependent on company code.
Secondary Cost Elements
Secondary Cost Elements do not correspond to P/L accounts. One cannot directly post to
a secondary cost element, but rather they are used for Controlling internal allocation
purposes.
At Glenmark the following secondary cost elements will be used:
Secondary cost elements for activity type, to allocate the production costs from
production cost center to production order
Assessment cost elements for the assessment from indirect cost center to direct
cost center . (type 42).
Secondary cost element for Internal Order settlement, to transfer the internal order
expenses to the cost centers. (type 21).
The field description is the same as for the primary cost elements.
The source of the secondary cost element naming conventions is not the P/L
account, because the secondary cost elements does not have a correspondence to a P/L
account it exists only in Controlling. The name of the secondary cost elements can be
freely defined.
The following secondary cost element categories will be used:
Category 43: Activity Types
Category 42: Assessments
Category 21: Internal Order settlement
Cost Element Groups
Primary and secondary cost elements can be grouped into cost element groups. Cost
element groups shall be used for planning and reporting. The cost element groups can be
used to define the row structure in the cost center and internal order reports.
Cost Center
The cost center structure is created to meet the management requirements (Glenmark).
Cost Center Description / Naming Conventions
Cost Center naming conventions:
Pnn: Production Costs
Tnn: Indirect Costs
Ann: Sales and Administration
Cost Center categories will be:
C Name
V Sales/Adm
H Indirect cost centers
M Overheads
F Production
To decide about the Controlling structure for Brazil we have scenario into consideration:
EXAMPLE
Scenario :
10000 PRESIDENCY
11000 FINANCE
12000 HR
12100 ADMINISTRATION
13000 IT
13100 SAP PROJECT
20000 INDUSTRIAL DIRECTOR
21000 PRODUCTION
21010 WEIGHTAGE
21020 SOLIDS
21030 SEMI SOLIDS / LIQUIDS
21040 PACKAGE
21050 FILLING
22000 SUPPLY CHAIN
22010 LOGISTICS
22020 PP
22030 INTL. PURCHASE
23000 QUALITY
23010 QUALITY CONTROL
23020 QUALITY ASSURANCE
23030 VALIDATION
23040 RESEARCH AND DEVELOPMENT
23050 QC/QA PROJECT
24000 ENGEENIRING
25000 MAINTENANCE
30000 COMMERCIAL DIRECTOR
30100 SALES ADMINISTRATION
30200 MARKETING INTELLIGENCY
30300 SALES TRAINING
30400 MEDICAL MANAGER
31000 PHARMA NSM
31010 REGIONAL MANAGER 1
31020 REGIONAL MANAGER 2
31030 KEY ACCOUNT
31200 MARKETING PHARMA
31210 DERMATOLOGY MARKETING
31220 ENDOCRINOLOGY MARKETING
31230 RESPIRATORY MARKETING
31240 GYNECOLOGY MARKETING
31250 OTHERS MARKETING
31300 SALES TRAINING PHARMA
32000 ONCOLOGY MANAGER
32010 SALES FORCE ONCOLOGY
32200 MARKETING ONCOLOGY
32300 SALES TRAINING ONCOLOGY
33000 HOSPITALAR MANAGER
33010 PUBLIC HOSPITALS
33020 PRIVATE HOSPITALS
33200 MARKETING HOSPITALS
33300 SALES TRAINING HOSPITALS
34000 REGULATORY
34100 SAC
39000 NEW BUSINESS
70000 LATAM PRESIDENCY
71000 LATAM FINANCE
71100 LEGAL LATAM
72000 LATAM HR
73000 IT LATAM
74000 LATAM IP
79000 LATAM API
80000 UPPER LATAM
80010 JAMAICA
80020 DOMINICAN REPUBLIC
80030 TRINIDAD & TOBAGO
80040 HAITI
80050 GUYANA
80060 ECUADOR
80070 PERU
80080 VENEZUELA
80090 CHILE
80100 MEXICO
80110 COLOMBIA
80120 ARGENTINA
81000 BRAZIL
81100 UPPER LATAM FINANCE
81200 UPPER LATAN HR
81300 UPPER LATAM IT
The cost center hierarchy: Example
Processes
Internal Processes Controlling
Cost Center Accounting
Planning within Cost Center Accounting
Glenmark will do planning by cost centers/primary cost element in auxiliary cost centers.
The planned data in the R/3 system must be used to control the costs, through the
variances (Plan vs. Actual).
After the input of the planning data, the cost center assessments will be executed. For
the assessments will be used the percentage criteria.
It will be created 03 planning versions, besides version 0 (Annual Plan):
Version Update 1
Version Update 2
Version Update 3
These versions will be selected at the moment of the reports execution for
actual/planned comparison.
The postings can be done manually in each version, automatically or both. The plan
version can be copied to another version or it can be revaluated.
The currency type used for planning will be P (planning).
The assessments for planning must be the same for actual data.
Actual Posting within Cost Center Accounting
The cost center postings can be generated by FI/GL. All the P&L accounts are prepared
to demand a cost object controlling that can be a cost center.
The postings can be visualized in cost center in real time, through of the reports after
the documents be saved.
Itll be used the Standard reports.
There is a transaction in SAP system called automatic assignment of
controlling objects (transaction code: OKB9) where one can provide
default settings for controlling objects depending on the company code
/ account combination.
1Assessments within Cost Center Accounting
The SAP technique to do these assessments is to create assessment cycles. An
assessment cycle is a series of rules determining which sender allocates costs to which
receiver and on what basis this is done. One creates these cycles only once, but one has
to process the cycles every month during the month end closing procedure
The assessment will occur between indirect cost centers to production cost centers
where the activity types occur:
The indirect cost centers must have balance 0 but if we add the secondary cost element
in specific reports. sin the end of the month. All the indirect cost must be in the
production cost center (Pnn), consequently in the stocks.
Internal orders (CO-OPA) are used to collect costs for special / event based reporting
purposes or reposting to other receivers. In most cases, an internal order will be used to
receive cost bookings which will be settled at month end to a different cost object.
These internal orders are called real internal orders and this type of order will be used only
for CAPEX control. Valid receivers for settlement include cost centers, other internal
orders, GL accounts, materials, assets and production orders. Settlement is controlled in
the order master record and may be on a percentage or fixed amount basis to multiple
receivers. Order settlement may be made with the original cost elements used to post to
the order or, as in most cases, using asecondary cost element to amalgamate the various
cost elements posted to the order to a single value. In certain cases the order may not
be settled and this is known as a statistical internal order. When posting to a statistical
order another cost object will be used, such as a cost center, to take the real posting.
The collection of car expenses or travel costs might be an example of this sort of order.
Orders may be grouped for reporting or settlement purposes and a single order may be
placed in many hierarchies. Plans can be built for orders at the individual order level or
the order group level. Through SAP R/3 integration, plans built at the order level can be
rolled up through cost centers, profit centers and company codes.
Internal orders (CO-OPA) are used to collect costs for special / event based reporting
purposes or reposting to other receivers. In most cases, an internal order will be used to
receive cost bookings which will be settled at month end to a different cost object.
These internal orders are called real internal orders. Valid receivers for settlement include
cost centers, profitability analysis, other internal orders, GL accounts, materials, assets
and production orders. Settlement is controlled in the order master record and may be on
a percentage or fixed amount basis to multiple receivers. Order settlement may be made
with the original cost elements used to post to the order or, as in most cases, using
a secondary cost element toamalgamate the various cost elements posted to the order to a
single value. In certain cases the order may not be settled and this is known as a statistical
internal order. When posting to a statistical order another cost object will be used, such
as a cost center, to take the real posting. The collection of car expenses or travel costs
might be an example of this sort of order.
Orders may be grouped for reporting or settlement purposes and a single order may be
placed in many hierarchies. Plans can be built for orders at the individual order level or
the order group level. Through SAP R/3 integration, plans built at the order level can be
rolled up through cost centers, profit centers and company codes.
The Glenmark will use the statistical internal orders with a separate order type to control marketing
expenses. Internal orders will be created in combination of brand and marketing expense. The
actual expenses will be collected in the internal order in such a way that the expenses directly
incurred to the products will be reflect automatically in the corresponding statistical internal orders
by an internal order report.
The plan can be updated in the statistical internal order. This will facilitate the comparison of actual
vs plan marketing expenses.
IV Transactions / Programs / Reports / User Exits
NA
Transactions Program Reports
User
Exits
Description \ Comments
KA01 Create Primary Cost Element
KA06 Create Secondary Cost Element
KA02 Change Cost Element
KA03 Display Cost Element
KA04 Delete cost element
KA05 Cost element: display changes
KAH1 Create Cost Element Group
KAH2 Change cost element group
KAH3 Display cost element group
KS01 Create cost center
KS02 Change cost center
KS03 Display cost center
KS04 Delete cost center
KS05 Cost center: Display changes
OKEON Change Standard Hierarchy
OKENN Display Standard Hierarchy
KSH1 Create Cost Center Group
KSH2 Change Cost Center Group
KSH3 Display Cost Center Group
KK01 Create Statistical Figure
KK02 Change Statistical Figure
KK03 Display Statistical Figure
KO01 Create Internal Order
KO01 Change Internal Order
KO01 Display Internal Order
V Description of Functional Deficits
The Glenmark desires that the values planned for cost center, have the function of stop
purchases requisition. This function of Budget exists only by cost object level not by
object level and account. In this case , The SAP Standard system takes care only
planning necessities .
VI Approaches to address Functional Deficits
The Control of budget with the implementation of the FM module , only for accounts
manageable.
II Interfaces
VIII Authorisations
IX SAP Configuration
Reporting Requirements
XI Supplementary Information
XII Annexure:
Attachments:
As IS XLS document:
*****END OF DOCUMENT*****
CO Module Page 16 of 16
Process Number: CO 1.1

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