PowerPoint PresentationDay 2
Day 3
Day 4 (half day)
Day 4 (sec half)
Configuration Customizing #2
SAP AG 2002
JVA Workshop Goal
Understand the concepts and gain hands-on experience of mySAP.com
Oil & Gas JVA
Perform JVA related functions, using Finance, Controlling, Project
System, and Materials Management
Use sample companies to understand and apply JVA functions
This workshop will enable you to:
SAP AG 2002
JVA Unit 1
SAP AG 2002
EXPLORE
DEVELOP
PRODUCE
REFINE
MARKET
SELL
Upstream or Exploration and Production
The exploration, development and production of oil and gas and
related products
2) Downstream
Transport, Refining, Marketing and Distribution of the crude oil
and gas products
The two sector contain very different business processes and
environments and have very little in common.
This course is refers only to Sector 1 Upstream or Exploration and
Production
SAP AG 2002
The Upstream Oil and Gas Industry
Is characterised by:
Joint Ventures
Companies enter joint ventures for several reasons, such as the
following:
To share risks
To share personnel or other resources
SAP AG 2002
Non Operator
Partner A
Non Operator
Partner B
Share income or product
Joint Ventures
A Joint Venture is a contractual agreement between several parties
normally referred to as Joint Venture Partners, under which they
share the investment, risk and income associated with a given
business activity according to predetermined percentage
interests.
It is normal practice to appoint one Partner as the Operator for a
specific Joint Venture ie the Company who will manage the work and
pay suppliers from the joint funds. The other Partners become
primarily financial investors and are referred to as Non Operator
Partners.
.
SAP originally designed Joint Venture Accounting (JVA) for the
upstream oil industry, and all further examples refer to upstream
oil companies. Such companies regularly enter into joint ventures
for exploration purposes, to develop oil & gas producing
facilities, and to maintain such facilities.
SAP AG 2002
Maintain accounting records for their own share of the
venture
Settle accounts with the operating partner, according to the
conditions of the venture
Operating Partner
Maintain venture accounting records
Report venture activity to partners
In a typical oil industry joint venture, one partner becomes the
operator with the following responsibilities:
Manage the venture on a day-to-day basis
Maintain the venture accounting records
Calculate partner shares of venture expenditure and revenue
Report venture activity to partners
The non-operating partners have the following
responsibilities:
Maintain accounting records for their own share of the
venture
Settle accounts with the operating partner, according to the
conditions of the venture
SAP AG 2002
SAP AG 2002
Settle partner account
Accounting principles are often illustrated using 'T'
accounts.
As with other forms of bookkeeping, JVA uses a double entry system.
Each accounting transaction requires at least two entries, one
debit and one credit. You usually make the entries to different
accounts. For example, if you purchase an asset using a cheque,
this transaction is recorded as a debit to an asset account
(increase) and a credit to a bank account (decrease).
These transactions are displayed in 'T' accounts. Debits are shown
on the left side of the 'T' and credits on the right.
One important feature of double entry bookkeeping is that the sum
of all entries always equals zero.
SAP AG 2002
Operator Oriented Accounting
Company A calculates company B’s share of costs (40%).
Company B accounts for its own share of costs.
Company B reimburses company A.
Partner B
3
40
In this example, Company A operates a joint venture and holds a 60%
share. Company B is the only other venture partner. The accounting
steps are shown below.
The operator, Company A, incurs costs of 100 on behalf of the
venture. These are paid directly from the venture bank to simplify
the example. Not all ventures have their own bank accounts.
Typically, only very large ventures use this operating method.
Although, in recent years even large ventures tend to be funded
from shared bank accounts.
Company A calculates 40% of the costs and charges these to the
partner (Company B) account.
Company A notifies Company B of the costs incurred, and Company B
records its own share (40%) of these costs in its books.
Company B reimburses company A. Funds are transferred from the
Company B bank to the venture bank and the partner accounts are
cleared.
Company A combines accounting records for the activities within the
venture with those for its own activity. This ensures simple
accounting entries, but great care is needed when reporting, since
venture activities and a company’s own activities are represented
by sub-balances in accounts. Particular care is needed when
reimbursing the venture for the operator share of costs.
In the oil industry, this accounting method is used mainly by US
and Canadian companies, who traditionally operate large numbers of
small joint ventures.
SAP AG 2002
Partner Oriented Accounting
Company A incurs costs while running the venture.
Company A calculates the share of costs for Partner A and Partner
B.
Company A accounts for its own share of costs.
Company B accounts for its own share of costs.
Company A reimburses the venture.
Company B reimburses the venture.
Company B
2
40
40
6
Company A operates a joint venture and holds a 60% share. The
venture has one other partner, Company B. Company A creates a
special operating company in which to record the venture accounts
separately from its own accounts. Sometimes a real legal entity is
created for a very large venture. In the oil industry, this would
be an exception. The accounting steps are shown below.
The venture incurs costs of 100. These are paid directly from the
venture bank to simplify the example.
Company A takes 60% of the costs, and 40% of the costs are charged
to Company B.
Company A records its own share (60%) of these costs in its own
books.
Company A notifies Company B of the costs incurred, and Company B
records its own share (40%) of these costs in its books.
Company A reimburses the venture. Funds are transferred from the
Company A bank to the venture bank and the partner accounts are
cleared.
Company B reimburses the venture. Funds are transferred from the
Company B bank to the venture bank and the partner accounts are
cleared.
In this method, the operator (Company A) keeps separate accounting
records for activities within the venture and for its own activity.
This means more accounting entries are required, but reporting for
venture activity and a company’s own activity is clear and
simple.
SAP AG 2002
Operator / Partner Accounting
Company A incurs costs running the venture.
Company A calculates the share of costs for Partner A and Partner
B.
Company A accounts for its own share of costs.
Company B accounts for its own share of costs.
Company A reimburses the venture.
Company B reimburses the venture.
Company B
2
40
40
6
Company A operates a joint venture and holds a 60% share. Company B
is the only other venture partner. Company A records the venture
accounts separately from its own accounts, but as the same company.
The accounting steps are shown below.
The venture incurs costs of 100. These are paid directly from the
venture bank to simplify the example.
Company A takes 60% of the costs, and 40% of the costs are charged
to company B.
Company A records its own share (60%) of these costs in its own
books.
Company A notifies Company B of the costs incurred and Company B
records its own share (40%) of these costs in its books.
Company A reimburses the venture. Funds are transferred from the
Company A bank to the venture bank and the partner accounts are
cleared.
Company B reimburses the venture. Funds are transferred from the
Company B bank to the venture bank and the partner accounts are
cleared.
With this method, the operator (Company A) keeps separate
accounting records for activities within the venture and for its
own activity. This means more accounting entries are required, but
reporting for venture activity and a company’s own activity is
clear and simple.
SAP AG 2002
Billing Basis
Expenditure Based
Invoice Based
Cash Based
Billing Basis refers to the point in the procurement cycle at which
joint venture partners are charged for their share of
expenditure.
Expenditure Based Partners are charged as soon as expenditure is
incurred, such as when venture materials are received at the
warehouse.
Invoice Based Partners are charged when the operator receives an
invoice for venture services or materials.
Cash Based Partners are charged when the operator pays for services
and materials for the venture, when funds actually leave the bank
account.
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An invoice is received in Month 2.
An invoice is paid in Month 3.
JV Billing Month 1
JV Billing Month 2
JV Billing Month 3
SAP AG 2002
An invoice is received in Month 2.
An invoice is paid in Month 3.
JV Billing Month 1
JV Billing Month 2
JV Billing Month 3
0
Total
0
Invoice based billings are calculated using transactions from
expenditure accounts and from accruals accounts, such as the goods
received not invoiced (GRNI) account.
The balance in the accruals accounts offsets the value of
expenditure, resulting in a zero billing until the accrual is
reversed by an incoming invoice.
SAP AG 2002
JV Billing Month 1
JV Billing Month 2
JV Billing Month 3
Invoice based billings are calculated using transactions from
expenditure accounts, from accruals accounts, and from payable
accounts.
The balance in the accruals and the payables accounts offsets the
value of expenditure, resulting in a zero billing until the accrual
balance is reversed by an incoming invoice and the payable balance
is reversed by an outgoing payment.
SAP AG 2002
SAP AG 2002
Describes rules for sharing profit and loss
Specifies penalties
Assigns partner shares and validity
Specifies reporting requirements
Defines taxation rules
Defines accounting procedure
SAP AG 2002
Single operating partner and share
One or more non-operating partners and shares
Equity Group
Linked to customer accounts receivable (A/R) sub-account for
non-operating roles
Linked to vendor accounts payable (A/P) sub-account for operating
roles
Partner
Link customer and vendor using Account control fields
JV Partner
SAP Company GBU1
Sometimes a partner in an equity group is associated with the
operator and set up as an SAP company code. In this case, the
partner is called an inter-company partner and the company code
reference is entered in the joint venture partner master.
You should create a customer account and a vendor account (which is
optional) for each inter-company partner in the usual way.
When an inter-company partner is added to a venture, the JVA system
prompts you to enter the number of the venture and equity group (in
the partner company) in the venture master.
Joint venture processes, such as cash-calling and cutback, use the
inter-company information to post non-operated partner share
documents to the partner company.
This functionality is also used for the ‘Partner Oriented’ Cutback
model but using the same Company Code
SAP AG 2002
Master Data Structure
Represents time-independent aspect of venture and equity
group
Provides link between venture activity and equity group
Activity may be actual or logical
Equity Type
Equity Type 1
Equity Type 2
Equity Type 3
Partner 1
Display joint venture partners
Company Code
JOA Class
01 Operated
02 Non-Operated
CP Corporate
JOA Class
JOAs are grouped in classes which can be defined by the user. For
example:
01 Operated JOA
02 Non-operated JOA
CP Corporate JOA
Each JOA class has a number range which can require an internal or
external number.
The JOA class must exist before a JOA can be created within the
class. This is a customizing function.
The JOA class cannot be changed after the JOA has been
created.
SAP AG 2002
Maintain a JOA
The applicable venture type is determined automatically.
You cannot change the equity group if JVA documents exist.
Each equity group may be used in the following types of ventures,
depending on the operated and non-operated share:
Operated
Non-operated
Corporate
Double click (F2) on equity group to enter partner shares.
SAP AG 2002
Joint Venture Class
Company Code
Joint Venture
JV Class
01 Operated
02 Non-Operated
CP Corporate
JV Class
Like JOAs, joint ventures are grouped in classes that can be
defined by the user. For example:
01 Operated ventures
02 Non-operated ventures
CP Corporate ventures
Each Venture class has a number range which can require an internal
or external number.
The venture class must exist before a venture can be created within
the class. This is a customizing function.
The venture class cannot be changed after the venture has been
created.
SAP AG 2002
The following venture types are used by the JVA application:
Operated not taxed This venture is operated by the company using
JVA. You cannot add a tax to this type of venture.
Operated taxed This venture is operated by the company running JVA.
You can assign a tax code to this type of venture. The JVA process
cutback calculates tax to be charged to the venture partners.
Non-operated, on-billed In a non-operated on-billed venture, the
company running JVA sells part of its non-operated share of the
venture to third parties. The company running JVA distributes
portions of the billings it receives from the venture operator to
the partners in its non-operating share. In effect, the company
running JVA acts as an operator toward these other partners.
Non-operated In a non-operated venture, the company running JVA
holds a non-operated share in the venture, and is billed by the
operator for its share of venture expenses.
Corporate In a corporate venture, the company running JVA holds
100% of the interest. Expenses, booked in the JVA company without
JVA information, are assigned to the corporate venture and equity
group.
SAP AG 2002
Maintain Joint Venture
The Posting Method is used to determine the accounting treatment of
a venture.
The Funding Group represents a group of ventures that are funded
from the same set of bank accounts.
The assignment from equity type to equity group is based on the
document date.
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Identifies category of a joint venture transaction
Indicates whether a particular revenue or expense is shared by
venture partners
Used to select data for reporting to venture partners
Used to distinguish between joint and own revenues and
expenditures
Recovery indicators include the following:
Billable (BI)
Corporate (CP)
Non-billable (NB)
Cutback (CB)
CUTBACK
30%
Add a new partner
Integration
This section describes the integration between JVA and other SAP
R/3 components.
SAP AG 2002
Company
Code
Venture
Equity
Group
Account
Cost
Object
Profit
Center
Recovery
Indicator
Coding
Block
Set of Special Ledgers comprising Line Item and Balance tables fed
almost entirely from standard SAP modules
JVA Coding block is based on Joint Venture structures but also
contains the key structures from the standard financial and costing
modules.
JVA captures ALL financial and cost postings real time from
standard modules such as FI, CO & MM and converts them to JV
format
It provides new processes specific to E & P and also amends
standard ones to be compatible with the JV structures
It provides a full Trial Balance by Venture and Equity Group
Effectively a new Finance Reporting Module
SAP AG 2002
JVA captures and posts joint venture financial information
online.
The standard Finance (FI/CO) interface collects details of all
accounting transactions and uses the information to prepare
accounting documents for the various accounting applications
including FI, CO, PS, PCA and AM.
The joint venture interface reviews all accounting documents and
uses the information to prepare a JVA document. The joint venture
accounting document includes information about venture, equity
group, and recovery indicator. You use this document to identify
financial transactions for a venture and to charge any venture
costs to the relevant partners in the venture.
The main activities of the joint venture interface are:
Coding
Joint venture details are derived from CO accounting cost
objects
Splitting
Joint venture details are copied to unencrypted lines in the joint
venture document
Clearing
Joint venture details are copied from preceding documents during
clearing transactions, such as outgoing payment
SAP AG 2002
Reporting with JVA
JV Processes
The JV Ledgers are SAP delivered Special Ledgers. They are ‘fixed’
ie cannot be changed by the customer in order to protect the
integrity of a highly complex set of data and processes.
The JV database collects ALL financial and cost line items from any
relevant module
The JV processes use the jv database for the source data but then
the FI Module for the posting thus synchronising the JV and FI
databases.
It effectively replaces FI as the source of Financial
Reporting
SAP AG 2002
JVA Data Capture
FI Balance Sheet
Partly
Captured
The JV database is the only source for complete financial postings,
including Balance Sheet, analysed by Joint Venture structure.
Profit Center accounting fails to analyse all Balance Sheet
postings to the same level of detail, in particular in the area of
Tax and Bank postings.
SAP AG 2002
JVA Activation
The JVA module is activated at Company Level in SAP -
specify:
Region -
USA
Canada
International
JVA Cutback Model -
Operator as Partner model
JVA is activated at Company Code level and it is at this level that
the key decisions are made regarding the process options to be
used.Once set, they are effectively not changeable.
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Cost Object
Production Order
Network Order
JIB/JIBE Subclass A
Joint venture coding is derived from Cost Objects in Controlling
(CO). Examples include Cost Centers and Orders.
Each Cost Object includes the following joint venture fields in the
master data:
Joint Venture
Equity Type
Recovery Indicator
JIB/JIBE Subclass A
The joint venture fields on the Cost Object fall into the following
three categories:
Accounting These fields are used to determine joint venture coding
for finance documents
Control The JV Object Type determines whether or not the JVA fields
are mandatory. It also defines the type of expenditure for
reporting to partners, such as capital expenditure and operational
expenditure.
Reporting The JIB Class and Sub-Class A are fields used to
structure the standard Joint Interest Billing (JIB) report.
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Accounting Documents
Vendor Invoice
FI Document
CO Document
JV Document
JV Document
In this example, an invoice is posted and charged to two cost
centers:
Cost centre Venture Eq.Type Rec.Ind
JV00-A JV1001 A BI
JV00-B JV1001 B BI
Venture coding is derived for each cost line and then copied
pro-rata to the vendor line and the tax line.
SAP AG 2002
Fixed Asset
JIB/JIBE Subclass A
Accounting transactions involving assets are usually coded to a
joint venture, even if it is the corporate venture.
JVA derives venture coding for an asset using the cost centre
entered on the asset master record.
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Accounts Payable
30
Invoice
Cutback
70
There are two accounting options for capitalising expenditure in
the Upstream Oil and Gas Industry ie
1) Via a WBS or Order – this will normally apply to the Oil and Gas
Assets
2) Direct to the Asset Accounts – this would normally be rare and
apply only to the items such as Cars, Office Equipment etc. Often
these are treated as under option 1 above.
SAP AG 2002
JV Document
Vendor Invoice
Asset Document
JV Document
Asset Master
In this example, an invoice is posted for the direct acquisition of
a joint venture asset.
The asset is assigned to the cost centre JV00-B in the
time-dependent parameters, and this cost centre is assigned to
venture JV1001, so the asset transaction is coded against venture
JV1001.
The venture coding is copied from the asset entry to the vendor
entry.
SAP AG 2002
Plant
Material movements are usually coded with a venture.
JVA derives venture coding for material movements from a special
stock cost object that is assigned to a plant and a valuation type
(which is optional) associated with the plant.
SAP AG 2002
Goods Receipt
Material Document
Accounting Doc
JV Document
MM Assignments
JV Document
In this example, a goods receipt document is posted to receive
stock worth GBP 500 into plant JA01.
Plant JA01 is assigned to cost centre JV00-S01.
Cost centre JV00-S01 has the following joint venture coding:
Venture JV1001
Equity Type C
Recovery Ind. BI
The resulting joint venture document is coded with cost centre
JV00-S01 and all the joint venture coding on that cost
centre.
SAP AG 2002
Project
Equipment
Plant maintenance (PM) orders carry venture coding in the master
data for other types of orders such as internal orders and network
orders.
You can enter joint venture codes directly, or these codes can be
derived from the cost object on the functional location or
equipment master, for which the order is raised.
SAP AG 2002
Create a joint venture project
SAP AG 2002
Unit 1 Summary
Understand the concepts and gain hands-on experience of mySAP.com
Oil & Gas JVA
Perform JVA related functions, using Finance, Controlling, Project
System, and Materials Management
Use sample companies to understand and apply JVA functions
You are now able to: