Attachment H Chart of Accounts and Financial Master Data Redesign Documentation.pdf

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S/4 Planning Project

Documentation

Chart of Accounts and Financial Master Data Redesign

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Responsible Team Member

XXXXX

Accounting and control requirements to be supported

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Financial Accounting and Control

The Financial Accounting and Control Objectives result in self-balanced sets of accounts across SAP's Segment (Lines of Business replacing AASIS Fund Groups), SAP Fund (AASIS' Legal Fund and Sub-Funds), SAP Profit Center (AASIS' current Business Area) and Grant (AASIS' current statistical WBS or Internal Order). From these self balanced sets of accounts, we will be able to selectively report different bases of accounting, grouping together Modified Basis Accounting entries with corresponding contra accounts to net these to zero for Full Accrual Accounting. We will also use SAP security to prevent any of these special Contra Accounts or Full Accrual Only accounts from any operational accounting.

• Utilize SAP General Ledger and Fund Accounting features to support document splitting/balancing by lines of business (Segment), agency/constituency (Profit Center), legal funding source (Fund), and sponsor funding (Grant), including full balancing of open-item accounts by zero-balancing fields]

• Provide integrated Modified Accrual Accounting following the standards promulgated by the Governmental Accounting Standards Board (GASB), as well as supporting detailed modified accrual-based managerial and fixed asset accounting

• Provide integrated Full Accrual Accounting following the GASB standards, as well as supporting detailed full accrual-based managerial and fixed asset accounting

• Use separate/contra General Ledger Accounts (including additional Fund Balance / Net Position balance carryforward accounts) to support automatic reconciliation of the Budgetary Accounting, Modified Accrual Accounting and Full Accrual Accounting bases

• Enable financial statements by lines of business (Segments/hierarchies), legal funding sources (Funds/hierarchies), agencies (Profit Centers/hierarchies), function (Functional Areas/hierarchies), and General Ledger Accounts/hierarchies

• Provide trial balance reporting by General Ledger Accounts/hierarchies, lines of business (Segments/hierarchies), legal funding sources (Funds/hierarchies), agencies (Profit Centers/hierarchies), function (Functional Areas/hierarchies), and sponsor funding (Grants), with drill-down to detailed postings

• Provide General Ledger Account balance inquiry by line of business (Segment), legal funding source (Fund), agency (Profit Center), and sponsor funding (Grant), with drill-down to detailed postings

• Provide detailed General Ledger line-item inquiry by General Ledger Accounts/hierarchies, lines of business (Segments/hierarchies), legal funding sources (Funds/hierarchies), agencies (Profit Centers/hierarchies), function (Functional Areas/hierarchies), and sponsor funding (Grants), with drill-down to detailed postings

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• Provide direct-method cash flow reporting following the GASB standards using the relevant SAP cash flow reporting document splitting/balancing functionality

• Structure General Ledger Accounts to support reconciliation of accrual-based postings and cost allocations, including restricting the use of these accounts to prevent operational postings

• Enable automatic reclassification of custodial (trust/fiduciary) fund amounts from revenue/expense to liability General Ledger Accounts, with custodial revenue/expense/fund balance amounts automatically recorded and reportable in SAP Funds Management

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Budgetary Accounting and Control

The Budgetary Accounting and Control Objectives result in enforcing legal levels of appropriation, while still supporting lower levels of managerial budgeting and, as needed, control. In addition, we intend to implement budgetary controls to ensure that expenditures don’t exceed a fund’s certified annual cash proceeds. Budget Transaction classification will allow for reconciling back to original appropriations, as adjusted during the fiscal year. In addition, AASIS will be configured to reconcile the state’s budgetary basis of accounting with the cash, modified accrual and full accrual bases of accounting. Several new fiscal year change over processes will be implemented to support efficiently carrying forward eligible open encumbrances and closing revenues and expenses to fund balance, both for Financial Reporting and for Budgetary reporting. Other improvements include building automated support for Capital Project Planning and Funding.

1. Utilize SAP Funds Management to record legislatively-approved cash-basis biennial budget (using annual appropriations by appropriation / agency / project (Funded programs/control objects), legal funding sources (Funds/control objects), sponsor funding (Grants), responsible agency organizations (Funds Centers/no control object), function (Functional Areas/no control object), and Commitment Items (1:1 with General Ledger Accounts with some exceptions)/control objects)

2. Support prevention (blocking) of appropriation budget commitment/spending based on relevant available cash amounts

3. Provide integrated reconciliation of legal vs. blocked vs. supplemented (for 45 day rule) vs. transferred

vs. lapsed appropriations

4. Prevent transfer of budget by agencies to non-appropriated line items

5. Provide budget vs. commitment vs. invoice vs. actual cash-basis revenue and expenditure reporting by appropriation and agency (Funded programs/groups), legal funding sources (Funds/groups), sponsor funding (Grants/groups), responsible agency organizations (Funds Centers/hierarchies/groups), function (Functional Areas/groups), and non-statistical revenue, expenditure, and transfer Commitment Items/hierarchies/groups

6. Enable goods receipt/service entry and invoice expense (GR/IR) updating to properly reconcile with Financial Accounting

7. Enable real-time cash-basis budgetary revenue and expenditure updating upon payment

8. Budget releases to control and align available budget with available cash

9. Utilize non-statistical Commitment Items to support budget-based revenue, other financing sources, expenditures, other financing uses, and fund balances

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10. Enable statistical Commitment Items to segregate non-budget-based revenue, other financing sources, expenditures, other financing uses, and fund balances (modified accrual) / net position (full accrual) amounts

11. Enable separate/contra and real/statistical Commitment Items (including the use of Fund Balance / Net Position balance carryforward Commitment Items) to support automatic reconciliation of the Budgetary Accounting, Modified Accrual Accounting and Full Accrual Accounting bases

12. Support automatic reclassification of custodial (trust/fiduciary) fund amounts from revenue/expense to liability General Ledger Accounts, with custodial revenue/expense/fund balance amounts automatically recorded and reportable in SAP Funds Management

13. Establish security authorizations to only allow authorized financial accounting end users to post against statistical Commitment Items (except for postings to custodial (trust/fiduciary) funds

14. Prevent end users from posting against non-statistical Commitment Items after the budgetary month-end close, while continuing to allow authorized end users to post against statistical Commitment Items during the month until the accrual month-end is closed

15. Support carryforward of open commitments at fiscal year-end against the next year’s annual appropriation

16. Enable multiple account assignments on individual purchase order and invoice line items

17. Enable link of the Method of Finance (MoF) to approved projects, including budget vs. actual reporting related to the original and revised project-level appropriations

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Managerial Accounting and Control

The Managerial Accounting and Control Objectives target planning, accounting and reporting costs and revenues at additional levels of detail than is currently available. SAP Analytics Cloud can serve as the tool to initiate detailed planning, feeding into (or replacing) the current budget preparation process in either PBAS or ABS. If there is an interest in full program costing, Managerial Accounting objective can support allocation of indirect costs to Cost Center, Orders or WBS Elements. This applies as well to grant billing on a Modified Accrual basis, Program or Organizational performance reporting can be linked to financials via Statistical Key Figures to better inform managers on efficiency and effectiveness.

1. Utilize SAP Controlling, General Ledger, and Fund Accounting features to support detailed cost planning, accounting, and management by lines of business (Segments/hierarchies), legal funding sources (Funds/hierarchies), agencies/constituencies such as Counties, Municipalities, or Regions (Cost Centers, Internal Orders and/or Profit Centers/hierarchies), service/function/process/activity (Functional Areas/hierarchies), and sponsor funding (Grants), with drill-down to detailed postings

2. Utilize Controlling, General Ledger, and Fund Accounting features to support managerial accounting and reporting with summarization of amounts by lines of business (Segments/hierarchies), legal funding sources (Funds/hierarchies), agencies/constituencies (Cost Centers and/or Profit Centers/hierarchies), function (Functional Areas/hierarchies), and sponsor funding (Grants/hierarchies)

3. Integrate SAP Analytics Cloud to support detailed managerial planning and custom reporting

4. Enable automated settlements of capital projects to Assets under Construction (AuCs) in the General

Ledger, including automated creation of asset sub-numbers for multi-funded, multi-functional capital project amounts

5. Enable activity types for input-driven charging and allocation of costs for time entry and maintenance costing purposes

6. Enable statistical key figures to allow manual input and automatic interfacing of key agency metrics to support financial and managerial allocations and/or reporting

7. Provide support for detailed activity-based costing and performance measurement

8. Enable integration with Funds Management and Grants Management – Grantee to properly reflect cost and revenue allocations from a budgetary accounting and control perspective:

• Legal budgetary allocations – updated against the State’s legal budget

• Grant-related allocations – updated against the State’s detailed grant budgets

• Non-budgetary modified accrual allocations – updated statistically against the State’s legal budget and detailed grant budgets, but able to be reconciled with the State’s legal budgetary actual fund balances

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• Full accrual (non-budgetary, non-modified accrual) allocations – updated statistically against the State’s legal budget and detailed grant budgets, but able to be reconciled with the State’s legal budgetary actual fund balances and modified accrual actual fund balances

9. Enable integration with the General Ledger to properly segregate cost and revenue allocations from a budgetary, modified accrual and full accrual perspective (for example, allocate long term debt proceeds to projects on a modified accrual basis).

Sponsor Accounting and Control

The objectives of the Sponsor Accounting and Control requirements is to support the full lifecycle of a grant from initial application through close out. With Funds Management, the Grantee Management module will allow us to further specify appropriation budgets down to its corresponding grant(s). Grantee Management will help control that only allowable costs are posted to the grant. Additionally we can automate billing for both direct and indirect costs (per negotiated overhead rates). Finally, at fiscal year end, AASIS can support Single Audit compliance and SEFA reporting. As mentioned in the Financial Accounting and Control section, Grant will also be one of the four balancing segments for FI.

1. Utilize SAP Grants Management – Grantee and Fund Accounting features to integrate requests, budgeting, control, billing, and reporting of sponsor-related funding based on specific grant requirements

2. Enable automatic reclassification/reconciliation of grant-related budget in SAP Funds Management based on budget entered in SAP Grants Management – Grantee

3. Support daily drawdowns of sponsor funding based on cash-basis grant-related expenditures

4. Enable integrated control to manage relevant unallowable costs from being recorded against a grant

5. Support utilization of an indirect cost recovery rate to automatically record allowable overhead amounts to grant billings

6. Provide grant-related reporting including the annual Schedule of Expenditures of Federal Awards

7. Provide grant-related reporting to reconcile grant expenses, expenditures, receivables, and reimbursements to identify billed (received, vs. billed (not yet received) vs. billable (not yet billed) vs.

expensed (not yet billable) grant amounts

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Cash-Basis Accounting and Control

The objectives of the Cash Basis Accounting and Control requirements are to enable Cash Basis accounting and reporting. This supports appropriation reporting on a cash basis as well as cash control to prevent a fund from having negative cash balances, unless specifically excluded from this requirement.

1. Utilize real-time cash-basis revenue and expenditure updating in SAP Funds Management to provide detailed cash-basis appropriation vs. cash basis revenue and expenditure amounts

2. Utilize the SAP Average Daily Balance ledger to support calculation of average daily cash balances by funding (Fund, Grant) and agency (included in Profit Centers) to support investment earnings rates and allocations

3. Utilize SAP Cash Control ledger features to record, track and control cash amounts by Agency, legal funding sources (Funds/control objects) and cash-related accounts (General Ledger Accounts/control objects)

a. Non-Treasury Fund cash-related General Ledger Accounts

i. All Cash in Bank accounts mapped to a non-Treasury house bank

b. Treasury Fund cash-related General Ledger Accounts

i. Cleared Cash accounts

ii. Cash Outgoing (warrant/ACH payment) accounts

iii. Cash EFT Outgoing accounts

iv. Transfers Incoming accounts

v. Transfers Outgoing accounts

c. Special Revenue process only

i. Agencies deposit Special Revenue throughout the day

ii. Daily (end-of-day)

1. Before the payment run

2. Special Revenue job runs to move that money from the deposit fund to the

ASA0000000 holding fund until month-end distribution

iii. Cash-related General Ledger Accounts to support Special Revenue job processing

1. Cash Incoming for Deposits accounts (excluded for all other postings)

2. EFT Deposits accounts (excluded for all other postings)

3. All Treasury Fund cash-related General Ledger Accounts listed above

4. Support the following cash control requirements:

a. Dynamic calculation of available Fund cash balances

b. Exception-based cash control requirements for specific transactions

i. Document types ZM, ZA, ZB, and ZX

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ii. Batch processing for the Daily AIRS Revenue Interface Apply cash control to any outgoing movement of cash (payments, transfers, or reversals)

iii. Check and control available cash for these specific processes

1. Search first for the Special Revenue fund on the interfaced transaction for an amount to transfer to the fund from which Special Revenue Distributions will be made

2. If there is sufficient balance, then use this fund to transfer from the Deposit Fund to the Holding Fund

3. If there is insufficient balance, then check the first of the Receiving Funds in the custom table for cash available to transfer to the holding table

a. Move to the next fund in this table until all relevant receiving funds have been checked.

4. Allow the remaining balance post even if it results in a negative cash balance.

c. Allow non-specific transactions to process

i. If sufficient Fund cash balance

ii. If Funds are excluded from cash control

1. Payroll paying Funds

2. Cash Management Improvement Act (CMIA) Funds

3. Display only a warning indicating insufficient Fund cash balance

d. Prevent remaining non-specific transactions from processing

i. If insufficient Fund cash balance

ii. Display error indicating insufficient Fund cash balance

Custodial (Trust / Fiduciary) Accounting and Control

1. Utilize SAP Fund Accounting Trust Fund features to support automatic reclassification of custodial (trust/fiduciary) fund amounts from revenue / other financing sources / expense / other financing uses / fund balance to liability General Ledger Accounts, with custodial revenue / other financing sources / expense / other financing uses / fund balance amounts automatically recorded and reportable in SAP Funds Management

Below are examples of custodial funds, which represent non-State funding that is managed in SAP on behalf of third parties:

• Custodial funds for foster care (Department of Human Services)

• Prisoner accounts (Department of Corrections)

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Core SAP for Public Sector components and features to be used, including expected impacts

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SAP Analytics Cloud (SAC)

Cost and Revenue Planning

Business Drivers

1. Existing Cost Center planning is obsolete

2. SAC is SAP’s stated direction for managerial planning

3. Existing account assignments will change

4. Integration is required with the State’s budgeting system (Legacy PBAS or SAP SBP)

Features to be Used

1. Utilize SAP-delivered SAC planning content (if possible) to support detailed cost and revenue planning using the following account assignments:

• Cost Centers

• Internal Orders (non-statistical)

• Profit Centers

• Funds

• Grants

• Functional Areas

• General Ledger Accounts (relevant for Costs and Revenues)

2. Utilize SAP-delivered integration to transfer information between SAC and S/4HANA, if possible

3. Enable additional versions to isolate budget-related planning vs. accrual-based managerial planning

Expected Impacts

1. Detailed integration with the State’s budgeting system (PBAS or SAP SBP)

2. Utilize new SAP SAC solution for managerial planning instead of SAP ECC planning

3. Enable new Fiori Apps for end users to manage managerial planning in S/4HANA

• F1711 – Import Financial Plan Data

• F4848 – Display Financial Plan Data Jobs

• W0163 – Financial Plan Data Report

4. Enable additional integration between SAC and S/4HANA for transferring information between solutions

5. Develop the following State-specific content and integration if SAP-delivered content does not support all State managerial planning requirements:

• Planning content

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• Integration between SAC, S/4HANA and the State’s budgeting system (PBAS or SAP SBP)

• Reporting

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Controlling

Cost and Revenue Management

1. Standardization and proper integration of account assignments

2. Simplified operational planning, management, and reporting

3. Managerial accounting should be automatically integrated with financial and budgetary accounting

4. Statistical information needs to be collected to support statewide metrics

5. Activities need to be charged to discreet activities or funding (e.g., maintenance orders, grants)

6. Corrections of errors need to be simplified, controlled, and directly linked to the original documents

Features to be Used

1. Non-statistical Internal Orders, with settlement to other account assignments only if required (e.g., capitalization of fixed assets)

2. 16-digit Functional Areas to support service/function/process/activity-based management

3. Managerial planning (ACDOCP) using Cost Centers and non-statistical Internal Orders as described in under SAP Analytics Cloud above

4. General Ledger cost and revenue postings (ACDOCA) using General Ledger Accounts with Cost Element attributes to support primary cost and cost-reducing revenue postings and reporting

5. Accrual-based commitment accounting (ACDOCA predictive accounting extension ledger). This will post planned deliveries as an accrual in the extension ledger and reverse them out the following month.

6. Statistical Key Figures to track statewide metrics

7. Line-item repostings for document corrections

a. Custom workflow

i. Review and approval prior to posting

1. Organization Manager approval only (within the organization’s Funds Centers and Functional Areas, same Fund, same Grant, same appropriation and agency codes within the Funded Program, and same expenditure character of object within the Commitment Item)

2. DFA Fiscal approval (across Funds, across Grants, across appropriation and/or agency codes within the Funded Program, and/or across expenditure character of object within the Commitment Item

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a. Including notifications that the posting will result in due to/due from postings

b. Allows the necessary Treasury Transfers (Cash in Transit In / Out) to be processed separately

ii. Separate control for reversals, either need to control through role assignments or custom workflow.

8. Cost and Revenue Management reporting

a. Standard reporting

b. Custom reporting (using SAC and/or latest S/4HANA reporting tools)

c. Global Hierarchies

i. General Ledger Accounts (reporting by nature/classification of expense and revenue)

ii. Profit Centers (reporting by line of business and agency)

iii. Cost Centers (reporting by organizational structure)

iv. Functional Areas (reporting by service/function/process/activity)

v. Funds (reporting by state funding source)

vi. Grants (reporting by external grant funding source)

d. Groups

i. Internal Orders (reporting by ad-hoc cost collectors)

1. Post against non-statistical Internal Orders instead of using statistical Internal Orders for reporting

2. Settlement of non-statistical Internal Orders for capitalization of fixed assets

3. Managing and using Functional Areas as dynamic master data instead of configured objects

4. Planning and posting using the combination of Cost Center (or Internal Order) plus Fund, Functional

Area, and Grant instead of hard-coding non-organizational objects with the Cost Center

5. Alignment of Cost Centers and Internal Orders with agencies using Profit Centers which will support reorganizations through reassignment of Profit Centers, allowing the internal organizations affected to continue using their existing Cost Centers and Internal Orders instead of creating new objects

6. Eliminates creation and integration of separate Cost Element master data

7. Accrual-based cost accounting and reporting will change to utilize planning, commitment, and actual information posted in the General Ledger instead of separate cost accounting tables

8. Updating and reporting of statewide metrics in SAP using Statistical Key Figures

9. Eliminate journal entries to correct document line items posted to erroneous account assignments,

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a. Corrections and correction reversals will be directly connected to the erroneous line item, preventing inaccurate or duplicate corrections or reversals

b. Custom workflow of corrections for review and approval

10. Simplified reporting of cost and revenue information using different fields, with simplified grouping of the fields

a. General Ledger Accounts (reporting by nature/classification of expense and revenue)

b. Profit Centers (reporting by line of business and/or agency)

c. Cost Centers (reporting by organizational structure)

d. Functional Areas (reporting by service/function/process/activity)

e. Funds (reporting by state funding source)

f. Grants (reporting by external grant funding source)

g. Internal Orders (reporting by ad-hoc cost collectors)

11. Integrated financial reporting of capital outlay expenditures for the ACFR

a. Internal Order Global Hierarchies

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Project System

Project Management

2. Simplified project planning, management, and reporting

3. Project accounting should be automatically integrated with financial and budgetary accounting

1. Non-statistical WBS Elements, with settlement to other account assignments only if required (e.g., capitalization of fixed assets)

2. Standard project planning

a. Planning includes separate Fund Accounting fields

i. Fund

ii. Functional Area

iii. Grant

3. General Ledger project-related postings (ACDOCA) and reporting

4. Accrual-based commitment accounting (ACDOCA predictive accounting extension ledger)

5. Project reporting

a. Standard project accrual-based reporting in Project System

i. Using project structure hierarchies

b. Custom reporting (using SAC and/or latest S/4HANA reporting tools)

c. Project accrual-based reporting (Project System)

i. WBS Element hierarchies

ii. General Ledger Account hierarchies (reporting by nature/classification of expense and revenue)

iii. Profit Center hierarchies (reporting by line of business and agency)

iv. Cost Center hierarchies (reporting by organizational structure)

v. Functional Area hierarchies (reporting by service/function/process/activity)

vi. Fund hierarchies (reporting by state funding source)

vii. Grant hierarchies (reporting by external grant funding source)

d. Project budgetary reporting (Funds Management)

i. Funded Program groups/hierarchies

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ii. Commitment Item groups/hierarchies (reporting by nature/classification of expense and revenue)

iii. Funds Center groups/hierarchies (reporting by organizational structure)

iv. Functional Area groups/hierarchies (reporting by service/function/process/activity)

v. Fund groups/hierarchies (reporting by state funding source)

vi. Grant groups/hierarchies s (reporting by external grant funding source)

1. Post against non-statistical WBS Elements instead of using statistical WBS Elements for reporting

2. Managing and using Functional Areas as dynamic master data instead of configured objects

3. Planning and posting using the combination of WBS Element plus Fund, Functional Area, and Grant instead of hard-coding non-organizational objects with the WBS Element

4. Alignment of project structures with agencies using Profit Centers which will support reorganizations through reassignment of Profit Centers, allowing the internal organizations affected to continue using their existing project structures instead of creating new objects

5. Eliminates creation and integration of separate Cost Element master data

6. Accrual-based project accounting and reporting will change to utilize commitment and actual information posted in the General Ledger instead of separate cost accounting tables

7. Simplified reporting of project information using different fields, with simplified grouping of the fields

a. Project structures (reporting by complex activities as they are managed by project managers)

b. General Ledger Accounts (reporting by nature/classification of expense and revenue)

c. Profit Centers (reporting by line of business and/or agency)

d. Cost Center hierarchies (reporting by responsible / requesting organizational units)

e. Functional Areas (reporting by service/function/process/activity)

f. Funds (reporting by state funding source)

g. Grants (reporting by external grant funding source)

8. Integrated project budgetary control and reporting (Funds Management)

a. Funded Programs (project budgetary management of complex activities to the

Appropriation/Line of Business/Agency/Project Definition/WBS Element/Network levels)

b. Commitment Items (project budgetary management by nature/classification of expense and revenue)

c. Funds Centers (project budgetary management by organizational structure)

d. Functional Areas (project budgetary management by service/function/process/activity)

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e. Funds (budgetary management by state funding source)

f. Grants (budgetary manage by external grant funding source

9. Integrated financial reporting of capital outlay expenditures for the ACFR

a. WBS Element Global Hierarchies

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Budgetary Accounting and Control

1. Integration is required with the State’s budgeting system (Legacy PBAS or SAP SBP)

2. Standardization, management, and proper integration of account assignments

3. Detailed budgetary reporting

4. Streamlined, detailed cash-basis revenue and expenditure management

5. Proper control of budget transfers within legal appropriations

6. Proper alignment of available budget with available cash

7. Proper alignment of available grant-related budget with specific grant programs

8. Proper control of encumbrances at fiscal year-end

9. Automatic integration and reconciliation of budgetary accounting with managerial and financial accounting (budgetary vs. modified accrual vs. full accrual) across fiscal years

1. Proper account assignment integration and support for detailed managerial budgetary reporting

a. Budget control objects to enable posting to detailed account assignments with budgetary control at higher, derived account assignment levels

b. 1:1 alignment of Commitment Items with General Ledger Accounts (with some exceptions)

c. Alignment of General Ledger Accounts and Commitment Items with relevant characters of objects to simplify budgetary control object derivation and budgetary reporting

d. Use of statistical Commitment Items to reflect non-budgetary financial and managerial amounts

e. 10-digit Funds Centers aligned 1:1 with Cost Centers

f. 10-digit Funds to support lower-level accounting and reporting (e.g., fee-based funding sources)

g. 16-digit Functional Areas to reflect service/function/process/activity-based information

h. 24-digit Funded Programs containing the following:

i. Appropriation control

ii. Line of Business

iii. Agency

iv. Internal Order or Project structures (to support detailed programmatic reporting)

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i. Automatic Funds Management master data creation/updating to simplify creation and updating of the following account assignments

i. Commitment Items from General Ledger Accounts

ii. Funds Centers from Cost Centers

iii. Funded Programs from Internal Orders and Project structures

2. Real-time cash-basis budgetary revenue and expenditure updating upon payment

3. Budget document validation checks to prevent incorrect budget transfers between appropriations and funding

4. Budget releases to control and align available budget with available certified cash

5. Reconciliation of grant-related appropriated budget, automatically transferring budget to relevant grant-related objects in Funds Management with grant budget posted in Grants Management

6. Carryforward of open commitments at fiscal year-end against the next year’s annual appropriation

7. Use of real vs. statistical Commitment Items and fund balance carryforwards to automatically integrate and reconcile budgetary vs. modified accrual vs. full accrual accounting

a. Real fund balance/net position, revenue, other financing source, expenses, and other financing use General Ledger Accounts that are the same for the budgetary, modified accrual, and full accrual bases of accounting

b. Statistical fund balance/net position, revenue, other financing source, expense, and other financing use Commitment Items that represent differences between the budgetary vs.

modified accrual vs. full accrual bases of accounting

c. Carryforward of actual amounts in Funds Management to the appropriate real or statistical fund balance / net position Commitment Items to track detailed budgetary vs. modified accrual

vs. full accrual accounting differences across fiscal years

8. Budgetary reporting

a. Standard reporting

b. Custom reporting (using SAC and/or latest S/4HANA reporting tools)

c. Global Hierarchies

i. Commitment Items (reporting by nature/classification of expenditure, revenue, and fund balance / net position)

ii. Funded Programs (reporting by appropriation, agency, ad hoc / project cost collectors)

iii. Funds Centers (reporting by organizational structure)

iv. Functional Areas (reporting by service/function/process/activity)

v. Funds (reporting by state funding source)

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vi. Grants (reporting by external grant funding source)

1. Detailed integration with the State’s budgeting system (PBAS or SAP SBP)

2. Restructuring of account assignments for proper use and simplified derivation

a. 1:1 alignment of Commitment Items with General Ledger Accounts, restructured to reflect characters of objects, with no assignment of Commitment Item in the General Ledger Account

b. Real vs. statistical Commitment Items to reflect budgetary vs. non-budgetary amounts

c. No year-dependent master data, eliminating the creation of duplicate Commitment Items every fiscal year

d. 10-digit Funds Centers aligned 1:1 with Cost Centers (instead of the appropriation code) for detailed organizational budgetary reporting

e. 10-digit Funds (zero-filled to the right to support lower-level management funding sources in the future)

f. 16-digit Functional Areas (managed as dynamic master data instead of configuration) without legal budget availability control to support service/function/process/activity-based reporting

3. Integration of new account assignments for proper use

a. 24-digit Funded Programs containing the following:

i. Appropriation control (instead of using Funds Center)

ii. Agency (to support simplified high-level organizational reporting)

iii. Internal Order or Project structures (to support detailed programmatic reporting)

4. Simplified creation and updating of the following account assignments with automatic Funds

Management master data creation/updating

a. Commitment Items from General Ledger Accounts

b. Funds Centers from Cost Centers

c. Funded Programs from Internal Orders and project structures

5. Immediate updating of cash-basis budgetary revenue and expenditure upon payment instead of scheduled periodic batch payment updating

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6. Budget document validation checks to prevent incorrect budget transfers between appropriations and funding instead of maintaining and using Budget Structure

7. Use of budget releases (instead of funds blocking) to control and align available budget with available certified cash

8. Integration of legal budgeting in Funds Management with detailed grant-related budget in Grants

Management

a. Grantee budget with automatic distribution of grant-related appropriated budget to relevant grant-related objects in Funds Management

i. Grant

ii. Fund

1. External

2. Internal (matching)

iii. Sponsored Program

1. Funded Program

2. Functional Area

3. Funds Center

iv. Sponsored Class

1. Commitment Item

b. Grantor budget in Funds Management

i. Funds

ii. Funds Centers

iii. Funded Programs

iv. Commitment Items

v. Earmarked funds

1. Pre-encumbrances for grantor applications received

2. Encumbrances for grantor awards given

c. Fiscal year-end management

i. Unencumbered, unspent grant-related budget

ii. Open grant-related encumbrances

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9. Detailed budgetary reporting, with higher-level reporting supported by account assignment hierarchies / groups

a. Commitment Items

i. Detailed reporting by nature/classification of revenue, other financing source, expenditure, and other financing use

ii. Grouped by character of object, as well as beginning fund balance / net position

b. Funds Centers

i. Reporting by detailed organizational units

ii. Grouped by higher-level organizational structure

c. Functional Areas

i. Reporting by detailed activities

ii. Grouped by higher-level service/function/process/activity

d. Funds

i. Reporting by detailed state funding source

ii. Grouped by higher-level funding sources

e. Grants

i. Reporting by external grant funding source

ii. Grouped by higher-level grant funding

f. Funded Programs

i. Reporting by detailed appropriations / lines of business / agencies / programmatic ad hoc or project structures

ii. Grouped by higher-level appropriation, line of business, agency, program, project

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Grants Management

Business Drivers

1. Standardization, management, and proper integration of

a. Grant-related processes

b. Grant-related account assignments

2. Proper reconciliation / integration with grant-related budget to the state’s legal grant budget

3. Integrated grant reporting

4. Streamlined, detailed cash-basis grant expenditure management

a. Reimbursements from grantors

b. Payments to grantees

5. Proper alignment of available grant-related budget with specific grant programs

6. Proper control of grant-related budget and encumbrances at fiscal year-end

Grantee Management

1. Integrated SAP Grantee Management processes

a. Management of requests for external grant funding

i. Proposals

ii. Applications

iii. Awards

iv. Close-out

b. Electronic approvals of life cycle changes.

c. Management of grant-related documents

d. Detailed grantee-related budgeting

i. Planning

ii. Pre-award

iii. Post-award

iv. Cost sharing (matching)

e. Submission of required information and requests for reimbursement (cash-basis billing)

i. Manual billing

ii. Automated (resource-related) billing

iii. Calculation and billing of indirect costs

1. Grantor-approved approved cost recovery rates

2. Grantor-defined maximum amounts (caps)

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2. Integrated grantee-related master data, with integration to legal budgeting in SAP Funds Management

a. Grant (representing each grant award)

b. Funds

i. External

ii. Internal (matching)

iii. Auxiliary (grant-generating funding) for program income.

c. Sponsored Program

i. Funded Program

ii. Functional Area

iii. Funds Center

d. Sponsored Class

i. Commitment Item

Grantor Management

1. Integrated SAP Grantor Management processes

a. Management of State grant programs

b. Submission of requests for funding

c. Assessment and review of funding requests

d. Funding awards / agreements or rejections

e. Submission of required information and requests for payment

f. Review and approval of payment requests

g. Validation / audit of program compliance using Statistical Key Figures

h. Acceptance of grantee reimbursement amounts for identified program non-compliance via credit memos and payments for same.

i. Program reconciliation, period-end closing, and close-out

2. Integrated controls and documentation

a. Electronic approvals and automatic notices to requestors

i. Funding requests

ii. Awards or rejections

iii. Receipt of information

iv. Payment requests

v. Program compliance

1. Audit results

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2. Non-compliance reimbursements

vi. Close-out

b. Documentation management and retention

i. Program information

ii. Submissions

1. Requests for funding

2. Requests for payment

3. Program non-compliance reimbursement

4. Electronic approvals and notifications

iii. Assessments / program compliance (via Attachments)

1. Checklists

2. Formal notes

3. Approvals / rejections

4. Notifications

iv. Awards

1. Formal agreements

2. Notifications

v. Payments

1. Payment

2. Notifications

vi. Close-out

1. Notifications

2. Reporting

3. Integrated grantor-related master data, with integration to legal budgeting in SAP Funds Management

a. Master data

i. Funds

ii. Funds Centers

iii. Funded Programs

iv. Commitment Items

b. Earmarked funds

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i. Submitted funding requests (pre-encumbrances)

1. Adjusted for follow-on processes

a. Reduced for approved funding requests

b. Reduced for rejected funding requests

ii. Approved funding requests (encumbrances)

1. Adjusted for follow-on processes

a. Reduced for payments

b. Increased for grantee non-compliance reimbursements

Expected Impacts

1. Integration of all grant-related processes and information in SAP - Grantee

2. Centralized review and management of all State grants

3. Integration with the State’s budgeting system (PBAS or SAP SBP)

4. Management of detailed grant budgets in Grants Management – Grantee

a. Supported through restructuring of account assignments for proper use and simplified derivation

i. Sponsored Programs

1. Funded Programs containing the following:

a. Appropriation control

b. Agency

c. Grant-related Internal Order or Project structures

2. Functional Areas containing service/function/process/activity-based information

3. 1:1 alignment of Funds Centers with Cost Centers for detailed organizations

ii. Sponsored Classes mapped at either the Grant level or defaulting from Sponsor

1. 1:1 alignment of Commitment Items with General Ledger Accounts

b. Automatic transferring to / reconciliation with grant-related budget in Funds Management based on the Funds Management account assignments identified with the Grants Management account assignments

5. Integration of State grant programs with Grants Management – Grantor

a. Supported through restructuring of account assignments for proper use and simplified derivation

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i. Funded Programs containing the following:

1. Appropriation control

2. Agency

3. Grant-related Internal Order or Project structures

ii. 1:1 alignment of Funds Centers with Cost Centers for detailed organizations

iii. 1:1 alignment of Commitment Items with General Ledger Accounts

b. Use of earmarked funds in Funds Management to reserve grant-related budget related to

Grants Management – Grantor activities

i. Pre-encumbrances

1. Funding requests

ii. Encumbrances

1. Awards

6. Recording of grantee-related expenses incurred with immediate updating of cash-basis amounts upon payment to support

a. Cash-basis billing

b. Grant reporting

7. Sponsor’s fiscal year-end management

a. Unencumbered, unspent grant-related budget

b. Open grant-related encumbrances

8. U.S. federal funding reporting

a. Schedule of Expenditures of Federal Awards

b. Reconciliation of grant expenses, expenditures, receivables, and reimbursements

i. Billed (received)

ii. Billed (not yet received)

iii. Billable (not yet billed)

iv. Expensed (not yet billable)

9. Detailed grant-related reporting, with higher-level reporting supported by account assignment hierarchies / groups

a. SAP Grantee Management

i. Grants (reporting by external grant funding source, grouped by relevant grant funding)

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ii. Funds (reporting by relevant state funding sources, grouped by relevant funding sources)

1. External grant funding

2. Internal (matching) funding

3. Auxiliary (grant-generating) funding

iii. Sponsored Classes (grant-related reporting by nature/classification of revenue, other financing source, expenditure, and other financing use, grouped by relevant classifications)

iv. Sponsored Programs (grant-related reporting by relevant programs, activities, and organizations, grouped by relevant programmatic activities/responsibility)

b. SAP Grantor Management

i. Commitment Items (detailed reporting by grant-related nature/classification of revenue, other financing source, expenditure, and other financing use, grouped by character of object, as well as beginning fund balance / net position)

ii. Funds Centers (reporting by relevant grant-related organizational units, grouped by higher-level organizational structure)

iii. Funds (reporting by relevant grant-related state funding source, grouped by higher-level funding sources)

iv. Funded Programs (reporting by relevant grant-related appropriations / agencies / programmatic ad hoc or project structures, grouped by higher-level appropriation, agency, program, project)

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Financial Accounting

General Ledger Accounting (including Fund Accounting)

2. Integrated and automatic balancing of General Ledger postings (full sets of financial statements) by

a. Type of activity [Annual Comprehensive Financial Report (ACFR) government-wide line of business reporting]

b. Agency

c. Funding

3. Simplified financial accounting and reporting

4. Automatic integration with managerial accounting

5. Corrections of errors need to be simplified, controlled, and directly linked to the original documents

1. General Ledger postings (ACDOCA) using 10-digit General Ledger Accounts with Cost Element attributes to support primary cost and cost-reducing revenue postings and reporting

2. Integrated document splitting to automatically split and balance General Ledger postings to support full sets of financial statements by the following:

a. State type of activity (line of business)

i. 10-digit Segments

ii. 10-digit Profit Centers (including line of business)

b. State agencies

i. 10-digit Profit Centers (including agency)

c. Funding

i. 10-digit Funds

ii. 20-digit Grants

d. Direct method cash flow classification

i. 10-digit Expense and Revenue General Ledger Account (RE_ACCOUNT) field

3. 16-digit Functional Areas to support service/function/process/activity reporting

a. Flexible groupings to support ACFR functional reporting, as required

4. Configuration of a document type for automatic splitting of accrual/deferral journal entries

a. Configuration of document types to prevent more than one balance sheet account per accrual/deferral document

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b. Automatically split the balance sheet line by

i. Revenue lines

ii. Expense lines

5. Ability to process journal entries with automatic reversal at a specific date

6. Standard journal entry verification workflow able to be configured and supported by functional staff

7. Recurring journal entries to allocate amounts (e.g., prepaids)

8. Line-item repostings for document corrections

a. Custom workflow

i. Review and approval prior to posting

1. Organization Manager approval only (within the organization’s Funds Centers and Functional Areas, same Fund, same Grant, same appropriation and agency codes within the Funded Program, and same expenditure character of object within the Commitment Item)

2. DFA Office of Accounting Fiscal approval (across Funds, across Grants, across appropriation and/or agency codes within the Funded Program, and/or across expenditure character of object within the Commitment Item

a. Including notifications that the posting will result in due to/due from postings

b. Allows the necessary Treasury Transfers (Cash in Transit In / Out) to be processed separately

3. All Revenue Receipt Corrections route to DFA Office of Accounting for approval and posting.

b. Separate control for reversals

9. Use of SAP Public Sector Cash Flow Reporting features to record, track and report cash flow amounts using the direct method of cash flow

a. The Expense or Revenue General Ledger Account (RE_ACCOUNT) and/or other relevant fields

(e.g., Fund, Grant, General Ledger Account, etc.), including Global Hierarchies of these fields, will be used to determine the following cash-related item classifications:

i. Operating activities

1. Cash received from customers

2. Cash received from other government agencies

3. Auxiliary enterprise charges

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4. Compensation and benefits

5. Payments to suppliers

6. Insurance taxes

7. Unemployment taxes

8. Payments for lottery prizes

9. Principal and interest on loans received

10. Loan administration received

11. Loans issues to students

12. Federal grant funds expended

13. Scholarships and fellowships

14. Other operating receipts (payments)

ii. Noncapital financing sources

1. Direct lending receipts

2. Direct lending payments

3. Taxes

4. Grants and contributions

5. Noncapital financing receipts (payments)

6. Transfers in

7. Transfers out

iii. Capital and related financing activities

1. Principal paid on capital debts and leases

2. Interest paid on capital debts and leases

3. Acquisition and construction of capital assets

4. Proceeds from long-term borrowings

5. Proceeds from sale of capital assets

6. Other capital and related financing receipts (payments)

iv. Investing activities

1. Purchase of investments

2. Proceeds from sale and maturities of investments

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3. Interest and dividends on investments

4. Loss disbursements

5. Principal repayments on loans

6. Interest received on loans

7. Federal grant funds expended

v. Cash and cash equivalents – beginning

vi. Cash and cash equivalents – ending

10. Financial reporting

a. Standard reporting

b. Custom reporting (using SAC and/or latest S/4HANA reporting tools)

c. Global Hierarchies

i. General Ledger Accounts (reporting by nature/classification of expense and revenue)

ii. Segments (reporting by line of business)

iii. Profit Centers (reporting by line of business and agency)

iv. Functional Areas (reporting by service/function/process/activity)

v. Funds (reporting by state funding source)

vi. Grants (reporting by external grant funding source)

1. Fund Accounting is supported in the General Ledger

a. Eliminates the Special Purpose Ledger (ZFINLED* tables) for Fund Accounting purposes

b. Postings have multiple General Ledger views

i. Entry view reflecting how the end user entered information into the document

ii. General Ledger view reflecting how the document was posted to the General Ledger

1. Document splitting/balancing to fully balance the document by

a. Segment

b. Profit Center

c. Fund

d. Grant

e. Expense or Revenue General Ledger Account (RE_ACCOUNT)

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2. Automatic recording of partner relationships within due to / due from lines

a. Partner Segment

b. Partner Profit Center

c. Partner Fund

d. Partner Grant

2. Additional support for integrated accounting and reporting by State ACFR types of activity (lines of business)

a. Configuration of Segments

b. Creation and integration of Profit Centers

3. Simplified accounting and reporting by State agency

a. Eliminate use of the Business Area (configuration)

b. Creation and integration of Profit Centers (master data)

i. Assignments to

1. Cost Centers

2. Internal Orders

3. Maintenance Orders

4. Project structures

5. Asset Masters

6. Sales Orders

7. Bank Accounts

8. Material Masters

ii. Integrated updating of Profit Center assignments to support internal reorganization of agencies

4. Managing and using Functional Areas as dynamic master data instead of configured objects

5. Posting using the combination of Cost Center (or Order or WBS Element) plus Fund, Functional Area, and Grant instead of hard-coding non-organizational objects with the Cost Center (or Order or WBS Element)

6. Eliminates creation and integration of separate Cost Element master data

7. Management of journal entry verification workflow by functional experts instead of technical staff

8. Eliminate journal entries to correct document line items posted to erroneous account assignments,

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a. Corrections and correction reversals will be directly connected to the erroneous line item, preventing inaccurate or duplicate corrections or reversals

b. Custom workflow of corrections for review and approval

i. Review and approval prior to posting

1. Organization Manager approval only (within the organization’s Funds Centers and Functional Areas, same Fund, same Grant, same appropriation and agency codes within the Funded Program, and same expenditure character of object within the Commitment Item)

2. Fiscal approval (across Funds, across Grants, across appropriation and/or agency codes within the Funded Program,…