Financial Terms in SAP

1. Business Area 2. Chart of Accounts 3. Client 4. Commitment Item 5. Company Code 6. Controlling Area 7. Cost Center 8. Cost Center Group 9. Cost Element 10. Cost Object 11. Cost Sharing 12. Cost Sharing (Committed) 13. Cost Sharing (Nonreportable/Voluntary) 14. Cost Sharing (Reportable/Mandatory) 15. Customer Aging 16. Customer (A/R and S/D) 17. Derivation Rule 18. Dunning (A/R) 19. Financial Management Area 20. Functional Area 21. Fund 22. Funds Center 23. Funds Center Group 24. General Ledger Account 25. Grant 26. House Bank 27. Internal Order 28. Land Grant 29. Letter of Credit 30. Master Data 31. Revenue Element 32. Special Purpose Ledger 33. Sponsor 34. Sponsored Class 35. Sponsored Program 36. Statistical Internal Order 37. Work Breakdown Structure (WBS) Element 38. Workflow

1
Current Terminology: SAP Terminology: SAP Definition: Corporation/Reporting Entity Business Area An organizational unit that requires audited financial statements for external use. Often this corresponds to a separate operational or responsibility area in the organization at the highest level. All Housing and Dining, Hospital, UKRF

Module(s): Example(s):

2
Current Terminology: Chart of Accounts SL Object (Sub) Code and GL Account Controls Chart of Accounts A chart of accounts provides a framework for the recording of values to ensure an orderly rendering of accounting data. The chart of accounts is the operative chart of accounts and is used in both financial accounting and cost accounting. FI, CO, FM Claim on Cash 110000 Salaries 511011 Claim on Cash 1100 Salaries 1101 Accounts Payable 210000 Accounts Payable 2100

SAP Terminology: SAP Definition:

Module(s): SAP Example(s): FRS Example(s):

3
Current Terminology: SAP Terminology: SAP Definition: Training/Development/Production Systems Client In commercial, organizational and technical terms, a self contained unit in an R/3 System with separate master records and its own set of tables. All

Module(s):

4
Current Terminology: Subsidiary Ledger Revenue and Expense Object (Sub) Codes Commitment Item Commitment Items represent budget classifications of revenues and expenditures in the Funds Management Module. Commitment items are linked to the GL account in FI and the revenue and cost elements in CO. With this linkage, transactions posted to the GL account or revenue or cost elements are automatically posted to FM. Commitment items can also be arranged in a multilevel hierarchy where the top nodes are defined for reporting and/or controlling levels. FM Misc Income 449030 Misc Income 0365 Current Expenses 530000 Current Expenses 3050

SAP Terminology: SAP Definition:

Module(s): SAP Example(s): FRS Example(s):

5
Current Terminology: SAP Terminology: SAP Definition: Not Applicable Company Code The highest organizational unit of financial accounting for which a complete selfcontained set of accounts can be drawn up for purposes of external reporting. The University will utilize a single company code (UK00). All

Module(s):

6
Current Terminology: SAP Terminology: SAP Definition: Not Applicable Controlling Area An organizational unit within a company, used to represent a closed system for cost accounting purposes. The University will utilize one controlling area (UK00) that will include a single company code (UK00). CO

Module(s):

7
Current Terminology: SAP Terminology: SAP Definition: Subsidiary Ledger Account Cost Center An organizational unit within a controlling area that represents a clearly delimited location where revenue and costs occur. Organizational divisions can be based on functional requirements, allocation criteria, physical location and/or responsibility for costs. Cost centers will be used for certain current SL accounts. They will replace FRS ledgers 1, 2, 3 (except 35XXXX, 36XXXX), 5, 8 and 9. CO Financial Systems 1012013080 Financial Systems 201308 Haggin 1023170850 Haggin 317085

Module(s): SAP Example(s): FRS Example(s):

8
Current Terminology: SAP Terminology: SAP Definition: Responsibility RollUp Reporting Cost Center Group A hierarchical group of cost centers defined and organized according to selected criteria. (also see Funds Center Group). It can be any group of cost centers used for reporting aggregated data. CO Animal Science State Research

Module(s): Example(s):

9
Current Terminology: SAP Terminology: SAP Definition: Subsidiary Ledger Revenue and Expense Object (Sub) Codes Cost Element A cost element classifies the organization's expenses within a cost object (Examples: cost center, internal order, WBS). A cost element corresponds to a commitment item in FM and the GL account in FI. CO Miscellaneous Income 449030 Miscellaneous Income 0365 Travel in State 530011 Travel in State 3011

Module(s): SAP Example(s): FRS Example(s):

10
Current Terminology: SAP Terminology: SAP Definition: Module(s): SAP Example(s): FRS Example(s): Account Number Cost Object A generic term referring to cost centers, internal orders, and WBS elements. All 1012012830 (cost center) 201283 806013140000 (internal order) 601314

11
Current Terminology: SAP Terminology: SAP Definition: Cost Sharing Cost Sharing An agreement by the University to support the costs of certain sponsored projects through University funds, third party sponsors or volunteer time. Cost sharing is normally broken into three categories: 1) Reportable/Mandatory 2) Committed, and 3) Non Reportable/Voluntary. SAP will allow cost sharing to be budgeted and recorded along with the grant in Grants Management (GM) by identifying the funding sources in the grant master data. GM

Module(s):

12
Current Terminology: SAP Terminology: SAP Definition: Cost Sharing (Committed) Cost Sharing (Committed) Cost sharing that was included in the proposal document that resulted in an award to the institution. This cost sharing was not required by the sponsor, but was offered and therefore becomes a commitment of the award. GM 1012054050 Bucks for Brains Summer Student Research 205405 Bucks for Brains Summer Student Research

Module(s): SAP Example(s): FRS Example(s):

13
Current Terminology: SAP Terminology: SAP Definition: Cost Sharing (Nonreportable/Voluntary) Cost Sharing (Nonreportable/Voluntary) Cost sharing that was neither required by the sponsor, nor included in the proposal. These are costs that were unanticipated by either party. For example, an investigator may have recorded that the planned effort would be 10 percent of the academic year effort. In reality, the investigator spent 12 percent of the academic year effort working on the grant. The extra 2 percent would be considered nonreportable/voluntary cost sharing. Currently, this type of cost sharing is only reflected in FES. GM

Module(s):

14
Current Terminology: SAP Terminology: SAP Definition: Cost Sharing (Reportable/Mandatory) Cost Sharing (Reportable/Mandatory) Costs required to be reported to the sponsor as detailed in the request for proposal, sponsor guidelines or award document. GM 1013601000 Cost Share Community Outreach Partnership Center Program 360100 Cost Share Community Outreach Partnership Center Program

Module(s): SAP Example(s): FRS Example(s):

15
Current Terminology: SAP Terminology: SAP Definition: Not Applicable Customer Aging An aging schedule of accounts receivable invoices is used to review customer accounts for delayed payments. (Also see Dunning) FI

Module(s):

16
Current Terminology: SAP Terminology: SAP Definition: Customer (A/R and S/D) Customer (A/R and S/D) A business partner from whom receivables are due for, among other things, goods delivered, services performed and rights transferred, and/or a business relationship exists, involving the issue of goods or services. Used for grant sponsors, employees for direct benefit billing and county appropriations. FI

Module(s):

17
Current Terminology: SAP Terminology: SAP Definition: Not Applicable Derivation Rule A rule defined by IFTHEN logic which controls how certain target characteristic values are derived automatically from source characteristic values. This rule will be used to minimize entry of the account string to only those elements that vary or for which entry is required. All The functional area will be derived from the cost center.

Module(s): SAP Example(s):

18
Current Terminology: SAP Terminology: SAP Definition: Dunning (A/R) Dunning (A/R) Provides the ability to evaluate accounts receivable and send notifications of invoices that are past due. Dunning incorporates many parameters, but normally the length of time an invoice is overdue is key to determining which notices to send. (also see Customer Aging) FI, CM

Module(s):

19
Current Terminology: SAP Terminology: SAP Definition: Not Applicable Financial Management Area SAP defines a financial management area in R/3 as the organizational unit within an institution used to represent budgeted and actual revenues and expenses. FM

Module(s):

20
Current Terminology: SAP Terminology: SAP Definition: PCS Code Functional Area SAP defines the functional area as a master data element that is maintained within the Funds Management (FM) Module. It is used in FI to classify revenues and expenditures of an organization by function. Functional area is often referred to as mission. The functional area will be derived from the cost center. FI, FM Instruction, Academic Support, Research

Module(s): Example(s):

21
Current Terminology: SAP Terminology: SAP Definition: General Ledger Account (Map Code Account) Fund A separate and distinct fiscal/accounting object containing a selfbalancing set of accounts used to budget and control costs and to identify source and use of funding. Financial data will be separated by Funds so that certain activities can be performed or objectives achieved in accordance with special regulations, restrictions, or limitations. Fund is not hierarchical. The Fund is the lowest level at which a balance sheet can be created. FI, FM 0011000100 Presidents Office University General Fund 010001 Presidents Office University General Fund

Module(s): SAP Example(s): FRS Example(s):

22
Current Terminology: SAP Terminology: SAP Definition: Not Applicable Funds Center An organizational unit within the Funds Management (FM) Module. It represents the lowest level area of responsibility for budgetary monitoring and controlling costs by area of responsibility. Fund centers are arranged in a multilevel hierarchy where a parentchild relationship is defined for reporting and/or controlling levels. For the University of Kentucky, Fund Centers will have a onetomany relationship with cost centers. FM 1012530060 Animal Science Research State Funds (funds center) 1012530160 Beef Cattle Nutrition Research (cost center) 1012530260 Swine Nutrition Research (cost center) 1012530060 Animal Science Research State Funds (cost center) 253006 Animal Science Research State Funds (parent) 253016 Beef Cattle Nutrition Research (child) 253026 Swine Nutrition Research (child)

Module(s): SAP Example(s): FRS Example(s):

23
Current Terminology: SAP Terminology: SAP Definition: Department, College, Area RollUps for budget monitoring Funds Center Group Funds Centers can be grouped together to form funds center groups (not necessarily hierarchical). Funds Center groups will be used to provide the organizational structure for reporting information from the SAP system. Budgeting will be done at the Funds Center level. FM

Module(s):

24
Current Terminology: SAP Terminology: SAP Definition: Account Controls/Object (Sub) Codes General Ledger (GL) Account A structure that records values and represents assets, liabilities, revenues, expenses and fund balances. A G/L account has transaction figures that record changes to the account during a posting period. These figures are used for financial reporting. FI Claim on Cash 110000 Salaries 511031 Claim on Cash 1100 Salaries 1102 Accounts Payable 210000 Accounts Payable 2100

Module(s): SAP Example(s): FRS Example(s):

25
Current Terminology: SAP Terminology: SAP Definition: Grant, Contract, Cooperative Agreement Grant Contains financial conditions and legal rules agreed upon by the sponsor and the University which may require financial reporting. It can cover project costs partially or in total. It has a limited life cycle, split into phases, indicated by a system status in GM as follows: Proposal: The proposal is a complete formal document, including budget. Award: If the sponsor approves the grant, an award is received. This is the operative phase of the grant. The budget is released in whole or in part in this phase. Conclusion: If an award is expired, but not closed, then it is in the conclusion phase. There are posting restrictions on the grant in this phase. Final Conclusion: The grant has expired and been closed. It can be archived, but no other actions are allowed. Terminated: The grant was terminated, either for internal reasons or because the sponsor rejected the application. GM

Module(s):

26
Current Terminology: SAP Terminology: SAP Definition: Disbursement Bank House Bank A business partner that represents a bank through which the University can process its own internal transactions. The University has four checking accounts with National City Bank. The vendor account Bank 01 in FRS, maintains a specific account, which is the major disbursement account the University utilizes to pay its vendors. Other accounts are established for a specific disbursement purpose or for a restricted disbursement purpose. FI

Module(s):

27
Current Terminology: SAP Terminology: SAP Definition: Job Order (6XXXXX Accounts) Internal Order Similar to a cost center, an internal order is used to record and monitor costs and, in some cases, revenues. A guiding principle is that internal orders should be set up for programs that are shortterm or finite in nature. CO

Module(s):

28
Current Terminology: SAP Terminology: SAP Definition: Agriculture Federal Formula Funds/Appropriations Land Grant Agricultural Research and Cooperative Extension programs in which funds are distributed by the U.S. Department of Agriculture on an annual basis according to a statutory administrative formula (noncompetitive funding). Eligibility is limited to cooperating land grant institutions. Awarded on a federal fiscal year basis (October 1 September 30). GM, FM Hatch, MultiState Research, SmithLever Extension, McIntire Stennis, Expanded Foods and Nutrition Education Program (EFNEP)

Module(s): Example(s):

29
Current Terminology: SAP Terminology: SAP Definition: Letter of Credit Letter of Credit An agreement between a sponsor and the University to provide payment via Federal Reserve ACH when the University requests reimbursement for grant expenses. These sponsors have a secured system through which the University requests payment. GM Department of Health and Human Services, National Science Foundation

Module(s): Example(s):

30
Current Terminology: SAP Terminology: SAP Definition: Attributes/Data Elements Master Data Master data form a pool of information stored on a long term basis in the SAP system and can be incorporated into individual transactions. Master data are entered once and can be modified as needed. All The master data of a cost center contain the name of the cost center, the person responsible for the cost center, and the corresponding hierarchy area. The master data of a vendor contains the name, address, and bank information for the vendor.

Module(s): SAP Example(s):

31
Current Terminology: SAP Terminology: SAP Definition: Revenue Subcodes Revenue Element A revenue element classifies the organization's revenue within a fund center. A revenue element corresponds to a cost element in CO and the GL account in FI. CO

Module(s):

32
Current Terminology: SAP Terminology: SAP Definition: Not Applicable Special Purpose Ledger (SPL) A special purpose ledger provides the ability to produce balance sheets based on fund accounting. Most of the financial activities updating general ledger accounts will be posted to the special purpose ledger simultaneously as transactions are processed. It uses the split processor functionality to create entries to balance transactions among funds. The SPL shares the same GL accounts as FI. The difference between the two is that the SPL will break the transaction down even further to allow the correct split by fund and business area. FI 210000 Accounts Payable

Module(s): SAP Example(s):

33
Current Terminology: SAP Terminology: SAP Definition: Sponsor Sponsor An organization or other source that finances a project conducted by University personnel. The sponsor may agree to fund the project in total or in part based upon an application or proposal provided in response to a request for proposal. The sponsor may be a government agency, company, foundation, or individual interested in furthering study or interest in a particular area and is entitled to receive some consideration or benefits. The agreement from the sponsor represents a contractual obligation for performance of the specific activity by the University. GM

Module(s):

34
Current Terminology: SAP Terminology: SAP Definition: Sponsored Class Sponsored Class The sponsored class represents the sponsor's expense and revenue classification. The sponsored class is used to group expenses and revenues in order to satisfy the sponsor's view and reporting needs. It is also used to specify in detail which expenses are relevant for billing and for indirect cost calculation. GM Salaries, Materials and Supplies, Equipment

Module(s): Example(s):

35
Current Terminology: SAP Terminology: SAP Definition: PCS Code Sponsored Program This master data element is maintained within the Grants Management (GM) Module. It is used to classify revenues and expenditures of a grant by mission. Sponsored Program is equivalent to functional area in FM. GM

Module(s):

36
Current Terminology: SAP Terminology: SAP Definition: User Code Statistical Internal Order An internal order created and maintained by a department user to accumulate costs and revenues for internal reporting purposes. These orders are created using master data functionality and may be short or longterm in nature. The user may enter the statistical internal order number on a posting transaction to make a real posting to a cost center and simultaneously make a statistical posting to the internal order to track department specific activity. CO A department may want to accumulate costs and revenues associated with a conference. A statistical internal order may be created to track these costs for a fiscal year or across fiscal years as needed. Each transaction for the conference will contain an entry in the cost center and the internal order field when posted. Once entries are posted, the statistical internal order may be used for reporting as needed.

Module(s): SAP Example(s):

37
Current Terminology: SAP Terminology: SAP Definition: Not Applicable Work Breakdown Structure (WBS) Element A cost object, similar to an internal order, used to represent grants, land grants and capital projects in the Controlling Module of SAP. When used for grants, the WBS element represents a grant in the Controlling Module and is used to post transactions to the grant in the Grants Module (GM). When used for capital projects, the WBS element represents a Project in the Controlling Module (CO) and is used to post transactions to the capital project in Project Systems (PS). PS Milestone invoicing

Module(s): Example(s):

38
Current Terminology: SAP Terminology: SAP Definition: Not Applicable Workflow The sequence and evaluation of conditions needed to complete a business process. This is an electronic function monitored by the workflow manager within SAP. All A possible workflow could be the electronic approval of requisitions based upon material group, dollar amount and cost center. Based on the evaluation of these conditions, the requisition would be forwarded from the originator to the next appropriate user for approval. As the approvals occur, workflow will automatically route to the next level of required approval, and ultimately to the Purchasing Department.

Module(s): Example(s):