How does SAP FICO integrate with the MM module?

The integration of SAP FICO with the MM (Materials Management) module is primarily focused on the automatic management and posting of financial transactions related to inventory and procurement processes. When a purchase order is created in the MM module and subsequently goods are received, the system automatically generates accounting entries that reflect these transactions in the financial records.

This integration ensures that all inventory movements and procurement activities are accurately reflected in the financial statements, maintaining consistency and providing real-time financial visibility. It streamlines processes, reduces manual entry errors, and enhances efficiency by automating the posting of costs associated with purchased goods or services. This way, the financial impact of procurement activities is immediately incorporated into the financial accounting, which is a key feature of SAP’s integrated ERP system.

The other options do not accurately capture the nature of integration between SAP FICO and MM. Managing user permissions is more related to system security and access control rather than direct integration of functional modules. Manual handling of financial transactions would negate the efficiency benefits provided by the integration. Generating budget reports pertains to financial planning and analysis but doesn't directly relate to the integration function that deals with inventory and procurement costs.