SAP Audit Issues

David Terpening,
New York Dept. of Revenue

Walter J. Cochara, CAS

State of California-Board of Equalization

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

What is SAP?

In German...
Systeme, Anwendungen, Produkte in der Datenverarbeitung

In English...
Systems, Applications & Products in Data Processing

Slide 3

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
Slide 4

ERP Major Players

SAP Oracle / Peoplesoft J.D. Edwards SSA (BAAN/Marcam) JBA Lawson / Intentia QAD

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

(contd)

Stores Inventory Advanced Business Application Program (ABAP) Audit Information System (AIS)

SAP R/3 Overview

System Architecture Business Process Overview System Modules Standard Tables Document Structure ABAP Functionality Audit Information System (AIS) Overview

SAP Architecture
Legacy
Separate ledger for A/P transactions

SAP
All transactions are included in one ledger

VS
Differentiate transactions by GL Account
One entry contains all relevant information

Differentiate transactions by document type

Relevant information recorded in multiple documents

SAP Architecture
Legacy
Accounts Receivable Accounts Payable

(contd)

The basic structure of SAP is fundamentally different from that of a legacy system.

SAP
Materials Mgmt Inventory Sales General Ledger

Inventory

General Ledger

Finance Purchasing

Asset Mgmt

SAP Advantages

One central database

Real time processing

Allows integration of legacy systems

Document Balancing

Manages Work flow

Slide 12

SAP Disadvantages

Data integrity must be maintained by all users

Numerous tables and Documents GRIR must be reconciled Audit trails can be disappear in data extractions

Slide 13

SAP Business Processes

Know that over 1,200 business processes can be defined by SAP!

Highly flexible Customized to fit Company Can Choose implementation of

-Modules -Business processes -Import of Legacy/External Data

SAP Business Processes

Therefore every SAP installation is different!

Have clear understanding of business Processes that are effected by SAP Document Types Used Data Integrity (Is it SAP created?) Data Reconciliation (Tolerances)

SAP R/3 Modules

CO Controlling
-Plants, Chart of Accounts, Customer/Vendor Masters

FI - Financial Accounting -Financials, G/L, A/P, A/R SD - Sales and Distribution (Orders, Invoicing,EDI -Orders, Invoicing, EDI AM - Asset Management -AUC account from A/P transactions MM - Materials Management -Procurement for Production and Consumption PS - Project System (Construction Contractors)

Slide 16

SAP Tables-General

Master Tables
Chart of Accounts Customers Vendors Employee

Transactional data
Sale Invoices (A/R) Purchases (A/P) Inventory Movements (MM) Assets (AM)

Slide 17

SAP Tables-Examples

Sales Tables
Customer Master (KNA1) Sales Document Header (VBAK) Sales Document Line Items (VBAK) Billing Header Data (VBRK) Billing Line Items (VBRP)

A/P Tables
Vendor Master (LFB1 and LFA1) PO Order Info (EKKO and EKPO) Goods Receipt Line Items (EKBE) Payables G/L Line Items (BKPF and BSEG)

Slide 21

Audit Challenge
Challenges in SAP that dont exist in other systems! To overcome these challenges

Understand SAP document types Specific Number Ranges apply to each Specific G/L Accounts mapped to each Doc Type AP Doc Types
KA-KZ (vary by company) KI-Interface (Legacy/P-Cards) KN and/or RN-Non PO (aka Net Invoice) KR and/or RE-PO issued

Audit Challenge
Sales Doc Types
SA-SZ* S1-S9*

(contd)

*Will vary by Sales Channel / Revenue Source

Other Document Types (MM, Stores Inventory)

WA-Goods Issue WE-Goods Receipt
Used for Prepaid Expense Inventory Tracking

Goods receipt document contains link to Vendor and A/P transaction info!

R/3 Financials (Financial Accounting -FI Module)

General Ledger
Central pool of financial data Real-time update of subledgers and GL

Special purpose Ledger

User created combinations of entered data
Generate data summaries for planning, allocation, distribution

Cost center accounting

R/3 Financials (Financial Accounting -FI Module)

Accounts Receivable and Payable - Subledgers
Integrates with GL
Sales and Distribution Materials Management. Vendor and Customer information Payment automation (EFT and check processing)

R/3 Financials (Financial Accounting -FI Module)

Asset Accounting Subledger - (FI-AA)
Captures asset related transactions Country-specific depreciation charts Compliance with local legal requirements

Slide 26

R/3 Financials (Financial Accounting -FI Module)

Asset Accounting Subledger - (FI-AA)
Follows asset life cycle
requisition to retirement integration with Plant Maintenance component to manage
-machinery and equipment -leased assets and assets under construction

Provides for interactive reporting

Slide 27

Lessons Learned

PO Purchases vs. Non PO GRIR Transactions Assets under Construction Multi Location Purchases MM Docs (Stores Accounts) P-cards EDI ERS (Evaluated Receipt Settlement)

Purchase Order Invoices

Requisition

Purchase Order Goods Receipt

(optional)

Tax Calculation

Tax is estimated on the Purchase Order Tax is expensed at Goods Receipt

Invoice Receipt
Payment to Vendor

Tax Calculation

Tax is paid or accrued at Invoice Receipt

Purchase Order Invoice Example 1

Use Tax Accrued (No tax on vendor invoice)

Goods Receipt
678910 Supplies 210090 GR/IR Clearing $10.83
($10.83)

Invoice Receipt
210090 323456 193010 193010 193010 GR/IR Clearing $10.83 Vendor ABC Company ($10.00) Use Tax Accrual ($.63) Use Tax Accrual ($.10) Use Tax Accrual ($.10)

Purchase Order Invoice Example 2

Tax Paid to Vendor (Amounts include estimated tax)

Goods Receipt
678910 210090 Supplies GR/IR Clearing $10.83 ($10.83)

Invoice Receipt
210090 323456 GR/IR Clearing Vendor ABC Company $10.83 ($10.83)

Purchase Order Invoice Example 3

Price Variance

Goods Receipt
678910 210090 Supplies GR/IR Clearing $10.83
$10.83)

Invoice Receipt
210090 323456 193010 193010 193010 190023 GR/IR Clearing $10.83 Vendor ABC Company ($11.00) Use Tax Accrual ($.69) Use Tax Accrual ($.11) Use Tax Accrual ($.11) Price Variance $1.08

Non-Purchase Order Invoice

Invoice Receipt Payment to Vendor

Tax Calculation

Tax is paid or accrued at Invoice Receipt

Tax Paid to Vendor (Amounts include estimated tax)

Invoice
678910 323456 Supplies Vendor ABC Company $10.83 ($10.83)

Non-Purchase Order Invoice Example 2

Use Tax Accrued (No tax on vendor invoice

Invoice
678910 323456 193010 193010 193010 Supplies $10.83 Vendor ABC Company ($10.00) Use Tax Accrual ($.63) Use Tax Accrual ($.10) Use Tax Accrual ($.10)

ABAP/4

4 GL ABAP ABAP Repository Information system

Debugger
Computer Aided test tool Performance Monitor Function Library Business Objects Team Development Standardized Interfaces Report Builder

Data Modeler
ABAP Dictionary Screen Painter/Menu Painter

Program Editor

Business Audit

Balance Sheet P&L Accounts Vouchers

SD,FI, MM, PP, HR , CO

Slide 36

Methods for Data Evaluation

ABAP (standard reports)

Query (individual inquires) All downloadable
Unconverted text
Excel Word (Rich Text)

HTML
Print Files
Slide 37

A.I.S. Audit Information System

System Audit
System functions

Business Audit
Accounts

Financial Statements
Assets Liabilities

P&L
Slide 38

A.I.S. Audit Information System

Focus on GL (FI Module - Business Audit)

Complete record of business transactions Individual transactions accessible any time Balance sheet/profit and loss data International capability

Customizable views of data

Auditors Environment
Slide 39

ACL SAP CSP

Master Document Query to ACL
(contains 76 fields (record length 577)

Slide 40

BKPF = Header info BSEG = Detail info Table_Field BKPF_BUKRS BKPF_BLART BKPF_MONAT BSEG_SAKNR BSEG_BUXEI BSEG_KOSTL BSEG_SGTXT

Description Company code

Document type Fiscal Period G/L account number Line item number Cost center Item text

ACL SAP CSP

Complementary Service Partner SAP/AIS Conversion Utility

Automatic ACL Document population and file
mapping

Slide 41

Other AIS Audit Software Tools

External Analysis Tools

Balance Sheet Evaluation

IDEA

BPA Baetge

Slide 43

Web Hot Links

www.sapfans.com www.sap.com www.mysap.com

www.asug.com*
www.erpfans.com

www.acl.com
*membership fee may be required
Slide 44

Training

ACL Services www.acl.com MIS Institute www.misti.com SAP www.sap.com

Slide 45

A.I.S Limitations

Needs to be turned on Standard Views/Reports Limited Online-Transaction Inquiry Cant access Historical Data

Potential large volume of transactions

Developed primarily for financial audit

Slide 46

Alternatives

DART (Data Retention Tool)

IRS RevProc 98-25 Historical Data Processor intensive

Tie back checks to GL for control

Proprietary file View of DART file for extract
Slide 47

Bolt-On Products

Vertex & Taxware

Sales and Use Tax calculation engines

based on expanded jurisdictional coding both maintain an audit trail database

Slide 48

Audit Recommendations

Know the lingo Suggest who should be at EDP Conference

-Tax Manager

EDP Auditor Training

-SAP Overview -AIS

-ABAP/4
-Taxware -Vertex

-Key MIS personnel

-ABAP programmer(s)

Slide 49

Reading Material
The Sap R/3 Handbook Jose Antonio Hernandez Format: Paperback, 1st ed., 969pp. ISBN: 0070331219 Publisher: McGraw-Hill Companies, The Pub. Date: January 1998 $59.95 10 Minute Guide to SAP R/3 Simon Sharpe Deanna Wright Format: Paperback, 192pp. ISBN: 0789708981 Publisher: Que Pub. Date: March 1997 $14.99
Slide 50

Reading Material

(contd)

SAP R/3 Business Blueprint Thomas Curran Gerhard Keller Andrew Ladd Format: Paperback, 1st ed., 300pp. ISBN: 0135211476 Publisher: Prentice Hall Pub. Date: August 1997 $49.99 Special Edition Using Sap R/3) Jonathan Blain Format: Hardcover, 3rd ed., 1164pp. ISBN: 0789718219 Publisher: Que Pub. Date: December 1998 $75.00
Slide 51

Reading Material

(contd)

Using SAP R/3: Special Edition ASAP World Consultancy With Gray Elkington Jonathan Blain Format: Hardcover, 2nd ed., 1264pp. ISBN: 0789713519 $ 75.00

Administering Sap R/3: The Fi-Financial Accounting and CO-Controlling Modules ASAP World Consultancy With David Sandison Bernard Dodd Format: Hardcover, 1st ed., 496pp. ISBN: 0789715481 Publisher: Que Pub. Date: March 1998
Edition Desc: 1 ED $49.99
Slide 52

Reading Material
From SAP Press Discover SAP
Available 10/2007

(contd)

http://www.sap-press.com/downloads/sap_press_catalog_2007_summer.pdf

Nancy Muir, Ian Kimball 300 pages. SAP Press: 2007 Catalog , H1989 $ 39.95 Discover ABAP Available 12/2007 Karl-Heinz Kunhauser
400 pages. SAP Press: 2007 Catalog , H1993 $ 39.95

Slide 53

Reading Material (contd)

From SAP Press
http://www.sap-press.com/downloads/sap_press_catalog_2007_summer.pdf

SAP Business Explorer (BEx) Tools Peter Scott 71 pages. SAP Press: 2007 Catalog , H1989 $ 85.00

US Tax and SAP Michael Scott Available 11/2007

320 pages. SAP Press: 2007 Catalog , H1995 $ 79.95

Slide 54

Reading Material (contd)

From SAP Press
http://www.sap-press.com/downloads/sap_press_catalog_2007_summer.pdf

SAP ERP Financials: Configuration and Design Naeem Arif Available 1/2008 500 pages. SAP Press: 2007 Catalog , H1997 $ 79.95 SAP BW Data Retrieval / Mastering the ETL Process
Norbert Egger, Jean-Marie Fiechter, Ralf-Patrick Sawicki, Robert Salzmann, and Thomas Thielen 320 pages. SAP Press: 2007 Catalog , H990 $ 69.95

Slide 55

Questions/Discussion
Thank You !

Slide 56