SAP ERP Controlling popularly known as SAP CO helps improve management across the financials spectrum by Planning and analyzing costs to deliver reports the influence decision making. Since almost every SAP ERP Financial Accounting and Logistics process ends with a controlling document, the controller has to understand the value flow and be able to realize errors early and to correct them in a timely manner. Reports generated by controlling activity have to be informative and include detailed information on any actual/plan variance.
SAP FI-CO Integration
SAP CO and FI modules are independent components in an SAP system. The data flow between these components takes place on a regular basis.
SAP CO Sub-Modules
The Controlling module in SAP ERP contains a variety of sub-modules that offer functionality for diverse controlling requirements. Here is a list of those sub-modules.
1. Cost Element Accounting
Cost Elements structure revenues and expenses, making them a critical piece of any organization’s complete managerial accounting picture. Cost and Revenue Element Accounting provides an overview of cost and revenue occur in an organization. Values are moved automatically from Financial Accounting to controlling. It calculates cost which
2. Cost Centre Accounting
Cost Center reflects the organizational structure of a company and displays the areas of responsibilities. The cost center structure is very important because it defines the basis for other modules and overhead reporting. Cost Centre is one of the cost objects in cost of production calculation. It is used for Overhead Management in Product Cost Calculation
3. Internal Order
Internal Orders are used in SAP to represent projects. Compared with Cost Center Internal Orders are temporally limited. Internal Orders don’t reflect the organizational structure; instead, they represent, For example, research and development projects, exhibition events or SAP Implement project cost. Internal Order is CO is used to collect & control cost for a specific purpose or task. We can assign a budget for these jobs so that the system automatically monitors to ensure that they will not exceed from the set budget. Note that we cant create complex structures with Internal Orders, so if we need to create project hierarchies, It is better checking out the Project System module of SAP ERP.
4. Product Costing
Product Costing is the core module that relies on the correct setup of master data in Logistics modules to create cost estimates. the cost estimates help plan and analyze costs and their different components. The result of using Product Costing is a standard price that can be released to the material master and used for at least one period for inventory valuation of those manufacturing goods.
5. Cost Object Controlling
Cost Object Controlling is required for companies that produce goods or service within Production planning or the Production Planning for Process Industries submodule. If we working with Product Costing to determine our standard Cost, then Cost object Controlling determines our actual cost and any variances to standard cost. The cost object controlling is presented by production order, process Order, product Cost Collector or sales order-depending on the type of cost object controlling we are using.
6. Profitability Analysis (CO-PA)
Profitability Analysis is a sub-module of SAP controlling module for which there is no template. This means that each customer structures Profitability Analysis according to their specific needs. Operating Concern is the highest organizational element in the SAP organizational structure. The operating concern services as a valuation level for profitability Analysis and needs to be created before Profitability Analysis can be used. We can assign multiple controlling areas to an operating concern. It is required that these controlling areas all have the same Fiscal Year variant, though they can have different charts of accounts. We cant create reports in SAP that contain data of different operating concerns, so we should assign all controlling areas to one operating concern if group reporting required.
Types of Profitability Analysis
- Costing-based Profitability Analysis
- Account based Profitability Analysis
Costing based Profitability Analysis is the type that is used the most. Account based Profitability Analysis can be activated alone or add to costing-based Profitability Analysis. With S4 HANA Finance, the use of account-based Profitability Analysis is recommended because data from account based Profitability Analysis is stored in the same database table as the SAP Financial Accounting and Controlling documents. (Table ACDOCA) To activate new Profitability Reporting in SAP S/4 HANA Finance, we must activate account-based Profitability Analysis. With SAP S/4 HANA Finance the features of account-based Profitability Analysis get enhanced.
7. Profit Center Accounting
Profit center Accounting is used to calculate profit or Loss of individual, independent areas within the organization. Profit Center accounting single Dimensional Analysis where as Profitability Analysis multi-Dimensional Analysis.
