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

OBJECTIVE AND AGENDA Objective for the session Establish a baseline understanding of core components of the 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

“SAP 101” SAP Ledgers

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

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

Chart of Accounts Balance Sheet Accounts Income Statement Accounts FI FM CO General Ledger Acct Commitment Item Cost Element Balance Sheet Accounts 1xxxxx – Assets 2xxxxx – Liabilities 3xxxxx – Fund Balance Income Statement Accounts 4xxxxx – Revenue 5xxxxx – Expense How transactions post to these objects can vary between modules

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

Organization Fund Cost Object “ACCOUNTS” Company Code Business Area “Accounts” are comprised of three main components Company Code and Business Area are derived today In the future state, Fund and Cost Center will also be derived Organization Company Code Business Area Fund Cost Object Cost Center Internal Order

FundS Represent a particular funding source and restriction Subdivide balance sheet reporting Can split all balance sheet G/L’s by fund Today, some funds are shared (“central revenue”) while others are owned by specific units In the future structure, all funds will be shared And only 61 funds will be used Most departments will use ~6 funds

FundS Three general funds Most units will only use 21010000 21020000 and 21030000 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 - Other

FundS One Services fund One Gift fund, one Scholarship fund Recharges, general service centers, and “ancillary” income producing options will share one fund 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 One Grant fund Grant type will differentiate sponsor types

FundS Other restricted funds Agency (1) Auxiliary (1) Debt (23) Endowment (2) Federal Appropriations (8) Plant (1) Restricted – Other (1) State Line Items (3) Student Aid (3) Student Loans (6) Work Study (4)

ORG STRUCTURE

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

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

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.

Business Area Future State Example Campus ExecutiveSegment

ORG STRUCTURE

Cost Center Future State Represents units FI 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 are accountable for their annual revenue and expenditures 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

Cost Center Structure Three Level Hierarchy 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

Cost Center Future State FI FM CO Cost Center Fund Center Future State 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

“ACCOUNTS” Future State All accounts will have a unique Internal Order (IO) or WBS Element (WBSE) Fund and organizational elements will be derived from the IO or WBSE No longer will be able to tell campus and major unit/college from looking at the cost center

Internal Orders Used for detailed tracking within Cost Centers FI 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 any level of Cost Center Transactions not associated with faculty or construction accounts will post to internal orders in the future state

Internal Orders Internal Order Types FI FM CO Internal Order Funded Program Internal Order Types Enables standard groupings for more better reporting Categorizes accounts by detailed restrictions/ designations Undergrad Scholarships, Graduate Scholarships, etc. Will determine IO numbering

WBS Element (WBSE) Similar to an Internal Order FI FM CO WBS Element Funded Program Similar to an Internal Order Allows for linkages to “projects” Construction projects (C.X0.00000) Faculty* members (F.XXXXXXXX.XX.XXX) Each faculty member will have a project Will be categorized by Project Type Also categorized by “node” *Staff who receive allocations for their personal research/instruction/ engagement activities may also have projects

WBS Element (WBSE) Faculty can see all accounts in one place Allows departments to identify and segregate resources allocated to faculty for their individual activities

ORG STRUCTURE

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

Grant & Sponsored Program FI 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

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

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)

PUBLIC / AVAILABLE Flags that track whether an account contains “public” funding or funding unavailable for debt payments Legislation limits what the university can do with funds from certain sources Will be tracked on individual IO’s/WBSE’s in the future state Currently tracked on individual funds