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Funds Management Overview: © 2005 Intelligroup, Inc

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Funds Management Overview

© 2005 Intelligroup, Inc. Confidential and Proprietary


Funds Management

The tasks of Funds Management are to budget all revenues and


expenditures for individual responsibility areas, monitor future
funds movements in light of the budget available, and prevent
budget overruns.

You can adapt the budget to changes in conditions by entering


releases, supplements, returns, and transfers.

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© 2005 Intelligroup, Inc. Confidential and proprietary
Funds Management

Funds Management is fully integrated with other components in the


R/3 System.

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© 2005 Intelligroup, Inc. Confidential and proprietary
FM Area

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© 2005 Intelligroup, Inc. Confidential and proprietary
Organizational Structures

Organizational Structures
Client

FM area

Controlling Controlling
area 1 area 2

Company Company Company Company


code 1 code 2 code 3 code 4

Werk
Werk Einkaufs-
Einkaufs- Personal-
Personal- Verkaufs-
Verkaufs-
Plant Purchasing
organisation Personnel
Bereich Sales
organisation
organisation
organization Bereich
area organisation
organization

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Funds Center Hierarchy

Funds Center Hierarchy

FM area #01
Funds center 1

Manager Name

Manager

Funds center 2 Funds center 3

Manager Name Manager Name

Superior center Superior center


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© 2005 Intelligroup, Inc. Confidential and proprietary
Funds Center Hierarchy

• Funds centers are used to represent organizational


units (areas of responsibility, departments, projects)
and are arranged in a hierarchy.
• Fund centers are created for a given FM area.
• Each funds center hierarchy has one Top Funds
Center located at the top of the hierarchy. Every other
funds center is assigned to a more superior center, to
denote its location in the hierarchy

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© 2005 Intelligroup, Inc. Confidential and proprietary
Funds Center Hierarchy

• The funds center master record contains important


information, such as the name and description of the
funds center and the name of the person responsible for
the funds center.

• You can only have one Funds Center hierarchy per FM


area.

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© 2005 Intelligroup, Inc. Confidential and proprietary
Funds Center Hierarchy

IMR Funds Center Hierarchy


INSTITUTE FOR
MEDICAL RESEARCH
Exec. Board
Fraser
V

Administration Department 1 Department 2 Department Z


Kelly Thiele Fraser Pomeroy
C1 A1 A2 Z1

Secretarial Services Project group P11 Project group P21 Lab Technical
C11 P11 P21 Z11

Purchasing Project group P12 Project group P22 IT Technical


C12 P12 P22 Z12

Personnel
C13

Security
C14

IMR = Institute for Medical Research R

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Commitment Hierarchy

Commitment Item Hierarchy


Financial trans. 30 30 30 40 60 90
Item category 2 3 3 3 2/3 1

Name Revenues Expenditures ... Goods receipt/ Customer/ Bank


invoice receipt vendor
clearing reconcil.acct

Summarization item
can be budgeted
cannot be posted to
Acct assignment item R

can be budgeted
can be posted to
 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Commitment Items

Commitment items describe an organization's functional


breakdown structure.

There are two types of commitment items:


· Summarization items (= hierarchy nodes) - You can
assign a budget to a summarization item, but cannot post to them.
·
Account assignment items - You can assign budgets and
post to these items. These items represent the lowest level in
the commitment item hierarchy.

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© 2005 Intelligroup, Inc. Confidential and proprietary
Commitment Items

A commitment item's master record contains important control


parameters:

The financial transaction categorizes business transactions from the


feeder application components (Financial Accounting and Materials
Management).

The commitment item category sorts actual/commitment and plan


values into revenues, expenditures, and inventory.

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© 2005 Intelligroup, Inc. Confidential and proprietary
Commitment Items

You can create one or more sub-hierarchies within each category


of items (hierarchy level). The commitment item category is
identical in all commitment items within a given sub-hierarchy.

Financial transactions of “50” and greater do not affect the fund


balance, e.g., reconciliation accounts, bank accounts.

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© 2005 Intelligroup, Inc. Confidential and proprietary
Commitment Items

Example: Assigning G/L Account to Commitment


Item

FI FM

Balance Bank - Bank 90 1  Balance


sheet Assets - Assets 30 3  Expend.
accounts Assets accum.depn - N/A 50 3
Material stock - Material 30 3  Expend.
Vendor rec. account - Payables 60 3
Input tax - Input tax 30 3  Expend.
GR/IR - GR/IR 40 3

P&L Raw material expenditures - Material 30 3

Financial trans. Item category


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© 2005 Intelligroup, Inc. Confidential and proprietary
Commitment Items
Accounts providing the base for a revenue or expenditure must
be linked to a commitment item with financial transaction 30 and
item category 2 or 3.

This is the only way the SAP system can recognize a revenue or
expenditure. Material stocks and asset portfolios require this type
of control too.

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© 2005 Intelligroup, Inc. Confidential and proprietary
Expenditure Hierarchy

IMR Expenditure Hierarchy


INSTITUTE FOR
MEDICAL RESEARCH
Expenditures
3

Personnel Operating Project Capital


expenses expenses investment
40000 50000 60000 80000

Office supplies Project


Wages Data processing
operations
40010 50010 80010
60010

Social Security Books and Travel costs Lab equipment


periodicals
40020 60020 80020
50020

Fringe benefits Communications Chemicals Office equipment


40030 50030 60030 80030

Equipment Lab supplies


50040 60040

IMR = Institute for Medical Research


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© 2005 Intelligroup, Inc. Confidential and proprietary
Expenditure Hierarchy
You can create only one commitment item hierarchy for each FM
area.
This hierarchy can then consist of various sub-hierarchies

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© 2005 Intelligroup, Inc. Confidential and proprietary
Fund Centers vs Commitment Items

Funds centers are used to represent organizational units (areas


of responsibility, departments, projects) and are arranged in a
hierarchy.

Commitment items are used to represent functional aspects


(expenditure and revenue structures) in a hierarchy.

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© 2005 Intelligroup, Inc. Confidential and proprietary
Funds Centers vs Commitment Items

The Funds Management application component is used to bring


together organizational and functional structures (funds center
hierarchies and commitment item hierarchies) into one structure
in which each funds center contains the complete commitment
item hierarchy.

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© 2005 Intelligroup, Inc. Confidential and proprietary
Master Data

Assigning CO Objects to FM Objects - 1

1. Assign cost element/cost element group to commitment item

Controlling area IMR


Cost element
With this assignment table, you can
Cost element group IMR-KOAGR-01 assign cost elements/cost element
FM area 9020 groups to a commitment item. This is
particularly important in the case of
Assignment secondary cost elements/cost element
Commitment item OFFICE SUPPLIES
groups.

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Master Data

In Master Data, Assignments in R/3, FM assignments can be


allocated to the follow CO account assignments.
 Cost elements
 Cost centers
 Orders
 WBS elements

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© 2005 Intelligroup, Inc. Confidential and proprietary
Postings in Funds Management

When making a posting, the system looks for the FM account


assignment in the following sequence:
1. Enter funds reservation or purchase order reference
2. Manual entry
3. Commitment item from G/L account/funds center from
commitment item master record
4. Assignment to CO account assignment from derivations
5. Commitment item from assignment to cost element

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budget

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budget Creation and Maintenance

Key Points: Budget Creation and Maintenance

 Creating budgets
 Budget adjustments
 Budget structures

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budget

• Budget Planning
• Budget Profile
• Creation of Budget
• Top –Down and Bottom-Up budget
• Budget Release

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budget Planning

Budget Planning Process

Budget
model
Budget
Year xx - 1
Requests
Budget
Version 0
(approved)

Budget Plan
Version 01

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budget Versions

Budget Versions
Year-dependent parameters
Budget Versions FM area Year Consistency Avail-
Version Name ability

0 Original budget
IMR 1997
1 Forecast 1

Original budget Forecast 1 Availability


Availability control
controlis isonly
only
possible
possible ififbudget
budget
Admin Admin consistency
consistency
1000 1000 requirement
requirementis is active.
active.
Personnel Personnel
700 900
Projects Projects
Save (with check) Save
100 200
Yes No No Yes
Error Consistency Budget consistent Budget consistent Consistency Error
required required
No Yes No
Yes
No
availability control

Create document in number range 05 for budgeting


 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budgeting & Availability control

You can manage more than one budget version in Funds


Management.

Availability control can be activated \ inactivated for a particular


year

Active availability control is only available for budget version zero.

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© 2005 Intelligroup, Inc. Confidential and proprietary
Top-Down and Bottom-Up Budgeting

Top-Down and Bottom-Up Budgeting


 Top-Down  Bottom-Up

 Budget preparation  Budget creation


Sample scenario: Sample scenario:
Total figures exist Budget exists
 distribution supported by  enter into SAP
the system

 Consistency check  Budget automatically consistent


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© 2005 Intelligroup, Inc. Confidential and proprietary
Annual and Overall Budgets

Budget ‘98
Annual and Overall Budgets Budget ‘97
Budget ‘96
Annual Overall 100,000
values values 20,000
...
1. Budget and funds which are
available for one fiscal year X
2. Funds which are available for Fund xy
valid from 05/01/96 to 08/30/98
the total duration of a “project”, X
without specific funds having 10,000
to be allocated at any particular 15,000
65,000
point in time ...

3. Funds from secondary sources


X X
which are available for the total Fund xy
valid from . . . to . . .
duration of a “project”, with
stipulation as to how the funds 100,000
‘96 30,000
are to be distributed across the ‘97 20,000
‘98 50,000
individual years ...

Consistency
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© 2005 Intelligroup, Inc. Confidential and proprietary
Periodic Budgeting

Periodic Budgeting
1. You can enter statistical
period budgets for annual Annual Overall Periodic
values. values values values Budget 98

2. Annual values are


distributed to individual
X X
100,000
periods either manually or
using distribution keys. X X
3. Period budgets are used for
statistical purposes only.
For reporting purposes, Budget 98
budget utilization is
represented per period. The Periods
active availability control 1 8,000
always checks against the 100,000 2 8,000
annual budget. 3 10,000
4 10,000
...
R

4. Overall values can not be displayed per period

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budget Profile

Budget Profile Functions


General definition in Customizing Optional definition in individual fund master

Assignment of budget profile to FM area FM area IMR


Fund FUND 1
FM area W/o fund With fund
IMR FM0001 FM0002 Name
.. ...
.
.
.
.
. Budget profile FM0003
... ...

Profile FM0001 Format defaults for the


Permitted
budgeting Text FM profile budgeting transactions
timeframe Format
View 11 Key for automatically distributing
Decimal places 2 annual values to individual periods
As of
Scaling 0 4.0
Availability control
Time horizon Distribution key
You can choose overall checks against
Past 1 1 released or current
values and/or annual
Future 5 budget and overall or
values and period values;
Start 0 annual values
Overall values are only Availability control
available if funds are used. X Overall values Releases R

Annual values Overall


As of Period values
4.0
 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budget Release

• Funds Management includes a release option, which you


can use to release the budget bit by bit.

• The release is based on the current budget - that is, the original
budget as amended by supplements, returns, and transfers

• A release can be expressed in percent or as absolute amounts.

• A release can relate to annual values and/or overall values.

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budget Views

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budget Update

Updating the Budget


R

Budget plan  = current budget


1996 Results:
Supplements
Supplements
Transfers
Transfers
Returns
Returns
Budget
plan 1996

Agenda
• blocking budget
• budget cut R

• supplementary budget

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budget Update

Example of Using Updating


• Original budget
• Supplement
• Transfer
+100
  current budget
(- 50)
1000 (+ 50)
 1100
100
300  500 (+50)
 250  650

50
100 50 50 300 (+50)
 100  50 -50  400
0
100 50
 100 +50
 100
R

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© 2005 Intelligroup, Inc. Confidential and proprietary
Budget Update

 Supplements - You assign an additional budget for a funds


center or commitment item.
· Returns - You use a return to give back surplus funds from one
FM account assignment within your hierarchy to superior funds
centers and commitment items, that is the distributable value is
increased by the amount given back.
· Transfers - If there are funds shortages in one funds center and
the available funds in another one have not yet been fully
utilized, then Funds Management enables you to transfer funds
from one FM account assignment to another.

The current year budget = Original Budget + Supplements -


Returns +/- Transfers.

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© 2005 Intelligroup, Inc. Confidential and proprietary
Earmarked Funds

• Funds Block
• Funds Reservation
• Funds Pre-commitment
• Funds Commitment

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© 2005 Intelligroup, Inc. Confidential and proprietary
Earmarked Funds

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© 2005 Intelligroup, Inc. Confidential and proprietary
Funds Management

Closing Operations

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© 2005 Intelligroup, Inc. Confidential and proprietary
Closing Operations

Key Points: Closing Operation

 Carrying over residual budgets


 Carrying over open commitments
 Carrying over fund values

 SAP AG
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© 2005 Intelligroup, Inc. Confidential and proprietary
Closing Operations

Closing Operations

Old fiscal year New fiscal year

Bring forward
Residual budget residual budget
Dec. from old
31 fiscal year

Open obligations Carry forward


- P.O. requisitions
- P.O.s
open obligations
- Reservations

 Maintain carryforward rules


 Treatment of special cases
R

 Technical process

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Fiscal Year Change

Fiscal Year Change


Report for funds center: Institute for med. research as at 12/31/96
Period 01 - Period 12

Item Curr. budget Cmmts Actual Resid.budget

MAT 5000 1000 3000 1000


Pers 7000 6500 500
DP 3000 1000 2000 0

Open commitments Genuine residual


(+ associated budget) budget

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Control Options

Control Options

Old Fiscal Year Control New Fiscal Year

Residual budget Carry-fwd rules Residual budget


Budget for commitment Per commitment Budget for commitment
Open commitments Per FM acct asst and Open commitments
value type

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Closing Operations

Maintaining the Carry-Forward Rules - 1


*.* - Entry only
appears if you
You are in All funds centers
have not
level 1 and commitment
restricted the
items
selection in any
way.
S Lev. Funds center/commitment item Percentage
This level is
subdivided + 1 * * 100%
+ S * 100%
+ * 40000 ...
..
.

All commitment items


in center S All funds centers with
commitment item 40000
R

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Closing operations

Maintain Carry-Forward Rules - 2


Maintain Carry-Forward Rules

Funds Center Commitment Item Fund Percentage


Sender Secretariat *
Receiver Administration Exp.bus.supplies 100.00

Sender Project gr. P11 Misc.revenues


Receiver Project gr. P11 Project exp. 100.00

Result:
The actual residual budget for the "Secretariat" funds
center is carried forward in full to the "Administration"
funds center, commitment item "Business supplies".
The revenue surplus in funds center "Project P11",
commitment item "Misc.revenues" is carried forward in
full to funds center "Project P11", commitment item
"Project exp.". R

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Closing Operations

Carrying Over Open Commitments

Purchase
requisitions
Purchase
December requisitions
Purchase
orders
Purchase

Funds
reservations
31 orders

Funds
reservations

Invoices *
Invoices *
* when recording on a payment basis R

 SAP AG

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© 2005 Intelligroup, Inc. Confidential and proprietary
Closing Operations

• Carry forward Rules


• Commitment carry forward
• Budget Carry forward

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© 2005 Intelligroup, Inc. Confidential and proprietary
Information System

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© 2005 Intelligroup, Inc. Confidential and proprietary

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