Best Practices in SAP FI-Asset Accounting

Global Best Practices for
Fixed Assets
Thomas Michael
Michael Management Corporation
www.michaelmanagement.com
Global Fixed Asset System Client
Example
Global Fixed Asset Vision & Goals
Global Best Practices
Global Challenges
Elements of Success
Wrap up / Q&A
Overview
Several large multi-national, multi-year
implementations covering North/South America,
Europe, Asia
Understand how a large Global Company
approached the development of a single global
solution set
How to approach a Global AA Design template
Explain the key elements for global best
practices
Intro - Learning Objectives
Example
Elements of Success
Wrap up / Q&A
What well cover
U.S. based Company doing business in more
than 160 countries worldwide with over 300
consumer brands
@ 80 countries worldwide with general offices
and/or manufacturing plant sites
Currently have 56 charts of depreciation in
global SAP 4.5b client (increase of 22 CODs
since 2002)
Example
@ 1MM asset records in global SAP 4.5b client
@ 135 asset-holding company codes in global
SAP 4.5b client (increase of 55 since 2002)
In fiscal year 2004, client had $2B in capital
spending (AUC assets)
Example (contd)
Over 15,000 clients worldwide are live on Asset
Management module
Over 70 countries/languages supported
Global Fixed Asset System SAP Statistics
Example
Elements of Success
Wrap up / Q&A
What well cover
Define global chart of depreciation to satisfy
both US and local requirements:
US GAAP and local country GAAP
rules/reporting
US tax and local country tax rules/reporting
Global Insurance valuation reporting
One set of asset classes used across the globe
Develop a standard set of work processes to be
used across the globe
Global Fixed Assets Vision & Goals
Minimize available options such as depreciation
keys, transaction types, reports, etc.
Implement a global standard for the integration
between Fixed Assets and EC-PCA as well as
EC-CS (business segment reporting)
Secure a single client that houses all Capital
Projects and Fixed Assets for all countries
global reporting from one place!
Global Fixed Assets Vision & Goals (contd)
Global Fixed Asset System Client Example
Local vs. Group requirements
Global Chart of Depreciation
Asset Class design
Standard Business Processes
Minimize Options
Consolidations (AA and PCA / EC-CS)
Elements of Success - Wrap up / Q&A
What well cover
Realize that you need to fulfill legal
reporting requirements in each country
Depreciation area 01 - LOCAL GAAP
Depreciation areas 30/31 are for GROUP
GAAP
Research local requirements and their
consequences PRIOR to initial design
Frances area 05 for deferred gain/loss
RARUECK01
Italys need for specific asset history sheet
format
Germanys need for detailed asset class format
Etc. pp.
Global Best Practices Local vs. Group
requirements
CoD Germany
Chart of depreciation Chart of depreciation
Germany
Depreciation areas Depreciation areas
01
02
03
10
15
20
30
31
32
41
51
99
Book depreciation
Special tax depreciation
Special depreciation reserve
Valuation of net assets
Balance sheet for tax purposes
Cost-accounting depreciation
Consolidated balance sheet (local curr.)
Consolidated balance sheet (group curr.)
Book depreciation in group currency
Investment support (reducing APC)
Investment support as a reserve
Insurance
CoD USA
Chart of depreciation Chart of depreciation
USA
Depreciation areas Depreciation areas
01
10
11
12
13
20
30
31
32
33
99
Book depreciation
Federal tax ACRS/MACRS
Alternative Minimum Tax
Adjusted Current Earnings
Corporate Earnings & Profits
Cost depreciation
Consolidated balance sheet in local currency
Consolidated balance sheet in reporting curr.
Book depreciation in group currency
State modified ACRS
Insurance
Global Best Practices Global Chart of
Depreciation
Create two depreciation areas per reporting
requirement, one in local currency and one
in USD. This captures historical exchange
rate values rather than using translation
methods.
Both areas use same depreciation key and life
Example: Area A (US GAAP) is set to local
currency; area B (US GAAP) is set to USD
Depreciation
Globally, reserve certain depreciation areas
01-20 for specific related reporting purposes
(i.e. 01-20 GAAP, Tax, Insurance, etc. and
21-29 for local use (GAAP and Tax);
regions can meet any additional local needs
outside of this range
Depreciation
In order to use an asset class across the
globe, each country using the asset class
must be able to use the same account
determination for both U.S. GAAP and Local
GAAP reporting (if other posting areas exist)
Enables global reporting by asset class
Global Best Practices Asset Class Design
Enables easier asset life changes across the
globe (via workflow), when needed
Screen layout use a set of global rules or
the SAP delivered layout rule but a country
can create their own as needed in order to
meet local needs
Globally defined fields:
Eval. group 1 (i.e. California ADR reporting)
Eval. group 2 (i.e. Insurance reporting)
Property Indicator (Real vs. Personal
property)
Standard set of depreciation keys/lives for
US GAAP, US tax, California ADR, and
Insurance depreciation areas
Use as many user fields (table ANLU) as
necessary
Tips & Tricks
Realize the difference between the A- and
B-segment (A-segments usually not
company/country specific)
Dont set up asset classes by useful life
(e.g. M&E 5yrs., M&E 7yrs, etc. use more
sophisticated tools such as substitutions)
You will need more detailed asset classes
for certain countries (e.g. Germany requires
more detailed building asset classes, e.g.
Buildings, Bldgs-Warehouses, Bldgs-
Office/Retail, Bldgs-Sheds, etc.)
Standard Business Processes aka The 80/20 rule
Fixed Assets core business processes are the
same or very similar across the globe (only 3
core processes in AA)
Master Data
Transactions
Periodic Processing
80% of your configuration should be transferable
to other countries, 20% may be country-specific
Global Best Practices Standard Business
Processes
Standard set of work processes:
Create/Change master records
Divestiture handling
Asset sales to third party
Handling of asset reserves
Reversals of asset retirements
Handling of assets traded-in
Handling of deferred charge assets
Asset transfers between companies & countries
Settlements of AUC assets
Standardization of asset reports
Global Best Practices Standard Business
Processes
Over 700+ calculation keys
Over 2300+ depreciation keys
yet many do the same thing:
M150, NA0
M200, DG20
LINx straight line
Over 230+ transaction types
Over 200+ asset reports
Global Best Practices Minimize options
Global configuration item -- make the time-
dependent screen time-independent
(transaction ORFA; Master Data) automatic
FI postings upon business segment changes
All balance sheet postings must reflect a
Consolidation transaction type
Global Best Practices AA and PCA / EC-CS
All postings (balance sheet and P&L) must
reflect a profit center; 3KEH table reflects
default profit center for each account just in
case!
Link AA transaction type to EC-CS transaction
type via TABW table
Use areas 30/31 for consolidated Group
reporting
Global Best Practices AA and PCA / EC-CS
Example
Global Challenges
Elements of Success
Wrap up / Q&A
What well cover
Incorporating local needs into a US based
company
Supporting and communicating with multi
language based SAP users
Distribution of new work processes as well as
training end user in several countries
Time zone differences
Global Challenges
Example
Global Challenges
Elements of Success
Wrap up / Q&A
What well cover
Global Chart of Depreciation
Local vs. Group requirements
Asset class design
Standardize business processes - 80/20
rule
Do your homework PRIOR to design
Been there, done that resources
Elements of Success
It is critical to involve key customers (Tax,
Corporate Accounting) when developing
global processes/configuration for new
requirements
Realize that local legal requirements have
to be met
Consider the integration of SAP with its
other modules
Key Learnings
Global standardization puts everyone on
the same page across the globe! This
makes system support easier because
everyone should be doing things the same
way.
Must have an excellent communication
process to make it work.
Documentation must be kept up to date
and easily accessible by the end users
Global standardization can be done
successfully!
Key Learnings
Example
Global Challenges
Elements of Success
Wrap up / Q&A
What well cover
Comments
Questions
Contact Thomas Michael at
tmichael@michaelmanagement.com
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