Which configuration setting in SAP S/4HANA ensures purchase orders are created with reference to valid purchase requisitions or contracts?

The choice of "Reference Mandatory Configuration" is the correct one because it specifically ensures that purchase orders must be created in reference to valid purchase requisitions or contracts in SAP S/4HANA. This setting facilitates a streamlined procurement process, ensuring adherence to organizational purchasing policies by mandating that a purchase order cannot be created unless it corresponds to an existing valid requisition or contract. This reduces the risk of unauthorized or unplanned purchases, enforcing a more controlled and efficient procurement workflow.

In contrast, the other options do not focus on enforcing the relationship between purchase orders and requisitions or contracts. The "Approval Process Configuration" relates to the approval workflows for purchase orders but does not address their creation process in relation to requisitions or contracts. "Document Type Configuration" defines the various types of documents used in procurement processes, like standard purchase orders or framework orders, but does not influence whether a purchase order must reference a requisition or contract. Lastly, "Invoice Verification Settings" pertain to the processing of invoices against received goods or services, which is separate from how purchase orders are initiated. Thus, the reason "Reference Mandatory Configuration" is vital is that it establishes the necessary links between purchasing activities and organizational controls.