Funds Management

[Former Member]

What are Commitment Item and Funds Center? Why are these used in Funds Management ?

Regards

Ravi

[Former Member · Accepted solution]

Commitment item

Definition

Commitment items represent the functional grouping of an organization within a financial management area (FM area).

Use

Commitment items classify budget transactions and business transactions affecting liquidity into revenue, expenditure, and cash balance items. You can assign budget for particular responsibility areas (funds centers) to the commitment items. Budget is used up as postings commitment items and funds centers with commitment and actual values. Funds reservations and business transactions entered in the feeder systems also affect the budget.

Structure

Commitment item hierarchy

Commitment items in Funds Management are arranged in hierarchies. You can create more than one hierarchy for an FM area. Example: one hierarchy for revenues and another for expenditures. However, you can also set up different hierarchies for expenditures. Example: one hierarchy for personnel costs and one for equipment purchases.

There are two types of commitment items:

· Account assignment items (= lowest level in the hierarchy)

You can post to and budget these items.

· Summarization items (= hierarchy nodes)

You can budget these items, but cannot post to them. Summarization items are needed for setting up a commitment item hierarchy. You define a commitment item hierarchy by combining accounting assignment items at any summarization level you want. Within the hierarchy, a summarization item can be succeeded by a summarization item or an account assignment item. This means that budget assignment is not tied to the lowest level in the hierarchy. The system totals up the posting data from the account assignment items and displays it in the appropriate summarization items.

Commitment item master record

The commitment item master record contains important information, including:

· Name and description of the commitment item

· Superior commitment item

· Important control parameters

- Financial transaction

The financial transaction represents commercial business transactions from the Funds Management feeder systems; it has a central role in passing on data from those systems to Funds Management.

- Item category

The item category determines whether this commitment item is a revenue, expenditure, or cash balance item.

The financial transaction and item category in a commitment item hierarchy are identical.

· Funds center

Integration

For posting data from the feeder systems to be updated in Funds Management, you must always specify a complete Funds Management account assignment (funds center, commitment item, and, if required, fund) in the posting transaction. You can keep manual input work to a minimum using the link to the basic data. The system derives the FM account assignment from the link.

Link Between Basic Data Elements in Funds Management

· Define a funds center in a commitment item

In the posting transaction, the system derives the funds center from the commitment item and proposes it as a default value.

Link Between Basis Data Elements in Other Components

· Define a commitment item in the G/L account

In the posting transaction, the system derives the commitment item from the G/L account.

· Assignment of a commitment item to a CO account assignment

In the posting transaction, the system derives the commitment item from the CO account assignment.

Funds Center

Definition

Organizational unit within an FM area which represents the structure of an organization (areas of responsibility, departments, projects) in the form of a hierarchy.

Use

You can assign budget to funds centers in Funds Management. Budget is used up as postings are made to funds centers with commitment and actual values. Budget is even consumed in Funds management through a reservation of funds or by business transactions entered in the feeder systems of Funds Management (such as financial accounting, materials management).

Structure

Funds center hierarchy

Funds centers in Funds Management are arranged in hierarchies. You can define only one funds center hierarchy per FM area. There is only one top funds center in a funds center hierarchy. Every other funds center has exactly one superior funds center. A superior funds center is defined in the master record of a funds center.

Funds center master record

The funds center master record contains important information, including:

· Name and description of the funds center

· Superior funds center

· Funds center manager

It is the funds center manager who, in certain situations (such as in active availability control), receives messages generated by the system.

· Fund

Integration

For posting data from the feeder systems to be updated in Funds Management, you must always specify a complete Funds Management account assignment (funds center, commitment item, and, if required, fund) in the posting transaction. You can keep manual input work to a minimum using the link to the basic data. The system derives the FM account assignment from the link.

Link Between Basic Data Elements in Funds Management

· Define a fund in the funds center master record

Using this link, the fund is automatically defaulted by the system in posting transactions.

· Define a funds center in a commitment item

In the posting transaction, the system derives the funds center from the commitment item and proposes it as a default value.

Link Between Basis Data Elements in Other Components

· Assignment of a funds center to a CO account assignment (cost center, WBS element, order, profit center)

In the posting transaction, the system derives the funds center from the CO account assignment.

· Assignment of a funds center to HR master record

Regards

V.Krishnan

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