Presentation on Audit under SAP Environment By

Presentation on Audit under SAP Environment By : CA Archit Shah (SAP FI Consultant)

Objective Provide participants with an overview of the necessary aspects needed to understand general SAP concepts, and obtain usable data extractions from SAP for the purpose of serving an Audit

What is SAP? It is SAP and not SAP In German. . . Systeme, Anwendungen, Produkte in der Datenverarbeitung In English. . . Systems, Applications & Products in Data Processing

Cont…. IT’S AN APPLICATION DRAWING DATA FROM DBMS (Database) CONFIGERATION IS VERY EASY AND FLEXIBLE ITS’ CLASSED AS AN ERP SYSTEM SECURITY AUTHORIZATION CAN BE DONE AT DIFFERENT LEVELS AND IS VERY COMPLEX AS WELL AS EASY APPLICATION PROGRAM – CONTROLS RECORDING UPDATING AND READING DATA FROM DATABASE IN REAL TIME

SAP and ERP Enterprise Resource Planning (ERP) An information system designed to integrate and automate the business functions of medium and large companies Purchasing Manufacturing Distribution Personnel Financials & Controlling Slide 5

ERP Major Players

SAP -R/3 Enterprises - Application components

SAP R/3 –Architecture -3 Layers

Learn the Lingo DOC Type DOC Number Goods Issue (GI) Goods Receipt GR) GRIR Account Intermediate Document (Idoc) Work Breakdown Structure (WBS) Assets Under Construction (AUC)

Learn the Lingo (cont’d) Stores Inventory Advanced Business Application Program (ABAP) Audit Information System (AIS)

SAP R/3 Overview

SAP Architecture Legacy SAP Separate ledger for A/P transactions All transactions are included in one ledger Differentiate transactions by GL Account Differentiate transactions by document type One entry contains all relevant information Relevant information recorded in multiple documents

SAP Architecture (cont’d) The basic structure of SAP is fundamentally different from that of a legacy system.

SAP Advantages

SAP Business Processes

SAP R/3 Modules

SAP Tables-General

Purchase Order Invoices

Purchase Order Invoice Example 1 Use Tax Accrued (No tax on vendor invoice) Goods Receipt Material Cenvat Clearing GR/IR Clearing 100. 00 12. 36 - 112. 36 Invoice Receipt GR/IR Clearing Vendor ABC Company Excise Credit Cenvat Receivable E. Cess Hcess Cenvat Clearing 10. 00 2. 00 12. 36

Purchase Order Invoice Example 2 Tax Paid to Vendor (Amounts include estimated tax)

Purchase Order Invoice Example 1 Price difference Goods Receipt Material Cenvat Clearing GR/IR Clearing 100. 00 12. 36 - 112. 36 - 111. 36 1. 00 Invoice Receipt GR/IR Clearing Vendor ABC Company Rate Difference/Material Excise Credit Cenvat Receivable E. Cess Hcess Cenvat Clearing 10. 00 2. 00 1. 00 - 12. 36

Non-Purchase Order Invoice

Non-Purchase Order Invoice Example 2 Use Tax Accrued (No tax on vendor invoice)

SAP Tables-Examples

Audit Challenge

Audit Challenge (cont’d)

R/3 Financials (Financial Accounting -FI Module)

Lessons Learned

Methods for Data Evaluation

Audit In SAP

Business Audit

Control Compliance Parked Document Allows for entry and storage of an unfinished document in the system. A “parked” document is pending posting (No financial Effect and used for dual controlling) and once it is posted by authorized person document is posted with the same document number.

Cont… Hold Documents Same as Parked documents but the same can be posted by the same person who have put the document on hold. Once it is posted new document no is generated. Posted Documents Once the document is posted it effects the financials of the company.

Cont. . While doing auditor must take special care about the document which are put on parked / hold and find out the reason about the same. Auditor should also see that the document which were parked/hold and later on posted the duration between these two as it should not be longer and if so then ask the reason about the same.

SAP R/3 T-codes with Screen Let’s See some Screen Shot for SAP R/3 with their T-codes which are useful for conducting the Audit work

SAP R/3 Document Display

Cont… You can compare it with Organizational hierarchy of Authority and responsibility (Who is authorized to approve the document and who had entered and posted the document). You can also view that the period open till what date and whether it is Approved by the management that the period should be open for such time.

General Ledger Line item view (T-code : Fbl 3 n)

Display General Ledger Balance(T-Code: FS 10 n)

Vendor Line Item display (T-code : Fbl 1 n)

Cont… Form above if you subtotal the field of clearing document it will show you the document with it clearing document together so that you can confirm that the document is cleared either by making payment or reversing the same together.

Vendor Balance Display (T-code: Fk 10 n)

Cont… Special G/L Tab shows you whether the company had paid advance payment to the supplier as it is not regular payment it is shown as special transaction and hence it is not displayed in regular transaction and shown as special G/L.

Customer Line Item display (T-Code: Fbl 5 n)

Customer Line Item display (T-Code: Fd 10 n)

SAP R/3 Asset Balance Display (T-Code – AR 01)

SAP R/3 Asset Depreciation Display (T-Code –AR 03)

A. I. S Limitations

Web Hot Links

Another Product We had seen SAP R/3 now let’s see another product of SAP i. e. SAP Business One which is specially designed to serve Small Medium enterprises

SAP Business one SAP Business one – target customers are Small Medium Enterprises Not much complex as well as costly as compared to SAP R/3 Menu driven and not T-code driven as SAP R/3 Not much customization is possible No modules needs to buy entire package and Restrictions can be done on the basis of License purchased

Cont. More or less Serves to all manufacturing process except HR and AM (Asset Management) Limited MRP and Production customization is possible External soft ware can be connected to SAP Business One either by using SDK or DTW (SAP B-One tools).

Cont… Now Let’s See some screen shots and reports in SAP Business One

SAP B-One –Home Screen

SAP Business One Screen Restrictions

SAP B-One –COA

SAP B-One –Analysis for Sales Report

SAP B-One –Open Items (Sales)

SAP B-One – Sales Reports

SAP –Business One Financial Reports

SAP Business One GL Report

SAP Business One GL Report - 1

SAP Business One Journal Document Report

SAP Business One Journal Document Report -1

SAP Business One - Customer Aging Report

SAP Business One Customer Aging Report -1

SAP Business One – Balance Sheet Comparison

SAP Business One – Various Banking Reports

SAP Business One Trial Balance

SAP Business One – Customized Reports

SAP Customized Reports Are prepared by the programmer as per requirement of management which are not fulfilled by standard reports While reviewing from customized reports auditor must compare with the SAP standard report because SAP Standard reports are fully tested by SAP team as well as SAP Consultants.

Thanking You I am honored to have been given this opportunity to present my esteemed colleague members Presentation on Audit under SAP Environment which would be helpful to you.