1. Business Process Re-Engineering Finance Transformation “SAP 101”
Fundamentals of finance system structure, master data, and functionality

2. OBJECTIVE AND AGENDA Objective for the session
Establish a baseline understanding of some core components of the future state SAP Finance system
This baseline will be the foundation for future trainings and exercises
Agenda
SAP ledgers
Main master data elements
Other critical data elements and fields
New or modified functionalities

3. “SAP 101”
SAP Ledgers

4. FOUR LEDGERS Purdue’s SAP implementation uses four ledgers
Financial Accounting (FI)
Funds Management (FM)
Controlling (CO)
Grants Management (GM)
It’s important to understand the use for all ledgers in financial management
Each is intended to answer different questions

5. FOUR LEDGERS Financial Accounting (FI) Reporting based on GAAP
Provides Balance Sheets and Income Statements
Funds Management (FM)
Reporting based on budgetary management
Calculates available balance
Provides Income Statements
Controlling (CO)
Designed to assist with planning on individual accounts
In S/4, CO ledger table has been merged with the FI ledger table
Grants Management (GM)
Facilitates both budgetary management and financial accounting by grant

6. Chart of Accounts Balance Sheet Accounts Income Statement AccountsFI FM CO
General Ledger Acct
Commitment Item
Cost Element
Balance Sheet Accounts
1xxxxx – Assets
2xxxxx – Liabilities
3xxxxx – Fund Balance
In FM, transactions on these accounts are classified as “statistical”
Income Statement Accounts
4xxxxx – Revenue
5xxxxx – Expense

7. MAJOR FI/FM Differences
FI (GAAP Financial)
Capital Assets post as Assets & Depreciate over useful life
Bond principal is recorded as reduction of liability
Inventory is recorded on balance sheet and expensed when used
FM (Funds Mgmt)
Capital Assets expense completely in the period the asset is procured
Bond principal payment recorded as expense in the period it is made
Inventory is recorded as an expense when it is procured
Bond Principal and Inventory postings are changes to the existing posting rules.
GR/IR and Accounts Receivable Write Offs will be consistent across both modules in the future, and are not today.

8. Master Data – Main Elements
“SAP 101”
Master Data – Main Elements

9. “ACCOUNTS” “Accounts” are comprised of three main components
Company Code and Business Area are derived today
In the future state, fund will also be derived in most instances
Organization
Company Code
Business Area
Fund
Cost Object
Cost Center
Internal Order/ WBS Element

10. FundS Represent a particular funding source and restriction
Used to maintain accountability to the source
Subdivide balance sheet reporting
Can split all balance sheet G/L’s by fund
In future state, funds mostly consolidated by fund type
Internal Orders and WBSE’s will replace the use of multiple funds within a fund type
Balances/transactions for A/R, A/P, etc. will be reportable by IO/WBSE

11. FundS Three general funds Most units will only use 21010000
and will remain available for areas required to divide their general fund by function
Other unrestricted funds consolidated into general fund
Residuals (conference, grant, royalty, etc.)
Study Abroad
Digital Education & Conferences
Income-producing activities to be distinguished by funded program type (explained later)

12. FundS One Internal Services fund
All recharge center accounting will be consolidated to one fund
Individual recharge centers will be designated by cost centers
Activities within recharge centers that require separate tracking will use internal orders

13. FundS One Gift fund, one Scholarship fund
All gift and scholarship accounting will be consolidated to one fund for each type
Tracking of individual gifts & scholarships will shift from funds to internal orders

14. FundS Other restricted funds Agency (1) Auxiliary (1) Debt (23)
Endowment (2)
Federal Appropriations (10)
Grants (1)
Plant (1)
Restricted – Other (1)
State Line Items (TBD)
Student Aid (3)
Student Loans (6)
Work Study (4)

15. Company Codes Separates Distinct Legal Entities
Current State: One company code (PUR) Future State: Multiple company does
PUR
PII
NewU
PUR: Purdue University
PII: Purdue International
PICO: Purdue Colombia
PIAF: Purdue Afghanistan
TBD: NewU
PICO
PIAF
7/1/2018: PII, PICO and PIAF will be implemented
“NewU” implementation TBD

16. Business Area
Within company codes, Business Areas divide the organization
Today, Business Area represents campus
West Lafayette, Fort Wayne, Northwest
Future State, represents
Organizations led by direct reports to the President, Provost, Treasurer, or EVPRP
And equivalent positions at PNW / PFW
And organizations which require a separate GAAP financial statement
E.g. WBAA, North Central Nursing Clinic

17. Business Area Business Areas will be grouped into segments
Two levels of segments will be used
First grouping: based on executive reporting
Segments for Provost, CFO, EVPRP and President
Second grouping: based on campus
Segments for West Lafayette, Fort Wayne, Northwest
May want to mention that this allows full financial reporting at the campus level. This is a hot topic at the Fort Wayne campus especially.

18. Business Area
Future State Example
Segment
Segment
Business Area

19. Cost Center Future State Represents unitsFI FM CO
Cost Center
Fund Center
Future State
Represents units
To which multiple positions are assigned
1:1 with future state HR Departments (i.e. “org units”)
That have accountability to an annual budget plan
That can allocate revenues or make independent decisions about use for specific purposes and programs
Will not be used for tracking programs, projects, etc. that don’t function as organizational units

20. Cost Center Future State Three-level hierarchyFI FM CO
Cost Center
Fund Center
Future State
Three-level hierarchy
Level 1: “Department”
Level 2: “Sub-Department”
Level 3: “Program”
Cost Centers can be reassigned to different departments and business areas without changing numbers
Addresses many problems caused by reorgs
Will not maintain “smart-numbering” after implementation
No longer will be able to tell campus and major unit/college from looking at the cost center

21. Cost Center Structure Future State Example
Emphasize that level 3 and level 4 are going to exist as organizational units
Cost centers will be used forever
Relations with other cost objects

22. Internal Orders Used for detailed tracking within Cost CentersFI FM CO
Internal Order
Funded Program
Used for detailed tracking within Cost Centers
Individual programs
E.g. Study Abroad, Digital Education programs
Individual gift/scholarship accounts
Can be assigned to the “Sub-Department” and “Program” level Cost Centers
Most transactions not associated with faculty or construction accounts will post to internal orders in the future state

23. Internal Orders Internal Order TypesFI FM CO
Internal Order
Funded Program
Internal Order Types
Allow grouping for more detailed reporting
Internal Order Sub-Type/Funded Program Type
Categorizes accounts by detailed restrictions/ designations
Undergrad Scholarships, Graduate Scholarships, etc.
Will determine IO numbering
SIO’s will still not be available for use in conjunction with “RIO’s”

24. WBS Element (WBSE) Similar to an Internal OrderFI FM CO
WBS Element
Funded Program
Similar to an Internal Order
Allows for linkages to “projects”
Construction projects (C.X )
Faculty* members (F.XXXXXXXX.XX.XXX)
Each faculty member will have a project
Will be categorized by Funded Program Type
Also categorized by “node”
*Staff who receive allocations for their personal research/instruction/ engagement activities may also have projects

25. WBS Element (WBSE) Simplified Faculty Allocations Structure
(next slide is bigger – if you want to get closer)
Faculty can see all accounts in one place
Allows departments to identify and segregate resources allocated to faculty for their individual activities

26. Master Data – Other Elements & Fields
“SAP 101”
Master Data – Other Elements & Fields

27. Grant & Sponsored ProgramFI FM CO GM
WBS Element
Funded Program
Sponsored Program
Future State
Grant number field extended to 8 digits
Grant types expanded to replace sponsor divisions previously identified by unique fund numbers (e.g. NSF, NIH, Industrial)
Internal Orders replaced with WBS Elements
Formatted as F.xxxxxxxx.02.xxx
The “.02.” identifies sponsored accounts
The same WBSE number will be used in the Sponsored Program field

28. Functional Area Defined by NACUBO codes
Categorizes expenditures by function
Instruction, research, student support, etc.
Used for financial statement and IPEDS reporting
Will be assigned to individual IO’s/WBSE’s in future state
Currently assigned based on fund and funds center combination

29. Functional Area Instruction & Departmental Research (1000 – 1100)
Organized Research (1200 – 1400)
Extension & Public Service (1500)
Academic Support (1600)
Student Services (1700)
General Administration & Inst. Support (2000 – 3000)
Scholarships & Fellowships (4xxx)
Auxiliaries (5xxx)
Plant (1800)

30. PUBLIC / nonpublic
Flag that tracks whether an account contains public funding
Public funding includes
Tuition & Fees
State & Federal Appropriations
Any funds that could be considered to have come from a public source
Will be tracked on individual IO’s/WBSE’s in the future state
Currently tracked on individual funds

31. AVAILABLE / UNAVAILABLE
Flag that tracks whether an account is available or unavailable for use to repay debts (bonds)
Unavailable sources include
State Funds
Tuition & Fees
Other Legally Pledged Funds
Will be tracked on individual IO’s/WBSE’s in the future state
Currently tracked on individual funds

32. “SAP 101”
New Functionality

33. Revenue-Increasing-Budgets (RIB)
Creates an expenditure budget for every account
New revenue postings increase the budget
Expense postings decrease the budget
Example Transactions
Revenue posted: $500
Expense posted: ($300)
Revenue posted: $250
FY ends
New FY carryforward
New FY revenue posted: $100
Budget Balance
$500
$200
$450
$550

34. Revenue-Increasing-Budgets (RIB)
Enables consistent management of all accounts
“Central revenue” and “unit revenue” accounts will all have RIB
Budget carryforward on all accounts
LTD reporting can be replaced by YTD reporting
Balance calculation will be consistent across systems (BI, SAP, etc.)
Does not impact annual budget entries/amounts

35. Alternate Budget Address / CO Plan
Directs postings to one account to change the budget of another account
Facilitates tracking “within” IO’s/WBSE’s
CO Plan
Allows expenditure plans to be entered into SAP to which actuals are compared
Enables calculation of a balance based on the CO Plan amount entered rather than the account’s RIB amount

36. Alternate Budget ADDRESS / CO PLAN
Using Alternate Budget Address and CO Plan together enables reporting without manual tracking and transfers
Example
Making allocations to faculty from a gift IO
Revenue
Expenses
Expenditure Budget
Unexpended Plan
Department Gift IO
100,000
(81,232)
18,768
143,768
Plan
Smith Project WBSE -
(23,499)
N/A
76,501
Jones Project WBSE
75,000
(45,376)
29,624
Daniels Project WBSE
50,000
(12,357)
37,643
225,000
The Gift IO has been assigned as an alternate budget address to these WBSE’s
A plan amount has been entered for the WBSE’s equal to the amount allocated by the Dept Head

37. NEXT STEPS
October 2017
Mapping of existing accounts into the new structure