FINAL PROJECT

SUMMER INTERNSHIP PROJECT | 2014 | INDIAN OIL CORPORATION LIMITED | FINAL REPORT
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FOR PARTIAL FULFILLMENT OF POST GRADUATE DIPLOMA IN
MANAGEMENT (PGDM)
Submitted By- Submitted To-
ANKANA SAHA Prof. Hardik Gandhi
Enrolment No- 30301211 Unitedworld School of Business
ProjectGuide- Date:- 19th JUNE, 2014
Mr Rajat Sarkar Place:- Kolkata
Finance Manager, IOCL
FINAL REPORT
INDIAN OIL CORPORATION LTD KARNAVATI KNOWLWDG E VILLAGE
MOURIGRAM, WEST BENGAL 907/A, UVARSAD DIST. GANDHINAGAR
GUJARAT-382422

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ACKNOWLRDGEMENT
As a student of UNITEDWORLD SCHOOL OF BUSINESS, I am privileged to have the fortune to prepare
a project like this from the experience that I have gained. I think that I succeeded in this attempt, which
would not have been possible without a number of people. I take this opportunity to express my gratitude to
all individuals associated with this project.
I am thankful to Indian Oil Corporation Limited for giving me the opportunity to work and learn there. I
wish to express my profound thanks for the priceless and valuable advice and guidance delivered to me by
my guide Mr. Rajat Sarkar (Finance Manager) in spite of his busy schedule.
I am ingratiated to Mr. Hardik Gandhi (Faculty Guide), for his keen support and guidance provided for the
successful completion of the project.
I would like to record my gratitude to all other staff members of Indian Oil Corporation Limited who helped
me in the completion of this project.
ANKANA SAHA

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APPROVAL OF THE GUIDE
This is to certify that MR. ANKANA SAHA of UNITESWORLD SCHOOL OF BUSINESS has
successfully done his Summer Internship Project from 21st April to 20th June on “ SAP FICO MODULE
AND IT’S APPLICATION IN ASSET AND FUND MANAGEMENT” under my guidance and
supervision. The work that he projected is highly acknowledged by me.
Internal Guide Company Guide
Prof. Hardik Gandhi Mr. Rajat Sarkar
(Professor, Accountancy) (Finance Manager)
UNITEDWORLD SCHOOL OF BUSINESS Indian Oil Corp. Ltd

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DECLARATION
This is to certify that this report entitled “SAP FICO MODULE AND IT’S APPLICATION IN ASSET
AND FUND MANAGEMENT” which is submitted by me in partial fulfillment for the award of the degree
PGDM (2013-2015) in UNITEDWORLD SCHOOL OF BUSINESS, comprises only my original work and
due acknowledgement has been made in the text to all other material used.
ANKANA SAHA

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TABLE OF CONTENT
INDEX PAGE NO.
1. INTRODUCTION 8
DEFINITION 8
LITERATURE REVIEW 8
OBJECTIVE OF THE REPORT 12
FUNTIONALITIES 12
2. ABOUT THE COMPANY 14
INTRODUCTION 14
OVERVIEW OF PIPELINE DIVISION 16
FACILLITIES 16
SWOT ANALYSIS 22
3. ERP 23
WHAT IS ERP 23
CHARACTERISTICS 23
SAP FICO MODULE 23
OVERVIEW OF MASTER RECORD 29
PLANNING IN FI 32
4. QUESTIONNAIRE FOR SAP & FI AND IMPLEMENTATION 32
5. ASSET MANAGEMENT 34
KEY ELEMENTS 34
KEY MASTER DATA 34
KEY ASSET TRANSACTION 35
ASSET MASTER 36

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CREATION OF ASSET 38
ADDITION TO ASSET 49
ACQUISITION TO ASSET MASTER 50
MAINTAIN SETTLEMENT RULE 54
INTER-COMPANY ASSET TRANSFER 59
RETIREMENT OF ASSET WITHOUT CUSTOMER 65
RETIREMENT OF ASSET WITHOUT REVENUE 69
RETIREMENT OF ASSET WITH REVENUE 70
DISPLAY G/L ACCOUNT BALANCE 74
6. FUND MANAGEMENT 75
FUND MANAGEMENT(AS IN SAP) 76
FUND MANAGEMENT (AS IN IOCL) 77
FUND CENTRS 77
BUDGET 77
BUDGET REAPPROPRIATION 79
SUPPLEMENTARY BUDGET 82
ASSIGNMENT ON FUND MANAGEMENT 84
7. SWOT ANALYSIS OF REPORT 85
8. RECOMMENDATION AND CONCLUSION 86
RECOMMENDATION 86
CONCLUSION 86
9. REFERENCESECTION 87
BIBLIOGRAPHY 87
APPENDIX 88

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LIST OF FIGURES
FIGURES PAGE NO.
OPERATIONS OF IOCL 20
HIERARCHY OF ORGANIZATIONAL UNIT IN
SAP
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ORGANIZATION OF ASSET IN SAP 36
CAPITALIZATION THROUGH CWIP 37
ASSET MASTER: INITIAL SCREEN 38
CREATE ASSET:MASTER DATA 41
CREATE ASSET :INITIAL SCREEN 42
CREATE ASSET WITH REFERENCE NO. 43
ASSET MASTER: GENERAL DATA SCREEN 44
ASSET MASTER : TIME DEPENDANT SCREEN 45
ASSET MASTER : ALLOCATION SCREEN 46
ASSET MASTER : ORIGINAL SCREEN 49
ASSET MASTER : DEPRECIATION AREA
SCREEN
51
ADDITIONAL ASSET 51
ASSET ACQUISITION AGAINST EMPLOYEE
ADVANCE
51
MAINTAIN SETTLEMENT RULE 55
SETTLEMENT OF AUC 57
FLOW CHART OF SETTLEMENT OF
INTERNAL ORDER
58
ACTUAL SETTLEMENT 59
INTER COMPANY ASSET TRANSFER 66
RETIREMENT OF ASSET WITHOUT
CUSTOMER
69
RETIREMENT OF ASSET WITHOUT REVENUE 71
RETIREMENT OF ASSET WITH REVENUE 74
DISPLAY G/L ACCOUNT BALANCE 78
BUDGET UPLOAD PROGRAM 82

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SUPPLEMENTARY BUDGET TRANSACTION 83
ASSIGNMENT OF FUND MANAGEMENT 84
TRANSFER OF FUND 84
LIST OF TABLES
TABLES PAGE NO
PURCHASE ORGANIZATION 9
SWOT ANALYSIS OF IOCL 12
QUESTIONNAIRE FOR SAP & FI 22
DEPRECIATION AS PER COMPANY ACT 32
DEPRECIATION AS PER INCOME TAX ACT 47
DEPRECIATION AS PER EMPLOYEE AREA 48
TRANSACTION BUDGET REAPPROPRIATION 80
SWOT ANALYSIS OF THE REPORT 85
INTRODUCTION----------

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DEFINITION
The report elaborates on management of asset and fund through ERP (Entrepreneur Resource Planning)
package - SAP at Indian Oil Corporation Limited.
LITERATURE REVIEW
The SAP structure comprises organizational units. These units are mapped to the existing Indian Oil
organizational entities in such a manner that the structure thus evolved will drive processing in the system
so as to reflect the business environment of the Corporation. The organizational units of SAP and their
relationship with the organizational entities in the existing enterprise structure of our Corporation are
explained below:
The organizational entities in Indian Oil which have been defined as Company Codes
in SAP are:
- Registered Office, Mumbai
- Marketing Division: Head Office, Regions & State Offices
- Refineries Division: Head Office and Refinery Units
- Pipelines Division: Head Office, Regional Offices, and all Pipeline Units
- R&D Centre
- AOD: AOD Marketing and Digboi Refinery
- Indian Oil Blending Ltd.
The organizationalelements of the Sales & Distribution module are:
- Sales Organization
- Distribution Channel
- Division
- Sales Office
- Sales Group

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As a software package of ERP, IOC preferred SAP over others. The SAP package comprise of SAP R/3(4.0
B), IS-OIL (4.0) and CIN (2.2 B). SAP R/3 stands for Systems, Applications and Products in Data
Processing. The letter ‘R’ represents Real Time and the number ‘3’ indicates 3-tier architecture. IS-OIL
(4.0) is the oil industry specific solution and CIN represents Country India Version of SAP R/3.
PRE-SAP SCENERIO POST-SAP SCENERIO
Islands of inconsistent information Integrated, consistent, concurrent information
Distributed information processing, data transfer
from different location & functions
Centralized information processing, on- line, real
time, updated information
Duplication of jobs due to lack of information and
connectivity
Integrated information, data once entered update
all relevant records
Local processing Remote processing, on central server
SAP Implementation - Major Activities:
The following activities are inbuilt in the implementation of SAP.
• Conceptual Design
• Detailed Design
• Construction
• Implementation
• Data Conversion
3-tier Architecture of SAP:-
Presentation Layer: Typically installed on a PC, provides the SAP Graphical User Interface.
Application Layer : Executes the business logic, process client transactions, print jobs, running reports, co-
ordinate access to the Database.
Database Layer: Stores both the business generated data and SAP application programs, which are loaded
into application servers from the database at run-time.

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SAP is implemented in the Company in a centralized and three layer architecture namely Database,
Application and Presentation layers. The SAP system is having three servers i.e. Development Server,
Quality Assurance Server and Production Server. The Company is using UNIX as its operating and
application system, while Oracle has been used as RDBMS (Relational Database Management System) for
managing its database. The Company has kept its Database and Application servers at the corporate data
centre and they are accessible through leased line and/or very small aperture terminal from all stateoffices,
refineries and pipeline units’ networks. Other units such as terminals, depots and bottling plants etc., are
connected to SAP through connectivity to the nearest State Office/Refinery.
In IOCL, there will be eight credit control areas defined for :-
• Lubes
• LPG
• MS & HSD
• SKO
• Aviation
• Speciality products
• Combined products
• Miscellaneous
This would enable credit monitoring and control for customers in each product category, as is the
requirement in Indian Oil.
Basic Functions During Sales Order Processing:-
During sales order processing, the system can carry out, the following basic functions:
· Monitoring the sales transactions
· Checking for availability
· Transferring requirements to materials planning (MRP)
· Scheduling the delivery
· Calculating pricing and taxes

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Depending on how the system is configured, these functions may be completely automated or may also
require some manual processing. The data that results from these basic functions (for example: shipping
dates, confirmed quantities, prices and discounts) is stored in the sales document where it can be displayed
and, in some cases, changed manually during subsequent processing.
Plant: -
A plant has an address, a language and belongs to a country. A plant also has its own material master data.
In IOCL, there are two categories of plants:
• Physical plants - Refinery units ; Pipeline units ; Lube blending plants ; Small can filling plants ; Central
inventory points ; CFA agents ; Bottling plants ; Aviation Fuel Stations ; Terminals; Depots; R&D Center ;
IOBL ;AOD Refinery ;AOD Marketing
• Logical plants:- wherein the physical location is not of IOCL but the consignment ownership is that of
IOCL Examples :
 Refinery Division - High Sea (for Crude); Discharge port (for Crude) ;
 Marketing Division - High Sea (for Products) ; Discharge Ports (for Products);
In SAP, plants are assigned to company codes. A plant can belong to only one company code.
Purchasing Organization: A purchasing organization is subdivided into purchasing groups, which
are responsible for certain day-to-day purchasing activities.
(1) Hydrocarbon Purchasing Organization
(2) Non - Hydrocarbon Purchasing Organization
(3) Services Purchasing Organization
Each of the above purchasing organizations will be ‘floating’ in nature. At the time of transactions,
company codes will be determined through plants.

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Hydrocarbon purchasing organization All plants except those belonging to pipeline
division company code
Non-hydrocarbon purchasing organization
Service purchasing organization
All plants
All plants
Conclusion:
For any enterprise to get success in its’ own arena, it has to make its communication infrastructure strong. It
is truer for organization like Indian Oil who has already implemented across the board the solutions of
Enterprise Resource Planning. The theme of ERP is integration and standardization of business processes,
which in turn, results in more benefits for the organization. The act of integration along with the sharing of
information demands for an enterprise networking solution.
OBJECTIVESOF THE REPORT
 This report shows the formation and overview of functional activities of this organization.
 This project gives an idea of the FICO module in SAP system.
 This project helps to know how to create asset master and its display by applying the specific code.
 It shows how to capitalize the created asset master.
 It also helps to know the method of transfer of an asset from one location to another location.
 Project highlights the process of retirement of assets in ERP.
 It gives the idea regarding the retirement of assets without revenue.
 It highlights how this organization manages the funds.
 Fund management supports the organization for creating budgets for individual responsibility areas.
 It also helps to know how the commitment item creates for budget head and the group of expenses taken
together in a commitment item and the budget will be entered for a combination of cost center and
commitment items. e.g. R&D center - cost center and commitment item- salary of this department.
 It helps to know how to transfer the budget from one fund centre/commitment item to another fund
centre/commitment item in case the expenditure exceeds the budget supplemented to the latter.
FUNCTIONALITIES
SAP ERP redefines enterprise resource planning, delivering role-based access to crucial data, applications,
and analytical tools. With SAP ERP, we can efficiently deal with business challenges in the following areas:

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FINANCIALS :-
Ensure compliance and predictability of business performance so that an organization can gain a deeper
financial insight across the enterprise and tighten control of finances. SAP ERP Financials automates
financial and management accounting and financial supply chain management. The solution also provides
support for corporate-governance.
MARKETING :-
Indian Oil is only largest commercial enterprise in the country as well as primary corporate of the Indian
Nation. It was founded in 1964. Its headquarter is situated at New Delhi. It has a dominant market share.
Benchmarking quality, quality and service to world class standards is a philosophy the IOC follows to
ensure that customers get a truly global experience in India.
HUMAN CAPITAL MANAGEMENT :-
Optimize HR processes with a complete, integrated, and global human capital management (HCM) solution.
SAP ERP provides this HCM solution for organizations of all sizes and in all industries. We can maximize
the potential of your workforce, while supporting innovation, growth, and flexibility. The SAP ERP HCM
solution automates talent management, core HR processes, and workforce deployment, enabling increased
efficiency and better compliance with changing global and local regulations.
OPERATIONS :-
Manage end-to-end procurement and logistics business processes for complete business cycles, from self-
service requisitioning to flexible invoicing and payment, optimizing the flow of materials. SAP ERP
Operations also helps discrete and process manufacturers manage the entire life cycle of product
development and manufacturing. The solution automates the entire manufacturing process and reduces costs
by controlling and adapting the manufacturing process in real time – and increases customer satisfaction by
delivering higher-quality products.

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ABOUT THE COMPANY------------
Indian Oil Corporation Ltd. (Indian Oil) was formed in 1964 through the merger of Indian Oil Company
Ltd. (Estd. 1959) and Indian Refineries Ltd. (Estd. 1958).
It is currently India’s largest company by sales with a turnover of Rs. 4, 63,285 crore and profits of Rs.
18,443 crore.
It is also the 21st largest petroleum company in the world and the # 1 petroleum trading companies among
the National Oil Companies in the Asia-Pacific region.
Indian Oil Corporation Limited is an Indian state-owned oil and gas corporation with its headquarters in
New Delhi, India. The company is the world's 98th largest public corporation, according to the Fortune
Global 500 list, and the largest public corporation in India when ranked by revenue. Indian Oil and its
subsidiaries account for a 47% share in the petroleum products market, 34% share in refining capacity and
67% downstream sector pipelines capacity in India. The Indian Oil Group of Companies owns and operates
10 of India's 20 refineries with a combined refining capacity of 65.7 million metric tons per year.
The President of India owns 78.92% (1.9162 billion shares) in the company. In FY 2011 IOCL sold 64.1
million tons of petroleum products and reported a PBT of 90.96 billion, and the Government of
India earned an excise duty of 257.899 billion and tax of 16,500 million. With over 34,000-strong
workforce, Indian Oil has been helping to meet India’s energy demands for over half a century. With a
corporate vision to be the Energy of India, Indian Oil closed the year 2010-11 with a sales turnover of Rs.
3,28,744 crore ($ 72,125 million) and profits of Rs. 7445 crore ($ 1,633 million).
IndianOil operates the largest and the widest network of fuel stations in the country, numbering about
19,463. It has also started Auto LPG Dispensing Stations (ALDS). It supplies Indane cooking gas to over
62.4 million households through a network of 5,456 Indian distributors.
At Indian Oil , operations are strategically structured along business verticals- Refineries, pipelines,
marketing, R&D centre, business development- E&P, Petrochemicals & Natural Gas.
Overview of Pipeline Division:
The Pipeline Division continued to show the best performance by recording excellent operational
throughput during the financial year 2010-11 setting a milestone in transporting of crude oil and petroleum
products. Pipeline Division is executing the preparation of manuals on operation; maintenance and

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inspection of the pipeline system of Greater Nile Petroleum Operating Company (GNPOC), Sudan at a
contract value US$ 839000.
Eastern Region pipelines
Western Region pipelines PIPELINE DIVISIONS
Northern Region pipelines
Southern Region pipelines
USP
India's most well renowned brand
TAGLINE/SLOGAN:-
The energy of India
VISION
 A major diversified, transnational, integrated energy company, with national leadership and a strong
environment conscience
 Playing a national role in oil security& public distribution.
MISSION
 To achieve international standards of excellence in all aspects of energy and diversified business with focus
on customer delight through value of products and services, and cost reduction.
 To maximise creation of wealth, value and satisfaction for the stakeholders.
 To attain leadership in developing, adopting and assimilating state-of- the-art technology for competitive
advantage.
 To provide technology and services through sustained Research and Development.
 To foster a culture of participation and innovation for employee growth and contribution.
 To cultivate high standards of business ethics and Total Quality Management for a strong corporate identity
and brand equity.
 To help enrich the quality of life of the community and preserve ecological balance and heritage through a
strong environment conscience.

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VALUES
Care, Innovation, Passion, Trust
OBJECTIVES
 To serve the national interests in oil and related sectors in accordance and consistent with Government
policies.
 To ensure maintenance of continuous and smooth supplies of petroleum products by way of crude oil
refining, transportation and marketing activities and to provide appropriate assistance to consumers to
Conserve and use petroleum products efficiently.
 To enhance the country’s self-sufficiency in oil refining and build expertise in lying of crude oil and
petroleum product pipelines.
 To further enhance marketing infrastructure and reseller network for providing assured service to customers
throughout the country.
 To create a strong research & development base in refinery processes, product formulations, pipeline
transportation and alternative fuels with a view to minimizing/eliminating imports and to have next
generation products.
 To optimise utilisation of refining capacity and maximize distillate yield and gross refining margin.
 To maximise utilisation of the existing facilities for improving efficiency and increasing productivity.
 To minimise fuel consumption and hydrocarbon loss in refineries and stock loss in marketing operations to
effect energy conservation.
 To earn a reasonable rate of return on investment.
 To avail of all viable opportunities, both national and global, arising out of the Government of India’s
policy of liberalisation and reforms.
 To achieve higher growth through mergers, acquisitions, integration and diversification by harnessing new
business opportunities in oil exploration & production, petrochemicals, natural gas and downstream
opportunities overseas.
FICILITIES OFFERED BYIOCL:-
 FINANCIAL OBJECTIVES
 To ensure adequate return on the capital employed and maintain a reasonable annual dividend on equity
capital.
 To ensure maximum economy in expenditure.

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 To manage and operate all facilities in an efficient manner so as to generate adequate internal resources to
meet revenue cost and requirements for project investment, without budgetary support.
 To develop long-term corporate plans to provide for adequate growth of the Corporation’s business.
 To reduce the cost of production of petroleum products by means of systematic cost control measures and
thereby sustain market leadership through cost competitiveness.
 To complete all planned projects within the scheduled time and approved cost.
Pipeline Division implemented centralized payroll system for distributing salaries directly to bank
accounts of all employees across the corporation from financial year 2013-2014. Off-cycle payment of
refineries division, R&D centre and pipeline was distributed centrally.
Employee services like medical re-imbursement, furniture and PC claims, spectacles
claims and maintenance of senior executive office scheme were migrated from E-SUVIDHA to employee
self service.
Pipeline Division achieved the target of 100% e-payment to employees and 99% to
outside parties.
 MARKETING
IOC is a heritage and iconic brand at one level and a contemporary, a global brand at another brand.
Their various products-
 -Indane Gas
 -Auto Gas
 -Natural Gas
 -Petrol/Gasoline
 -diesel/gas oil
 -Jet fuel
 -SERVO lubricants and greases
 -kerosene
 -Petrochemicals
 -crude oil
 -Special products (Benzene, Jute Batching Oil, Micro Crystalline Wax, Mineral Turpentine Oil, Paraffin
Wax, Propylene, Raw Petroleum Coke, Sulphur)
STP
 Segment

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Corporates, countries, individuals looking to fulfill energy needs
 Target Group
Enterprises looking for energy for production, people for petrol diesel for vehicles and
domestic uses
 Positioning
IOCL provides energy to entire India
 HUMAN RESOURCE
The Corporation is managed by Board of Directors appointed by President of India. Besides the Chairman,
the board has the following whole time Directors:-
1. Directors(Refineries)
2. Directors(Pipelines)
3. Directors(Marketing)
4. Directors(Finance)
5. Directors(HR)
6. Directors(R & D)
7. Directors(P & BD)
The working of Corporation’s 5 divisions, namely
(i) Pipeline Division
(ii) Marketing Division
(iii)Refineries Division
(iv)R & D Centre
(v) Assam Oil Division
Is co-ordinate by full time Chairman.
BOARD OF DIRECTORS
CHAIRMAN
FUNCTIONAL DIRECTORS

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EXECUTIVES
During the year, Pipeline Division continued to drive HR initiatives through technology with launch of RTI
management system, attendance submission system, and dispatch management system and e-
sambandh portal.
Under CSR(Corporate Social Responsibility) of the corporation, pipeline utilized its allocated fund of Rs.
210 lakh by providing drinking water facilities in 33 villages and organizing 15 health camps in different
villages near pipeline installation
 OPERATIONS
The oil industry has mainly five processes
1) Exploration and production,
2) Transportation and distribution (crude oil),
3) Refining,
4) Transportation and distribution (petroleum products) and
5) Marketing.

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The year 2013-2014 was one of the most challenging years for pipeline operations both in product and
pipeline operation.
 TECHNICAL SERVICE
A number of schemes were implemented to adopt technological achievements in pipeline operations and
maintenance to achieve energy efficiency as well as reliability and safety of pipeline networks.
Upgrade SCADA control systems, CCTV based surveillance system, crude blending facilities etc.

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 INFORMATION SYSTEM
Web based software was developed and implemented for generation of daily maintenance reports and
history cards for mainline equipment of pipeline division.
 HEALTH, SAFETY AND ENVIRONMENT(S,H,&E)
Annual safety-cum-technical audits b multi-disciplinary teams, safety index surveys and safety awarenss
were carried out at all pipeline locations
COMPETITORS:-
1. Bharat Petroleum
2. Hindustan Petroleum
3. Reliance Industries
4. ONGC
OBLIGATIONS:-
Towards customers and dealers: To provide prompt, courteous and efficient service and quality products
at competitive prices.
Towards supplier: To ensure prompt dealings with integrity, impartiality and courtesy and help promote
ancillary industries.
Towards employees: To develop their capabilities and facilitate their advancement through appropriate
training and career planning.
Towards community: To develop techno-economically viable and environment-friendly products.
Towards Defense Services: To maintain adequate supplies to Defence and other Para-military services
during normal as well as emergency situations.

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SWOT ANALYSIS OF IOCL
STRENGTH
1.India's largest commercial enterprise with a
strong brand name
2.Has around 50% petroleum products
3.Operates 10 refineries in India
4.Huge distribution network through retailing
5.Accounts for a 47% share in the petroleum
products market, 34.8% share in refining
capacity and 67% downstream sector pipelines
capacity in India
6.Has over 35,000 employees
7. Loyalty programs like XTRAPOWER Fleet
Card Program is aimed at Large Fleet
Operators
WEAKNESS
1.Legal issues
2.Employee management
3.Bureaucracy
4.Volatility in the crude market & subsidy burden
OPPORTUNITIES
1.Increasing fuel/oil prices
2.Increasing natural gas market
3.More oil well discoveries
4.Expand export market
THREATS
1.Government regulations
2.High Competition
WHAT IS ERP?-----------

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Enterprise resource planning (ERP) systems integrate internal and external management
information across an entire organization, embracing finance/accounting, manufacturing, sales and
service, customer relationship management, etc. ERP systems automate this activity with an
integrated software application. The purpose of ERP is to facilitate the flow of information between all
business functions inside the boundaries of the organization and manage the connections to outside
stakeholders.
ERP systems can run on a variety of computer hardware and network configurations, typically employing
a database as a repository for information.
CHARACTERISTICS:-
 An integrated system that operates in real time (or next to real time), without relying on periodic
updates.
 A common database, which supports all applications.
 A consistent look and feel throughout each module.
 Installation of the system without elaborate application/data integration by the Information Technology
(IT) department.
SAP FINANCIAL ACCOUNTING AND CONTROL (FICO) MODULE---
Introduction
The SAP FI Module has the capability of meeting all the accounting and financial needs of an organization.
It is within this module that Financial Managers as well as other Managers within the business can review
the financial position of the company in real time as compared to legacy systems which often requires
overnight updates before financial statements can be generated and run for management review.
The real-time functionality of the SAP modules allows for better decision making and strategic planning.
The FI (Financial Accounting) Module integrates with other SAP Modules such as MM (Materials
Management), PP (Production Planning), SD(Sales and Distribution), PM (Plant Maintenance), and PS
(Project Systems).

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Sub modules of FI:-
Accounts Receivables (A/R):-
Accounts Receivables records all account postings generated as a result of Customer sales activity. These
postings are automatically updated in the General Ledger. It is within the Accounts Receivables Module
that we can monitoring of the receivables and generate customer analysis. The Accounts Receivable
Module also integrates with the General ledger, Sales and Distribution, and Cash Management Modules.
Accounts Payable (A/P):-
Accounts Payable records account postings generated as a result of Vendor purchasing activity. Automatic
postings are generated in the General Ledger as well payment programs within SAP enables the payment of
payable documents by check, EDI, or transfers.
Asset Accounting (AA):-
Asset Accounting is utilized for managing the company’s Fixed Assets. SAP allows to categorize assets
and to set values for depreciation calculations in each asset class.
Bank Accounting (BA):-
Bank Accounting allows for management of bank transactions in the system including cash management.
Consolidation: -
Consolidation enables the combining of financial statements for multiple entities within an organization.
These statements provide an overview of the financial position of the company as a whole.
Funds Management (FM):-
Funds Management allows management to set budgets for revenues and expenses within the company as
well as track these to the area of responsibility.
General Ledger (G/L):-
General Ledger is fully integrated with the other SAP Modules. It is within the General Ledger that all
accounting postings are recorded. These postings are displayed in real-time providing up-to-date visibility
of the financial accounts.
Special Ledger(S/L):-
Special Purpose Ledger is used to define ledgers for reporting purposes. Data can be gathered from internal
and external applications.

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Travel Management (FI-TM):-
Travel Management provides management of all travel activities including booking trips and handling of
expenses associated with travel.
The two major areas within the SAP environment
 Configuration: -
Maintenance of settings in the system to support customized business requirements of the clients.
 Application: -
Ongoing processes required to record and report business activity.
The two methods available for accessing the configuration functions in FI
 Implementation Guide (IMG):-
Leads us through the steps required for configuration in an implementation.
 Transaction codes: -
Takes us directly to the first screen of a transaction without the use of the IMG or menu paths.
The four configuration areas of the IMG
 General Settings:- non-application dependent specifications
 Enterprise Structure:- definition of organizational units and their relationships
 Cross:-applications component
 Functional Areas:- (e.g., Financial Accounting, Sales and Distribution)
Examples of activities performed on the configuration side in SAP and on the
application side in SAP are:
Configuration:-
 Create Organizational structures
 Define foreign currencies
 Define financial statements

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 Outline Credit Management functionality
Application:-
 Post Accounting transactions
 Post Customer Invoice
 Post Vendor Invoice
 Create Master records
 Process financial statements
 Display accounting documents
FI/CO Team usually responsible for establishing the organizational structure on an implementation.
Some examples of units setup under organizationalstructure are:
 Company Code
 Business Area
 Credit Control Area
 Functional Area
“Cross-application” components in the IMG: -
Cross-application components encompass all areas of configuration that are not specific to one application.
They are used across the functional modules. Examples include:
 Document Management
 Documentation Tools
 ALE
 EDI
The correction and transport system:-
The Correction and Transport System provides a method to move configuration and program code from
system to system or Client to Client. It would be used to move customized data from a development system

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to a test system, and then to a production system. The Correction and Transport System is usually operated
by the System Administrator.
The major organizational hierarchy elements within the Financial Accounting module and the
relationship between each of them:-
The hierarchy, from the highest organizational unit to the lowest, is the Client, Chart of Accounts (COA),
Company Code and the optional Business Areas (BA). Two other optional areas include the Dunning Area
and the Credit Control Area (CCA).
Credit Control Areas come above the Company Code, and Dunning Areas come below the Company Code.
There is only one Client and its values are the same across all Company Codes that are attached to it.
Every Company Code is a legal independent entity. Business Areas can be shared among Company Codes
(many-to-many relationship) and they are used for internal reporting purposes. Each Company Code is
assigned a COA. The COA may be the same for multiple Company Codes, but each Company Code may
only use one COA.
The Client is the highest level in the SAP organizational structure. Anything specified for a Client applies
to all Company Codes that are attached to that Client. Clients have a one-to-many relationship with
Company Codes. Clients are generally not reported on with balance sheet and P&L a/c s, the company
codes are the legal entities and serve for this purpose. However, clients can be reported on as part of
consolidation or extended G/L.

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The relationship between company code, business areas and financial statements:-
A Company Code represents an independent legal entity that is required by law to issue financial statements
(Balance Sheet and P&L Statement). Business Areas are defined independently of Company Codes and can
be shared across Company Codes. Internal Balance Sheets and P&L Statements can be generated by
Business Area though they are not required.
Three benefits of the SAP organizational structure:-
 It gives flexibility to reflect complex organizational structures
 It helps to consider future changes in the organizational structure
 It is clearly defined into logistical (sales, purchasing) and financial views (cost accounting, financial
accounting).
Business areas:-
BAs are defined independent of company codes. They can be added to the detail of a line item in a
document, thus enabling the system to keep track of business area information for reporting and controlling
purposes.
Credit control area:-

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A credit control area (CCA) is used to set and control credit limits for customers. They include one or more
company codes. There can only be one CCA per company code. Customers in several company codes can
exist under several CCA's. As part of credit management, an individual customer’s credit limit is set based
on an individual credit control area or across several credit control areas.
The chart of account falls in the FI organizational structure under Client and above company code.
Dunning is the process of automatically notifying and requesting payment from customers with past due
invoices.
To define a fiscal year (which differs from a calendar year) in SAP, we must specify the last day of each
individual posting period and indicate that the fiscal year differs from the calendar year. On the other hand,
when the fiscal year does represent the calendar year, each calendar month corresponds to a posting period.
The field status group defines what fields will be suppressed (do not appear), required (must enter value
during document creation), or optional for a specific type of account. A collection of field status groups
makes up a field status variant. The field status variant is tied to a company code in the “company code
global parameters” in the IMG.
A posting period variant controls the status (open or closed) of posting periods for document creation and
maintenance. It can also control the posting status by account types and ranges of accounts within account
types.
Posting Period Variants make it possible to maintain the status of Posting Periods independent of the
Company Code (one Posting Period Variant can be assigned to multiple company codes).
The Posting Period Variant is assigned to a company code in the “Company Code Global Parameters” in the
IMG.
An account type specifies the accounting area to which an account belongs. They are the account types
used in the FI module
S = General Ledger
D = Customers
K = Vendors
A = Assets
OVERVIEW OF MASTER RECORD

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Master Data is constant over a long period of time. Transaction Data is created by a transaction in the
system. Transactions can be created manually or automatically. Table Data is the data that is specifically
configured for a client’s business.
The Sort Key defines the field(s) used to populate the Assignment field when a document is posted in the
GL. The assignment field is used as a sort criterion when displaying GL account line items.
 VENDOR MASTER RECORD
The three segments of a vendor master record are:
 General data:- account name, address
 Company code level:- payment terms
 Purchasing data:- Terms and conditions
Reconciliation account: -
A reconciliation account is a G/L account that is defined within each customer/vendor master record. By
posting to a customer/vendor account, the reconciliation account balance is automatically updated.
A check for duplicates
can be configured to prevent the creation of more than one master record for the same vendor. This check is
configured on address match code fields and occurs when creating new accounts or when changing the
address on an existing account.
 Information included in the General Data section of the vendor master record is:-
 Address and Communication
 Account Control
 Bank Details
 Information included in the Company Code section of the vendor master record are:-
 Account Management
 Payment Data
 Automatic Payment Transactions

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 The purchasing organization data includes:-
 Conditions (order currency, payment terms, minimum order value)
 Sales Data (Salesperson, Telephone)
 Control Data (GR based invoice verification, evaluated receipt settlement, acknowledgment required,
automatic PO).
The account group controls the numbering for the Vendor master record. A number range is assigned to an
account group. The account group also determines the field status group and is used to designate one time
accounts.
 Three levels for field status groups that determine the screen layout for a vendor master
record are:-
 Account group
 Company code
 Activity type
The five major activities (in the order they occur) in the Procurement Cycle are:-
 Purchase Requisition (MM)
 Purchase Order (MM)
 Goods Receipt (MM)
 Invoice Verification (MM)
 Vendor Payment (FI)
Purchase Requisition:-
A Purchase Requisition is a document that identifies an organization’s demand for a product or service from
an outside vendor. It is an internal document (i.e., it is not visible to the vendor or any other outside
organization).
The two ways a Purchase Requisition can be created are:-

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 Automatically as a result of a Materials Requirements Planning (MRP) run.
 Manually by a user.
Purchase Order:-
A Purchase Order is a legal contract between a buyer and a vendor. It lists the materials or services to be
purchased on specified terms and conditions (quantity, price / pricing conditions, delivery date).
Four steps necessary for creation of a Purchase Order are:-
 Source Determination
 Vendor Selection
 Purchase Order Processing
 Purchase Order Follow-Up
A Purchase Order (PO) can be created directly or with reference to a (RFQ) Request for Quotation, a
Contract, a Purchase Requisition, or another Purchase Order.
The three different types of Materials Management documents are:-
 Order documents
 Goods receipt documents
 Invoice Receipt documents
PLANNING IN FI
Planning in FI utilizes the financial statement version to determine the layout of the planning screens.
Changes to the Financial Statement version are immediately reflected in the planning screens (upon re-
entry). Values entered in the planning screen are allocated between the periods using a Distribution Key.
The figures are entered based on the following:
 Fiscal Year

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 Version
 Business area
 Currency
QUESTIONNAIRE FOR SAP & FI AND IMPLEMENTATION---------------
QUESTIONS ANSWER
What is the difference between company and
company code?
A company is the organizational unit used in the
legal consolidation module to roll up financial
statements of several company codes.
The Company Code is the smallest
organizational unit for which a complete self-
contained set of accounts can be drawn up for
purposes of external reporting.
How many charts of accounts can be
attached to a company code?
One or more Operative Chart of Accounts can be
assigned to a company code.
A COA must be assigned to a company code.
This COA is the operative COA and is used in both
FI and CO. One Chart of Account can be assigned
too many Company codes i.e., multiple company
codes can either share the same or have separate
COA. But a company code (Country specific
Company code or International Company code) can
have a country specific COA also along with
Operative COA. The link between the regular COA
and the country COA appears in the alternate
number field of the G/L master record.
What are substitutions and validations?
What is the precedent?
Validations are used to check settings and return a
message if the prerequisite check condition IS met.
Substitutions are similar to validations; they
actually replace and fill in field values behind the
scenes without the user’s knowledge unlike
validations that create on-screen messages to the
user.
What is a controlling area? The Controlling Area is the central
organizational unit within CO module. It is
representative of a contained Cost Accounting
envt where costs and revenues can be managed.

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Define relationship between controlling area
and company code?
A controlling area may include one or more
company codes which must use the same
operative chart of accounts as the controlling
area. A Controlling Area can contain multiple
company code assignments but a single
company code can be assigned to only one
controlling area.
What is a fiscal year variant? Fiscal Year is a period of 12 months and SAP
provides 4 special periods to posting adjustment
Entries. Fiscal year determines posting periods.
Posting periods are used to assign business
transactions. Fiscal year may be year dependent
or year independent.
What are special periods used for? The Special periods in a fiscal year variant can
be used for things like posting audit or tax
adjustments to a closed fiscal year.
What do you mean by year dependent in
fiscal year variants?
Year Dependent: the financial year is same as
calendar year. Starting from 1st Jan to 31st Dec
(where posting periods and the calendar months
are equal)
Year Independent: the financial year is different
from calendar year Starting from 1st April to
31st March (where the posting period months are
not equal to calendar year months)
What is shortened fiscal year? When are they
used?
Shortened Fiscal Year: a financial year, which
has less than 12 periods.
What are posting periods? The Posting period variant controls which
posting periods, both normal and special, are
open for each company code. It is possible to
have a different posting period variant for each
company code in the organization. The posting
period is independent of the fiscal year variant.
What are document types and what are
they used for?
Document type is the identifier of different account
transactions like SA for G/L,AA for Asset
Accounting etc. The doc. Types controls things like
type of the account that can be posted to, the number
range assigned to it, and required doc header fields.
How are tolerance group for employees
used?
Tolerance group stores Posting amount defaults.
Tolerance groups are assigned to User ID’s that
ensures only authorized persons can make postings.
What are posting keys? State the purpose of
defining posting keys?
Posting keys determine whether a line item
entry is a debit or a credit as well as the possible
field status for the transaction.
Posting keys are SAP delivered. If u want

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changes like making additional fields optional on
payment type posting keys then the best possible
action is to copy the posting key that needs to be
modified and then modify it.
ASSET MANAGEMENT--------------
The Asset Accounting sub-module manages a company’s fixed assets. Within the Financial Accounting
system, FI-AA serves as a sub-ledger to the General Ledger, providing detailed information on asset related
transactions.
 Key elements in assetaccounting are:-
 Account Determination
 Asset Class
 Asset Master Record
 Depreciation Area
 Depreciation Key
 Key masterdata in assetaccounting:-
Account determination: -
Defines the level at which g/l accounts are defined for asset accounting.
Asset class: -
Defines all assets which depreciate in a similar manner are grouped to one asset class. The depreciation rates
are maintained at asset class level.
Assets master record:-
Defines the complete details like asset capitalizations date, location to which it belongs, voucher ref no, IR
no, vendor particulars etc.
Depreciation area:-
Defines the different depreciation books maintained viz. Companies Act, Income tax Act and Employee
Assets depreciation
Depreciation keys:-
Defines the different rates of depreciation for different assets classes. It will also have the method of
depreciation, salvage value of assets.
 Key AssetTransactions:-

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 Acquisitions
 Scrapping/ Dismantling of Assets
 Sale of Assets
 Asset Transfers
 Depreciation
 Asset Master:-
AssetMasterhas 3 Components:-
 Create
 Change
 Display
Types of AssetMasters:-
 Normal Assets
 AUC Assets
 Sub Assets
 Group Assets
ORGANISATION OF ASSET IN SAP

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AssetClass Account
Determination
General Ledger
Depreciation
Keys
Depreciation
Area

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Capitalization through CWIP in SAP
Create Project Orders/ Create
Internal orders
PS/ CO-IO
Assign Budgets to Projects
CO-I/O, PS
Goods Issued to Projects
MM
Settle Unallocated Expenses
of Projects to GL
CO-IO/ PS/ GL
General
Ledger
Book Expenses to Projects
FI-AP/ MM
Post Capital Advances for
Projects
FI-PS
Settle Project to Assets
Under Construction
CO-IO / PS/FI-AM
Capitalize Assets Under
Construction to Fixed Assets
FI-AM

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Capitalization through CWIP
Projects will be configured in project systems through project orders and work break down structures
Budgets will be assigned to Project orders
All expenses, Capital Advances and Material Issues will be booked to Project Orders as separate line items
End of period the following are identified:-
All line items which can be directly capitalized: - settled to fixed Assets
Line items which are identified as CWIP: - settled to Assets under Construction
Line items which are capital advances: - settled to Capital Advances
Line items which are not a locatable: - settled to construction period expenses pending allocation G/L
accounts
(I)CREATION OF ASSET / AUC (ASSET UNDER CONSTRUCTION) MASTER
(T CODE -AS01)
For creating fixed assets/ AUC master following fields are of upmost importance
1. Asset Class : Correct asset class is to be selected.
2. Cost center : System will post dep. in the cost center given.
3. Plant : Controlling SAP plant code is to be mentioned
4. Location : Physical location of the asset is to be mentioned.
5. Personnel : To be used for EMP assets.
6. Dep. Key : Most appropriate Dep. keys as per Co. Act, Income tax area and Employee area would be
defaulted by the system. The same is to be checked at the time of creation of asset master.Group
7. Asset : correct group asset class (Income tax area ) is to be selected.

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STEP1: ASSET MASTER INITIAL SCREEN
PRESS ENTER

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In case asset is to be created in reference to existing asset master, then asset no, sub asset no and company
code field is to be filled in under reference web page.
The initial screen is displayed. We will create asset master for “Wooden Almirah”. Here we put the asset
class, it is group of asset to which the asset belongs (F2000001).Then put the company code (9201-for
ERPL). This type of asset already exists we need to put the reference no. of the similar asset.
Asset class code for Furniture should be initiated with ‘F’ and it consists of 8 Alfa Numerical letters i.e.,
F2000001.

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Now from the drop down button we choose the asset class for Almirah.
We can also create asset master by taking reference form existing asset. From this snapshot we had to
choose the similar asset reference no. i.e. 50000288 while searching in Asset Description.

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After completing 3 snapshots we have displayed the necessary inputs given at the time of creation of asset
master.
The code for displaying asset is AS03
.
STEP 2: ASSET MASTER- GENERAL DATA SCREEN
In the GENERAL option. Here we put description, asset main no. text, account determination and serial no.
Serial no. for Equipment is 11401(For Office) &11402(For Employee)
Serial no. for Furniture is 11701(For Office) & 11702(For Employee)
Also put the capitalization date, the date when we start to use the assets.

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STEP 3: ASSET MASTER – TIME DEPENDENT SCREEN
Moving on to TIME-DEPENDENT option, we put cost centre to which the asset belongs. P1212 is cost
centre for ERPL Office. Also put the employee code no. i.e. 94098 in this case.

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STEP 4 : ASSET MASTER – ALLOCATION SCREEN
In the ALLOCATION option, we put political state code, here it is WB (West Bengal).

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STEP 5 : ASSET MASTER – ORIGIN SCREEN
Now go to the ORIGIN option. Employees are treated as Vendor in SAP so we put the employee’s no. in
vendor field.

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STEP 6 : ASSET MASTER – DEPRECIATION AREAS SCREEN
Then go to the DEPRECIATION AREAS option . Depreciation areas mean the areas to which the asset
belongs. It maintains the 3 aspects.
i) Companies Act,
ii) Income Tax act.
iii) Employee Depreciation
Depreciation key is the rate of depreciation. From the drop down menu we choose the depreciation key
mentioned for wooden almirah for different aspects.
Now we save the page and the final outcomes will display.

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Following are few depreciationkeys maintained in the system.
Depreciation as per Company Act
DEP KEY DESCRIPTION
Z001 ZERO
DEPRECIATION
KEY – IOCL
Z002 1.63(BLDG)
DEPRECIATION
KEY – IOCL
Z003 3.34(BLDG)
DEPRECIATION
KEY – IOCL
Z004 4.75(P&M)
DEPRECIATION
KEY – IOCL
Z005 5.28 (P&M)
DEPRECIATION
KEY – IOCL
Z006 6.33 (FURN & FIX)
DEPRECIATION
KEY – IOCL
Z007 7.07 (TRANSP)
DEPRECIATION
KEY – IOCL

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Depreciation as per Income Tax Act
DEP. KEY DESCRIPTION
Y001 5% INCOME TAX
DEPRECIATION
KEY – IOCL
Y002 10% IT
DEPRECIATION-
IOCL
Y003 100% IT
DEPRECIATION-
IOCL
Y004 25% IT
DEPRECIATION-
IOCL
Y005 60% IT
DEPRECIATION-
IOCL
Depreciation as per Employee Area
DEP. KEY DESCRIPTION

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ZEM 1 DEP. KEY FOR
EMPOLYEES 15% -
IOCL
ZEM 2 DEP. KEY FOR
EMPOLYEES 25% -
IOCL
(II) ADDITION TO ASSET – ( T Code – F-91)
After creation of asset master, the asset is capitalised in the above snapshot. We have capitalised the asset by
using the code F-91 and the addition to the asset by Rs. 20000/- and liability for the same in favour of
employee concerned.

53
(III) ACQUISITION TO ASSET MASTER
DirectAsset Acquisition:-
Most Asset Acquisitions are routed through internal orders because the procurement is almost always
against a capital budget and budgets are controlled only through orders.
Steps:
i) At PO: No Accounting. Budget is checked and commitment is booked.
ii) At Goods Receipts: Internal Order Settlement account is debited in the internal order and clearing
account is credited. Commitment moves to actual expense.
iii) At Invoice Verification: Clearing account is debited. Vendor account is credited.
iv) Settlement of Order: Internal Order Settlement account is credited in the order and the Asset account is
debited.
AssetAcquisition with Purchase Order with Budget Check (Internal Order):-
This transaction is used to create asset acquisition posting with purchase order. In this scenario of asset
acquisition, assets are purchased against capital budgets. This is the actual scenario that will be used
commonly in IOCL. In this case there should exist a purchase order and against that the goods must have
been received by the location. At the end of the quarter or during the period end obtain list/report of all the
actual commitments booked for all the internal orders and individually define settlement rule and capitalize
all the assets in the books.
AssetAcquisition with Vendors:-
 This transaction is used to create direct asset acquisition posting with Vendor. In this scenario of asset
acquisition, there is no reference to any budget.
 In this scenario there is only direct purchase of asset. There is no check of budget or there is no placement of
purchase order. Just an asset is purchased and capitalized.

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AssetAcquisition againstEmployee Advances:-
 Employees are treated as vendors in SAP. From accounts payable, capital advances are paid to the
employees as down payments for capital purchases.
 When the asset is delivered, this has to be capitalized in the books of Indian Oil and the employee
advance is to be cleared. This happens in SAP in asset management in conjunction with accounts payable.
STEP 1:-
STEP 2:-

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STEP 3:-

56
STEP 4:-

57
The above screenshot displays how transaction taking place between employee and company.
CREATE AUC ASSET MASTER:-
This transaction is used to create AUC asset master records. The varied demands on master data
management for Asset Accounting are met in the SAP R/3 AM System by:
i) AUC Asset master records that are structured according to functional and goal-oriented requirements
AUC master is the same as any other asset master created but in this case it will be important that this asset
is the one which will not get capitalized when this master is created.
ii) Master data maintenance that is organized according to this structure, and allows for individual
adaptation.
In order to make it easier for the user to create, maintain, and evaluate master data, the varied individual
information is structured according to its area of use and the relevant functions in the system.
(IV) MAINTAIN SETTLEMENTRULE:-
This script explains the procedure for maintaining a settlement rule, for settling the project balances.
Settlement rule is written in a WBS element. Therefore in project, you may settle the costs of Plant and
Machinery differently than that of Construction Period Expenses. You may view the actual cost line item
report for each WBS element for which the settlement rule is being written. Transaction Code: PS91, Actual
Cost Line Items report.
 Settlement of various costs is done as mentioned below:-
 Direct Costs:
Settlement rule is created, mentioning the AUC as receiver. Source assignment: Z62, Z63, Z64. New rules
typically need to be written for every settlement run as the AUC, and distribution amounts to each AUC
would vary in every period.
 Project Inventory:
Settlement Receiver: (Capital Stores at site (project*) indigenous/imported)
Source: Z61 (Project Inventory)
Percentage: 100%
Create one settlement rule. This can be reused every quarter.
 ConstructionPeriod Expenses:-
Settlement Receivers: G/L accounts of ‘CPE’. Source: Z64.

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Settlement rules are entered at the level of WBS elements in the project. Therefore to enter settlement rules,
first reach the screen Change Project: WBS Element Overview.
Settlement with settlement type PER covers only the costs for the relevant settlement period. With FUL,
each time all the costs that have occurred for a sender object for all the periods prior to the settlement (and
are not yet settled) are covered. If PER rules exist, they take precedence over the FUL rule.
During settlement run, PER rules take precedence over the FUL rules.
Please note that if you are writing settlement rules by “Amount”, and you do not mention the validity
period, there are chances of settling more than the amount available on the AUC.
 SETTLEMENT EXECUTION FOR PROJECTS

59
Settlement is the procedure using which some or all the actual costs incurred on an object (WBS element,
network) is allocated to one or more receivers. It is a period end activity and should be diligently done.
During settlement, the system automatically generates offsetting entries to credit the sender object with the
same cost element as that of original debit. The debit postings assigned to a sender object remain in place
even after settlement to a receiver (and can therefore be displayed). E.g. if a WBS element is settled to a
fixed asset, even after settlement, the WBS costs are still visible in project cost reports.
From networks/network activities, settlement is done to the WBS element to which they are assigned. From
WBS elements, settlement may be done to another WBS element or to external objects, which are fixed
assets, G/L accounts and cost centers.
 SETTLEMENT OF AUC
This transaction is used to process settlement of an asset under construction. You can define settlement rules
and keep it ready for execution at the end of the period. And then carry out the corresponding posting of the
line items at a later point in time, since a separate transaction exists for the actual settlement. This will mean
that execution of the settlement rule will be at the end of the quarter when all transactions gets over. For this
transaction first a master record for the AUC will be created. The master record is created as given in the
script for asset master data creation. The fixed asset master record number is noted before the settlement
rule is defined.
When settlement of AUC is carried out first you will define a rule where you will have to mention the AUC
asset master record number and the settlement rule is written.
This transaction initiates the settlement posting for the selected assets under construction, and creates the
necessary posting documents. During this process, the system automatically separates the transfer of
existing assets data from acquisitions that took place in the year of capitalization.
While defining the rule you will first distribute the AUC and then settle AUC. By distributing it means that
we will mention what part of AUC will be capitalized to which asset master and in which period we will
carry out this process.
The system automatically generates carry-over postings for partial capitalization. There is a standard report
(RAHERK01) that enables you to trace the origin of the items in the capitalized asset back to the original
asset under construction.

60
 Projects will be configured in project systems through project orders and work break down structures.
 Budgets will be assigned to Project orders.
 All expenses, Capital Advances and Material Issues will be booked to Project Orders as separate line
items.
 End of period the following are identified.
 All line items which can be directly capitalized:- settled to fixed Assets
 Line items which are identified as CWIP:- settled to Assets under Construction
 Line items which are capital advances:- settled to Capital Advances
 Line items which are not allocate able settled to construction period expenses pending allocation G/L
accounts.
 All the above settlements are done through a settlement rule defined in an order.
 SETTLEMENT OF INTERNAL ORDER TO AUC

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This script describes the process of settlement of capital expenditure booked in an internal order to a fixed
asset or asset under construction asset.
Internal orders are created for capital purchases pertaining to direct purchases and small AF works. Budgets
are allocated to internal orders by the capital budgeting section and the orders are released. This part is
maintained in investment management in SAP.
Capital commitments and actual expenditure are booked subsequently to these orders against the budget
allocated to the order.
The actual expenses booked in the order are then to be settled to the assets under construction and fixed
asset master records for capitalization. At the end of every period a report is to be generated and all the
actual commitments booked to all the orders are individually settled to the AUC.
General steps are
 View Line items booked in the internal order
 Define Settlement Rule for the internal order
 Carry out settlement
 Display the asset value display
 FLOW CHART DIAGRAM
Itemsbookedin
internal order
Settlementrule
for internal order
Carry out
settlement
Displayof
asset
value

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(V) INTER-COMPANYASSET TRANSFER
This transaction is used to process an asset transfer between two company codes. The transaction is relevant
when the employees are transferred from one unit to another unit. However for each asset, which is being
transferred we will have to carry out the transaction. The accounting entry in both the company code will hit
the inter company clearing account. At the end of the period the account will have net of balance which
should be nil. In case an asset is transferred from one location to another location there will be Inter
company transfer of asset.
Now we shall transfer the same asset (WOODEN ALMIRAH-50000338, already created) to the another
location using the code ABT 1N.
STEP 1:-

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First we go to the transaction data and put document date. Then put the posting date and asset value date and
the text. We have to mention the transferee Company code i.e, Chennai’s unit (9291) in this case. Then go
to ADDITIONAL DETAILS
In this snapshot ADDITIONAL DETAILS we put period as 2 (from the beginning of fiscal year),
document type as AA ( means Asset Accounting) & transfer Variant as Z4 (means gross method) . Also
mention the reference
STEP 2:-

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Then again go to the TRANSACTION DATA. Click on New asset and Master Data. In this displayed
snapshots we put cost centre code of transferee company, P7106 in this case for Chennai. Then click on
additional data.
STEP 3:-

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STEP 4:-
I

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In the GENERAL DATA option we put asset description, asset main no. text, account determination and
serial no. We have to put quantity as 1 and the repeat the process for creation of asset upto depreciation
areas.
STEP 5:-
As usual we choose the depreciation key from the drop down button of respective areas.
Then Click on “Go back option”

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STEP 6:-
Here we apply the depreciation key as per IT rule i.e., 10% for this asset being a furniture item and its useful
life. Depreciation key of IT rule’s code- Y002.
Group asset is the asset where the same depreciation key is applied i.e 10% in this case.
Go to the go back option.

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STEP 7:-
Now press the Simulate button. , the document as per the next page will be displayed.

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STEP 8:-
This is the final page and it displays the asset is getting transferred in the books of Chennai.
(VI) RETIREMENTOF ASSET WITHOUT CUSTOMER:
This transaction is required to retire the asset from the books of accounts. The retirement of asset is with
revenue but the customer is not known at the time when you actually retire the asset. This will mean that
you know from the approval note that some money has been received against the asset retired but from
which customer is not known. In this case you will follow this route and retire the asset from the books.
The code of retirement of asset without customer-ABAON.

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STEP 1:-
At First we give the retired asset. We put the sub asset no. Then put the document date, posting date and
asset capitalization date and mention text regarding the retirement. Now put the manual value i.e released
value of asset. Press go to ADDITIONAL DETAILS.
In this option we put period as 3 and document type and mention the transaction type as 210.

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STEP 2:-
Now put the document type i.e. asset accounting (AA) and put the transaction type. We are going to write
retirement with revenue due to its selling and its code is 210 for old asset and for the new asset the code is
260. Then mention the reference i.e. what asset is to be retired and make the assignment for the same.

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STEP 3:-
Type F9 for making the entry and it gets passed.
The necessary entry is as follow:
Accum. Depreciation A/c……………………..Dr. (70) 4,303.18/-
Clearing A/c…………………………………...Dr. (40) 10,000.00/-
Loss on sale A/c……………………………….Dr. (40) 39,696.82/-
To Asset disposal A/c ………………………. Cr. (75) 54,000/-
We save the page.

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(VII) RETIREMENTOF ASSET WITHOUT REVENUE i.e. by SCRAPPING
This transaction is required to retire the asset in the books of company. Scrapping of asset will not earn any
revenue from the transaction but it will only reverse the asset with net block and debit a loss account.
 Auto Postings
Credit Gross Block, Debit Accumulated Depreciation, and Debit loss on scrapping of asset.
To do this we need to use the ABAVN.
Initially we put scrapping asset no., here it mentions the Laptop’s no. Then put the document date, posting
date, asset value date. Then put the short text regarding the retirement of asset.

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Then go to the ADDITIONAL DETAILS.
In this option we put the document type, period and mention transaction type where we choose the
retirement without revenue. Then go to partial retirement where we posted the amount to be retired and also
put the quantity, it is mandatory.
The entry that will pass is:-
Asset w/o –fixed asset Dr.
Accumulated depreciation...Dr.
Asset A/c ………Cr.
And then we save the page.

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(VIII) RETIREMENT WITHREVENUE (CUSTOMER KNOWN):
This transaction is required to retire the asset from the books of accounts. The retirement of asset can be
with revenue or without revenue. Retirement with revenue will mean sale of asset with profit or loss on sale
of asset and retirement without profit or loss will mean scrapping of asset. Posting retirement with
customers will mean that when the asset is retired we know the customer to whom we are selling the asset.
This transaction is also used for retiring employee assets.
The code is ABSO
In the Misc. transaction we put the company code- 9201. Put the asset no., then put the document date,
posting date and the period here it is 3. Now go to transaction type where from the drop down button we
choose the retirement of asset with revenue, the code is 210. Now press enter.

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After ‘enter’ the following page will be displayed.

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In the create asset transaction we put Asset Value date and put the amount to be released. It needs the
quantity also. At last fulfill the additional details consists with document type, assignment and reference .
Now click on DISPLAY DOCUMENT.
Now the final page will come out. In this page the following necessary entry will pass.
Clearing A/c… Dr. 10,000/-
Accum. Depreciation A/c… Dr. 4,303.18/-
Loss on Retirement A/c…... Dr. 39,696.82/-
To Asset Disposal A/c… Cr. 54,000/-

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Now the page is saved and it will be shown in the financial statement generated by SAP.
(IX) DISPLAY G/L ACCOUNT BALANCE (T CODE:FBL3N)

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After filling the required fields the system will display the following screen.

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This screen shows the balance of the fixed assets, date, type of transaction i.e. AA means Asset Accounting.
FUND MANAGEMENT-----------
The function of Fund Management is to budget the expenditures of the concern, monitor future funds
movements in light of the budget available, and prevent budget overruns. We can adapt the budget to
changes in conditions by entering releases, supplements, returns, and transfers. The functions in this
component support you in creating budgets.
Fund management consists of:-
 Fund center/Commitment item
 Fund/Application of Fund
 Maintain Revenue Budget
 Maintain allocation of cost center to fund center
 Budget Re-appropriation
FUND MANAGEMENT (AS IN SAP)
 This component offers all the functions for reproducing the budget structure of your organization in Funds
Management.
 You must set up the following master data according to your individual requirements:-
o Funds centers:-
Funds centers are used to represent organizational units (areas of responsibility, departments, and projects)
and are arranged in a hierarchy.
o Commitment items Funds:-
Commitment items are used to represent budget heads (expenditure structures) in a hierarchy. Each GL
Account will be assigned to a commitment item.
Budgets need to be defined for a combination of Funds Center and Commitment Item.
Commitment items are of two types:-
 Account Assignment items:-
These are from the lowest level in the Commitment item hierarchy. You can post to and budget these items.
 Summarization items:-
You can budget these items, but cannot post to them. Summarization items are needed for setting up a
commitment item hierarchy.

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FUND MANAGEMENT(AS IN IOCL)
 In IOCL Fund Management will be used for Revenue Budget Monitoring.
 The Fund Center Hierarchy will be derived from the Cost Center Hierarchy.
 The Commitment Items will be created for Budget Heads. Groups of expense items taken together will be
defined as Commitment Item e.g. Traveling and Conveyance, Salary, Overtime, etc.
 Budgets will be entered for a combination of Fund Center and Commitment item. e.g. Refinery Process
Unit- Fund Center and Repairs and Maintenance Material Cost - Commitment Item.
 Research & Development – Fund center and Salary – Commitment item.
FUND CENTER AND COMMITMENT ITEMS FUND
 Fund is used mainly in relation to Repairs & Maintenance items.
 Each Fund in SAP represents a combination of the ‘Type of Maintenance’(like Breakdown, Shutdown,
Preventive, etc.) ‘Department’ ( Civil, Electrical, Mechanical, etc.) and the ‘Equipment’ undergoing repairs
and maintenance ( Building, Plant & Machinery, etc.)
 For Repairs & Maintenance commitment items the Fund center/Commitment item budget will be broken up
by Fund i.e. Budget will be maintained for Fund/ Fund center/ Commitment item.
APPLICATION OF FUND
 Application of Funds specifies the area where the Funds are put to use.
 In IOCL, there shall be only one Application of Fund for Repairs & Maintenance.
MAINTAIN BUDGET
 Budgets will be entered for a combination of Fund Center and Commitment item.
 For Repairs and Maintenance activities, budget will be maintained for a Fund, Fund center and Commitment
item.
 The Total budget for Fund, Fund center and Commitment item for repairs and maintenance items should be
equal to the budget uploaded for Fund center and R&M commitment item.
 RE budget will be maintained in version ‘0’ for the current year, whereas, the BE budget would be
maintained in version ‘1’ of next year.
 At the start of the next fiscal year, the BE budget will be copied from version ‘1’ to version ‘0’ and this
budget will be used for checking against all FI postings till the Revised budget is available.

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 When the RE values are approved from the board, the budget will be updated in version ‘0’ using the budget
upload program and also BE budget for next year will be uploaded.
ENTER ORIGINAL BUDGET TRANSACTION
This transaction is used to enter original budget – hierarchy transaction. Once the budget has been approved
by the budgetary authority or a new budget proposal (see also budget version handling) has been
established, the figures need to be keyed into the system. To cover this initial phase, the so-called original
budget in SAP is used. SAP provides the following transactions to enter the budget figures:
 Transaction for hierarchical treatment
 Direct entering with automatic roll up
Within the hierarchy transaction all selected budget objects are listed in hierarchical order. Budget can be
assigned completely manually – thus manual distribution to or from higher or lower levels or automated
total-up functionality could be used.
The transactionaims to provide:-
 Easy data entry facility: (copy of views)
 An overview picture while budgeting
 Treatment of sub-hierarchies
This transaction can also be used to “distribute” budget amounts within a given structure, for instance, to
distribute “reserves” kept at a higher level to the lower level where they are consumed. In contrast to the
hierarchical budget transactions, Transactions should be used to:
 Avoid blocking a complete/partial hierarchy and allow multiple users to enter budget data at the same time
 Keep the budget consistent due to automatic roll-up
Minimize impact on performance (avoid hierarchy processing).
Budget canbe entered into the system by two methods:-
Method 1:- Entering the budget by rollup.

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Method 2:- Entering the budget by uploading the excel sheet
Budget is entered in the system.

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BUDGET REAPPROPRIATION
Budget re-appropriation includes:-
 Supplement Budget
 Return Budget
 Transfer Budget
Budget Re-appropriationcould be through any of the following transactions:-
 Budget Supplement – i.e. Overall Increase in Budget
 Budget Return – i.e. Overall Decrease in Budget
 Budget Transfer – Transfer from one Fund center/Commitment item to another Fund center/Commitment
item
In case of re-appropriation of budget from one head to another we need to use the transfer budget
transaction. Here, the system tracks the sender, receiver and the amount. Only within the transaction, the
budget addressed is to be affected and the amount need to be identified. The system automatically rolls up
the budget to the next higher levels within the budget hierarchy until the top is reached.
The transactionprovides:-
 Easy data entry
 Quick data entry
 Automatic roll-up (always consistent) capabilities.
The additional input line at the bottom of the page can be used to position or scroll through the data entered.

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Other required data for transfer budget apart from those mentioned above are:
Field R/
O/
C
Description/Action
Document date R Ten-character field for document date
FM area R Four-character field to enter the funds management
area
Version O Three-character field to enter budget version
Sender Fund C Ten-character field to enter fund
Receiver Fund C Ten-character field to enter fund
Sender Year O Four-character field to enter sender budget year
Note: Either year (annual values) and/or overall
values to be selected depending on the budget
profile used for this fund
Receiver Year O Four-character field to enter receiver budget year
Note: Either year (annual values) and/or overall
values to be selected depending on the budget
profile used for this fund
Sender Period O Three-character field to enter Sender period
Receiver Period O Three-character field to enter Receiver period
Person responsible O Twenty-character field to enter free format
description or name of the person responsible
Enter the name of the person triggering this posting
- enter the name of an SAP user
Long text O Thirty-character field to identify the key/name of a
texteditor document to be used
Text O Forty-character to enter description, free header text
Example: Number of external act, etc.

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Field R/
O/
C
Description/Action
L no. Three-character line number indicating the line item
of the document assigned by the system
automatically, display mode only
SA R Distribution key
Note: Depending on the type of budget profile
assigned to the fund, period values can be entered
and a field for distribution key appears on this
screen
Amount R Sixteen-character amount (including decimals).
Amount available field under the amount field
displays the original budget in the sender fund
center / commitment item.

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Transfer budget entered.
ENTER SUPPLEMENTARYBUDGET-ROLL-UP TRANSACTION
This documentation describes the process used when, within the execution of the approved budget the
following additional budget amendments need to be made:
 Supplementary budget
 Budget returns
 Budget transfers
To clearly separate supplementary budget from the other budget categories, separate transactions allow its
registration.
SAP provides two transactions to enter the budget figures:
 A transaction for hierarchical treatment
 Direct entering with automatic roll-up to be covered in this paper
Within the transaction only the budget address to be effected and the amount need to be identified. The
system automatically rolls up the budget to the next higher levels within the budget hierarchy until the top is
reached.
A supplementary budget needs to be entered.

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Within the SAP system different budget categories exist which can be displayed in different columns in
budget reporting later on. The check for budget consistency and budget availability is always done against
the current budget status, not within one budget category. Using one or the other budget category through
different transactions technically triggers the same processing, except for reporting – the result can be
displayed in different columns.
Using the roll-up transaction offers a fast and efficient way to enter budget data. The user does not need to
know the hierarchical links or structures – just enter the budget element and the amount and the system will
automatically handle the hierarchy in the background. It is possible that within one transaction session the
system will create more than one budget document for the data entered. The document number displayed
after saving represents the last budget document number created.
Supplementary budget entered.

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ASSIGNMENT ON FUND MANAGEMENT:
Transfer of budget from one commitment item to a different cost center of another commitment item
Transaction code used in budget re-appropriation is FR14
After giving the relevant inputs go to the document overview.
Note:- Indian Oil Corp. can re-appropriate the budget within the same financial year.

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After that we give the code of Fund centre & Commitment item from/to which the fund amount has to be
transferred.
Budget re-appropriation is completed.
Now save the page.
SWOT OF THE REPORT
STRENGTH
 Improve alignment of strategies and operations
 Improve productivity and insight
 Improve financial management and corporate
governance
 Optimize IT spending
 Gain higher ROI faster
 Provide immediate access to enterprise
WEAKNESS
 The SAP system is costly. It cost to a company in
crores. Because of its high cost it is normally used
by big companies.
 The user must be expert to use SAP. The user must
be trained from time to time as the SAP system is
very vast.
 Network connectivity is required. The SAP system

91
information. breaks down in case of malfunctioning of network.
 There is a requirement of manpower expert team to
solve the problems faced by the users in their day
to day working.
 In case of asset management, manual intervention
is required in SAP system in case of shifting the
asset from one location to another location.
OPPORTUNITIES
 BRS will generate automatically
 Salaries of employees will updated
 Activities of company will updated automatically
THREATS
 Sustained management support
 Good project scope management
 Project tem Composition
 Project Champion Role
 User Involvement & testing
 Strong communication inwards and outward
RECOMMENDATION-------
Recommendations based on the study of the report are as follows:
 The user must be trained from time to time as the SAP system is very vast.
 The company using SAP must be having strong intranetworking system and there should be back up of the
network connectivity to prevent malfunctioning of system.
 The user managing the asset should update the asset record in SAP on daily basis.
 Company should hire employees with good computer knowledge as minimum training would be required
which would help in cost cutting.
CONCLUSION-------
 SAP-FICO module provides an advance accounting package and also provides guidelines in well and good
manner.
 In this module the creation, display and reconciliation of asset are defined easily.
 Inter-company asset transfer can be maintained through SAP without difficulties.
 Fund is used to manage in SAP in lucid manner.
 Budget re-appropriation can be done properly through SAP.

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REFERENCE SECTION
BIBLIOGRAPHY-----
 BOOKS:_
SAP handbookof IOCL
Pipeline division performance highlights bookof IOCL
Annual report of IOCL
 WEBSITES:
www.iocl.com.
www.mbaskool.com.
www.sap.com
en.wikipedia.org
 REFERENCES
Mr. Rajat sarkar, Finanace Manager
Mrs. Richa bengani

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APPENDIX---
AA -- Asset Accounting
A/P – Account Payable
A/R – Account Receivable
AUC— Asset under Construction
BA— Business Area
BRS— Bank Reconciliation System
CCA— Credit Control Area
COA— Charts Of Accounts
CWIP— Capital Work In Progress
ERP— Enterprise ResourcePlanning
G/L— General Ledger
MM— Material Management
MRP— Material Requirements Planning
PM— Plant Maintenance
PO— Purchase Order
PP— ProductionPlanning
PS— Project system
RFQ— Request ForQuotation
SAP— System Application & Products
SD-- Sales & Distribution
S/L— Special Ledger

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