How S/4 Simple Finance will impact the Financial processes for an organization.
tome 83
lecture_42.pptxLecture 4 Introduction to SAP Controlling (CO)
FIN419
Learning Objectives
Understand the goal of SAP Controlling (CO)
Understand the purpose, master data and reporting of CCA
Understand the purpose, master data and reporting of PCA
Understand the purpose, master data and reporting of Internal orders
Understand the purpose, master data and reporting of Product Costing
Understand the purpose, master data and reporting of Profitability Analysis
Understand the integration of CO and FI
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SAP Controlling (CO) Goal
The purpose of the Controlling (CO) module in SAP is to provide organizations with a method of slicing and dicing data to view costs from an internal management perspective and provide a view of profitability beyond that of basic financial reporting.
Controlling allows an organization to plan and track overhead costs within the company's specific organizational structure.
Standard reports include:
Cost center performance
Profit center performance
Budget analysis
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SAP Controlling (CO) Organizational Structure
Client
An independent environment in the system
Company Code
Represents an independent legal accounting unit
Balanced set of books, as required by law, are prepared at this level
A client may have more than one company code
Controlling Area
The controlling area identifies a self-contained organizational structure for which costs and revenues can be managed and allocated.
May contain one or more company codes, which can operate in different currencies.
Company codes within a controlling area must all use the same operational chart of accounts and fiscal year variant
Represents the legal and/or organizational views of an enterprise and it forms a framework that supports the activities of a business in the manner desired by management
SAP Controlling (CO) Organizational Structure (Cont)
Operating Concern
It represents an organizational unit in your company for which the sales market data has a uniform structure (characteristics/dimensions)
It is the valuation level for profitability analysis (CO_PA)
Multiple controlling areas can be assigned to one operating concern
Plant
The plant represents a production unit and is the central organizational unit in Materials Management and Production Planning.
A plant is assigned to a company code.
Cost Center Hierarchy
It is a tree structure representing all the cost centers belonging to a controlling area from a controlling perspective
Profit Center Hierarchy
It is a tree structure representing all the profit centers belonging to a controlling area from a controlling perspective
SAP Controlling (CO) Controlling Area and Currencies
By assigning more than one company code to a controlling area you can perform cost accounting for all company codes
The controlling area and company codes can have different currencies
The currency of the controlling area can be the same as that for a company code or different from all the company codes assigned to the controlling area.
Currencies on CO
You can use three currencies in management accounting
Controlling area currency
Company code currency or local currency
Transaction currency
By default, cross-company code cost accounting displays the company code currency as the object currency
SAP Controlling (CO) Global Bike Controlling Structure
One operating concern
Two company codes
Two controlling areas
North America link with US company
Europe link with EUR company
SAP Controlling (CO) Reflection
What currencies would be involved in a CO transaction on Global Bike Inc?
What currencies would be involved in a CO transaction on Global Bike Germany?
Under the GBI Controlling org structure, what needs the financial management team has and why?
SAP Controlling (CO) Sub-modules
Cost Element and Cost Center Accounting (CCA)
Profit Center Accounting (PCA)
Internal Orders
Product Costing (CO-PC)
Profitability Analysis (CO-PA)
SAP Controlling (CO) Master Data Summary
Controlling consists of all master data, configuration, and reporting required to analyze both spend and revenues, both within and across organizations. This includes the following master data:
Cost Elements - cost and/or revenue accounts
Cost Centers - departmental units
Profit Centers - business lines, product lines or divisions
Internal Orders - projects or events
Statistical Key Figures - non financial statistics for allocating or measuring financial costs
Activity Types - Labor or other activity costs
SAP Controlling (CO) Cost and Statistical Objects
Cost Objects
True cost objects can act as sending or receiving objects during cost allocation.
Cost centers, real internal orders, real projects, networks, make-to-order production orders, cost objects, and profitability segments.
Statistical Cost Objects
Statistical objects cannot allocate cost to other objects.
Statistical orders, statistical projects, and profit centers.
Cost Element & Cost Center Accounting Introduction
Financial Accounting is a primary source of data for Management Accounting.
Most expense postings in the general ledger result in a cost posting in Management Accounting.
These expense postings to the general ledger can be journal postings, vendor invoices, or depreciation postings from Asset Management
Cost center
Responsible cost containment
Common use
Finance
Planning
Shipping
Quality
Cost Element & Cost Center Accounting Transactions
KA01 Create primary cost element
KA06 Create secondary cost element
OKEON Cost center hierarchy
KS01 Create cost center
KL01 Create activity type
KK01 Create statistical key figures
XXXX Budget entry
S_ALR_87013611 Cost Centers: Actual/Plan/Var
KSB1 Cost center actual line items
Cost Element & Cost Center Accounting Master Data: Primarily Cost Element (KA01)
When an expense is occurred in FI it is passed into CO by cost element accounting as a single sided posting.
Primary cost elements have to exist in the FI GL maser record before they can be created as primary cost elements in CO.
Primary cost elements create the link between FI and CO
Finance
Controlling
GL Master Record
Primary Cost Element to link FI and CO
P&L accounts
Controlling area
Validity
Category (1 or 11)
Cost Element & Cost Center Accounting GL account link with Primary Cost Element
When an entry is posted in FI to a G/L Account that is a cost or revenue account and a corresponding primary cost element exists in CO, then a corresponding entry is posted in CO.
This is a one sided entry to get the expense or revenue into CO.
A controlling object needs to be specified in the FI document to define where to post the costs in CO
Cost Element & Cost Center Accounting Master Data: Secondary Cost Element (KA06)
Exist only in CO but not in FI.
Used in conjunction with various allocation techniques in CO
Used for internal allocations within CO.
Do not have any corresponding G/L accounts in FI
Used in CO to redistribute costs and these costs must be balanced
Controlling
Controlling
Primarily Cost Element
Secondary Cost Element
Controlling area
Validity
Category
Cost Element & Cost Center Accounting Primary Cost Element link with Secondary Cost Element
Any transactions that create cost movements within CO are balanced entries.
When a cost is moved from one controlling objet to another, the sending object is credited and the receiving object is debited for the same amount.
Cost Center Accounting Cost Center Hierarchy (OKEON)
Cost Centers require a formal structure called a hierarchy
The standard hierarchy is a tree structure representing all the cost centers belonging to a controlling area from a controlling perspective
You can combine cost centers into cost center groups
You can then create cost center hierarchies from these groups by combining the groups according to decision making area, area of responsibility, or management area
Cost Center Accounting Master Data: Cost Center (KS01)
Use cost center for differentiated assignments of overhead costs to organizational activities based on utilization of the relevant areas and for differentiated controlling of costs arising in an organization
Define a cost center for each low-level organizational unit that has responsibility for managing costs.
The cost center is an organizational unit in a controlling area representing a clearly delimited location where costs occur
Basic Data
Name and description
Cost Center Hierarchy
Profit Center
Company Code
Responsible person
Business Area
Other
Category
Currency
Cost Center Accounting Master Data: Activity Types (KL01)
Usually measured in a time or unit increment
Used to allocate cost only from cost centers.
Rent
Power
Telephone
CO impact: Costs can flow to other cost objects such as cost centers, internal orders, production orders, ABC processes, etc.
It is the productive output of a cost center and transfer cost between cost centers.
Basic Data
Name and description
Allocation type
Allocation
Activity unit
Cost center category
Allocation cost element
Price indicator
Cost Center Accounting Master Data: Statistical Key Figures (KK01)
Can be defined as either fixed values or total values.
Examples
Number of employees
Square footage
CO impact: None, used for reporting and allocation purposes
Represent numerical measures used as a basis for internal cost allocations and can be used by cost centers, profit centers, internal orders.
Cost Center Accounting CO postings: Types of Allocation
Distribution
Method for periodically allocating primarily cost elements
Primarily cost elements maintain their identifies in both the sending and receiving objects
Sender and receiver cost centers are fully documented in a unique controlling (CO) document
Assessment
Method of allocation both primarily and secondary cost elements
Primary and/or secondary cost elements are grouped together and transferred to receiver cost centers through use of a secondary cost element.
Sender and receiver cost centers are fully documented in a unique Controlling (CO) document.
Cost Center Accounting CO postings: Components of the Distribution Cycle
A number of segments can be combined into an allocation cycle, which is typically executed in a batch job usually at month end.
Segments indicate the cost sender, the cost elements to be allocated, the receivers, and weighting factors called tracing factors and tracing factor rules.
Segments within a cycle are usually processed in the most efficient manner the system determines.
Allocations with dependencies should be setup in separate cycles and must be done at the highest levels first
Cost Center Accounting CO postings: Distributions
The purpose is to allow a cost center to charge a cost object for services or activities provided using a planned rate.
Cost allocations do not affect the General Ledger
Deals with the measurement, posting, and allocation of an organizational activity.
You need to create the corresponding tracing factors known as activity types in cost center accounting.
Cost Center Accounting CO postings: Assessment
Assessment affords a higher level of summarization for allocations where the receiving cost center manager has no control over reducing the expense at the sender cost center.
All the debits and credits posted to the cost center will be combined on a secondary cost element for allocation.
The only way to further allocate secondary costs is to use assessments.
Cost Center Accounting Budget (Planning)
Involves entering plan figures for costs, activities, prices, or statistical key figures for a particular cost center and a particular planning period.
Goal
Calculate planning costs to define deviations later and to prepare the allocation to the cost bearers.
Based on absorption costing, it allocates all the costs in overhead area to the cost bearers in a company using different procedures
Objectives
To plan the structure of the organization’s future operations for a clearly defined period.
To control business methods within the current settlement period using plan/actual or target/actual comparisons
To monitor the efficiency after the completion of the settlement period using plan/actual or target/actual comparisons
To provide a basis for the valuation of organizational activities independent of random fluctuations
Cost Center Accounting Budget vs Actuals (S_ALR_87013611)
Controlling area
Fiscal year
From to Period
Plan Version
Cost centers
Cost elements
Cost Center Accounting Cost center reporting (KSB1)
Controlling area
Cost center
Cost element
Posting date
Cost Center Accounting Reflection
Which currencies would you think a Global Bike Germany profit center document would have?
What would you recommend GBI in Germany to be its cost center structure and hierarchy and why?
What examples can you provide for GBI distribution process?
What examples can you provide for GBI allocation process?
What would you say is the main purpose of having the distribution and allocation process in SAP?
What benefits you can derive for having your cost center budget in SAP?
Profit Center Accounting Introduction
Purpose is to determine profit for internal areas of responsibility and it is integrated to the New GL
Responsible for revenue regeneration and cost containment
Common use
Region
Function
Product
Profit center
Revenue
Cost
Profit Center Accounting Transactions
KE51 Create profit center
KCH1 Create profit center hierarchy
KE5Z Profit center actual line items
Profit Center Accounting Master Data: Profit Center (KE51)
Profit center accounting is a statistical accounting component
It takes transaction data posted in other components and represents it from a profit-center-oriented point of view.
By assigning balance sheet items to profit centers you can analyze your company’s fixed assets by profit centers making it possible to analyze a number of key figures by profit center, thus using them as investment centers
An organizational unit in accounting that reflects a management-oriented structure of the organization for purpose of internal controls
Basic Data
Controlling area
Validity
Name & description
Company codes
Other
Responsible
Hierarchy group
Profit Center Accounting Data Flow
Profits centers can receive data from:
Direct postings from GL
Automatically generated for AR and AP from document splitting
Direct posting from revenue
Derived posting from expenses
Profit center
Balance sheet
Revenue
AR and AP
Expense
Profit Center Accounting Reporting (KE5Z)
Controlling area
Company code
Posting Period
Fiscal Year
Profit center
Account
Document number
Profit Center Accounting Reflection
Which currencies would you think a Global Bike Germany profit center document would have?
What do you think GBI can use profit center accounting for considering they are a manufacturing company.
Internal Order Introduction
Interim cost collector
Usually used to break costs out below the cost center level.
Common use
Project cost
Campaign cost
Travel cost
Used for tracking individual or recurring events where several cost centers may share the expense
Usually short term and gets set to zero at the end.
Overhead Orders
Used to monitor costs incurred for a particular purpose
Investment Orders
Used to monitor costs incurred in the production of a fixed asset
Accrual Orders
Used to offset postings of accrued costs to cost centers
Orders with Revenue
Used to replace the cost accounting parts of SD customer orders if SD is not being used.
Internal Order Transactions
KO01 Create order
Planning
Posting and settlement
KOB1 Actual line items
Internal Order Master Data (KO01)
It can settle cost at its end of its life into:
Fixed assets
Projects
Profit centers
Is a self-contained mini project cost object with an interim life.
Basic Data
Order and description
Category
Other
Company code
Controlling area
Plant
Profit center
Responsible
Currency
Internal Order Planning
During internal order planning, you enter costs, activities, and business processes that you expect to incur during the lifecycle of an order.
Using internal order planning, you can compare plan and actual costs, and carry out a differentiated variance analysis
Planning levels
Overall planning is simplest level for planning order costs which allows you plan overall and annual values irrespective of the cost elements.
Primary/secondary cost and revenue planning can be used if you have detailed information about the internal order which allows you to plan primary costs, activity inputs, and revenues.
Unit Costing can be used to carry out more detailed planning than is possible on cost elements.
Internal Order Posting and Settlement
Posting
An internal order is a bucket that allows a better view of costs that could not be itemized in detail in a cost center.
An order can be real or statistical (informational postings only).
If it is a statistical posting, the cost object for that the internal order is attached to would receive the real posting
Settlement
Another form of periodic cost allocation.
Internal orders must be settled because they are interim collectors of costs.
The order will be periodically credited and a receiver will debited with cost.
Can occur at the end of each period or at the end of the order’s life.
Internal Order Settlement Rule
Settlement rule establishes the sender and receiver relationship as well as how much each receiver will receive during settlement.
Receivers must be defined as valid in customizing and no impending system restrictions (such as locks) prevent settlement.
Cost centers, other orders, projects, profitability segments, fixed assets, sales order with cost collector, and G/L accounts
Orders
Cost center
Other orders
Projects
CO-PA
FI-FA
Cost collectors
Internal Order Reporting (KOB1)
Controlling area
Order
Cost element
Posting date
Internal Order Reflection
What would you say is the difference between a cost center and an internal order?
What would you recommend the GBI team to use internal orders for?
What the “settlement” activity has to do with the interim life of an internal order?
Product Costing Introduction
Concerned with all aspects of planning the cost of producing products or services, as well as tracking and analyzing actual costs and consist of the following three components:
Product Cost Planning
Cost Object Controlling
Actual Costing and Material Ledger
Material
Cost of material
Labor
Cost of labor
Overhead
Cost of overhead
Product Costing Introduction: Product Cost Planning
Used to estimate the costs to produce goods or services.
If a quantity structure (bill of material and routing) is available in manufacturing Planning, then the system can automatically create a cost estimate based on this data.
If no quantity structure is available you can either enter the cost items manually with the unit costing tool or transfer them automatically from a non-SAP system using batch input.
Product Costing Introduction: Actual Costing
Used to provide actual costs for each material at the end of the period.
Materials and their movements are valuated with a standard price during the period.
Any variances with respect to this standard are collected in the material ledger when invoices are received or orders settled.
During period end closing, the variances are used to calculate an actual price for the material in the closed period.
Product Costing Transactions
CK40N Costing run
CKMLCP Actual costing run
Product Costing Master Data: Material Master
Contains all of the key information a company needs to manage a material within its organization.
The material master defines, among other things, how a product is sold, manufactured, purchased, inventoried and costed.
Information is grouped into views that are organized by business function.
The majority of views of master data are stored at the plant level.
Basic Data
Material
Valuation class
Accounting and Costing
Unit of measure
Material group
Description
Controls account determination
Price control
Price per unit
Standard price
Previous price
Last price change
Profit center
Cost estimate
Product Costing Costing Run (CK40N)
Once you have carried out a cost estimate for a material, you can transfer the costing results to the material master as prices.
Three steps
Mark the standard cost estimate
Release
Update
Product Costing Costing Run (CK40N)
Release Standard Cost
The system transfers the result of the standard cost estimate into the material master record as the material standard price.
The price is then active for Financial Accounting and is used for the valuation of the material until the next time a standard cost estimate is released.
You can release a standard cost estimate only once per period, unless you delete the previously released standard cost estimate from the database.
Mark Standard Cost
The system writes the result of the cost estimate into the costing view of the material master record as the future standard price.
You can use this price to valuate a material component in the cost estimate.
Product Costing Costing Run: Cost Itemizations
Itemizations show detailed information about the origin of costs.
Cost element itemizations groups the individual cost items into cost elements. The cost element group the costs in order of appearance.
Cost component split groups the cost elements into cost components.
Product Costing Costing Run: Reporting (S_ALR_87099930)
Costing run
Costing date
Plant
Product Costing Reflection
What it means to “estimate the cost”?
What is the inventory effect after a costing run?
What impact would you have in your cost of goods sold when the engineering team may have revisions to the BOM.
Profitability Accounting Introduction
Enables you to evaluate contribution margins of external market segments which can be classified according to:
Products,
Customers,
Orders
Strategic business units,
Sales organizations or
Business areas,
Profitability Accounting components are integrated with Overhead Management and Product Cost Controlling.
Profit Center Accounting receives statistical cost postings from all other management accounting components.
Profitability Analysis can receive cost assessments from cost centers and Activity-Based Costing processes, settlements of costs from internal orders, and production variances settled from cost objects.
Profitability Accounting Introduction: Data Flow
Data from sales order management is one of the key sources of information.
In costing-based profitability analysis information can be taken when an order is created or changed and when an invoice is generated for the order.
In account-based profitability analysis information can be taken when a goods issue is posted and when an invoice is generated for the goods issue.
Profitability Accounting Transactions
KE30 Execute report
KE24 Line items display
Profitability Accounting Reporting (KE24)
Currency type
Period/year
Document number
Company code
Dimensions
Cost element
CO order
Sales order
Customer
Product
Profitability Accounting Reflection
What would be your recommendation for the GBI tem on how to use CO-PA?
What type of data would you expect to see on the CO-PA document?
SAP Controlling (CO) Reflection
It is month end at GBI and the managerial accounting group is working on its month end close, what activities would you need to review in each of the areas below
Cost center accenting
Profit center accounting
Internal order accounting
Product costing
Profitability analysis
