1. Performing Fixed Asset Physical Inventory in SAP Cheryl Pettus Financial Systems Consultant Monsanto Company

2. Agenda Monsanto at a Glance Purpose of Asset Physical Inventory
SAP Delivered Functionality
Monsanto’s Answer to Performing Asset Physical Inventory in SAP
Features of Monsanto’s Physical Inventory Process
Technical Components
How System Functions
System Flow
Q & A

3. Monsanto at a Glance

4. Monsanto at a Glance (cont)
Leading provider of agricultural products for growers
$4.7BN in net sales in 2002
14,500 employees worldwide
380 locations worldwide in 4 primary regions – Europe/Africa, Asia Pacific, Latin America and North America
Headquartered in St. Louis, Missouri
2.3BN Net Property Plant and 12/31/2002; 26% of total company assets

5. Monsanto at a Glance (cont)
                   
                   
                     

6. Purpose Of Asset Physical Inventory
Protect large capital investments
Validate fixed asset amounts reflected in the financial statements
Provide for appropriate insurance coverage
Comply with audit requirements
Establish accountability
Provides basis for sound decision making

7. SAP Delivered Functionality
Provides Inventory List Reports to assist with physical inventory
Provides standardized BAPIs (business application programming interfaces) that enable you to interface with outside inventory software
Does not provide special functions for carrying out a fixed asset physical inventory

8. Monsanto’s Answer to Performing Asset Physical Inventory in SAP
Did not purchase bolt-on inventory software package for several reasons (cost, effectiveness, efficiency & flexibility)
Built our own Asset Physical Inventory Process in SAP using customized ABAP code
Process and Programs are owned by Central Property Accounting Dept.

9. Features of Monsanto’s Physical Inventory Process
Flexibility in selecting asset population
2 sampling methods (monetary unit statistical sampling & non-statistical random sampling); sampling method can be different for each asset class
Flexible confidence levels, precision & sample %’s
Ability to exclude recently inventoried assets from sample selection by class
Ability to generate Excel Spreadsheet to send to inventory sites
Ability to load inventory results into SAP for master data update & results evaluation
Option to update asset master record with new physical inventory date
Assigns Pass/Fail rating for statistically sampled assets

10. Technical Components 4 Seamless SAP ABAP Programs
Population Selection
Define Sampling Criteria
Selects Assets & outputs selected assets to Excel
Calculation of results and update of asset records (BDC session - batch data communication)
2 SAP customized tables
Captures selection criteria and population and sample amounts by class (used in results evaluation)
Captures each asset, master data & values of assets selected for physical inventory & results of physical inventory
Unix Server Accessed
Provides intermediate storage for population and sample selection files

11. How System Functions – Population Selection
Population – set of assets about which you want to form a conclusion
Rules/Features
The definition of the population should match the objectives
Population should only include active assets (handled in programming code)
Population selected should be consistent with how you want inventory results to be evaluated. - i.e. should results be evaluated by company code, site, person responsible, etc. (selected by end-user)
Gross BV and Net BV input selection fields allow user to select or exclude assets with specified GBV or NBV.
Report generated that lists assets selected in population sorted by asset class.
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

12. How System Functions – Population Selection (cont)
Population Selection Screen
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

13. How System Functions – Population Selection (cont)
Population Report Generated
Must decide which data fields are pertinent to verify your population
After User Verifies Population, click the Define Inventory Methods to go to the next program (Define Inventory Method & Selection Criteria)
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

14. How System Functions –Define Asset Selection Criteria
Sampling Criteria – how should assets be selected from the population for physical inventory
Rules
Assets selected are grouped by class due to the flexibility to choose a different sampling method for each asset class (i.e. , user may decide to do a 100% count for asset classes with few assets or high risk assets and a statistically sample for asset classes with a significant amount of assets or less risky classes).
Each asset class represents its own population for purposes of selecting assets to be inventoried and results evaluation.
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

15. How System Functions –Define Asset Selection Criteria
Selection/Sampling Methods Offered
Non-Statistical Random Selection – method can be used when user opts to perform a complete count of assets over a specified time period. Includes the ability to include/exclude assets based on last inventory date
Monetary Unit Statistical Sampling – assets are statistically chosen based on user entered confidence level and precision error rate
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

16. Monetary Unit Statistical Sampling
Also known as “dollar unit sampling” and “proportionate to size sampling”
With monetary unit sampling the data is treated as a stream of dollars and each dollar has a chance of being selected. The likelihood that a given record will be selected is directly proportional to the size of the item. Thus, to ensure that the sample does not include just high value items we separate assets into 3 stratums (high, medium and low value) and statistically select assets from each stratum.
Terms that must be understood to perform monetary unit sampling:
Confidence Level% – the reliability the sample should generate
Precision % - the maximum % of error you are willing to accept in the population without detection
Based on the confidence level and precision percentages, the program performs statistical calculations using internal tables and formulas to select assets from each asset class marked for statistical sampling
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

17. Non-statistical Random Sampling
Also called “representative” or “proportionate” sampling because all groups should be proportionately represented
Each member of the population has an equal chance of being selected
User specifies % of dollar population they want sampled. % is multiplied by population total to determine dollar limit. System selects a randomly generated number (k) and every kth member of population is selected until dollar limit is reached.
Considered non-statistical because we do not use statistical calculations to express the results of the audit sample
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

18. How System Functions –Define Asset Selection Criteria
If performing a monetary unit statistical sample the confidence and precision % fields must be completed
If performing a non-statistical random sample, the sample% field should be completed and confidence & precision fields left blank
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.
Click Select Assets button to view assets selected

19. How System Functions –Sample Selected
Report with assets selected to be inventoried is generated; User can remove columns not necessary for site to perform inventory
User clicks Update tables button to update tables with sampling data
User uploads this report to excel
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.
Sends excel spreadsheet to site
Site completes inventory and sends completed excel sheet back to user

20. How System Functions – Upload of Completed Excel Spreadsheet into SAP
The excel file uploaded back into SAP must contain specific columns. The file is compared to the custom table to ensure that each asset sampled is included in the spreadsheet uploaded back into the system
The found column is where the site indicates whether the asset was found. (Y or N)
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.
There is a column to enter error amounts in assets value

21. How System Functions – Upload of Completed Excel Spreadsheet into SAP
User uploads Excel text file to SAP
If the user is ready to update the tables and last inventory date, check upload box. T-Code AS02 (change asset) is accessed in order to update the last inventory date
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.
Several print options are available
Uses a BDC (Batch Data
Conversion) session to load data

22. How System Functions –Results Evaluation
What’s needed to perform results evaluation
Customized table 1 that stores each instance by asset class and includes unique file identification, asset class population value, # of assets in population, # of assets in sample, sampling method, etc.
Customized table 2 that stores all necessary data for each asset selected for physical inventory (i.e., asset number, class, value, etc.)
Internal reference tables for calculation of results for asset classes in which monetary unit statistical sampling was chosen (overstatement chart, understatement chart, reliability table, etc.)
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

23. How System Functions –Results Evaluation
Summary of Output
Reports of evaluated results – pass/ fail grade assignment for asset classes using monetary statistical sampling; % of dollars incorrect for asset classes using non-statistical random selection
Last inventory date in the asset master record updated
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

24. How System Functions – Results Evaluation (Example of Overall Non-Statistical Results Summary)
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

25. How System Functions – Results Evaluation (Example of Statistical Monetary Results Summary for Asset Class 2100)
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

26. How System Functions – Results Evaluation (Example of Overall Results for an Entire Population)
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.

27. System Flow Excel File SAP Customized Tables Site performs
Inventory and
Updates Excel
sheet
Unix Server File
Non SAP
Excel File
System selects
Sample and generates
report which is exported
to excel
User defines
Sampling method
& Criteria
User Defines Population
Tables Updated
Evaluation reports
Generated & asset
master data updated
w/ last inventory date
SAP Process
Similar to selection screen for asset balances report.
Unique file identifier allows user to add a name and year (I.e. ABC site 2002). If user decides to modify population prior to acceptance of sample criteria – assets included in population is stored on unix server and if user uses the same name, they will be given the ability to override initial population file.
SAP
Customized
Tables
User is satisfied with sample & updates table
Completed sheet loaded
compared to tables for
completeness

28. Any Questions?

29. Thank you for attending!
Please remember to complete and return your evaluation form following this session.
Session Code: 1404