CA Uday Kumar Yelchuri Chapter2 Day 2 1649657868
CA Uday Kumar Yelchuri Chapter2 Day 2 1649657868
CA Uday Kumar Yelchuri Chapter2 Day 2 1649657868
CA INTERMEDIATE
Faculty Name: CA Udaya Kumar Yelchuri ACA, CISA, PMP, CSPO & ITIL
Financial & Accounting Systems
CHAPTER 2
Business Process Modules & Their Integration
with Financial & Accounting Systems
To manage a Process –
• Define the Process. This involves defining the tasks/steps in the process and mapping the tasks to
the roles involved in the process
• Establish Performance Measures creates a basis to improve the process
• Organizational Setup that enables the standardization and adherence to the process throughout the
Organization
Organizations have many different business processes such as Purchase of Raw Materials, Sale of goods, etc.
Each Business Process has either a direct or indirect effect on the financial status of the Organization.
P2P
Financial Adjusted Trial
Closing Entries Balance
Statement
R2R
❖ Trading Business
o Buying and Selling of goods without any modifications
o Purchase, Sales & Inventory Accounting are major aspects in Accounting
o This industry requires accounting & inventory modules.
❖ Manufacturing Business
o Purchase of Raw Material + Conversion=Sale of ‘Finished Goods’
o All Aspects of Trading Business+ Manufacturing
o This type of Industry requires Accounting, Complete Inventory & Manufacturing Modules.
❖ Service Business
o Selling of Skills/Knowledge/efforts/time (Ex: CA’s, Lawyers, Engineers & Doctors, etc.)
o Does not hold Inventory
o This Industry doesn’t need Inventory Module
Quality Management
Controlling
Plant Maintenance
Sales & Distribution ERP
Project Systems
Human Resource
Supply Chain
Production Planning
CRM
Key Features:
• Tracks Flow of Financial Data Across the Organization and Integrates all information for Strategic
decision making
• Creation of Organization Structure (Defining Company, Company Codes, etc.)
• Financial Accounting Global Settings
• General Ledger Accounting
• Tax Configuration
• Creation & Maintenance of House Banks
• Accounts Payable
• Accounts Receivable
• Asset Accounting
• Integration with Other Sub Ledgers (Material Management, Sales and Distribution)
• Cost Element accounting- Provides Overview of Costs and Revenues that Occur in an Organization
• Cost Center Accounting-Provides Information on the Costs Incurred by Business. Managers Can set
Budgets/Cost Center Targets, Distribute Costs, etc.
• Activity Based Costing –Allows Process Oriented or Cross-Functional View of Cost Centers.
• Internal Orders- Means of tracking/Collecting Costs of a Specific Job, Service, or Task
• Product Cost Controlling-To analyze their product costs and to make decisions on the Optional
Prices to market their products.
• Profitability Analysis-To review the company’s profit or contribution margin by individual market
segment
• Profit Center Accounting – Evaluates Profit or Loss of Individual, Independent areas of Organization Dec
2021
6 Marks
Key Features:
• Setting Up Organization Structure
• Assigning Organizational Units
• Defining Pricing Components
• Setting Up Sales Document Types, Billing Types, and Tax-Related Components and
• Setting Up Customer Master Data records and Configuration
Process:
Pre-Sale Activities Sales Order Processing Inventory Sourcing Delivery Billing Payment
a) Pre-Sales Activities
b) Payment
c) Delivery of Product to Customer
d) Production Planning
• Master Data: Material Master, Work Centers, Routings and Bill of Materials
• Sales and Operations Planning (SOP) – Ability to forecast Sales based on Past, Current & Future Data
• Distribution Resource Planning (DRP)-Ability to plan the demand for distribution centers
• Production Planning- Material Forecasting, Demand Management, Long Term Planning
• Material Requirement Planning (MRP) – Based on demand and Supply, Calculate Net Requirements
from Planning Run
• Capacity Planning- Evaluates the Capacity Utilized based on the Work Centers Capacity
• Product Cost Planning-Evaluates the time Values and Value of Component Materials to determine
Product Cost
Plan Quality
Quality Control
Perform Quality Measurements Perform Quality
Assurance Control
Work Performance
Change Requests Information Deliverables
Perform
Direct & Manage
Integrated Change
Approved Change Project Execution
Control Requests
Objectives:
• To achieve minimum breakdown and to keep the plant in good working condition at the lowest
possible cost
• To use the plant at Optimum Capacity without any hindrance or interruption
• To ensure the availability of machines, buildings, and services required by other sections of the
factory at Optimum return on investment.
Information on Types
of Machinery from
Production Planning
Equipment Master & Control PM Reminder Report
PM Schedule Report
Plant Master
Monthly PM Report
Project Request
Business Relationships
❑ Optimize Marketing:
o CRM enables to understand the Customer needs and Behaviour in a better way, thereby allowing any
enterprise to identify the Correct time to market its product to the Customers.
o It will also give an idea about the Most Profitable Customer Groups.
Production Planning
• Material Valuation
• Material Costing
Material • Inventory Posting
Sales & Distribution
Management • Stock Transfers
Quality Management
Plant Maintenance
Plant Maintenance
Production Planning
• Delivery
• Availability Check
Material
Sales & Distribution • Stock Transfers
Management
Quality Management
Plant Maintenance
Production Planning
• Quality Inspection at Goods Receipt,
In-Process, FG, etc.
Material • Vendor Evaluation based on Quality
Sales & Distribution
Management Parameters
• Items Subject to Quality Inspection
are identified & corresponding
Quality Management activity is initiated in QM System
Plant Maintenance
Production Planning
• Maintenance Order → Purchase
Requisition
Material • Material Issue against the PO
Sales & Distribution
Management
Quality Management
Plant Maintenance
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