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Business Blueprint

ASAP Business Blueprint

Finance Module
MODECOR
Created by: Chandrasekaran A

Date of creation: 19/10/2005

Version: A

_________________

Sign Off Date

________________ _________________ _____________

Consultant Team Lead Consulting - PM

Chandrasekaran A Shan Juno Srivastava

________________ ________________ _____________

FI - Coordinator Business Process Owner Client – PM
Bharat Shukla Nistala J Sharma Pankaj Pandit

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Record of Release
Version No. Release Date Modified By / Reviewed By / Remarks/Changes
date date

A 10.10.2005 Shan Original issue

17.10.2005

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Table of Contents
A. Organization ................................................................................................................................ 4
1. Financial Accounting ............................................................................................................ 4
1.1. Chart of Accounts ......................................................................................................... 4
2. Asset Accounting .................................................................................................................. 5
2.1. Depreciation area .......................................................................................................... 5
2.2. Chart of depreciation ..................................................................................................... 6
2.3. Asset class .................................................................................................................... 7
B. Master Data ................................................................................................................................. 8
1. Financial Accounting ............................................................................................................ 8
1.1. G/L Account .................................................................................................................. 8
1.2. Ledger ........................................................................................................................... 9
2. Asset Accounting .................................................................................................................. 9
C. Business Processes .................................................................................................................... 11
1. Financial Accounting ............................................................................................................ 11
1.1. Basic Settings ............................................................................................................... 11
1.2. General Ledger Accounting .......................................................................................... 15
1.3. Accounts Payable ......................................................................................................... 21
1.4. Accounts Receivable .................................................................................................... 30
1.5. Bank Accounting ........................................................................................................... 40
2. Asset Accounting .................................................................................................................. 44
2.1. Handling Fixed Assets .................................................................................................. 44
2.2. Handling of Leased Assets ........................................................................................... 60

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Organization
1. Financial Accounting
1.1. Chart of Accounts
Questions:

Q: 1) Which companies use the same chart of accounts?

A: Each Company will use its own individual chart of accounts

Q: 2) How many natural accounts will each chart of accounts contain? (estimated)

A: Depends on Business requirement - (approx 400 nos)

Q: 3) What is the document numbering logic?

Explanation: Possible reconciliation with SD/MM

A: Planning to use the SAP standard Internal Numbering.

Q: 4) Describe how the account number is set up (for example: department, natural
account).

A: Account Group wise (e.g. Liabilities, Current Liabilities, Assets, Fixed and current ,
Expenses (i.e. Manufacturing, Selling, Administration) Revenues (Sales, Dividends,
Miscellaneous Income & others)

Q: 5) Will the chart of accounts need to be approved? If so, by whom?

A: It has been decided to follow the Legacy Chart of accounts with additional GL accounts
for MM, SD & PP automatic postings.

Q: 6) Which maintenance language should be used for each chart of accounts?

A: English

Q: 7) Which additional languages do you wish to use for your charts of accounts?

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A: Arabic

Q: 8) Please provide your current Chart of Accounts.

A: List will be provided shortly.

2. Asset Accounting
Questions:

Q: 1) For which of your legal entities will you be implementing FI-AA?

A: For all the 4 Companies (i.e. SFCCL, MODECOR, UGG & UGS)

Q: 2) If you have more than one enterprise entity: is a holding company the owner of assets
used in another enterprise?

A: No

Q: 3) If you have more than one entity, are there affiliated or integrated companies? Please
list all affiliates, subsidiaries, trading partners, shares in other companies and integrated
companies.

A: No.

2.1. Depreciation area

Questions:

Q: 1) Is there a distinction necessary between book depreciation (for external balance

sheet) and tax values (for a tax balance sheet)?

A: According to KSA Laws, any addition to the FA, the depreciation will be calculated on
50% of APC in current year and 50% next year and on retirements during the year.

Q: 2) Do you require additional parallel valuations for your assets, e.g. for consolidated
valuation, for cost accounting purposes or for statutory reasons? If so, please specify

A: Not required.

Q: 3) If you have a separate valuation for cost accounting, do you calculate and record
interest?

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A: No

Q: 4) Is there a distinction between taxation values and valuation of net assets?

A: No

Q: 5) Do you need to record depreciation for purposes other than book depreciation?
accounting depreciation - Special reserves for special depreciation ? - N

Explanation: In addition to book depreciation, is there a need to manage depreciation for

other purposes? For example:? - Tax depreciation - Group depreciation - Group currency
- Cost-accounting depreciation - Special reserves for special depreciation ? - Net worth tax
valuation ? - Other ? - Other

A: No. Only Book Depreciation

Q: 6) Do you want the values for these other viewpoints to be derived from the book
depreciation area or another depreciation area (for example, the cost-accounting depreciation
area can be derived from indexed book depreciation values)?

A: Not applicable. As we have only Book Depreciation.

Q: 7) Which depreciation area do you use for calculating cost-accounting depreciation and
passing it on to cost accounting?

A: Book Depreciation.

Q: 8) If the cost-accounting depreciation area uses its own valuation, is depreciation

calculated from APC or from the replacement value?

A: Base for Cost accounting depreciation is Book Depreciation. Hence no specific valuation
is required.

Q: 9) If you claim special tax depreciation, how do you handle it: - Allocation and write-off
amounts individually or balanced with each other? - Using a separate depreciation valuation
area?

A: No Special Tax depreciation.

2.2. Chart of depreciation

Questions:

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Q: 1) In which countries do you manage fixed assets?

A: Kingdom of Saudi Arabia. In future it may be maintained in other countries also

depending upon the Business Need and future Development

Q: 2) Are there any statutory asset valuation requirements which would involve parallel
valuation in your financial accounting?

A: Only book depreciation as per the KSA Accounting Standards

2.3. Asset class

Questions:

Q: 1) Describe how your fixed assets are structured in the balance sheet?

A: Depends on Business Requirement.

Q: 2) How do you classify your fixed assets at the moment? How do you intend to classify
your assets in the future?

A: Based on the Nature of the Asset and its use

Q: 3) Will you manage financial assets in the asset accounting system?

A: No

Q: 4) Do you manage low value assets (LVAs) as fixed assets, or do you post them directly
to an expense account?

A: The Limit for LVA is 2500 SAR. Yes, we will have the concept of LVA in future.

Q: 5) Please list, or provide a list of the asset types that you intend to manage in the Asset
Accounting system (e.g. Land, Buildings, Intangibles, etc).

A: List will be provided in due course

Q: 6) For each asset category (asset class), list the default depreciation method and the
period of depreciation you would like to use.

A: Each Asset class will have uniform rate of Depreciation and period will be derived from
the nature of FA.
SLM will be followed.

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B. Master Data
1. Financial Accounting
1.1. G/L Account
Questions:

Q: 1) What procedure do you use when you need to create new account numbers?

Explanation: This can occur centrally or decentralized; Sample accounts can be used.

A: Based on the Nature of Accounts, under relevant account group it will created
Creation of GL account will be a centralized. Decision to be taken by Business Heads

Q: 2) Can you define groups of general ledger accounts that require similar information in
the master record?

A: Yes. All individual GL accounts will be grouped according to its nature with similarity
through FSV.

Q: 3) How many retained earnings accounts do you have?

A: 1 account for each Chart of accounts at each company code level.

Q: 4) For which general ledger accounts do you wish to display line items?

A: All expenses, revenues, clearing accounts, bank accounts and for all off setting, payable
accounts.

Q: 5) Which accounts do you wish to manage on an open item basis (for example, bank
clearing accounts)?

A: All clearing accounts, certain Assets & liabilities, Bank accounts.

Q: 6) Which accounts do you wish to maintain in foreign currency (for example, bank
accounts)?

A: There are certain bank accounts which are maintained in Foreign Currency account. Any
other GL accounts which business process requires (e.g. Service charges incurred for foreign
nationals)

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Q: 7) Describe any special requirements when posting to particular general ledger accounts
(for example, expense accounts require an associated cost center).

A: Yes there will be certain expenses will have default Cost Centers.

Q: 8) What criteria do you use to search for G/L accounts?

Explanation: Match code

A: Short text of GL description .

Q: 9) Which of your General Ledger accounts are not relevant to tax?

A: As there is no tax procedures exists in KSA, Hence all accounts will be not relevant to
tax.

1.2. Ledger
Questions:

Q: 1) Do you have to report in accordance with cost of sales accounting?

A: Presently no such requirement

Q: 2) Do you have special statutory accounting requirements that are not covered in other
R/3 applications? Example: Currency translation of a foreign subsidiary, different fiscal year
ends to the international trading partner.

Explanation: A special type of rendering of accounts is meant, which requires a characteristic

not contained in a standard SAP database.

A: Presently no such statutory requirements exists.

Q: 3) Have you defined the necessary domains and data elements in the ABAP Dictionary?

A:

2. Asset Accounting

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Questions:

Q: 1) How many fixed assets and how many assets under construction do you currently
have?

A: We have various AUCs and thousands of FA

Q: 2) Which organizational units do you manage in the asset master record?

A: Mainly Cost Center.

Q: 3) Do you want asset master record numbering to be internally or externally assigned?

A: Internal Number Assignment.

Q: 4) Do you see a business need to use both internal and external number assignment,
depending on the asset class? If so, please specify.

A: NO. Only Internal Number assignment

Q: 5) If you use external number assignment, do you want to allow the assignment of
alphanumeric numbers?

A: No

Comments: Only Internal assignment

Q: 6) Do you want to represent asset components using asset sub-numbers? If so, for what
purposes do you plan to use asset sub-numbers?

A: Yes for any additions to the existing Asset Master.

Q: 7) Are cost centers (business areas) to be defined in the asset master record on a time-
dependent basis?

A: Yes. Cost Centers will be assigned to individual asset master record.

Q: 8) Do you see a business need to create multiple similar asset master records in one
step?

A: Yes. For similar type of assets purchased in a lot.

Q: 9) Do you have assets that require increased depreciation due to multiple shift use?

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A: Presently not in use.

Q: 10) In your enterprise, is there a requirement to shut down an asset (discontinue

depreciation) for a period of time?

A: No. Depreciation will be charged for entire year.

Q: 11) How do you archive your asset master records at the present time?

A: No Archievein has done as of now.

Q: 12) How long do you intend to continue to manage assets, which are no longer on hand
physically, in the system?

A: Till it is physically retired or scrapped.

C. Business Processes

1. Financial Accounting
1.1. Basic Settings
1.1.1. Fiscal Year and Posting Periods

Questions:

Q: 1) Do your posting periods correspond to the calendar months?

A: Yes

Q: 2) Is your fiscal year identical with the calendar year?

A: Yes

Q: 3) If your fiscal year is not identical with the calendar year, please provide a schedule of
period closing for the past, current and next year.

A: Identical with Calendar year. Hence not applicable.

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Q: 4) Do all your company codes have the same fiscal year/fiscal year variant? Provide
details if this is not the case.

A: All the 4 company codes follow Calendar year. But each company will have its own fiscal
year variant.

Q: 5) When do you close your fiscal year?

A: Once the auditing is completed and Audit Report is approved by Top Management.

Q: 6) Who is responsible for opening and closing accounting periods (including for materials
management)?

A: Respective Company's Finance department

1.1.2. Document

Questions:

Q: 1) What criteria do you use to classify your documents?

A: Depending upon transaction nature.

Q: 2) For which types of documents are the document numbers assigned

internally/externally?

Explanation: Are there any legal requirements?

A: For all the Document types Internal Number will be used. There are no legal
requirements.

Q: 3) What is the document numbering logic?

Explanation: Possible reconciliation with SD/MM

A: Planning to use the SAP standard Internal Numbering.

Q: 4) Are the document numbers assigned on a yearly basis?

A: Yes, on yearly basis.

1.1.3. Posting Help

Questions:

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Q: 1) Which help for posting do you need (such as account assignment models, sample
documents, control totals, user parameters)?

A: Depending on the nature of transaction, various document models will be used.

1.1.4. Tax on Sales/Purchases in SAP System

Questions:

Q: 1) Value added tax: Which are the current tax rates in the countries of your company
codes?

A: Not Applicable.

Q: 2) Value added tax: Do you have non-deductible taxes?

A: Not Applicable.

Q: 3) How do you handle taxes on imports (tax rate, reporting requirements)?

A: Not Applicable.

Q: 4) How do you handle taxes on exports (tax rate, reporting requirements)?

A: Not Applicable.

Q: 5) Do you have companies with plants in foreign countries?

Explanation: "Foreign plants" functions (SD/MM integration)

A: As of now No. In future depending upon the Business requirement and development, we
may have.

Q: 6) What are the tax reporting requirements?

A: As of now no Tax report requirements.

Q: 7) How do you calculate taxes if there are cash discounts?

Explanation: Is tax calculated on the amount after cash discount?

A: Not Applicable.

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Q: 8) To which G/L accounts will taxes be posted?

A: Not Applicable.

Q: 9) Do you use a particular exchange rate for taxes? If so, please specify.

A: Not Applicable.

1.1.5. Tax on Sales/Purchases in Non-SAP System

Questions:

Q: 1) Do you use an external system to calculate tax on sales/purchases?

A: No

1.1.6. Withholding Tax

Questions:

Q: 1) What are the reporting requirements for contractors, self-employed etc. in your
country?

A: WHT is applicable for Imported Services only and WHT to be deducted only at the time of
payment.

Q: 2) How do you transmit this information to the tax authorities and your vendors?

A: Yet to be decided by Government and Company.

1.1.7. Inflation

Questions:

Q: 1) Are there legal requirements regarding inflation in your country?

A: No

Q: 2) If there are legal requirements for inflation, how do they impact financial accounting:
Do you use hard currency or do you use periodic revaluation?

A: Not Applicable.

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1.2. General Ledger Accounting

1.2.1. Postings in G/L
1.2.1.1. Park G/L Account Document

Questions:

Q: 1) What is your procedure for parking and releasing documents?

Explanation: Are "Workflow" functions planned?

A: There will be Parking & releasing document procedures.

1.2.1.2. G/L Account Posting

Questions:

Q: 1) What types of general ledger transactions do you process?

Explanation: Check document types

A: [X] Down payment

[X] Bill of exchange
[X] General ledger
[X] Document journals
[X] Accrued/prepaid expenses
[ ] Cross-company code transactions
[X] Incoming payments
[X] Outgoing payment

Q: 2) Which internal documents do you need to print?

A: All Internal Documents will be printed.

1.2.1.3. Recurring Entry

Questions:

Q: 1) Do you have documents that occur on a regular basis (monthly or quarterly, for
example)?

A: Yes, we will be using Recurring Entries concept.

1.2.1.4. Document Reversal

Questions:

Q: 1) How should a document reversal update the balances of the relevant accounts?

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Explanation: Negative posting?

A: On line when the Document is Reversed.

Q: 2) Do you want do define a specific document type for reverse documents?

A: SAP Standard relevant Document types will be used for document reversal.

1.2.1.5. Accrual/Deferral Posting

Questions:

Q: 1) How do you handle accruals?

Explanation: Function "create accrual/deferral document" in the task level menu

A: SAP Standard Accrual/Deferral Document will be used.

1.2.2. General Ledger Account Analysis

1.2.2.1. General Ledger Line item Analysis

Questions:

Q: 1) Is there certain information that you wish to be able to display when you view items
online?

Explanation: The function "Create accrual/deferral document" in task level menu

A:

1.2.2.2. Balance Analysis

Questions:

Q: 1) Which online analysis options do you use?

A: Ageing and Line item display.

1.2.2.3. G/L Evaluations

Questions:

Q: 1) What daily, weekly, periodic, and ad hoc reports do you need for the general ledger?

A: Account and Trial Balance.

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1.2.3. Account Clearing [GL]

1.2.3.1. Automatic Clearing

Questions:

Q: 1) By what criteria do you clear open items?

A: As per SAP Suggested Standard procedure.

1.2.4. Account Balance Interest Calculation (G/L)

1.2.4.1. Account Balance Interest Calculation for General Ledger

Questions:

Q: 1) For which G/L accounts do you calculate interest on balances? Give a brief
description.

A: Will be decided during the realisation phase.

1.2.5. Closing Operations

Questions:

Q: 1) Which internal and external evaluations belong to month-end closing?

A:

Q: 2) Which processes do you use to prepare the month-end closing reports?

A:

Q: 3) Describe your current process and time frame for year-end closing.

A:

Q: 4) How do you specifically handle reporting for taxes on sales and purchases and other
statutory requirements?

A:

Q: 5) What are your reconciliation procedures?

Explanation: Within Financial Accounting: (Does G/L accounting tally with sub ledger
accounting? Does Financial Accounting tally with Materials Management, Assets Accounting,
Controlling, and so on?)

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A:

1.2.5.1. Foreign Currency Valuation for Open Items

Questions:

Q: 1) Describe your foreign currency revaluation process and which valuation

methods/exchange rate types you use.

A: Latest rates and Average method.

Q: 2) In which cases do you post foreign currency revaluations manually?

Explanation: F-05

A: Presently not followed. But it will posted for GL Accounts.

1.2.5.2. Foreign Currency Valuation for Balances

Questions:

Q: 1) Describe your foreign currency revaluation process and which valuation

methods/exchange rate types you use.

A: With Latest rates and Average method will be used

Q: 2) In which cases do you post foreign currency revaluations manually?

Explanation: F-05

A: Presently not followed. Will be used for GL balances.

1.2.5.3. Regroup Receivables/Payables

Questions:

Q: 1) Do you classify open vendor/customer items in the financial statements according to

short, medium, or long term receivables/payables? Describe your procedure.

A: Not Applicable.

1.2.5.4. GR/IR Clearing Account Maintenance

Questions:

Q: 1) Do you show goods receipts without an invoice and invoices without goods receipts
separately in your balance sheet reporting?

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A: Only Goods receipts without an invoice will be shown

1.2.5.5. Profit and Loss Adjustment

Questions:

Q: 1) Do you need to produce an internal balance sheet on business area or profit center
level?

Explanation: You may need to make subsequent adjustments, in other words, distribute cash
discounts (for example) to the source business areas/profit centers.

A: No

1.2.5.6. Financial Statement Creation

Questions:

Q: 1) Do you create financial statements on a monthly, quarterly or yearly basis?

A: On monthly basis

1.2.5.7. Periodic Reports

Questions:

Q: 1) Which periodic reports do you carry out in general ledger accounting?

Explanation: see subsidiary ledgers too.

A: GL Balances, Trial Balance, AP & AR

Q: 2) What type of information flow do you have for the results of periodic asset reporting?

A: Asset Registers, Asset Explorer. Cost Center wise Depreciation Cost. and other
reporting requirements will be informed in consultation with Core User.

Q: 3) What are the critical monthly, quarterly and annual reports that you need for Asset
Accounting?

A: Assets purchased/capitalized, Amount of Depreciation posted on monthly, quarterly and

annual basis.

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Q: 4) Which kind of reports do you use to reconcile asset accounting with the general
ledger?

A: APC, Accumlated.Depreciation and Depreciation posted.

Q: 5) Are there any particular reports you would like for low value assets?

A: It is being expensed out at the time of purchase itself.

Q: 6) Are there any particular reports you run for leased assets?

A: Not Applicable.

Q: 7) How do you create your inventory lists? Do you use barcodes?

A: Manually.

Q: 8) By which organizational units (or combinations of units) are asset reporting functions
structured (for example, company, cost center etc)?

A: Co. Code, Plant & Cost Centers

1.2.5.8. Carry Forward G/L Balances

Questions:

Q: 1) How many retained earnings accounts do you have?

A: 1 account for each Chart of accounts at each company code level.

1.2.6. Integration

Questions:

Q: 1) How should the areas asset accounting, overhead cost controlling, materials
management, payroll, and sales and distribution be integrated with general ledger
accounting?

Explanation: You should also give consideration to special account assignments and
document summarizations.

A:

Q: 2) Do you wish to allow postings to decentralized general ledgers?

A: [ ]Yes

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[X ]No

1.3. Accounts Payable

1.3.1. Vendor Down Payments

Questions:

Q: 1) In which cases do your vendors require you to make a payment prior to the
processing of an order or shipment?

Explanation: Comment for PS: Note that it is possible to schedule a down payment in the
invoicing plan for an externally processed or general costs activity, or for an externally
procured material component within the project.

A: For all imported purchases,70% payment needs to be paid.

Q: 2) Please describe the complete process currently in place for down payments, including
the postings that are generated.

Explanation: Comment for PS: Note that it is possible to schedule a down payment in the
invoicing plan for an externally processed or general costs activity, or for an externally
procured material component within the project.

A: The request may be from Purchase department. Treasury will make the payment. Dr
Vendor and Cr Bank

Q: 3) Do you plan on paying down payments with the automatic payment program?

Explanation: Comment for PS: The transfer posting of cash items is a process that takes
place at the end of the period. It must be carried out before you can see the current cash
items in the project.

A: Yes

1.3.2. Invoices and Credit Memos

Questions:

Q: 1) What are your internal procedures and controls from the point of invoice receipt to
payment?

Explanation: Course of action for invoice verification without MM

A: Invoice is matched with Purchase Order and payment will be made on Due date

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1.3.2.1. Vendor Document Parking

Questions:

Q: 1) What is your procedure for parking and releasing invoices and or/credit memos?

A: SAP Standard procedure.

1.3.2.2. Invoice Receipt

Questions:

Q: 1) Which invoices, that are not related to a purchase order, do you typically post?

A: Petty Cash purchases, Staff related expenses and Non inventory transactions.

Q: 2) Can you use templates for some of these invoices?

Explanation: Reference documents, for example

A: Possibilities of using same will be decided during realisation time.

Q: 3) How do you handle transactions in foreign currencies?

Explanation: Handling of exchange rates - for example, manual entry of exchange rate in the
document?

A: As per the exchange rates maintained in the Table. No manual entry of exchange rate
will be made.

Q: 4) Describe any taxes that must be calculated on vendor transactions.

A: Not applicable

Q: 5) How do you handle cash discounts?

Explanation: Gross or net procedure?

A: Presently not available. In future it will be handled through Payment terms with
automatic account assignment posting

Q: 6) Is your cash discount base net or gross?

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Explanation: Taxes on sales/purchases Taxes on sales/purchases

A: Presently not applicable. When it is applicable it will be on Gross .

1.3.2.3. Vendor Credit Memo

Questions:

Q: 1) How do you process vendor credit memos?

Explanation: Clearing or disbursement?

A: It can be handled by way of clearing against invoices payable or direct disbursement

also.

1.3.2.4. Document Reversal

Questions:

Q: 1) How should a document reversal update the balances of the relevant accounts?

Explanation: Negative posting?

A: By way of negative posting or through clearing

Q: 2) Do you want do define a specific document type for reverse documents?

A: SAP Standard relevant Document types will be used for reversal.

1.3.2.5. Recurring Entry

Questions:

Q: 1) Do you have documents that occur on a regular basis (monthly or quarterly, for
example)?

A: Yes. Recurring Entries will be used.

1.3.3. Vendor Account Analysis

1.3.3.1. Vendor Line Item Analysis

Questions:

Q: 1) Is there certain information that you wish to be able to display when you view vendor
postings online?

Explanation: ABAP List Viewer/Line layout variants

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A: Vendor Invoice and PO NO.

1.3.3.2. Balance Analysis

Questions:

Q: 1) Which online analysis options do you use?

A: Ageing and Line item display.

1.3.3.3. Vendor Account Evaluations

Questions:

Q: 1) Which evaluations do you need for vendors?

A: by MM

1.3.4. Vendor Payments

Questions:

Q: 1) Which payment methods do you use (check, bank transfers, bills of exchange, direct
debit, etc.)?

A: Check, DD, LC, Bank Transfers,

Q: 2) How do you pay your domestic vendors (by check, bank transfer etc.)?

A: Check and Bank Transfers

Q: 3) How do you pay your foreign vendors (by check, bank transfer, etc.)

A: By LC and TTs.

Q: 4) How do you pay your employees (e.g. travel expenses)?

Explanation: Are you using the HR module? Are accounts managed for each employee?

A: Check, Bank Transfer and Cash.

Q: 5) How do you handle partial payments to vendors?

A: Through Advance Payments.

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Q: 6) Do you always issue a single payment for multiple invoices to the same vendor? If
not please specify the exceptions.

A: Individual and single check

Q: 7) How do you handle payables to vendors that are also customers?

Explanation: Separate payment? Clearing?

A: By Net payment after adjusting the payables against receivables.

Q: 8) How do you process credit memos from vendors?

Explanation: Clearing or payment?

A: Make the payment after adjusting Credit Memos.

Q: 9) How do you handle cash discounts?

Explanation: Gross or net procedure?

A: Presently not applicable. It will be on Gross procedure.

Q: 10) How do you handle exchange rate differences in foreign currency payments?

Explanation: Time of update of exchange rate differences/account determination

A: It will be expensed out at the end of every year.

Q: 11) How do you create the payment media (payment forms, remittance advices or
electronic files) for these payment methods?

A: Partially through system and by manual . By hard and soft copies.

Q: 12) Do you use pre numbered checks?

A: Yes

Q: 13) How do you reconcile your check register (cleared checks)?

A: with Monthly Bank Statements and also through BRS.

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Q: 14) How do you transfer your electronic payment file to the bank?

A: By e-mail or CD/Floppy.

1.3.4.1. Vendor Payment Request

Questions:

Q: 1) In which cases do your vendors require you to make payment before the date of
required payment on the invoice?

Explanation: Observe account determination for this special G/L transaction.

A: No stipulated rules. Depends upon business requirement.

1.3.4.2. Release for Payment

Questions:

Q: 1) How do you release invoices that have been blocked for payment?

Explanation: Observe possible blocking reasons / workflow

A: Currently no such procedure of blocking invoices for payments.

1.3.4.3. Manual Outgoing Payments

Questions:

Q: 1) In what cases do you use manual payments to vendors?

A: Normally manual payments. It will be through automatic payment program in future.

Q: 2) Do you print or hand-write the payment media (for example, debit memo forms)?

A: Normally printed and also hand-written.

1.3.4.4. Automatic Outgoing Payments

Questions:

Q: 1) How do you post payments? Which G/L accounts are used? Which additional account
assignments (for example, cost centers) do you need for bank postings, bank charges ac
counts, cash discount accounts, and exchange rate differences?

A: Bank Account GL. Bank Charges needs to be debited incase of DD. Presently cash
discount is not applicable.

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Q: 2) Do you wish to clear vendor invoices at the time of payment or at the time the bank
statement is posted?

Explanation: Payment method indicator: Selecting payment order and not payment posting
means that the payment program: does not post a payment document does not clear the paid
items. does not clear the paid items. Instead, a payment order is created and saved. The
information contained therein can be used to clear the item at a later date. contained
therein can be used to clear the item at a later date. The posting of the payment occurs
with the account statement of the bank and selection of the associated open items via
entry of the payment order. payment order. The paid items are locked until the
payment is posted. This means that they cannot be used in other clearing transactions or
further payment runs.

A: Only at the time of payment.

Q: 3) Do you enter payments automatically based on an electronic bank statement?

Describe in detail how these payments are processed.

Explanation: Observe collection procedure, for example

A: No. Payments are processed before Bank Statement.

Q: 4) USA: Do you use the lockbox procedure?

A: No

Q: 5) Switzerland: Do you use the POR procedure?

A: No

Q: 6) How often do you make automatic payments?

A: Presently not followed. In future it may be used.

Q: 7) Which bank account(s) are used for payments? List the bank accounts by payment
method, by foreign currency, or any other criteria relevant for bank selection.

A: As per the business requirement.

Q: 8) How does your actual cash position influence the way you assign funds to the
different banks in the payment program?

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Explanation: Maintenance of available amounts

A: Presently this functionality is not in use. Will be explored further to make use of it.

Q: 9) How do you handle bank charges?

Explanation: Perhaps define account determination

A: Through Account determination also. or by debiting bank charges account.

1.3.4.5. Vendor Payment Medium Creation

Questions:

Q: 1) For which incoming payments do you create payment medium forms (incoming bills of
exchange, for example)?

A: Not Applicable.

Q: 2) Which incoming payments are made electronically?

A: Accounts Receivables

Q: 3) Do you use your own number management for checks (check management)?

A: No

1.3.5. Account Clearing [AP]

Questions:

Q: 1) In which cases are open items cleared other than through payment receipts?

Explanation: Note: With advance payments and offsetting, clearing has to be done
afterwards.

A: Transfer from vendor to vendor, vendor to customer.

1.3.5.1. Automatic Clearing

Questions:

Q: 1) By what criteria do you clear open items?

A: As per SAP Suggested Standard procedure.

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1.3.6. Interest Calculation [A/P]

Questions:

Q: 1) For which vendors do you calculate interest?

A: No Interest on Vendors will be calculated.

1.3.6.1. Vendor Account Balance Interest Calculation

Questions:

Q: 1) Which interest rates do you use?

A: Not applicable.

Q: 2) How do you post interest charges?

A: Not Applicable.

1.3.6.2. Calculation of Interest on Arrears - Vendors

Questions:

Q: 1) After how many days do you calculate interest on overdue amounts?

A: Not Applicable

Q: 2) Which interest rates do you charge different vendor groups?

A: Not Applicable

Q: 3) How do you handle credit memos?

A: Not Applicable

Q: 4) How do you post interest charges?

A: Not Applicable

1.3.7. Correspondence with Vendors

1.3.7.1. Correspondence with Vendors

Questions:

Q: 1) What correspondence (such as balance confirmation) and internal evaluations (such

as internal documents) do you create for your vendors?

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Explanation: Correspondence is the written communication that is sent by the company to

vendors. Internal evaluations serve as the internal documentation of business transactions
with vendors.

A: SAP Standard Balance Confirmation.

1.4. Accounts Receivable

1.4.1. Customer Down Payments

Questions:

Q: 1) In which cases do you require your customers to make a payment prior to the
processing an invoice or delivery?

Explanation: Comment for PS: It is possible to schedule customer down payments in the
project billing plan in WBS elements that have the indicator "Billing element".

A: Depending of the business requirement.

Q: 2) What is the complete process for down payments, including the postings that are
generated?

Explanation: Comment for PS: Note that it is possible to configure the use of milestones
such that a down payment request is automatically triggered. When the milestone is
completed, the request is generated by the settlement run.

A: Customer account gets credited once the down payment is received and deposited in the
Bank. After, an invoice is raised , it will be knocked off against down payment.

Q: 3) Do you plan on paying down payments with the automatic payment program? (direct
debit)

Explanation: Comment for PS: The transfer posting of cash items is a process that takes
place at the end of the period. It must be carried out before you can see the current cash
items in the project.

A: No

Q: 4) Do you plan on dunning down payments request?

A: Yes

1.4.1.1. Customer Down Payment

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Questions:

Q: 1) How do you process customer down payments?

Explanation: Identification for separate reconciliation accounts

A: A separate Recon account will be created for Down payments received from customers.

Q: 2) How are these down payments cleared with the customer account?

A: Against the Invoices raised. Depending on the business requirement, either

partial or residual clearing concept will be used. Planning to use partial clearing.

Q: 3) Are some customer down payments related to projects?

A: No.

1.4.2. Invoices and Credit Memos

1.4.2.1. Customer Document Parking

Questions:

Q: 1) Do customer invoices require any type of approval before they are posted?

A: All invoice postings will be integrated through SD Module.

Q: 2) What is your procedure for parking and releasing invoices and or/credit memos?

A: Standard SAP Procedure. Authorised person will post the parked documents.

1.4.2.2. Outgoing Invoice

Questions:

Q: 1) Which document types and document number ranges do you use?

A: SAP Standard RV will be used and Doc Number range yet to be decided

Q: 2) Can you use templates for some of these invoices?

Explanation: Reference documents, for example

A: NO.

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Q: 3) How do you handle transactions in foreign currencies?

Explanation: How are exchange rates handled? For example, manual entry of the exchange
rate in the document?

A: Yes

Comments: Exchange rates will be maintained on periodic basis. The system should
take the rates from the Exchange rate table.

1.4.2.3. Customer Credit Memo

Questions:

Q: 1) How do you process customer credit memos?

Explanation: Clearing or disbursement?

A: Standard SAP suggested procedure.

1.4.2.4. Document Reversal

Questions:

Q: 1) How should a document reversal update the balances of the relevant accounts?

Explanation: Negative posting?

A: By way of negative posting or through clearing

Q: 2) Do you want do define a specific document type for reverse documents?

A: SAP Standard relevant Document types will be used for document reversal.

1.4.2.5. Recurring Entry

Questions:

Q: 1) Do you have documents that occur on a regular basis (monthly or quarterly, for
example)?

A: Depending upon business requirement Recurring Document will be used.

1.4.3. Account Analysis [A/R]

1.4.3.1. Customer Line Item Analysis

Questions:

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Q: 1) Is there any particular information that you wish to represent when representing
customer postings online?

Explanation: Note on ALV/line layout variants

A: Yes

1.4.3.2. Balance Analysis

Questions:

Q: 1) Which online analysis options do you use?

A: Ageing and Line item display.

1.4.3.3. Credit Management Analysis

Questions:

Q: 1) Which procedures do you have in place to control your customers' credit limits?

Explanation: Time of credit limit check; Relevant documents for the credit limit check;
Consequences of credit limit check (Notification of person responsible, locking of documents
and so on)

A: Presently it is used . In future we need to use the Credit Control Area concept for better
customer
credit limits.

1.4.3.4. Customer Evaluations

Questions:

Q: 1) Which evaluations do you need for customers?

A:

1.4.4. Customer Payments

Questions:

Q: 1) Which payment procedure do your customers use? (Check, bank transfer, bill of
exchange, debit memo procedure)

A: All. But, normally, Check, Bank transfer, LC & DD

Q: 2) How do you handle payment differences?

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Explanation: For example, charging off, creating residual items, partial payment

A: Diff. is of small amount, it will be written off. or else, partial payment clearing concept
will be followed.

Q: 3) Are payment differences posted automatically?

A: Yes , we need automatic posting for small payment differences.

Q: 4) Do your customers provide reason codes for discrepancies in payments?

A: Normally yes.

1.4.4.1. Payment Advice Note Processing

Questions:

Q: 1) Do you receive payment advices from your customers?

A: Yes

Q: 2) Do you enter payment advices manually prior to applying the payments?

A: Yes

1.4.4.2. Release for Payment

Questions:

Q: 1) How do you release invoices that have been blocked for payment?

Explanation: Observe possible blocking reasons / workflow

A: Currently no such procedure of blocking invoices for payments.

1.4.4.3. Manual Incoming Payments

Questions:

Q: 1) Which procedure do you use to enter customer payments?

Explanation: Time of customer payment, time of customer payment notice/account statement

A: SAP Standard if it is a invoice to invoice payment or else Partial payment.

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Q: 2) Which payment procedure do your customers use? (Check, bank transfer, bill of
exchange, debit memo procedure)

A: All. Mostly of Check, Bank Transfers, DD and LC

Q: 3) Do you print or hand-write the payment media (for example, debit memo forms)?

A: Printed.

1.4.4.4. Automatic Incoming Payments

Questions:

Q: 1) How do you post payments? Which G/L accounts are used? Which additional account
assignments (for example, cost centers) do you need for bank postings, bank charges ac
counts, cash discount accounts, and exchange rate differences?

A: Automatic Payment Procedure will not be used for Customers.

Q: 2) Do you process automatic payments for your customers, such as direct debits and
bills of exchange? Please describe in detail how these payments are processed.

A: Automatic Payment Procedure will not be used for Customers.

Q: 3) Do you enter payments automatically based on an electronic bank statement?

Describe in detail how these payments are processed.

Explanation: Observe collection procedure, for example

A: Automatic Payment Procedure will not be used for Customers.

Q: 4) USA: Do you use the lockbox procedure?

A: No

Q: 5) Switzerland: Do you use the POR procedure?

A: No

Q: 6) How often do you make automatic payments?

A: Automatic Payment Procedure will not be used for Customers.

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Q: 7) Which bank account(s) are used for payments? List the bank accounts by payment
method, by foreign currency, or any other criteria relevant for bank selection.

A: Automatic Payment Procedure will not be used for Customers.

Q: 8) How does your actual cash position influence the way you assign funds to the
different banks in the payment program?

Explanation: Maintenance of available amounts

A: Automatic Payment Procedure will not be used for Customers.

Q: 9) How do you handle bank charges?

Explanation: Perhaps define account determination

A: Yes. Automatic account determination will be made for customer payment related bank
charges.

1.4.4.5. Customer Payment Medium Creation

Questions:

Q: 1) For which incoming payments do you create payment medium forms (incoming bills of
exchange, for example)?

A: Not Applicable.

Q: 2) Which incoming payments are made electronically?

A: All are manually.

1.4.4.6. Payment Card Settlement

Questions:

Q: 1) Do your customers pay by credit card? Describe in detail how these payments are
processed.

Explanation: Consultation required with SD

A: No not in practice

1.4.5. Bill of Exchange Receivable

Questions:

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Q: 1) Do your customers use bills of exchange to pay? Describe this procedure in detail.

A: Yes. Bills of exchange will be either discounted, or sent for collection.

1.4.5.1. Manual Payment by Bill of Exchange

Questions:

Q: 1) If you process manual payments, do you want the option of directly entering a check
or a bill of exchange?

A: not clear

1.4.5.2. Bill of Exchange Usage

Questions:

Q: 1) Do you intend to issue bills of exchange to customers?

A: No. Not in practice.

1.4.6. Account Clearing [AR]

Questions:

Q: 1) In which cases are open items cleared other than through payment receipts?

Explanation: Note: With advance payments and offsetting, clearing has to be done
afterwards.

A: If a customer is also a vendor, then his receivables will be cleared against his payables.

1.4.6.1. Automatic Clearing

Questions:

Q: 1) By what criteria do you clear open items?

A: As per SAP Suggested Standard procedure.

1.4.7. Dunning Notice

1.4.7.1. Automatic Dunning

Questions:

Q: 1) After how many days do you intend to issue a dunning notice?

A: After the due date as per the payment terms.

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Q: 2) What is the dunning frequency?

A: Fortnightly, monthly and on quarterly basis.

Q: 3) Do you dun various customer groups at different intervals?

A: Yes.

Q: 4) Which types of dunning do you use?

A: SAP Standard dunning types

Q: 5) How many dunning levels do you have?

A: SAP Standard levels

Q: 6) Which organizational units are responsible for dunning (for example, company code,
division)?

A: Both Company Code & Division level are responsible.

Q: 7) Do you calculate dunning interest or charge a dunning fee?

A: NO.

Q: 8) In which cases do you dun a vendor?

A: Normally dunning will not be done for vendors.

1.4.8. Interest Calculation [A/R]

1.4.8.1. Customer Account Balance Interest Calculation

Questions:

Q: 1) For which customers do you calculate interest on balances?

A: Presently not followed. In future it may be followed.

Q: 2) Which interest rates do you use?

A: Presently not followed. In future it may be followed.

Q: 3) How do you post interest charges?

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A: Presently not followed. In future it may be followed.

Q: 4) What types of notices do you send to your customers and how often?

A: SAP dunning notices.

1.4.8.2. Calculation of Interest on Arrears - Customers

Questions:

Q: 1) After how many days do you calculate interest on overdue amounts?

A: Presently not followed. In future it may be followed.

Q: 2) Which interest rates do you apply to your different groups of customers?

A: Presently not followed. In future it may be followed.

Q: 3) How do you handle credit memos?

A: SAP Standard procedure.

Q: 4) How do you post interest charges?

A: Presently not followed. In future it may be followed.

Q: 5) What types of notices do you send to your customers and how often?

A: SAP standard dunning notices.

1.4.9. Correspondence with Customers

1.4.9.1. Correspondence with Customers

Questions:

Q: 1) What sort of correspondence (account statements, balance confirmations, for

example) and internal evaluations (internal documents, account balances, open item lists, for
example) do you create for your customers?

Explanation: Correspondence is the written communication that is sent by the company to

customers. Internal evaluations serve as the internal documentation of business transactions
with customers.

A: SAP Standard balance confirmation of balance correspondence.

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1.5. Bank Accounting

1.5.1. Incomings
1.5.1.1. Cash Journal

Questions:

Q: 1) How do you manage incoming cash?

A: Through Journal entries. Cash receipt in Cash Journal by way of Cash drawn from the
Bank.

Q: 2) For which business transactions are incoming cash journal postings made?

A: Employee related transactions and occasionally customer related business transactions.

Q: 3) How are these business transactions posted?

A: Through journal entries.

1.5.1.2. Electronic Bank Statement

Questions:

Q: 1) For which house banks would it make sense to use electronic bank statements? Do
these banks have the required technical capability?

A: Most of our banks are technically capable to provide us electronic bank statements.

Q: 2) In which format is the electronic bank statement available?

A: Mostly Text format and HTML.

Q: 3) What specific information do the bank statements contain (e.g. invoice numbers)? If
you wish to use the information for the payee to allocate items, you need to select a suitable
interpretation algorithm.

Explanation: Suitable interpretation algorithm (this may require additional company-specific

programming via a user exit - see note 24281).

A: Standard Bank Statement process.

Q: 4) Does you house bank transfer business transaction codes with the bank statements to
help you classify the postings?

A: No.

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Q: 5) Outline the posting steps for typical bank statement postings.

A:

Q: 6) Which payment methods do you process using the FI payment program?

A: Check, DD and Bank Transfers and LCs

Q: 7) Do you process these payment methods via separate clearing accounts?

A: Yes. through Incoming & Outgoing clearing accounts for each Bank account.

Q: 8) Do you want to distinguish between posting documents for manual and electronic
bank statements for accounting and reporting purposes?

A: As of now we are not planning for Electronic bank statement.

1.5.1.3. Manual Account Statement

Questions:

Q: 1) What specific information do your bank statements contain (for example, invoice
numbers)?

A: Normally Date, Particulars, Dr Amount & Cr amount.

Q: 2) Does you house bank transfer business transaction codes with the bank statements to
help you classify the postings?

A: not clear

Q: 3) Outline the posting steps for typical bank statement postings.

A: not clear

Q: 4) Which payment methods do you process using the FI payment program?

A: Check, DD, Bank Transfers and LCs.

Q: 5) Do you process these payment methods via separate clearing accounts?

A: Yes. Incoming & Outgoing interim clearing accounts for each Bank accounts.

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Q: 6) Do you want to distinguish between posting documents for manual and electronic
bank statements for accounting and reporting purposes?

A: No.

1.5.1.4. Check Deposit Transaction

Questions:

Q: 1) How many checks do you present to your house banks per day?

A: Approx 25 to 30 instruments.

Q: 2) Do you enter checks from customers manually or electronically?

A: Manually.

Q: 3) What information given by the check issuer can be used to allocate items (check
number, invoice number)?

A: Invoice Numbers.

Q: 4) Sketch the posting steps for check deposits (are checks posted directly to customer
accounts or via clearing accounts)?

A: Directly posted to customer accounts on receipt of checks.

Q: 5) Do you want to separate check postings for general ledger accounting and sub ledger
accounting?

A: No.

1.5.1.5. Bill of Exchange Presentation (Debit)

Questions:

Q: 1) Do you want to monitor the bills of exchange presented?

A: Yes. Format will be provided in due course.

1.5.2. Outgoings
1.5.2.1. Payment with Payment Requests

Questions:

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Q: 1) In addition to payments to or from customers and vendors, should payments between

G/L accounts also be dealt with using the payment program?

Explanation: Documentation: Payment requests form the basis for payment here, not open
items (FI documents).

A: No

1.5.2.2. Cash Journal

Questions:

Q: 1) How do you manage incoming cash?

A: Through Journal entries. Cash receipt in Cash Journal by way of Cash drawn from the
Bank.

Q: 2) For which business transactions are incoming cash journal postings made?

A: Employee related transactions and occasionally customer related business transactions.

Q: 3) How are these business transactions posted?

A: Through journal entries.

1.5.3. Check Management

1.5.3.1. Manage Check Balance

Questions:

Q: 1) Do you use pre numbered checks, or do you assign your checks numbers from self-
defined number ranges?

A: Yes

1.5.4. Account Balance Interest Calculation

1.5.4.1. Account Balance Interest Calculation

Questions:

Q: 1) For which G/L accounts do you calculate interest on balances? Give a brief
description.

A: Bank Overdraft & Loan accounts.

Q: 2) Which interest rates do you use?

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A: Depends on Bank Interest rates.

Q: 3) How do you post interest charges?

A: On monthly or quarterly basis through FI Journal.

Q: 4) Do you combine the debit and credit balances of different accounts for interest
calculation?

Explanation: Cash pooling involves the fictitious combination of debit and credit balances on
accounts. Interest is calculated on the pooled overall balance.

A:

2. Asset Accounting
Questions:

Q: 1) Are any of your asset values managed in a foreign currency? If so, specify the
relevant countries and currencies.

A: At present only in Local currency. As no branch or plant located outside the Kingdom

Q: 2) Does the fiscal year for asset accounting correspond to the calendar year? If not,
specify the start and end dates of your fiscal year.

A: It is a calendar year.

Q: 3) Is your enterprise currently using a shortened fiscal year, or you have used a
shortened fiscal year in the past, for which you want the R/3 System to recalculate
depreciation as part of the asset data transfer?

A: No

Q: 4) Is your enterprise required to calculate mid-month or mid-year depreciation?

A: No

2.1. Handling Fixed Assets

2.1.1. Asset Maintenance
2.1.1.1. Creation of Master Record for Tangible Assets

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Questions:

Q: 1) Do you need to manage and depreciate certain parts of your asset portfolio in the
form of group assets?

A: We will not have the group asset.

Q: 2) Who is responsible for creating asset maser records? Who provides which
information?

A: Highly responsible person from Finance Department.

Q: 3) Which organizational units and/or which functional areas have authorization for
creating or displaying asset master records?

A: Finance Department.

Q: 4) The asset master record can be divided up into tab pages. How should the asset
master record field groups be ordered for your organization?

Explanation: Customizing layout of screen layout and assignment to asset class.

A: SAP Standard and as per the business and reporting requirement.

2.1.1.2. Creation of Group Asset

Questions:

Q: 1) Do you need to manage and depreciate certain parts of your asset portfolio in the
form of group assets?

A: No group asset concept will be used.

2.1.1.3. Asset Master Record Change

Questions:

Q: 1) In your enterprise, who has authorization to change asset master records? For which
areas? Are these authorized individuals different from those who create the master records?

A: Finance Department, will hold the responsibility of creation, change & display master
asset master records.

Q: 2) How often is it necessary to change your asset master records? Which parts of the
asset master record are most often affected?

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A: Occasionally and restricted fields (i.e. cost center)

Q: 3) Are there certain asset master record fields that need to be protected against
changes? If so, which fields?

Explanation: It is possible to define non-changeable display fields in the asset master record
screen layout.

A: Yes. Date of capitalization, Description, Depreciation key, Cost Center & start date of
depreciation.

2.1.1.4. Mass Change

Questions:

Q: 1) In your enterprise, who has authorization to change a large number of assets

simultaneously?

A: Highly responsible person from Finance Department.

Q: 2) Do you need to make changes to a large number of assets simultaneously?

A: Yes

Q: 3) If so, under what circumstances? Please describe.

A: Depends on Top management decision and business need.

2.1.2. Receipts

Questions:

Q: 1) Does your organization have a specific amount, above which purchases are to be
capitalized as fixed assets? If so, what is this amount?

Explanation: Amount limit for low-value assets

A: Above 2500 SAR.

2.1.2.1. Direct Acquisition of Internal Activity

Questions:

Q: 1) Are some services (or internal activities) capitalized (such as legal costs or
consultancy charges)?

A: Yes.

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Q: 2) Do you activate costs for internal activity using: - Production order - Investment
measure - Asset under construction - Direct capitalization - Other?

A: Yes. Investment measures, AUC and Direct capitalization.

Q: 3) For reporting, would you like separate capitalized internal activities using different
transaction types?

A: Yes.

2.1.2.2. Processing of Asset Acquisition

Questions:

Q: 1) Describe the information flow for asset acquisitions in your enterprise.

A: Order will be placed through PO, Receipt of Asset, may be under WIP or AUC, then on
completion certificate it will be capitalized.

Q: 2) Describe your capital procurement requirements.

A: As explained in question no 1

Q: 3) What types of acquisition occur in your enterprise?

Explanation: Acquisition integrated via invoice receipt/goods receipt (Logistics - Materials

Management) Acquisition via goods receipt - accounts payable accounting Acquisition with
automatic clearing account offsetting entry

A: [X] Integrated with Materials Management (SAP MM)

[X] Integrated with Accounts Payable (SAP FI)
[X] Directly to Asset Accounting (SAP FI-AA)

Q: 4) Are asset acquisitions posted on a net basis (deducting any discounts) or as a gross
amount (discounts are deducted only on payment)?

Explanation: Document type settings: Net document type indicator

A: Net Procedure.

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Q: 5) Do you want to show acquisitions to certain depreciation areas differently than you do
in the book depreciation area (for example, to fulfill certain cost-accounting, tax or group
requirements)?

A: No.

Q: 6) Do you post goods receipt to assets valuated or non-valuated?

A:

Q: 7) Do you want down payments for assets to be shown separately?

A: No. Only through Vendor accounts.

Q: 8) If using asset sub-numbering, do you want to permit asset acquisitions only to the
main number in the year of capitalization, and post all later acquisitions to sub-numbers?

A: Sub Asset numbering concept will be used for any later or additions to the main asset.

Q: 9) Do you keep a record of costs using acquisitions to the asset under construction?

A: Yes, through Internal Order.

Q: 10) Do you plan and budget for capital investments in your enterprise? Should assets
that are capitalized directly also be included in the planning and budgeting processes?

A: Yes.

Q: 11) Which is the procedure from invoice receipt to posting of capitalization? Outline the
different steps.

A: Invoice approval (MIRO), AUC and Captilisation.

2.1.2.3. Subsequent Acquisition

Questions:

Q: 1) Under what circumstances do you intend to post subsequent acquisitions to

previously capitalized fixed assets?

A: Before captilisation all the expenses pertaining to assets will be carefully analysed. Then
asset will be capitalized. Mere subsequent debit in the asset will not serve our purpose.

2.1.3. Depreciation
2.1.3.1. Creation of Reserves from Gain from Asset Retirement

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Questions:

Q: 1) Under what circumstances do you intend to create reserves from profits realized on
the sale of fixed assets?

A: No reserves creation from profits realised out of sale of FA

2.1.3.2. Reserves Carry forward

Questions:

Q: 1) Do you create reserves for fixed assets?

A: No

Q: 2) If so, provide examples. How do you post? What are the reasons?

A: Not applicable.

2.1.3.3. Depreciation Processing

Questions:

Q: 1) What are the methods of depreciation that you are currently using?

A: Only one Straight Line Method

Q: 2) Do you calculate depreciation values to the day?

A: Monthly basis and not on day basis.

Q: 3) In certain cases do you change over from a declining-balance depreciation to straight-

line depreciation? If so, when?

A: No change over in depreciation method.

Q: 4) Do you want to allow negative depreciation for certain assets or categories of assets?
If so, please specify.

A: Yes. It may be for all asset classes.

Q: 5) Do you distinguish between a fixed and a variable depreciation portion?

A: No

Q: 6) How do you handle the period control for depreciation values?

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A: !st depreciation calculation period will be from the date of capitalization and for
subsequent periods on monthly basis.

2.1.3.4. Manual Depreciation Planning

Questions:

Q: 1) In which cases do you need to start depreciation manually?

A: Not Applicable.

Q: 2) How often do you use the manual depreciation function?

A: Not applicable.

Q: 3) When do you use unplanned depreciation?

A: Not applicable.

2.1.3.5. Depreciation Posting

Questions:

Q: 1) Is it necessary, from a business point of view, to post depreciation directly to cost

accounting? If so, which receivers are to be debited (for example, cost centers, internal
orders)?

A: Yes. It will be posted to a related cost centers assigned in the Asset Master.

Q: 2) How often do you intend to post depreciation to the general ledger and to cost
accounting?

A: Periodically (i.e. Monthly)

Q: 3) Do you post depreciation to assets under construction?

A: Only after the capitalization.

Q: 4) To which account(s) is depreciation posted?

A: Posted to individual GL accounts maintained for each asset class.

Q: 5) Do you want to show interest only in reports, or do you want to post interest directly to
cost accounting?

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A: Not Applicable.

2.1.3.6. Unit-of-Production Depreciation

Questions:

Q: 1) Do you use the unit of production method for certain assets? If so, please specify.

A: Fixed on Monthly basis.

2.1.4. Business Transactions

2.1.4.1. Settlement of Asset under Construction

Questions:

Q: 1) Do you wish to manage "Assets under construction" in Asset Accounting? If yes,

describe the capitalization process.

Explanation: 1. Classic asset under construction or investment measure

A: Yes. Assets under Construction. Expenses capitalization through Internal Orders settled
to AUC. Again settlement of AUCs to individual assets.

Q: 2) What is the timing for the capitalization process?

A: Depends on the technical completion. No time frame.

Q: 3) With respect to capitalization, are you bound by specific laws?

A: [ ]Yes
[X ]No

Q: 4) Is it possible that an asset under construction is capitalized as a low value asset?

A: No.

Q: 5) Do you intend to use summary settlement or line item settlement for assets under
construction?

A: Line Item Settlement.

Q: 6) To which receiver(s) do you settle assets under construction?

A: Fixed Asset.

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Q: 7) Do you use partial capitalization?

A: No

Q: 8) What kind of information flow do you have for when an investment measure is
completed and the asset under construction is ready for settlement to the final asset?

A: All information with respect to AUC till capitalization.

Q: 9) Do you display down payments to assets under construction separately?

A: No

Q: 10) What kind of information flow do you have for the settlement of down payments?

A: Not Applicable.

2.1.4.2. Post-capitalization

Questions:

Q: 1) What circumstances make post-capitalization necessary in your enterprise?

One amount on the asset should have a different depreciation start date than the original
asset -

Explanation: For example: - Someone neglected to capitalize an asset (if so, for what
reason?) - One amount on the asset should have a different depreciation start date than the
original asset - Other

A: Not Applicable.

Q: 2) How do you intend to post post-capitalization: - Gross, that is, with historical values
(APC and depreciation)- Net, that is, depreciation begins on the posting date using the net
book value.

A:

Q: 3) Do you want to post to a separate sub-number for post-capitalization?

A: Yes. In case any expense is missed out. It will be done through sub-number concept.

2.1.4.3. Write-up

Questions:

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Q: 1) Do the value of your assets appreciate, and if so, do your ledgers need to be
adjusted?

A: Not Applicable.

Q: 2) Describe the reasons for a fixed asset revaluation, the process used, and give
examples of the assets which are to be revaluated.

A: Not Applicable.

2.1.4.4. Reposting

Questions:

Q: 1) Is it necessary to transfer assets from one company code to another?

Explanation: Settings for company code transfer

A: Yes. Transfer of assets from one company code to another company happens.
But through Purchase and sales by way of PO, GR with Book value.

Q: 2) Do you sometimes split an asset into one or more new assets? If so, please specify.

A: Not applicable.

Q: 3) Do you transfer between different asset classes? Give examples.

A: Occasionally. Due to clerical mistake.

Q: 4) Is the changing of an assigned cost center or a business area, for example, a reason
for a transfer posting?

A: May be.

Q: 5) How do you find out about necessary transfer postings in asset accounting?

A: Through Asset Master History.

2.1.5. Specific Valuations

2.1.5.1. Closing of Insurance Contract

Questions:

Q: 1) Do you want to display insurance values for your fixed or leased assets?

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A: Yes

Q: 2) With which insurance companies do you have insurance agreements?

A: NCC and AICC.

Q: 3) Are your low value assets part of an insurance contract?

A: No

Q: 4) What is the basis for the calculation of an asset's insurable value?

A: Book Value.

Q: 5) Do you index your insurance values?

A: Not Applicable.

Q: 6) Do you intend to use a separate asset valuation area for your insurance values?

A: Not applicable.

Q: 7) Is there any interaction between insurance of assets and your leasing agreements?

A: Not applicable.

Q: 8) How do you wish to make your insurance payments?

A: Check.

2.1.5.2. Index Series

Questions:

Q: 1) For what business reasons do you need to index your asset values (for example for
insurance replacement values, cost-accounting revaluation, inflation etc.)?

A: Not Applicable.

Q: 2) What types of index figures do you intend to use?

A: Not Applicable.

2.1.5.3. Revaluation

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Questions:

Q: 1) Do you carry out fixed asset revaluations? If so, give examples

A: Presently not there.

2.1.6. Retirements
2.1.6.1. Retirement

Questions:

Q: 1) How and when is asset accounting informed of the retirement of an asset?

A: If it is not usable or if it is sold off.

Q: 2) Do you sell or transfer assets to affiliated/associated companies?

A: Yes. It will be a purchase and sales transaction.

Q: 3) How do you process retirement of a low value asset (e.g. retirement with zero value;
retirement with revenue; account assignment for retirement with revenue)?

A: Only by way of expensing out.

Q: 4) Who issues invoices for asset sales?

A: As of now Finance Department. In future plan to get through SD module.

2.1.6.2. Mass Retirement

Questions:

Q: 1) When retiring assets, is there ever a need to retire a large number of assets at the
same time?

A: No.

Q: 2) If yes, how many assets are normally concerned? Please provide an example with
documents.

A: Not applicable.

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2.1.7. Closing Operations [Asset Accounting]

Questions:

Q: 1) What activities are included in the month-end process for asset accounting?

A: Only depreciation and analysis of AUC to capitalize the completed AUCs to final asset.

Q: 2) Which internal and external asset valuations belong to month-end closing process?
Please provide a sample of all required valuations.

A:

Q: 3) What activities are included in the year-end closing process for asset accounting?

A: Presently no any activities are included.

Q: 4) Which internal and external asset valuations belong to year-end closing process?
Please provide a sample of all required valuations.

A:

2.1.7.1. Multiple Valuations

Questions:

Q: 1) Do you have parallel valuation for your asset, e.g. for group valuation, for cost
accounting purposes or for legal reasons?

A: Not Applicable.

Q: 2) Do you have to valuate your assets in different currencies?

A: Not applicable.

Q: 3) Is there a distinction necessary between book depreciation (for balance sheet) and tax
values (for a tax balance sheet)?

A: Yes the depreciation calculation will be different. Depreciation will be allowed only 50% of
current year APCs and Retirements.

2.1.7.2. Preparations for Year-End Closing in Asset Management

Questions:

Q: 1) When do you close your fiscal year?

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A: After auditing and reports are approved by the Board and shareholders.

Q: 2) Do you run the year-end closing process in asset accounting separate from general
ledger?

A: No separate process in Asset accounting.

Q: 3) Are leased assets treated like any other fixed assets in year-end closing?

A: No.

2.1.7.3. Depreciation Simulation / Forecast

Questions:

Q: 1) Do you include planned capital investments in addition to capitalized assets when

forecasting depreciation?

A: Yes

Q: 2) Describe the process for distributing planned depreciation. For example, do you
distribute based on asset class, cost centers or estimate the percentage depreciated?

A: On Cost Centers.

Q: 3) Do you simulate retirements of low value assets in your asset history sheet?

A: No.

Q: 4) Do you wish to use different methods of valuation or different depreciation methods in

your simulation? If so please specify.

A: Yes.

Q: 5) Do you include additional asset transactions in the simulation? If so, which

transactions are relevant?

A: No.

2.1.7.4. Mass Change

Questions:

Q: 1) In your enterprise, who has authorization to change a large number of assets

simultaneously?

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A: Highly responsible person from Finance Department.

Q: 2) Do you need to make changes to a large number of assets simultaneously?

A: Yes

Q: 3) If so, under what circumstances? Please describe.

A: Depends on Top management decision and business need.

2.1.7.5. Recalculation of Depreciation

Questions:

Q: 1) Does it sometimes occur that you need to change depreciation methods or calculation
rules during the course of a fiscal year? If so, please provide an example and reason why a
change was necessary).

A: Depreciation method will not be changed. There is a possibility of change in the rate of
depreciation.

Q: 2) Does it sometimes occur that you introduce a new depreciation valuation area during
the course of a fiscal year? If so, please provide an example and reason why a new valuation
area was necessary).

A: Not applicable.

2.1.7.6. Depreciation posting

Questions:

Q: 1) Is it necessary, from a business point of view, to post depreciation directly to cost

accounting? If so, which receivers are to be debited (for example, cost centers, internal
orders)?

A: No. Depreciation will be posted to cost center which has been assigned
in the respective Asset Master.

Q: 2) How often do you intend to post depreciation to the general ledger and to cost
accounting?

A: On a periodic/monthly basis.

Q: 3) Do you post depreciation to assets under construction?

A: NO

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Q: 4) To which account(s) is depreciation posted?

A: Normal Depreciation GL account which will be maintained for each asset class
separately.

Q: 5) Do you want to show interest only in reports, or do you want to post interest directly to
cost accounting?

A: NO.

2.1.7.7. Carry Out Year-End Closing in Asset Management

Questions:

Q: 1) How do you conduct the physical inventory for fixed assets (e.g. manually, using
barcode scanner)?

A: Manually

Q: 2) Who is responsible for the physical inventory of the fixed assets?

A: Finance Department

Q: 3) What is the relation between the inventory number of an asset and the number of the
asset master record?

A: 1 to 1

Q: 4) Do you create inventory lists using the SAP R/3 System, or using a non-SAP system?

A: SAP R/3 System

2.1.7.8. Integrated Planning in CO

Questions:

Q: 1) What is the relationship between investment measures and fixed assets in the
planning process?

A:

Q: 2) Is your plan activity-dependent or not activity-dependent?

A: Not activity-dependent.

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2.1.7.9. Periodic Reports

Questions:

Q: 1) Which periodic reports do you carry out in general ledger accounting?

Explanation: see subsidiary ledgers too.

A: GL Balances, Trial Balance, AP & AR

Q: 2) What type of information flow do you have for the results of periodic asset reporting?

A: Asset Registers, Asset Explorer. Cost Center wise Depreciation Cost. and other
reporting requirements will be informed in consultation with Core User.

Q: 3) What are the critical monthly, quarterly and annual reports that you need for Asset
Accounting?

A: Will be provided in report requirements.

Q: 4) Which kind of reports do you use to reconcile asset accounting with the general
ledger?

A: APC, Acc.Depn and Depn posted.

Q: 5) Are there any particular reports you would like for low value assets?

A: It is being expensed out at the time of purchase itself.

Q: 6) How do you create your inventory lists? Do you use barcodes?

A: Manually.

Q: 7) By which organizational units (or combinations of units) are asset reporting functions
structured (for example, company, cost center etc)?

A: Both at Company and Cost Center Level

2.2. Handling of Leased Assets

Questions:

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Q: 1) What kind of leasing agreements do you normally make? Operating leases (not
necessarily shown in Asset Accounting) or Capital Leases (Asset capitalized)?

A: Most of them are Operating Leases. only land is capital leases not capitalized.

2.2.1. Asset Maintenance

2.2.1.1. Asset Master Record Change

Questions:

Q: 1) Do you transfer your assets from one legal entity to another?

A: No

Q: 2) If not transferred between legal entities, do you create a new master record when
location changes?

A: NO.

Q: 3) Describe possible ways of processing changes in location. What procedures are

currently in place?

A: Not Applicable.

Q: 4) Does changing of location apply to low value assets?

A: No

2.2.1.2. Mass Change

Questions:

Q: 1) In your enterprise, who has authorization to change a large number of assets

simultaneously?

A: Responsible person from Finance Department.

Q: 2) Do you need to make changes to a large number of assets simultaneously?

A: No

2.2.2. Receipts
2.2.2.1. Acquisition of Leased Asset

Questions:

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Q: 1) Who is responsible for the acquisition of a leased asset? Who will negotiate the
leasing agreement?

A: HOD of Finance.

Q: 2) Describe the process for the acquisition of a leased asset, from the purchase order to
capitalization in Asset Accounting.

A: Presently this practice is not in force since we have only operational lease agreement.

2.2.2.2. Depreciation Processing

Questions:

Q: 1) What are the methods of depreciation that you are currently using?

A: Not Applicable.

Q: 2) Which depreciation method is used particularly for leased assets?

A: Not Applicable.

Q: 3) Do you calculate depreciation values to the day?

A: Not Applicable.

Q: 4) In certain cases do you change over from a declining-balance depreciation to straight-

line depreciation? If so, when?

A: Not Applicable.

Q: 5) Do you want to allow negative depreciation for certain assets or categories of assets?
If so, please specify.

A: Not Applicable.

Q: 6) Do you distinguish between a fixed and a variable depreciation portion?

A: Not Applicable.

Q: 7) How do you handle the period control for depreciation values?

A: Not Applicable.

2.2.2.3. Depreciation Posting

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Questions:

Q: 1) Is it necessary, from a business point of view, to post depreciation directly to cost

accounting? If so, which receivers are to be debited (for example, cost centers, internal
orders)?

A: Not Applicable.

Q: 2) How often do you intend to post depreciation to the general ledger and to cost
accounting?

A: Not Applicable.

Q: 3) Do you post depreciation to assets under construction?

A: Not Applicable.

Q: 4) To which account(s) is depreciation posted?

A: Not Applicable.

Q: 5) Do you want to show interest only in reports, or do you want to post interest directly to
cost accounting?

A: Not Applicable.

2.2.3. Business Transactions

2.2.3.1. Transfer Leased Asset

Questions:

Q: 1) Do you transfer leased assets between companies?

A: No

Q: 2) Would a transfer of a leased asset affect the leasing agreement? If so, please
describe.

A: Not Applicable.

2.2.3.2. Change in a Leasing Agreement

Questions:

Q: 1) How often are changes in a leasing agreement necessary?

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A: Presently Not Applicable

Q: 2) What type of changes are most frequent? Provide examples.

A: Presently Not Applicable

Q: 3) In cases where changes to a leasing agreement are necessary, how many assets
would be affected?

A: Presently Not Applicable

Q: 4) Does a change of location affect your leasing agreement? In what way?

A: Presently Not Applicable

Q: 5) What is the information flow in your enterprise regarding a change in asset location or
a change of an asset to a different organizational unit?

A: Presently Not Applicable

2.2.3.3. Lease Payment

Questions:

Q: 1) Describe the payment conditions of your leasing agreements. Differentiate if

necessary between different kinds of agreements.

A: For long term lease agreements the payment conditions may be monthly or yearly. But
for Operational lease the payments will be on monthly basis.

Q: 2) How often are your leasing payments due?

A: Monthly, quarterly , half yearly or yearly.

2.2.4. Specific Valuations

2.2.4.1. Closing of Insurance Contract

Questions:

Q: 1) Do you want to display insurance values for your fixed or leased assets?

A: Yes

Q: 2) With which insurance companies do you have insurance agreements?

A: NCC and AICC.

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Q: 3) Are your low value assets part of an insurance contract?

A: No

Q: 4) What is the basis for the calculation of an asset's insurable value?

A: Book Value.

Q: 5) Do you index your insurance values?

A: Not Applicable.

Q: 6) Do you intend to use a separate asset valuation area for your insurance values?

A: Not applicable.

Q: 7) Is there any interaction between insurance of assets and your leasing agreements?

A: Not applicable.

Q: 8) How do you wish to make your insurance payments?

A: Check.

2.2.4.2. Index Series

Questions:

Q: 1) For what business reasons do you need to index your asset values (for example for
insurance replacement values, cost-accounting revaluation, inflation etc.)?

A: Not Applicable.

Q: 2) What types of index figures do you intend to use?

A: Not Applicable.

2.2.5. Retirements
2.2.5.1. Retirement of Leased Asset

Questions:

Q: 1) What are the reasons for retiring a leased asset?

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A: At the time of retirement of agreement.

Q: 2) What is your process for retiring leased assets? Please describe the postings.

A: Standard accounting procedure is followed.

Q: 3) Do you normally buy leased assets after expiration of the leasing contract or do you
return them to the lessor?

A: Depends on the business requirement.

2.2.6. Closing Operations

Questions:

Q: 1) What activities are included in the month-end process for asset accounting?

A: Calculation and posting of depreciation. Analysis of AUC, Transfer of Internal Order

balances to AUCs and any capitalization.

Q: 2) Which internal and external asset valuations belong to month-end closing process?
Please provide a sample of all required valuations.

A: Not Applicable

Q: 3) What activities are included in the year-end closing process for asset accounting?

A:

Q: 4) Which internal and external asset valuations belong to year-end closing process?
Please provide a sample of all required valuations.

A:

2.2.6.1. Multiple Valuations

Questions:

Q: 1) Do you have parallel valuation for your asset, e.g. for group valuation, for cost
accounting purposes or for legal reasons?

A:

Q: 2) Do you have to valuate your assets in different currencies?

A:

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Q: 3) Is there a distinction necessary between book depreciation (for balance sheet) and tax
values (for a tax balance sheet)?

A:

2.2.6.2. Preparations for Year-End Closing in Asset Management

Questions:

Q: 1) When do you close your fiscal year?

A:

Q: 2) Do you run the year-end closing process in asset accounting separate from general
ledger?

A:

Q: 3) Are leased assets treated like any other fixed assets in year-end closing?

A:

2.2.6.3. Depreciation Simulation / Forecast

Questions:

Q: 1) Do you include planned capital investments in addition to capitalized assets when

forecasting depreciation?

A: [ ]Yes
[ ]No

Q: 2) Describe the process for distributing planned depreciation. For example, do you
distribute based on asset class, cost centers or estimate the percentage depreciated?

A:

Q: 3) Do you simulate retirements of low value assets in your asset history sheet?

A:

Q: 4) Do you wish to use different methods of valuation or different depreciation methods in

your simulation? If so please specify.

A:

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Q: 5) Do you include additional asset transactions in the simulation? If so, which

transactions are relevant?

A:

2.2.6.4. Mass Change

Questions:

Q: 1) In your enterprise, who has authorization to change a large number of assets

simultaneously?

A:

Q: 2) Do you need to make changes to a large number of assets simultaneously?

A: [ ]Yes
[ ]No

Q: 3) If so, under what circumstances? Please describe.

A:

2.2.6.5. Recalculation of Depreciation

Questions:

Q: 1) Does it sometimes occur that you need to change depreciation methods or calculation
rules during the course of a fiscal year? If so, please provide an example and reason why a
change was necessary).

A:

Q: 2) Does it sometimes occur that you introduce a new depreciation valuation area during
the course of a fiscal year? If so, please provide an example and reason why a new valuation
area was necessary).

A:

2.2.6.6. Depreciation Posting

Questions:

Q: 1) Is it necessary, from a business point of view, to post depreciation directly to cost

accounting? If so, which receivers are to be debited (for example, cost centers, internal
orders)?

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A:

Q: 2) How often do you intend to post depreciation to the general ledger and to cost
accounting?

A:

Q: 3) Do you post depreciation to assets under construction?

A:

Q: 4) To which account(s) is depreciation posted?

A:

Q: 5) Do you want to show interest only in reports, or do you want to post interest directly to
cost accounting?

A:

2.2.6.7. Carry Out Year-End Closing in Asset Management

Questions:

Q: 1) How do you conduct the physical inventory for fixed assets (e.g. manually, using
barcode scanner)?

A:

Q: 2) Who is responsible for the physical inventory of the fixed assets?

A:

Q: 3) What is the relation between the inventory number of an asset and the number of the
asset master record?

A:

Q: 4) Do you create inventory lists using the SAP R/3 System, or using a non-SAP system?

A:

2.2.6.8. Periodic Reports

Questions:

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Q: 1) Which periodic reports do you carry out in general ledger accounting?

Explanation: see subsidiary ledgers too.

A: GL Balances, Trial Balance, AP & AR

Q: 2) What type of information flow do you have for the results of periodic asset reporting?

A:

Q: 3) What are the critical monthly, quarterly and annual reports that you need for Asset
Accounting?

A:

Q: 4) Which kind of reports do you use to reconcile asset accounting with the general
ledger?

A:

Q: 5) Are there any particular reports you would like for low value assets?

A:

Q: 6) Are there any particular reports you run for leased assets?

A:

Q: 7) How do you create your inventory lists? Do you use barcodes?

A:

Q: 8) By which organizational units (or combinations of units) are asset reporting functions
structured (for example, company, cost center etc)?

A:

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