SAP Audit Guide for Inventory

Transcription

1 SAP Audit Guide for Inventory

2 This audit guide is designed to assist the review of inventory management processes that rely upon controls enabled in SAP systems. The specific areas examined in this guide are relevant configurables, transactions, authorizations and reports in the Materials Management (MM) module of SAP ERP. The guide provides instructions for assessing application-level controls in the following areas: Materials Master Data Goods Movement Physical Inventory Inventory Valuation The guide is delivered using clear, non-technical terms to enable financial and operational auditors to successfully navigate the complexities of SAP security. Other volumes of this guide deal with SAP controls in areas such as Financial Accounting, Revenue, Expenditure, Human Resources, and Basis. Materials Master Data The organizational structure in Materials Management consists of several hierarchal layers including client, company code, plant and storage location. These organizational units are defined and managed in the Logistics area of the Enterprise Structure within the Implementation Guide (IMG) and should agree with the actual structure of the logistics organization. Inventory SAP Audit Guide Information related to products and services is managed through the materials master which integrates directly with other areas of SAP ERP including Sales and Distribution and Financial Accounting. There are several critical configuration areas in the material master that should be closely scrutinized during an audit. This includes posting periods which are set within the Basic Settings for each company code. Posting periods should match periods configured in FI. The materials master should be configured to allow posting to only the current period and the most recently closed period. This is also selected in the Basic Settings. The runtime for the period close program in MM can be several hours and locks any changes to records during including goods receipts, shipments and other movements. Furthermore, global companies with distributed operations can have plants and storage locations

3 2 located in different time zones within the same company code. To minimize any potential conflict and the risk of posting transactions to the incorrect period, runtimes should be set to the timezone with the greatest number of users and posting should be set to local date and time. Other important configuration areas in the materials master are material types (SAP is preconfigured with dozens of material types that are identified through unique three or four-character references), material groups, units of measure and rounding rules for units of measure. The last area is configured through Order Optimizing in the Purchasing area of MM. Note that units of measure may vary according to the organizational unit. Items may be measured in crates at a plant level, for example, and individually at the level of a storage location. Ideally, SAP should be configured to block negative stocks. However, this is often required by organizations when, for example, there is a need to issue goods that have been physically received but not entered into MM. Negative stocks have to be enabled in valuation areas, storage locations and each material master record. For the latter, the Neg. stocks in plant indicator should be checked. Negative stocks should be short-lived and should not be carried forward at period end. TRANSACTION MM01 MM02 MMS1 MMS2 OMS2 OMSY OMSF MB1C MMBE MMPV MMRV DESCRIPTION Create Material Change Material Create Material Master Change Material Master Define Attributes of Material Types Maintain Company Codes for Materials Management Define Material Groups Maintain Stock Create Stock Close Period Allow Posting to Previous Period Required, optional and suppressed fields during the creation of new material records are defined and managed through IMG Logistics General Material Master Field Selection Maintain Field Selection for Data Screens. Mandatory fields should include Tax Indicator for Material and Material Freight Group. Critical fields that do not need to be updated once an initial entry has been made should be set as lock-relevant. This will prevent changes to the field in dialog mode, Locking and unlocking fields in material master records requires authorization object M_MATE_MAF. Access to specific fields in master records should also be restricted through the use of field groups. The creation and maintenance of material master records is performed through transactions MM01 and MM02. Relevant authorization objects include M_MATE_BUK (company code level), M_MATE_WRK (plant level) and M_MATE_MAR (material type level). The key materials master transactions are listed in Table A. Table A: Materials Master Transactions Goods Movement Receipts, issues, transfers, and reversals are defined as movement types in SAP. There are a variety of preconfigured movement types, identified through unique three character references. They perform an important control function by directing updates to stock locations, quantities and values. Standard and custom movement types available in an SAP system can be viewed via transaction OMJJ or through IMG Material Management Inventory Management and Physical Inventory Movement Type. 711 and 712 are used for adjusting differences between book and actual inventories. Reversals are performed through the movement type reference +1. For example, the reversal of a goods receipt for a purchase order (movement type 101) is performed using movement type 102.

4 3 A particular concern is movement type 501, used to enter a goods receipt without a preexisting purchase order. This could be used to receive goods that were neither ordered nor approved. Best practice is to disable the movement type. Another option is to only allow receipts without a purchase order if they are within a specified tolerance level. Delivery tolerances should also be set for receipts with purchase orders. This will limit under and over-deliveries to acceptable levels. Tolerances can be applied and managed through tolerance keys on a company code level. SAP is preconfigured with two tolerance keys for purchase order price and quantity variances. B1 displays an error message when limits are exceeded and blocks the posting of the goods receipt. B2 issues a warning message but will not block posting. Tolerance limits should be specified for each key using transaction OMC0 or through the menu path IMG Materials Management Inventory Management and Physical Inventory Goods Receipt Set Tolerance Limit. The GR message indicator must be selected in purchase orders as prerequisite for tolerance checks. The B1/ B2 tolerance keys check against minimum and maximum variances in price and quantity and therefore have greater application during invoice verification. Material quantity variances can be more effectively controlled through thresholds defined directly in material records using purchasing value keys configured through transaction OME1, purchasing info records and within the items details section of purchase order documents. The use of movement types 103 and 501 should be closely monitored. These enable the receipt of goods into socalled blocked stock which is not recorded in the general ledger. Blocked stock should be accrued at period end if items have not been accepted into inventory during the financial close. The standard report Display material documents can be used to identify receipts into blocked stock. SAP will allow the reversal of a goods receipt even if the corresponding invoice has been verified and processed by the system as long as the RevGR desp. IR indicator is checked for movement type 102 in transaction OMBZ (Rev. GR Despite Invoice). Best practice is to uncheck the indicator and configure a warning or error message for reversal attempts. This is performed through transaction OMCQ (System Messages for Inventory Management). Note that movement type 161 (returns for purchase order) can also be used to process reversals through transaction MIGO. Reversals should be approved before they are processed in SAP and should be referenced to the original purchase order. They should also be entered with the correct reason code to provide a sufficient audit trail. The automatic posting of MM documents to FI accounts is controlled through transaction OBYC (Configure Automatic Posting). Access to this transaction should be restricted. Other key transactions include MB1A (Goods Issue), MB1B (Transfer Posting), MB1C (Other Goods Receipt), MBAD (Delete Material Documents) and, most importantly, the wide-ranging MIGO (Goods Movement). Relevant MIGO authorizations are listed in Table B. M_MRES_BWA M_MRES_WWA M_BEST_WRK M_MSEG_BMB M_MSEG_BWA M_MSEG_ BWE Table B: MIGO Authorizations Physical Inventory AUTHORIZATIONS M_MSEG_ BWF M_MSEG_LGO M_MSEG_WMB M_MSEG_WWA M_MSEG_WWE Physical inventory procedures in companies relying upon SAP for materials management should follow a fixed process flow consisting of three distinct phases. The first phase should involve the creation of a physical inventory document that specifies the plants or storage locations where the count will take place, the timing of the counts and the stock types and materials selected for inspection. This is performed through the menu path Logistics Materials Management Physical Inventory Create Phys. Inv. Docs. Documents can be generated in single form for targeted counts and in session form for counts covering multiple stock types, materials, plants or storage locations. During this phase, SAP places an automatic block on the posting of material which is only lifted when posting the results of the physical count. The actual count should be performed during the second phase and results should be recorded on the physical inventory documents prepared by the system. The final phase of the process should involve entering the results of the count into SAP, analyzing the results and posting inventory differences.

5 Blocked stock is not recorded in the general ledger 4 Count data can be imported from non-sap systems through batch input or Portable Data Capture (PDC). If necessary, recounts should be triggered for specific materials, generating a new set of inventory documents. The block on the movement of goods can be released immediately after the count and before the results are entered into SAP by freezing the book inventory. This will allow logistics to quickly resume normal operations without impacting the count results. The system calculates material differences by comparing counted quantities entered against the book inventory. Differences are adjusted by SAP as results are posted through system generated documents that adjust the relevant materials master records and general ledger accounts. The ability to initiate physical inventory counts and enter or update the results of such counts should be restricted. This includes transactions listed in Table C. TRANSACTION MI07 MI08 MI09 MI10 MI11 MI31 MI32 MI33 DESCRIPTION Process List of Differences Create List of Differences with Doc Enter Inventory Count w/o Document Create List of Differences w/o Doc. Recount Physical Inventory Document Batch Input: Create Phys. Inv. Doc. Batch Input: Block Material Batch Input: Freeze Book Inv.Balanc TRANSACTION DESCRIPTION MI34 Batch Input: Enter Count MI01 Create Physical Inventory Document MI35 Batch Input: Post Zero Stock Balanc MI02 Change Physical Inventory Document MI37 Batch Input: Post Differences MI04 Enter Inventory Count with Document MI38 Batch Input: Count and Differences MI05 Change Inventory Count MI39 Batch Input: Document and Count Table C: Physical Inventory Transactions

6 TRANSACTION DESCRIPTION MI40 Batch Input: Doc.; Count and Dif SM35 Batch Input Monitoring Table C: Physical Inventory Transactions Cont. Inventory Valuation Material valuation should generally be configured at the plant rather than company code level. This can be verified through IMG Enterprise Structure Logistics General Define Valuation Level. Different stocks of the same material are often valuated separately. This is referred to as split valuation. Partial stocks are created by split valuation. When processing transactions such as a goods receipts, goods issue or invoice receipt against materials subject to split valuation, the partial stocks affected by the transaction are selected. Split valuations are configured through the valuation category and valuation type fields in each master record which allow partial stocks to be valued based on country of origin, grade, procurement type and other factors. Material is valuated at either standard price or moving average price. This is controlled through the price control field within the Accounting tab in the master records. If the standard price method is selected, SAP values stock at the price set in the material master and posts any variances during invoice verification and other procedures to designated expense/ revenue accounts. With the moving average price method, receipts are valued at the purchase order price and goods issues are valued by dividing the total value of the stock by the total quantity of stock at the time of the issue. Regardless of which method is used, any adjustment to the material price will lead the system to revaluate the stock. This is performed through transactions MR21 (Material Price Change) and MR22 (Material Debit/ Credit). Balance sheet valuation methods can be either FIFO, LIFO or lowest value determination. This is configured and activated for each valuation area through transactions OMWL (LIFO/ FIFO Global Setting) and OMWE (Activate/ Deactivate LIFO/ FIFO Valuation). Access to material price changes and adjustments should be restricted 5

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