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Copyright 2013 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. HP Restricted.

Compass for

FAM End UsersModule 5: Compass Project AccountingMay 2013

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Copyright 2013 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. HP Restricted.2

Module topics

Compass Project Accounting overview

Periodic Accounting Proportional Performance Accounting

Completed Performance Accounting

Amortization Accounting

Final accounting considerations

Labor expenses

Project Accounting and conclusion

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Amortization process

HP accounting rule

Costs incurred during the Transition

phase of a project are not recognized

until Ongoing Delivery begins

Defer actual expenses to the

Sheet

Deferred expenses are poste

long-term or short-term amo

expense account

Amortized expenses are divid

over the life of the Ongoing D

once delivery begins

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Compass amortization

RA key

PS-DNA

Key features

Automates deferral of expenses to long-term/short-term deferred accounts (19140100, 1512

Correctly defers and amortizes expenses incurred after amortization has started

Uses the historical accounting rate

Exceptions and special features

Is not a standard SAP RA key (custom code)

Separate batch job, and schedule, to standard RAdoes not run daily

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Batch job schedule

Batch job for PS-DNA is scheduled to run twice a month, on WD-4 and on last calendar day at 1

time

For certain efforts, like migrations, additional PS-DNA jobs can be scheduled

Each fiscal year, the dates for PS-DNA job, standard, and others are published on: FI Jobs Calen

If the PS-DNA job run fails to complete successfully, a ticket is raised by GSAO to SPS (Services

Support Team) to investigate

If the PS-DNA job run is in Finished status, and if there are any PS-DNA errors, GSAO reports th

the country contacts (EngCOS/FAM) to get them cleared

After the errors are fixed, they will not appear in the error logs when the scheduled program ru
http://prime21.sharepoint.hp.com/teams/Q2C_BA_BP/Published%20BPs/FI_Jobs_Calendar.xlsxhttp://prime21.sharepoint.hp.com/teams/Q2C_BA_BP/Published%20BPs/FI_Jobs_Calendar.xlsxhttp://prime21.sharepoint.hp.com/teams/Q2C_BA_BP/Published%20BPs/FI_Jobs_Calendar.xlsxhttp://prime21.sharepoint.hp.com/teams/Q2C_BA_BP/Published%20BPs/FI_Jobs_Calendar.xlsx

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When to use amortization

Apply PS-DNA to WBS elements in:

Transition, Transformation, Build, and Manage phases Consulting projects under the umbrella of an outsourcing arrangement

Incremental projects and change orders that modify an existing outsourcing

agreement with addition of significant new scope, new services, or new

functionality beyond the base outsourcing agreement

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Impact of PS-DNA on WBS design (1 of 3)

PS-NRA

PSPS-DNAPS-DNAPost costs and perform

amortization accounting at the

lowest level

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Impact of PS-DNA on WBS design (2 of 3)

Labor costs must not be posted to a

lower level element with PS-DNA as

parent

PS-NRA

PS-DNAPS-DNA

Labor costs

This is a special rule that pertains to labor cost only

You cannot post labor cost to a lower level than PS-DNA

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Impact of PS-DNA on WBS design (3 of 3)Third-party products requiring CAN

PS-NRA

PS-DNA

OPEN

PS-NRA

CANS

Labor or other costs posted on CAN WBS element will

not be considered for deferral

Labor and other non-CAN costs must be posted

directly on the parent DNA WBS element

Requires separate WBS element for CAN budget with

CAN-specific user status settings

Status codes CANS, CSSP, CCLS cannot be used on PS-

DNA element

Labor and no

poste

CAN Budget a

poste

NOTE: CAN process is covered in

detail in the Acquisitions lesson to

follow later in the course.

PS-NRA

PS-DNA must be at the lowest level in the hierarchy, EXCEPT in the

case of third-party Product acquisitions using CANS User Status

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Accounts considered for deferral and amortizaSCS account AFM account Description

3304MP9999 33040200 Third-party products

3310MP9999 33100100 Third-party services

3327F*9999 33270100 Project expenses (used in US only)3327MP9999 33270100 Project expenses

3363MP9999 33630000 CATS IC labor transfer

336326xx99 33630000 OMEGA IC billings

3365MP9999 33650000 OMEGA Domestic billings

3370MP9999 33701100 Equipment/Other Overheads

337126* 33712600 Response Center Charges

3372MP9999 33720100 Cross charge from other BU

337326* 33732600 Cross charge from MSGD

3851MP9999 38510300 Freight outbound expense

3852MP9999 38520800 Freight inbound expense

3854MP9999 38540300 Warehousing expense

3326MP9999 33260100 HP labortrade delivery (manual postings)

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WIP account usage

The following accounts are used in conjunction with WIP adjustments on PS-DNA

Account Description Business area usage

3345DA9999

(AFM: 33450000)

Cost of Sales adjustment account for Labor and

third-party Services (Work in Process Deferral,

Contra Cost of Sales)

All Compass business areas

1914MP9999

(AFM: 19140100)

Long-Term Deferred Direct Costs All Compass business areas

1512MP9999

(AFM: 15120100)

Short-Term Deferred Direct Costs All Compass business areas

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Long-term and short-term cost deferrals

During deferral (status = OPEN)

The forecast start and end dates are used to calculate the amortization period (number of mon Any cost posting is divided by this number of months, then:

A value equal to 12 months is posted to short-term deferral

The remainder to long-term

During amortization (status = AMRT)

The remaining amortization period is calculated from the current date to the forecast end-date

If this is > 12 months, amortization is from long-term deferral If < 12 months, from short-term deferral

Amortization amount is the remaining deferred balance divided by remaining amortization mo

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Amortization principles

The WBS element User

Status OPEN/AMRT andforecast start/enddates control thedeferral oramortization of costs

OPEN: Collect costsand defer

AMRT: Recognizeremaining deferredcost over remainingperiods

Amortization beginswhen user status ischanged to AMRT andnot on forecast startdate

Forecast en

controls th

periods ove

amortizatio

place

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Amortization periods

Month 1 2 3 4 5 6 7 8

Status OPEN OPEN OPEN OPEN OPEN OPEN AMRT AMRT A

Forecast

Start Date

Costs incurred in months 1-6 will be

deferred and begin amortization in

month 7

Costs incurred in months 7-12 will

be amortized immediately

Costs incurred after month 12

should be posted to a new WBSe and

be recognized immediately and not

amortized

Amortization begins

when user status is

changed to AMRT and

not on forecast start date

User status controls when am

Forecast End Date controls th

periods for amortization

Forecast Start Date is not use

by SAP

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Amortization example

Am

Costamo

Costamo

Costamo

Costs Posted in Amount Deferred Deferred BalanceRemaining

periodsRecognized

Remaining

Deferred

Mo. 1 $1,000.00 $1,000.00 $1,000.00 60 $0.00 $1,000.00

Mo. 2 $1,200.00 $1,200.00 $2,200.00 59 $0.00 $2,200.00

Mo. 3 $1,500.00 $1,500.00 $3,700.00 58 $0.00 $3,700.00

Mo. 4 $1,000.00 $1,000.00 $4,700.00 57 $0.00 $4,700.00

Mo. 5 $1,200.00 $1,200.00 $5,900.00 56 $0.00 $5,900.00

Mo. 6 $0.00 $0.00 $5,900.00 55 $107.27 $5,792.73

Mo. 7 $3,000.00 $3,000.00 $8,792.73 54 $162.83 $8,629.90

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Amortization calculation

= periods from current period to forecast end date

Amortization amount this period

Total Incurred Cost Total Amortized To-Date

Remaining Amortization Periods

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PS-DNA user statusesUser status Impact with PS-DNA Notes

OPEN or NOLA Capitalization occursExpenses posted will be

deferred

PS-DNA will determine the po

posted to long-term or short-

accounts

AMRT Amortization occursExpense Recognition

takes place

PS-DNA uses the WBS forecas

datesto determine amortizat

WKAC Work Accepted: Any remaining deferrals on the

Balance Sheet will be reversed to the P&L

This user status must be used

status to CLSD

CLSD Closed: No postings allowed Must use WKAC before CLSD

Must be

applied in

sequence

IMPORTANT: PS-DNA job must be allowed to run between making any status changes.

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PS-DNA golden rules

Always update User Status sequentially

OPEN

AMRT

WKAC

CLSD Do not skip the WKAC step

Do not go backward (such as AMRTOPEN)

Wait for PS-DNA to run between changes

Do not post manual JVs for expenses against 33450000 (WIP Adjustments Labor and third-par

without seeking support

Do not use PS-DNA for amortization of vendor prepayment

Separate Process Guide

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Copyright 2013 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. HP Restricted.

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PS-DNA

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