The University of Tennessee
Project IRIS
SAP R/3 Enterprise Structure and
Master Data
(Financial)
PHASE II - Business Blueprint Interim Deliverable
This document defines a proposed enterprise structure and master data for the University within
the R/3 system. The organization structure is established to encapsulate and model the Financial,
Human Resources and Logistics data within the R/3 system. The proposed enterprise structure
was modeled after reviewing University financial reports, legacy system documentation, and best
practices in Higher Education as well as discussions with team members. It will be refined through
a series of meetings to discuss the business goals, organizational structure, and the high-level
business processes to be included in the University of Tennessee’s SAP R/3 system.
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Enterprise Structure
The Enterprise Structure in R/3 refers to the organizational structure of the Institution. The organizational elements in
this structure allow encapsulation of configuration settings and data in each module. For example, the company code
organizational element encapsulates the financial accounting settings and data in the financial accounting module for
an enterprise.
Each element in the R/3 enterprise structure is defined below. The R/3 module in which each organizational element
appears is given in parentheses next to its name. The proposed University of Tennessee organizational elements are
given under each organizational element.
Client (Cross Application)
A client in R/3 is a technical entity containing configuration, master data and transactions for an
organization. For example the organization may designate Client 100 in the production system PRD as the
client in which data may be entered. Other clients may be used for development, testing and training.
Proposal: The University will have only one production client in the productive system – Client 100.
Company Code (Financial Accounting - FI)
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.
Proposal: The University will use only one Company Code - UT.
Business Area (Financial Accounting - FI)
Business areas are units, within an institution, for which a balance sheet and income statement can be
produced. In higher education, business areas are typically used to represent fund groups such as Current
Unrestricted, Current Restricted, etc. for which balance sheets and income statements are required.
In addition to balance sheets by fund groups, the University of Tennessee requires a separate internal balance
sheet and income statement for each budget entity such as Knoxville, Martin, Chattanooga, etc.
Proposal: The University will have business areas which represent a unique combination of Fund Group and
Budget Entity. All existing fund groups and budget entities will be set up as business areas. For asset and
liability entries, these business areas will be entered by users. For revenue and expenditure entries, these
business areas will be automatically defaulted from cost centers and WBS Elements. The following is a
sample partial list of business areas identified:
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Fund Group
Budget Entity
11 – Current Unrestricted Educational and General
Funds
13 – Current Unrestricted Auxiliary Funds
21 – Current Restricted Educational and General
Funds
23 – Current Restricted Auxiliary Funds
30 – Endowment Funds
40 – Life Income Funds
45 – Annuity Funds
51 – Unexpended Plant Fund
52 – Plant Funds for Retirement of Indebtedness
53 – Plant Funds for Renewal and Replacement
54 – Invested in Plant Funds
60 – Loan Funds
90 – Agency Funds
11 – Current Unrestricted Educational and General
Funds
16 – Current Unrestricted Hospital Funds
26 – Current Restricted Hospital Funds
01 – Knoxville
Business
Area
1101
01 – Knoxville
01 – Knoxville
1301
2101
01 – Knoxville
01 – Knoxville
01 – Knoxville
01 – Knoxville
01 – Knoxville
01 – Knoxville
01 – Knoxville
01 – Knoxville
01 – Knoxville
01 – Knoxville
02 – Space Institute
2301
3001
4001
4501
5101
5201
5301
5401
6001
9001
1102
04 - Chattanooga
04 – Chattanooga
1604
2604
Functional Area (Financial Accounting - FI)
The Functional Area is an organizational unit in Accounting that classifies the expenditures of an organization
by function.
Proposal: The University will use functional areas to enable reporting by function. These functional areas
will be defaulted from cost centers and WBS Elements. The following is a sample list of functional areas:
Function Code
01 – Instruction
02 – Research
03 – Public Service
04 – Academic Support
05 – Student Services
06 – Institutional Support
07 – Operation and Maintenance of Physical Plant
08 – Scholarships and Fellowships
09 – Auxiliary Enterprises
10 – Hospitals
11 – Staff Benefits
12 – Other Expenditures
13 – Service Centers
Figure 1 shows the financial accounting structures.
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Functional Area
1010
1020
1030
1040
1050
1060
1070
1080
1090
1100
1110
1120
1130
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Client
Company
Code UT
Bus ine s s Are a
Bus
s Are
Bus
ineine
s ssAre
a a
Cur Unre s E&G
Knoxville
Functional Are a
Functional
Are
aa
Functional
Are
Ins truction
Figure 1
Controlling Area (Controlling - CO)
A Controlling Area in R/3 is the organizational unit within an institution, used to represent a closed system
for cost accounting purposes. A controlling area may include one or more company codes which must use the
same operative chart of accounts as the controlling area.
Proposal: The University of Tennessee will use only one Controlling Area – UT. Company Code UT will be
assigned to Controlling Area UT.
Funds Management Area (Funds Management - FM)
A Funds Management Area in R/3 is the organizational unit within an institution, used to represent a closed
system for funds management and budgeting. A Funds Management Area may include one or more company
codes and one or more controlling areas.
Proposal: The University of Tennessee will use only one Funds Management Area – UT. Company Code UT
and Controlling Area UT will be assigned to Funds Management Area UT.
Figure 2 shows the relationship between the Company Code, the Controlling Area and the Funds Management Area.
Company Code
UT
Controlling Area
UT
Figure 2
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Funds
Management
Area UT
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Master Data
Master data structures in R/3 represent data relating to individual objects, which remain unchanged over an extended
period of time. This allows such data to be created once and used many times. Master data is also used to validate and
classify transaction data for reporting.
Financial Accounting Master Data (FI)
Chart of Accounts
The Chart of Accounts is a collection of general ledger accounts. Each company code is assigned to a chart of
accounts, and the controlling area is assigned to the same chart of accounts.
Proposal: Only one Chart of Accounts - UT will be used for the University of Tennessee. Company Code UT
and Controlling Area UT will be assigned to Chart of Accounts UT.
General Ledger Accounts
The General Ledger Accounts (GL Accounts) are the structures that classify debit and credit values for
accounting transactions in the FI module and form the basis for creating the balance sheets and income
statements.
There are five types of General Ledger Accounts in R/3 - assets, liabilities, fund balances, revenues and
expenditures. Asset, Liability and Fund Balance GL Accounts can be used, in combination with business
areas to create internal balance sheets by business area.
Revenue and Expenditure GL Accounts represent the highest level at which revenues or expenditures are
recorded by the Institution. They can be used in combination with business areas and functional areas to
create income statements by function and business area. Revenue and expenditure can also be further broken
down in the Controlling module.
Figure 3 shows the relationship between the chart of accounts and the company code:
Chart of
Accts UT
As s e ts
Liabilitie s
Fund
Balance s
Com pany Code
UT
Re ve nue s
Expenditures
Figure 3
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Proposal: At the University of Tennessee several different existing codes will be mapped to R/3 General
Ledger Accounts.
Existing Code
1. Assets
AXXXXXXXX
(e.g. A17010001 Cash on Hand
Treasurer)
Type of R/3 Account
Asset Account
Proposed Number Range
100000 through 199999
(e.g. 101001 Cash on Hand + Business
Area 1117)
2. Liabilities
AXXXXXXXX
(e.g. A01560005 A/P Knoxville)
Liability Account
200000 through 299999
(e.g. 256005 Accounts Payable +
Business Area 1101)
3. Type of Fund Balance or
Reserve
(e.g. 99 Balance or 84 Reserve for
Encumbrances)
Fund Balance Account
300000 through 399999
(e.g. 399000 Unreserved Fund Balance or
384000 Fund Balance Reserved for
Encumbrances)
4. Expenditure Object Codes
(e.g. 391 Operating Supplies)
Expenditure Account
400000 through 499999
(e.g. 439100 Operating Supplies)
Revenue Accounts
700000 through 799999
(e.g. 701010 Tuition and Fees Resident
Enrollment)
5. Ledger Activity Codes for
Expenditures and Transfers Out
(e.g. 050 Charges for Routine
Expense)
6. Major and Minor Sources of
Funds
(e.g. 0101 Tuition and Fees
Resident Enrollment)
7. Ledger activity codes for
Income and Transfers In
(e.g. 001 Endowment Income –
UT Endowments)
8. Income activity codes XX
(e.g. 01 Rent)
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Controlling and Project System Master Data (CO, PS and PCA)
Revenue Elements
Revenue elements are used to classify revenues in Controlling. They are linked to revenue GL accounts on a
one-for-one basis and have the same number and description. E.g. Revenue Element 701010 Tuition and Fees
Resident represents GL Account 701010 Tuition and Fees Resident in CO.
Cost Elements
Cost elements are used to classify costs in CO according to object of expenditure.
Primary Cost Elements represent expenditure GL Accounts in CO. They are linked to Expenditure GL
accounts on a one-for-one basis and have the same number and description. E.g. Cost Element 439100
Operating Supplies represents GL Account 439100 Operating Supplies in CO.
Proposal: Primary cost elements will be set up for all expenditure GL Accounts.
Secondary cost elements are used for internal allocations within a controlling area such as overhead. These
cost elements are not directly linked to an Expenditure GL account.
Proposal: Ledger Activity Codes for 010 Facilities and Admin Costs and similar internally allocation costs
will be mapped to secondary cost elements. Secondary cost elements will be set up in the range 500000 to
599999. E.g. 501000 - Facilities and Admin Costs.
Cost Center and Cost Center Hierarchy
A Cost Center is a unit within a controlling area that represents a revenue and cost collector for permanent
activities. A cost center can be linked to a company code, a business area, a functional area, a fund, a fund
center and a profit center allowing all these codes to be automatically defaulted when a user enters a cost
center in a document. Costs and revenues posted to a cost center can thus be automatically posted to the
company code, business area, fund, fund center and profit center linked to the cost center.
A standard hierarchy of cost centers is required for the controlling area and is used by drill-down reports. In
addition Cost Centers may optionally belong to additional alternative hierarchies that can also be used by
drill-down reports.
Proposal: The University will use Cost Centers to represent its current unrestricted income and expenditure
accounts (I and E accounts) in R/3. All E accounts with seven-digit numbers will be represented by cost
centers with the same seven-digit number. All I and E accounts with nine-digit numbers will be represented
by cost centers with ten-digit numbers. The ten-digit number will be created by adding a zero in the eighth
position in the ten-digit number. E.g. Account E01102401 will be represented by cost center E011024001.
The standard cost center hierarchy will be used to represent the organizational groupings to show Fund Group
>Budget Entity >Function > College or Division > Department> Cost Center (7 digit) > Cost Center (10
digit). An alternative hierarchy will be created to represent the State Appropriation hierarchy.
Figure 4 shows the relationship between a cost center and other master data and organizational elements.
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Company Code UT
Functional Area Instruction
Profit Center L011002401
Chemistry
Cost Center
E011024001
Fund E011024001
Business Area
Cur Unrest E&G Knoxville
Fund Center U011002401
Chemistry
Figure 4
Work Breakdown Structure Element (WBS Element) and WBS Element Group
A WBS element is an element in a project work breakdown structure (WBS) and is used as a revenue and
cost collector for activities with discrete start and end dates. At least one WBS element must exist in a
project. A WBS element can be linked to a company code, a business area, a functional area (through
substitution), a fund, a fund center and a profit center allowing all these codes to be defaulted when a user
enters a WBS Element in a document. Costs and revenues posted to a WBS Element can be automatically
posted to the company code, business area, fund, fund center and profit center linked to the WBS Element.
Additionally, collected costs may be billed or automatically transferred to cost centers or GL Accounts
periodically.
There is no standard hierarchy required for WBS elements. WBS Elements can be grouped together into
WBS Element Groups for reporting.
Proposal: The University will use WBS Elements to collect revenues and costs associated with costreimbursable grants, and all other funds other than current unrestricted funds. Thus WBS elements will be
used to collect revenues and costs for current restricted funds, endowment, annuity and life income funds,
plant funds, loan funds and agency funds. For example a balance account for restricted funds (B Account)
with a nine-digit number, will be represented by a WBS Element with a nine-digit number. The nine-digit
number will be created by replacing the fourth and fifth digit with two zeros. E.g. Account B01991024 will
be represented by WBS Element B01001024. An expenditure account for restricted funds (R Account) with a
nine-digit number will be represented by a WBS Element with a ten-digit number. The ten-digit number will
be created by adding a zero in the eighth position. E.g. Account R01102410 will become WBS Element
R011024010. Related B and R accounts as in the above case will appear in the same project structure.
Figure 5 shows the relationships between a WBS Element and other master data and organizational elements.
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Functional Area Research
Company Code UT
Profit Center L011002401
Chemistry
WBS Element
B01001024
Fund
B01001024
WBS Element
R011024010
Fund
R011024010
Business Area
Cur Rest E&G Knoxville
Figure 5
Fund Center U011002401
Chemistry
Profit Center and Profit Center Hierarchy
A Profit Center is an organizational unit in R/3, within which costs and revenue can be analyzed. Costs and
revenues posted to cost centers and WBS Elements can be automatically posted to profit centers.
A standard profit center hierarchy is required and is used by drill-down reports, and multiple alternative profit
center hierarchies can be created to be used by drill-down reports.
Proposal: The University will use Profit Centers to represent its reporting organization units in R/3 so that
reports can be created across cost centers and WBS element by organizational unit. The profit center number
will be based on the department number. For example, department 011002401 will be mapped to profit center
L011002401.
The standard profit center hierarchy will be used to represent the reporting organizational groupings to show
Budget Entity >College or Division > Department.
Funds Management Master Data
Commitment Item and Commitment Item Hierarchy
Commitment items represent budget and fund accounting classifications of GL Accounts and cost elements in
the Funds Management Module. They are thus used to reflect the type of revenues and expenditures being
budgeted and also to detail balances for each fund in FM.
Proposal: The University will create Commitment items for each Budget Object Code (two digit). For
example budget object code 11 – Admin and Professional Salaries will be mapped to commitment item 11 Admin and Professional Salaries. In addition, all fund balance GL accounts will be mapped to FM on a onefor-one basis and assets and liabilities GL accounts will be mapped to Commitment Items on a many-to-one
basis.
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Figure 6 shows the relationship between GL accounts, cost elements and commitment items:
Assets GL Account
Assets Commitmt
Item
Liabilities GL
Account
Liabilities
Commitmt Item
Fund Balance GL
Account
Fund Balance
Commitmt Item
Revenues GL
Account
Revenue Element
Revenues
Commitmt Item
Expenditures GL
Account
Primary Cost
Element
Primary Cost
Commitmt Item
Secondary Cost
Element
Secondary Cost
Commitmt Item
Figure 6
Fund
A fund represents the lowest level of funding requiring a budget. The fund master includes an application of
fund and one or more sources of funds. Budget rules can be specified separately for each fund.
Proposal: The University will use Funds for storing the budgets and actuals for all its accounts. Only one
application of fund will be created for the Current Unrestricted fund group but individual Sources of funds
will be created to represent each account. The current unrestricted sources of funds will have the same
numbers as the cost centers representing such accounts (seven-digit or ten-digit number). For all other fund
groups an application of fund and a source of funds will be created for each account. These sources and
applications of funds will have the same number as the WBS Element representing such accounts (ten-digit
number). Attributes such as the Vice-Chancellor and Dean/Department codes will be entered into user
defined fields on the fund master.
Funds Center and Funds Center Hierarchy
A fund center is the organizational unit responsible for preparing and monitoring the budget for one or more
funds. Fund centers are organized into a hierarchy along which the budget flows. Since the budget flows
along the fund center hierarchy, no alternative hierarchies are allowed.
Proposal: The University will create fund centers based on the reporting organization hierarchy of Budget
Entity> College or Division> Department. The fund center number will be based on the department number.
For example, department 011002401 will be mapped to fund center U011002401.
Name:
________________
________________
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Signature:
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