Accelerated Financial Closing with SAP

Accelerated Financial Closing with SAP

2013
978-1-59229-446-6
297

Product Details

• Explore the entire financial close process from financial accounting to entity and corporate closing
• Maximize the potential of SAP Financial Solutions like FI, CO, and Disclosure Management
• Meet the latest regulatory and reporting requirements with ease
• Based on ERP 6.0 and EPM 10.0

Your course is set and the light is green. Enable your business to navigate the hairpin turns of the financial close process with this end-to-end overview. Guided by practical workflow scenarios and customer examples, learn how to maximize the potential of SAP’s financial close solutions. From start to finish, manage data integrity issues, optimize your financial close processes, and handle system integration. Close your books in record time with this one-stop resource for all your financial closing needs!

Streamlined Financial Close Workflow
Align your business workflows to support a streamlined financial close process. 

A Financial Close Action Plan
Learn how to build a business case, create a clear action plan for your financial close process, and avoid the common barriers.

Reporting
Proactively address disclosure management and weather regulatory change with finesse and flexibility. 

Real-Time Visibility
Visualize your financial close success and identify issues with real time analysis and the Financial Closing Cockpit.

Practical Case Studies and Examples
Learn how industry peers have improved their financial close processes and reduced risk.

Highlights

• General Ledger close
• Controlling close
• Inventory management
• Entity close management
• Intercompany reconciliation
• Information management
• Process governance
• Financial consolidation
• Disclosure management
• Financial reporting

The Authors

James Fisher, Elizabeth Milne, and Birgit Starmanns have over 30 years of combined SAP financial knowledge, expertise, and practical business experience. All of the authors are frequent speakers at SAPPHIRE and SAP Insider on analytics and the financial close process.

 

Table of Contents

  • ... Foreword ... 15
  • ... Preface ... 19
  • ... Acknowledgments ... 23
  • 1 ... Introduction to the Financial Close ... 25
  • 1.1 ... The Business Case for a Fast High-Quality Close ... 26
  • 1.1.1 ... Internal and External Stakeholders ... 27
  • 1.1.2 ... Regulatory Drivers for the Accelerated Financial Close ... 27
  • 1.1.3 ... Benefits of the Accelerated Financial Close ... 29
  • 1.2 ... Components of the Financial Close ... 32
  • 1.3 ... How Fast Is Fast? ... 33
  • 1.4 ... Barriers to a Fast, High-Quality Close Process ... 36
  • 1.4.1 ... Compliance-Related Pressures ... 37
  • 1.4.2 ... Data Quality/Collection Errors ... 38
  • 1.4.3 ... Intercompany Reconciliation ... 38
  • 1.4.4 ... Poor Performance from Consolidation Applications ... 38
  • 1.4.5 ... Lack of Process Automation ... 39
  • 1.4.6 ... Weak Audit Trails ... 39
  • 1.5 ... Summary ... 40
  • 2 ... Creating an Action Plan for Improving Your Financial Close ... 41
  • 2.1 ... Vision, Benchmarking, and Sponsorship ... 42
  • 2.1.1 ... Perform “As-Is” Review ... 43
  • 2.1.2 ... Define Vision and Benefits ... 44
  • 2.1.3 ... Sponsorship ... 46
  • 2.2 ... Quick Wins ... 48
  • 2.2.1 ... Creating a Close Scorecard ... 50
  • 2.2.2 ... Peer-to-Peer Intercompany Reconciliation ... 51
  • 2.2.3 ... Right-First-Time Close ... 53
  • 2.2.4 ... XBRL Publishing ... 53
  • 2.3 ... Big Wins ... 54
  • 2.3.1 ... Standard Chart of Accounts ... 55
  • 2.3.2 ... Common Single Instance of SAP ERP ... 55
  • 2.3.3 ... Reporting and Disclosure Framework ... 56
  • 2.3.4 ... Corporate and Entity Close ... 56
  • 2.4 ... Continuous Improvements ... 57
  • 2.5 ... Summary ... 59
  • 3 ... Information Management ... 61
  • 3.1 ... Defining Data and Information ... 63
  • 3.2 ... Master Data Management ... 64
  • 3.2.1 ... Management of Financial Master Data in SAP Business Suite ... 65
  • 3.3 ... Transactional Data Management ... 67
  • 3.3.1 ... Extracting Data from ERP Systems with SAP Rapid Marts ... 67
  • 3.3.2 ... SAP Financial Information Management ... 68
  • 3.4 ... Summary ... 75
  • 4 ... The General Ledger and Subledger Close ... 77
  • 4.1 ... SAP ERP Financials Concepts ... 77
  • 4.1.1 ... The Organizational Hierarchy ... 78
  • 4.1.2 ... The Document Principle ... 79
  • 4.1.3 ... Customer Story: Cargojet Income Fund Soars to New Heights with Greater Financial Visibility ... 81
  • 4.2 ... The General Ledger Close ... 83
  • 4.2.1 ... Posting Periods ... 83
  • 4.2.2 ... Period-End Journal Entries ... 84
  • 4.2.3 ... Foreign Currency Valuation ... 85
  • 4.2.4 ... The Year-End Close ... 86
  • 4.2.5 ... Customer Story: Continental’s Smooth Transition with the SAP General Ledger Migration Service ... 87
  • 4.3 ... The Accounts Payable and Accounts Receivable Close ... 88
  • 4.3.1 ... Reconciliation of Payables and Receivables Accounts ... 89
  • 4.3.2 ... Valuation of Payables and Receivables Accounts ... 89
  • 4.3.3 ... Collections and Dispute Management ... 90
  • 4.3.4 ... Travel Management ... 91
  • 4.4 ... Asset Accounting Close ... 91
  • 4.4.1 ... Posting Depreciation ... 91
  • 4.4.2 ... Assets Under Construction ... 92
  • 4.4.3 ... Year-End ... 93
  • 4.5 ... Inventory Management ... 94
  • 4.5.1 ... GR/IR Reconciliation ... 95
  • 4.5.2 ... Work in Process ... 95
  • 4.5.3 ... Inventory Valuation ... 96
  • 4.5.4 ... Posting Periods ... 97
  • 4.5.5 ... Customer Story: ConAgra Foods Improves Financial Business Processes with In-Memory Computing ... 98
  • 4.6 ... Reporting ... 100
  • 4.6.1 ... Customer Story: KazStroyService Group Streamlines and Consolidates Business Processes ... 101
  • 4.7 ... Summary ... 102
  • 5 ... The Financial Close in Controlling ... 103
  • 5.1 ... Cost Element Accounting ... 105
  • 5.1.1 ... Primary Cost Elements ... 106
  • 5.1.2 ... Secondary Cost Elements ... 107
  • 5.1.3 ... Integration between Operations and Controlling ... 108
  • 5.1.4 ... Customer Story: Korea Exchange Bank Benefits from Standardized Business Processes ... 109
  • 5.2 ... Cost Centers ... 110
  • 5.2.1 ... Accruals ... 110
  • 5.2.2 ... Basis for Cost Center Allocations ... 111
  • 5.2.3 ... Cost Elements ... 111
  • 5.2.4 ... Activity Types ... 111
  • 5.2.5 ... Statistical Key Figures ... 112
  • 5.2.6 ... Allocations ... 112
  • 5.2.7 ... Variances ... 113
  • 5.3 ... Internal Orders ... 115
  • 5.4 ... Project Systems ... 116
  • 5.5 ... Product Costing ... 119
  • 5.5.1 ... Work in Process ... 121
  • 5.5.2 ... Variances ... 121
  • 5.5.3 ... Customer Story: Qingdao TKS Sealing Industry Achieves Transparent Reporting ... 123
  • 5.5.4 ... The Material Ledger ... 124
  • 5.6 ... Profitability Analysis ... 124
  • 5.6.1 ... Customer Story: Promivi, a Leader in Animal Nutrition, Utilizes SAP HANA and Gains Profitability and Growth Insight ... 126
  • 5.7 ... Profit Centers ... 127
  • 5.8 ... Year-End Closing ... 128
  • 5.9 ... Reconciliation Between the FI and CO Modules ... 129
  • 5.10 ... Summary ... 129
  • 6 ... Entity Close Management ... 131
  • 6.1 ... Plan and Prepare the Entity Close ... 132
  • 6.2 ... Execute the Entity Close ... 134
  • 6.3 ... Customer Story: Dow Chemicals’ Faster, Less Costly Financial Close Process with SAP Solutions ... 136
  • 6.4 ... Monitor the Entity Close ... 137
  • 6.5 ... Summary ... 139
  • 7 ... Enhanced Internal Controls for Better Compliance ... 141
  • 7.1 ... Access Risk Management ... 144
  • 7.1.1 ... Segregation of Duties ... 146
  • 7.1.2 ... Customer Story: Infosys Treats Governance and Compliance Strategically with SAP Access Control ... 147
  • 7.2 ... Identifying Controls across a Business Process ... 148
  • 7.2.1 ... Control Monitoring and Remediation ... 148
  • 7.2.2 ... Customer Story: REC Silicon, Inc. Leverages Enhanced Process Controls ... 150
  • 7.3 ... Audit Management ... 151
  • 7.4 ... GRC Analytics ... 153
  • 7.5 ... Summary ... 156
  • 8 ... Intercompany Reconciliation ... 157
  • 8.1 ... Defining Intercompany Reconciliation ... 157
  • 8.2 ... SAP Solutions for Intercompany Reconciliation ... 158
  • 8.2.1 ... One Source System ... 159
  • 8.2.2 ... Multiple Intercompany Source Systems ... 160
  • 8.2.3 ... Leveraging Consolidation Systems for Intercompany Reconciliation ... 161
  • 8.3 ... Managing the Intercompany Process ... 161
  • 8.3.1 ... Traditional Intercompany Reconciliation Process ... 161
  • 8.3.2 ... Peer-to-Peer Intercompany Reconciliation Process ... 162
  • 8.4 ... Faster, Collaborative Intercompany Reconciliation with SAP Intercompany ... 163
  • 8.4.1 ... Web-Based, Peer-to-Peer Communication ... 163
  • 8.4.2 ... Collaboration, Monitoring, and Approval ... 164
  • 8.5 ... SAP Intercompany Deployment Options ... 165
  • 8.5.1 ... Data Entry and Adjustments in SAP Intercompany ... 166
  • 8.5.2 ... No Data Entry or Adjustments in SAP Intercompany ... 166
  • 8.6 ... Security and Configuration ... 167
  • 8.7 ... Summary ... 168
  • 9 ... Financial Consolidation ... 169
  • 9.1 ... Data Collection ... 171
  • 9.1.1 ... Customer Story: Altron Consolidates Financial Data to Better Manage Assets and Risk ... 172
  • 9.1.2 ... Loading Data ... 173
  • 9.1.3 ... Data Mapping/Central Chart of Accounts ... 174
  • 9.1.4 ... Dimensionality: Identifying the Level of Detail to Collect ... 175
  • 9.1.5 ... Data Validation and Control ... 179
  • 9.1.6 ... Collecting Commentary with Data ... 180
  • 9.1.7 ... Workflow and Approval of Data ... 180
  • 9.1.8 ... Periodicity of Data (Collecting Year to Date versus Periodic) ... 181
  • 9.1.9 ... Currency (Local, Transaction, Group) ... 182
  • 9.2 ... Processing Data ... 183
  • 9.2.1 ... Customer Story: HMY Group Enables More Comprehensive and Up-to-Date Reporting with SAP Financial Consolidation ... 184
  • 9.2.2 ... Managing Organizational Structures ... 185
  • 9.2.3 ... Consolidation Adjustments ... 189
  • 9.2.4 ... Intercompany Eliminations ... 190
  • 9.2.5 ... Elimination of Investments ... 192
  • 9.2.6 ... Foreign Currency Conversion and Currency Translation Adjustments ... 192
  • 9.2.7 ... Rounding ... 193
  • 9.2.8 ... Workflow and Approval of Adjustments ... 194
  • 9.2.9 ... Consolidation Versions ... 194
  • 9.3 ... Differentiation between Consolidation Solutions ... 196
  • 9.3.1 ... Business Suite Solutions ... 197
  • 9.3.2 ... SAP Business Planning and Consolidation (BPC) ... 199
  • 9.3.3 ... Customer Story: Russian Railways Gets On the Right Track with Planning and Consolidation ... 200
  • 9.3.4 ... SAP Financial Consolidation ... 201
  • 9.3.5 ... Customer Story: Bekaert Standardizes Global Financial Reporting ... 203
  • 9.3.6 ... Engaging with SAP experts ... 204
  • 9.4 ... Starter Kits ... 204
  • 9.4.1 ... Customer Story: Bank of Cyprus Group Achieves Clear Audits with SAP Solutions ... 207
  • 9.4.2 ... SAP Disclosure Management Consolidation Starter Kits ... 208
  • 9.4.3 ... SAP Financial Close and Disclosure Management Rapid Deployment Solution (RDS) ... 210
  • 9.5 ... Summary ... 210
  • 10 ... Disclosure Management and XBRL Filings ... 213
  • 10.1 ... Collect Information from Source Systems ... 217
  • 10.1.1 ... Financial Figures for Disclosure Reports ... 218
  • 10.1.2 ... Unstructured Information in Financial Statements ... 220
  • 10.1.3 ... Customer Story: Metcash Delivers the Goods in Corporate Governance ... 222
  • 10.2 ... Manage Financial Statements and Reports ... 224
  • 10.2.1 ... Tracking the Progress of the Disclosure Process ... 224
  • 10.2.2 ... Manage Report Documents ... 225
  • 10.3 ... Collaboration and Workflow ... 228
  • 10.3.1 ... Role Definitions and Configuration of Workflow ... 228
  • 10.3.2 ... Document Control ... 229
  • 10.3.3 ... Workflow and Status Management ... 230
  • 10.3.4 ... Approvals ... 232
  • 10.3.5 ... Customer Story: GEA Group Produces Audit-Compliant Financial Statements Faster ... 233
  • 10.4 ... Publish Disclosure Statements and Reports ... 234
  • 10.5 ... Create and File XBRL Statements ... 236
  • 10.5.1 ... Tagging Data for Filing Financial Statement and Forms ... 239
  • 10.5.2 ... XBRL Instance Documents ... 240
  • 10.5.3 ... Customer Story: SAP Speeds Up the Last Mile of Financial Reporting with SAP Disclosure Management ... 241
  • 10.6 ... Summary ... 243
  • 11 ... Financial Reporting ... 245
  • 11.1 ... Reporting Requirements ... 245
  • 11.1.1 ... Balance sheet, P&L, and Cash Flow Reporting ... 246
  • 11.1.2 ... Management versus Statutory Reporting ... 248
  • 11.1.3 ... Variance Reporting ... 249
  • 11.1.4 ... Periodic Comparison ... 249
  • 11.1.5 ... Budget, Plan, and Forecast ... 250
  • 11.1.6 ... Versioning and What If Statements ... 250
  • 11.1.7 ... Drill Down versus Drill Though ... 252
  • 11.2 ... Reporting Delivery Methods ... 254
  • 11.2.1 ... Business Intelligence ... 255
  • 11.2.2 ... SAP Crystal Reports ... 255
  • 11.2.3 ... SAP BusinessObjects Dashboards ... 256
  • 11.2.4 ... SAP BusinessObjects Web Intelligence ... 256
  • 11.2.5 ... SAP BusinessObjects Analysis ... 256
  • 11.2.6 ... SAP BusinessObjects Explorer ... 257
  • 11.2.7 ... SAP BusinessObjects BI platform ... 257
  • 11.2.8 ... Mobility ... 257
  • 11.3 ... Summary ... 258
  • 12 ... The Future of Finance and Its Impact on the Financial Close ... 259
  • 12.1 ... Economic Environment and the Role of Finance ... 259
  • 12.2 ... Financial Operations ... 262
  • 12.2.1 ... SAP Business Suite Powered by SAP HANA ... 264
  • 12.2.2 ... Embedded Analytics ... 264
  • 12.3 ... Managing Stakeholder Expectations ... 265
  • 12.3.1 ... In-Memory Powered Planning, Budgeting, and Forecasting ... 269
  • 12.3.2 ... Predictive Analytics and Data Discovery ... 269
  • 12.3.3 ... Mobilizing Finance ... 270
  • 12.4 ... Ensuring Regulatory Compliance ... 271
  • 12.4.1 ... Taxation ... 272
  • 12.4.2 ... Integrated Reporting ... 273
  • 12.5 ... Summary ... 275
  • 13 ... Conclusion ... 277
  • ... Appendices ... 281
  • A ... Glossary ... 283
  • B ... References ... 287
  • C ... The Authors ... 289
  • ... Index ... 291