SAP Audit Guide for Financial Accounting

SAP Audit Guide for Financial Accounting

This audit guide is designed to assist the review of financial reporting processes that rely upon automated functions in SAP systems. The specific areas examined in this guide are relevant configurables, transactions, authorizations and reports in the General Ledger (GL), Asset Accounting (AA) and Bank Accounting (BA) components of the SAP Financial Accounting module. The guide provides instructions for assessing SAP application-level controls in the following areas of financial statement audits: Reporting Structure Chart of Accounts Journal Entry Posting Period End Close Foreign Currency Translation Inter-company Transactions Asset Management and Reporting Cash Management 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 Revenue, Inventory, Expenditure, Human Resources and Basis. Reporting Structure The financial reporting structure in SAP is determined by the organization of reporting units known as company codes. There can be multiple company codes within organizations with each code corresponding to a unique economic entity. Financial Accounting SAP Audit Guide Reporting entities in differing countries should have unique company codes since they may be subject to divergent accounting and tax requirements. Each company code has one domestic currency and up to two additional currencies to support financial reporting in multiple currencies. Company codes must be set to productive to prevent the deletion of transactional data. This can be verified through transaction code OBR3 or Table T001 through transaction SE16.

2 The company code structure should correspond to the legal reporting requirements of the company under review. The appropriateness of the structure should be reviewed through the menu path IMG> Enterprise Structure> Financial Accounting> Define Company, transaction OX15 or table T880 (note that IMG can be accessed through transaction SPRO). Relevant global parameters in IMG should also be reviewed. This includes areas such as Country Keys, Currencies, Controlling Areas, Credit Control Areas, Fiscal Year Variants, Sales and Purchasing Organisations, Business Areas and Plants, and Cost and Profit Centers (IMG> Enterprise Structure> Financial Accounting> Global Settings> Company Code> Global Parameters). Access to transactions such as OXO2 (edit company code) and EC01 (copy, delete and check company code) and the client configuration table T001 should be based on role requirements. Other critical transaction codes are listed in the Table A. TRANSACTION OB37 Assign Company Code to a Fiscal Year Variant OBB9 Assign Posting Period Variants to Company Code OKBD Define Functional Area OXO3 Define Business Area FM_FUNCTION Define Functional Area OXO6 Maintain Controlling Area KEP8 Create Operating Concern Table A: Company Code Transactions TRANSACTION OX16 OB38 OF18 OX19 OX18 OVX3 OX01 OH05 OBB5 OBY6 Assign Company Code to Company Assign Company Code to Credit Control Area Assign Company Code to Financial Management Area Assign Company Code to Controlling Area Assign Plant to Company Code Assign Sales Organization to Company Code Assign Purchasing Organization to Company Code Assignment of Personnel Area to Company Code Cross-System Company Codes Enter Global Parameters Chart of Accounts The chart of accounts is the container for General Ledger (GL) accounts and the basis for journal entry posting and financial reporting. Chart of Accounts can be company code specific or cover multiple companies in a single SAP client. GL accounts are assigned to specific groups determined by account type. The field status for account information and the numbering interval is determined at the group level. The configuration of all or a sample of account groups should be reviewed to assess which fields are required, optional, displayed or suppressed during the creation of a new account and to ensure that account numbering follows a logical and consistent policy. This can be performed through the menu path General Ledger Accounting> G/L Accounts> Master Data> Preparations> Define Account Group or transaction OBD4. The structure of the Chart of Accounts should also be reviewed through transaction FSP3 to assess account groupings and identify the appropriate use of control accounts for AP and AR. The latter are known as reconciliation accounts and are updated automatically. In other words, SAP does not allow manual journal postings against such accounts. This can be performed through transactions KALE and OK17.

3 Changes to the chart of accounts should be identified through report RFSABL00, accessible through transaction SA38. Alternatively, changes can be isolated through transactions FS04, FSP4 and FSS4. A sample of changes should be examined for evidence of approval, documentation and testing. Access to SAP functions that enable users to create, modify or delete GL accounts should be restricted and based on business need. This should include transactions in Table B with authorization objects F_SKA1_KTP and F_SKA1_BUK and activity levels 01 (create), 02 (change), 05 (block) or 06 (mark for deletion). Journal Entry Posting SAP is preconfigured with hundreds of document types for purchase orders, customer invoices, good receipts and many other transactions. Each document type has a unique 2 or 3 letter identifier and a specific numbering range. Particular attention should be paid to the GL account assignments for SAP documents since transactional data is automatically posted by the system based on the assignments defined in the system configuration. These should be reviewed through transactions OBA7 (Define Document Types) and OB41 (Posting Keys). Samples selected for review should include custom documents which are more likely to have assignment errors than standard SAP documents. TRANSACTION FS01 FS02 FS00 FS05 FS06 FSS1 FSS2 FSP0 FSP1 FSP2 FSP5 Create Master Record Change Master Record G/L Acct Master Record Maintenance Block Master Record Mark Master Record for Deletion Create Master Record in Company Code G/L Acct Master Record in Chart/ Accts Create G/L Acct Master Record in Chart/Accts Cross-System Company Codes Change G/L Acct Master Record in Chart/Accts Block Master Record in Chart / Accts Monetary limits for journal entries, cash discounts, payment or receipts differences should be defined for document types. These can vary by company code and employee group. Tolerance levels should be reviewed through transactions OBA4 and OB57. This should include clearing procedures for critical accounts such as GR/IR. SAP should also be configured to control posting to prior periods even though the system is capable of keeping open multiple periods at the same time. This is performed through rules defined in Posting Period Variants, part of the Financial Accounting Global Settings. Note that back posting settings in Logistics can also be configured to allow posting to prior periods. Both of these areas should be reviewed in the IMG. SAP Business Workflow is used by many companies to review values and account assignments prior to posting journal entries. If enabled, the relevant settings for workflow variants, company codes, and approval paths and groups should be examined under Financial Accounting Global Settings> Document> Document Parking. This should include a review of fields that would cause a release to be revoked if changed after approval, which would lead to the restart of the release procedure. Mark Master Record for Deletion in FSP6 Chart/Accts Table B: GL Account Transactions BusinessObjects Planning and Consolidation (BPC) and BusinessOne should be configured to block unbalanced journal entries. In the former, this can be verified through the JRN_BALANCE parameter. The parameter should be set to 1 (Journals need to be balanced). The default value is 0 (Journals need not be balanced). In the latter, the field for Block Unbalanced Journal Entry should be checked in Administration> System Initialization> Document Settings> Journal Entry.

BPC should be configured to block unbalanced journal entries through the JRN_BALANCE parameter 4 The ability to create, change, delete and reverse journal entries should be restricted to authorized employees. This includes transactions in Table C with authorization objects with the prefix F_BKPF_ and suffix BUK, KOA, GSB, and BLA and activity levels 01 (create/ enter), 02 (change), 06 (delete) and 77 (pre-enter/ park). TRANSACTION FB08 FB02/ FB09 FBL4 Reverse Document Change Document Change G/L Account Line Items TRANSACTION F-03/ FB1S Clear G/L Account F-02 Enter G/L Account Posting F-21/ F-42 Enter Transfer Posting FB01/ FBR2 Post Document FB05 Post with Clearing FB11 Post Held Document FB21 Enter Statistical Posting FBV1 FBV2 FBV4 FBD1 FBD2 Park Document Change Parked Document Change Parked Document Header Enter Recurring Entry Change Recurring Entry FB50 FBV0/ FBVB FBR1 F.81 FB08 G/L Account Posting Post Parked Document Post with Reference Document Reverse Accrual Deferral Document Code Reverse Document F.14 Execute Recurring Entry F.56 Delete Recurring Entry Table C: Journal Entry Transactions F.80 Mass Reversal of Documents

5 Period End Close The period end close process extends across many different SAP applications including SD, MM and PP. However, the majority of steps are performed within the FI and CO area. Audit procedures for the process should be tuned for each specific client since the process varies between organisations. As a guide, Table D lists the SAP transactions commonly used during the period end close process in sequential order. Together with the transactions listed in Table D, user access to SAP functions that control the opening and closing of financial periods should be tightly controlled. This should include transaction OB52 (opening and closing FI posting periods) and OBBP (define variants for open posting periods) with authorization object S_TABU_DIS and activity level 02 (change). TRANSACTION FBD1 Enter Recurring Document F-03 Manual Clearing General Ledger F-32 Manual Clearing Accounts Receivable F-44 Manual Clearing Accounts Payable FB50 Post Adjustment Entries FAGL_FC_VAL Foreign Currency Revaluation AIAB Order Settlement (Asset Under Construction) TRANSACTION AFAB Depreciation Run S_BCE_680001 74 Update Exchange Ranges ASKBN FB50 Periodic Asset Posting Automatic GR/IR Clearing VL10/ VL10A Ensure Movements are complete KSA3 Accrual Calculation MIRO Record Purchase Order related AP Transactions MRN0 CK11N Stock Valuation Inventory costing MRBR Release Blocked Invoices CK24 Price Update VXF3 MMPV OB52 CJ8G KKS1 CO88 CO02 Release Billing Documents for Accounting Open Period for Material Master Records Open and Close Posting Periods Calculation of Work In Process (WIP) Prod. and Process Order Variance Calculation Settlement PP Order PP Order (close) FB50 Stock value adjustment ENGR Create Intrastat / Extrastat periodic declaration S_ALR_870123 57 Advance Return for Tax on Sales/ Purchases FB41 Post Tax Payable F.52 Balance Interest Calculation Table D: Period End Close Transactions

6 TRANSACTION S_ALR_87012289 S_ALR_87012287 FF7A OB52 KE30 S_ALR_87012284 S_ALR_87005830 CK40N Compact Document Journal Document Journal Cash Position & Liquidity Forecast Open and Close Posting Periods Run Profitability Report Financial Statements Controlling Maintain Versions Costing Run Asset Management and Reporting The Financial Accounting Asset Accounting (FI-AA) component is responsible for managing fixed assets in SAP ERP. It serves as a subsidiary ledger to the FI GL, providing detailed information on transactions involving fixed assets. AA integrates directly with other FI components such as Materials Management (MM) and Plant Maintenance (PM) and manages assets reporting from acquisition to disposal or retirement. The component also tracks, depreciates and reports upon leased assets and assets under construction. Asset classes in SAP should be configured in line with country-specific requirements. Therefore, asset classes and the associated descriptions should be reviewed through transaction OAOA (define asset classes). S_ALR_87008275 Define Percentage Overhead (actual) AFAR Recalculating Values ABST2 Account Reconciliation AJRW Fiscal Year Change AJAB Year-end closing Asset Accounting F.07 Carry Forward AP/AR Balances FAGLGVTR Carry Forward GL Balances FAGLF101 Regrouping Receivables/Payable F.17 Balance Confirmation Receivable F.18 Balance Confirmation Payable OB52 Close previous account period S_ALR_87012284 Financial Statements S_ALR_87012287 Document Journal Table D: Period End Close Transactions cont. Depreciation keys should be defined for each asset class. The keys define the rules for calculating depreciation such as straight line or declining balance. They also control the useful life of assets. Auditors should review the configuration of all or a sample of depreciation keys through transaction AFAMA (View Maint. for Deprec. Key Method). Depreciation postings can be reviewed through transactions AFBP and AR25. Transaction ABST displays the reconciliation between asset accounting and the general ledger. If the SAP Project System (PS) is operating alongside FI- AA, the relevant availability controls should be reviewed in PS. These regulate the thresholds for asset acquisitions in excess of approved, budgeted amounts which, if configured correctly, can be blocked altogether. This can be performed through transaction OPS9 and the menu path IMG> Project System> Costs> Budget> Define Tolerance Limits. An audit of FI-AA should include a review of user access to transaction codes that provide the ability to change AA master data including asset groups and depreciation tables, as well as acquire, depreciate and dispose fixed assets. These are listed in Table E. The review should focus on authorization objects A_A_VIEW, A_S_ANLKL, A_B_BWART, F_BKPF_BUK, A_S_ANLGR, A_PERI_BUK, S_BDC_MONI, or A_C_AFAPL with activity levels 01, 02 and 06.

TRANSACTION AS01 AS02 AS05 AS06 Create an Asset Modify Asset Block Asset Master Record Delete Asset ABZE Acquisition from in-house production ABZK Acquisition from purchase w. vendor F-90 Acquisition w/ Vendor ABZV ABZP AS21 AS22 AS25 AS26 ABZU ABZS ABMA AFAB/ AFABN ABAV/ ABAVN ABAO/ ABAON ABAD Acquisition from clearing Account Asset Acquisition from affiliated company Create an asset group Modify Asset Block group asset Delete an asset group Asset write-up Asset write-up Asset manually depreciate Post depreciation Retire by scrapping Asset Sale Without Customer Asset Retire from Sale with Customer ABANK Retire with cost AR31 Asset mass retirement OAP1 Create chart of depreciation OA52 Close previous account period OAP2 Change chart of depreciation Table E: Asset Accounting Transactions Availability controls should block asset acquisitions in excess of budget 7

8 Foreign Currency Translation Foreign currency exchange ratios and rates are maintained through transactions OBBS and OB08. The underlying tables should be reviewed through these transactions to ensure that ratios and rates are regularly and accurately updated. SAP provides a variety of valuation methods and even provides an option to create custom methods. Custom valuations should be identified and examined very closely. This can be performed through transaction OB59 (foreign currency valuation methods). Automatic postings for foreign currency valuations should be analyzed via transaction OBA1. The assigned accounts are used to record realized/ unrealized gains and losses. This should be followed by a review of foreign currency rounding rules in transaction OB90. Inter-Company Transactions Cash Management Cash Management (CM) is component of SAP TR that is used to monitor payment flows and safeguard liquidity. This component is used to perform bank reconciliations and therefore should be a crucial element of an SAP financial audit. Management should regularly review reports FF.6, FF67, FF7A and FF68 to monitor cash transactions and ensure bank deposits and payments are reflected in the relevant GL accounts. Note that FF67 can be used to import and process bank statements in SAP. Changes to banking master data should be identified through transaction FI04 or report RFBKABL0 and traced to supporting documents to test for authorization, accuracy and completeness. Also, access to critical CM transactions should be reviewed, including those listed in Table F, focusing on authorization objects F_BNKA_BUK, S_TABU_DIS, F_BNKA_MAN, F_FEBB_BUK, S_GUI, F_BKPF_BES, F _ B K P F _ G S B, F _ F D E S _ B U K, F _ R E G U _ B U K, F_REGU_KOA, or F_PAYR_BUK with activity levels 01, 02, 06 and 17 Inter-company reconciliation is often a bottleneck in the financial close process. As a result, some SAP clients have migrated to the Web-based BusinessObjects Intercompany application. This significantly improves the speed and accuracy of identifying, matching and eliminating related party transactions. However, the majority of organizations continue to rely upon a manual process. Related parties are treated as trading partners in SAP and are defined through IMG > Enterprise Structure > Definition > Financial Accounting > Define Company. Once configured, SAP will post documents such as invoices, payments, receipts and asset transfers between related parties to designated inter-company accounts. Intercompany clearing accounts should be identified using transaction OBYA. All such accounts should be reviewed against the relevant financial statement assertions.

TRANSACTION FI12 FI01 FI02 FI06 FF67 FF_5 FEBA FLB2 FLB1 Change House Banks/Bank Accounts Change Master Record Change Bank Set Flag to Delete Bank Manual Bank Statement Import Electronic Bank Statement Post-process Electronic Bank Statement Import Lock box Data Post-processing Lock box Data F-28 Incoming Payments FB05 FRFT FI10 FF/4 FFB4 FF/5 FFB5 FF68 FCHG FF63 FCHX FCHG Post payment with clearing Set Up Repetitive Wire Parameters for Automatic Payment Import electronic check deposit list Import electronic check deposit list Post electronic check deposit list Post electronic check deposit list Manual Check Deposit Transaction Reset cashing/extract data Create Planning Memo Record Check Extract Creation Delete cashing/extract data Table F: Cash Management Transactions 9

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