Controlling:
Org
Structure:
Client
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Operating Concern
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Controlling1 Controlling 2
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Controlling: Controlling is nothing but a organizational structure with cost
accounting environment where revenues and costs are monitored controlling is
used for minimize the cost.
If an organization divides their accounting
operations into i.e. Internal Accounting and External Accounting.
Controlling represents an internal
accounting
Controlling provide with information for
management decision making.
It facilitates co-ordination, monitoring
and optimization of all process in an organization.
Controlling involves recording both the
consumption of production factors and the services provided by an organization
Sub
Modules in Controlling
- Cost Element Accounting
- Internal orders
- Activity Based Costing
- Product Costing
- Profitability Analysis
- Profit center Accounting.
Controlling
Area: It is a highest organizational unit in
controlling. One controlling area can be assigned to many co. codes
All the co. codes can maintain different
currency, no problem, but all the co. codes has to maintain same operating
chart of accounts and fiscal year.
-If we assign more than one co. code to one
controlling area, then we need to note the following points
1.
We need to use a consistent chart of accounts i.e. same operating COA
2. The fiscal
year variant in co code must match the fiscal year variant in the
controlling area.
3. You should
execute period end closing in controlling for all company codes at the same
time.
Other wise would be too much time
consuming.
Whenever execute period end closing,
it possible only after closing FI.
4. If you use one controlling area, you can use only one operating
concern.
**** Cross company code controlling
postings that can be displayed in the reconciliation ledger.
Assignment
of Controlling Area to Plant:
Each
plant is assigned to company code
As
a company code is assigned to a controlling area.
We
can also easily derive the relationship from the controlling area to plant.
Controlling
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Company
code1 Company Code 2
| \ / |
Plant Plant Plant
Versions: We can used versions to create independent data groupings in
planning and in actual. *versions
are defined at client level
Operating
Concern: It
is the highest hierarchy in controlling profitability analysis (COPA). All the
controlling areas can be assigned to operating concern to get the profitability
as per market segment.
An
operating concern is the central organizational structure in profitability
analysis.
Each
operating concern represents an area in which a market segment of a business
can be monitored and its profitability analyzed.
A
corporate group usually maintains only one operating concern. This operating
concern is assigned to all existing controlling areas.
That
assigns their cost to that operating concern. Revenues are assigned directly to
Operating concern from FI.
Operating concern can be created at
*Controlling
level or above
*Company
code level or above.
Cost
Element Accounting: It describes origin of cost.
Cost element is used for representing specific costs incurred by the
organizations. Where actual expenditure takes place.
Cost element classifies the organizations
valuated consumption of production factors within a controlling area
CEA
is two types
- Primary Cost Element: Primary cost element can be created for FI & CO. Direct posting a fixed amount to an account by specifying account no.
Primary cost
element generates an account of consumption of production factor externally.
Here allocation & settlements possible. When ever you are creating primary
cost element, it can be corresponds to GL accounts.
- Secondary Cost Element: It origins at an account of production factor internally. Secondary cost element does not corresponds to any GL account in FI
Here allocations are possible, settlements are not possible
System determines
an account automatically while posting. No account number is allowed is to be
posted.
Cost
Element Category: The classification of cost
elements according to their usage or origin.
e.g.
material cost element
Settlement cost element for orders
Cost element for allocating internal
activities.
Cost
Element Category Types:
1-Primary
cost/cost reducing revenue
3-Accrual/deferral
per charge
11-Revenues
12-Sales
Deduction
22-External
settlement.
Cost
Element group: Cost Element group is an organizational
entity that combines cost elements of the same type.
e.g.
can be used reporting purposes.
Revenue
Element: An object that records the value of
operating sales within the controlling area.
Each
revenue element corresponds to a revenue account in a chart of accounts.
Primary cost element can be created FI
level (FS00) and CO level (KA01).
Functional Area: Functional area used to
categorize an organization according to functional aspects such as
Manufacturing, administration, sale & distribution, R&D etc.
-Functional
Requirements
-Allocation
criteria
-Physical
Location
-Responsibility
for costs.
e.g -Production
cost centers
-
service cost centers.
-Administration
cost center
-Development
cost center
-Logistics
cost center.
e.g.
its use consolidation reports.
Cost
Center Group: A hierarchical group of cost centers
and organized according to selected criteria.
Internal
Orders: This will be useful to know item wise cost
like Raw material consumption for a particular period. To monitor collect the
cost internal orders are used.
Internal orders are used to plan, collect
& settle the cost of internal jobs and tasks.
Internal
orders are used to plan, collect and analyze the cost arising from internal
activities.
Internal
orders are used for the following purposes.
*Monitoring
the costs of short-term-jobs.
*Monitoring
the cost and revenues of a specific service.
*Ongoing
cost control.
e.g. to know the cost of individual
activities. i.e. telephone cost.
Internal
Orders Categories:
- Overhead Order: For short-term monitoring of the indirect cost arising from jobs. They can also be used in continuous.
- Investment Order: Monitor investment costs that can be capitalized and settled to fixed assets.
- Accrual Orders: period Based
- Order with revenues
- Model order.
Object
Class: The object class categories the object in
the controlling application component according to their managerial purpose and
makes it possible to analyze flows of costs according to managerial aspects.
The R/3 system contains the following
object classes
-overhead cost
-production
-investment
-profit analysis.
**Object class is used to classify
controlling object such as cost centers, orders and cost objects and to display
the cost flow within controlling from a business prospective.
Order
Type: The order type sub-divided orders, according
to their purpose.
*Each order type contains numerous pieces
of information which are necessary to managing the orders.
*Order types are defined at client level
e.g. Production order, maintenance order,
capital investment order, marketing orders.
Real
Orders: Real orders are the cost objects. Later we
have to do settlement to the particular receiver object.
e.g.
Vehicle is used for all departments.
The expenses incurred for maintaining that
vehicle will be added to the order. Based on the mileage used by each
department, we can settle the expenses to different cost centers by using
statistical key figures.
Statistical
Orders: These are used for information purpose.
Settlements are not possible here. E.g. create statistical order for each
account wise.
Activity
Type: It defines main functions and services
provided by a cost center & used as cost object like cost center internal
orders etc.
Re-Post Line Item:
When
we want to transfer amount from one cost center to other cost center with out
FI entry, we use repost line item.
It
takes must FI reference documents.
Re-Post Cost: If you want to transfer
amount from one department to other department
e.g.
Cost from service to Production.
Statistical
Key Figures: These are certain non financial
statistical data measured for a cost center which when compared tot hat total
of such data of all cost center yields a ratio that can be used for allocation
or planning.
Assessment: This is used for allocation of costs transferring primary and
secondary cost from sending cost center to receiving cost objects.
Distribution: This is used for allocations of primary cost to cost center. The
receiving cost center will have the information on primary cost elements. The
procedure is similar to period reposting.
Product
Cost: Valuation of Inventories will be done (W-I-P,
Finished Goods).
Profitability
Analysis: This is meant for decision making and
reporting purpose. To know the profitability product wise, sales organization
wise, customer wise we use it.
Analyze
the profit or loss of an organization according to individual market segment.
Profitability
Analysis provide on the basis of Decision making, Customer Selection, Price
determination.
Analyzes
the profit or loss of an organization according to individual market segment.
Profitability
Segment:
-The operating concern is divided into
individual market segment for which profitability analyses can be carried out.
-In profitability segment is defined by a
combination of characteristic values.
e.g.
Customer, sales organization, Distribution Channel, Product, Divisions etc. are
the Characteristics.
Object of Co-PA: is to support sales
product management, corporate wide planning and decision making using external
view from a market oriented perspective.
-*Normally the largest amount of data
transferred into CO-PA is from SD billing Doc.
These
are two types:
- Costing Based Profitability Analysis: This type of analysis is primarily design to let you analyze profit quickly for the purpose of sales management.
CO-PA is not
updated until the billing document is created, at which time COGS, revenues,
discount, freight and etc..
**When ever we
are following cost based CO-PA value fields must. The value fields contain amount and quantities that were
updated or planned for particular.
- Accounting Based Profitability Analysis: This type of profitability analysis enables you to reconcile cost and financial accounting at any time using accounts.
Account based
CO-PA created to allow to users to reconcile CO-PA data to FI data.
It captures
values according to the account posted to instead of values fields.
In account based
CO-PA, COGS is updated in CO-PA at the time of delivery (goods Issue),
remaining updated at the time of billing.
The Main difference of Acct based COPA and
Costing Based COPA
|-------- Acct----- Delivery
COGS---------|
(Updated
in COPA)|--------Cost------Billing
*****WE can assign multiple controlling
areas to One Operating Concern.
***Operating Concern is the highest level
hierarchy in controlling.
Derivation
Rule: All characteristics are populated via
derivation. A rule that you define in characteristics derivation using
‘If-Then’ logic, which controls how certain target characteristic values are
derived automatically from source characteristics values.
e.g. Derive “sales Region” from Country
| |
Characteristic Source.
Source
Fields:
you can used the following operating
concern fields as source fields.
e.g. All fixed characteristics.
All
user defined characteristics
All
characteristics copied from SAP tables.
Target
Fields: All the user defined characteristics and
all copied from SAP tables
Validation: A validation is a valuable tool that can be used in many of the
financial, controlling and asset accounting.
Validations are used to check settings and
return a message if the perquisite checks condition is not met.
Substitution: Substitutions are similar to validations; they actually replace and
fill in field values behind the scenes without the user’s knowledge unlike
validations that create on-screen message to the user.
Client
Copy: This application in particular to copying the
entire customizing environment of the source client to target clients either
within one sap system or to a different sap system.
User
Exit: Customer Enhancements
A point in an sap program where a customers
own program can be called.
Customer
Enhancement: An adjustment to the standard sap
system, requested by the customer.
SAP designs empty modification modules at
particular points in the standard system where customer enhancements are
anticipated. These modules known as exits.
Sand
Box Client: Accelerated SAP. In the development
system, a client other than the official customizing client, used for testing
the applications and customizing function.
It is created as a copy of the SAP
reference client (000) the entire implementation team has access to this client
for experimentation and education. The sand box client can be used to test
changes to essential structures, such as the number of company codes and to
ensure that these changes will work.
**we raise invoice, local currency i.e.
company code currency f-43
We
clear invoice with foreign currency f-53
Steps:
define reason code obbe
Define
account for payment difference obxl i.e.
automatic transfer for payment difference.
Statistical
Key Figures: Statistical values describes in cost
centers internal orders, business processes and profit center accounting
There
are two types of statistical key figures i.e. fixed values and total values.
Fixed Values: Fixed values are carried
forward from current posting period to all subsequent serials.
Total
Values: Total values are posted in the current
posting period only.
Creation of statistical Key figures
screen KK01
Statistical Key figures unit may be by way
of measuring H-Hours, Ea-Each and
LBS-Pounds.
Account
Determination (CO): A procedure that determines
adjustment accounts for reconciliation posting between CO and FI manually or
automatically by means of substitutions.
(FI) An automatic function that determines
the accounts in posting amounts in financial accounting.
Reconciliation
Ledger: Reconciliation ledger used for summarized
display of values, that appear in more detailed from in the transaction data.
Function: Reconciles controlling with
financial accounting
Provides an overview of all costs incurred.
In CO area activate the R.Ledger OKKP
In case you don’t want to activate KALB
Cost
Objects: The unit of output resulting from the
value added process with which costs are identified according to how they are
incurred.
i.e.
1. Provided cost conductors.
2. Production orders.
3. Process orders.
What are the Controlling Objects?
-cost center
-orders
-projects
-networks
-Sales Orders
-Cost Objects
-Profitability segment
-Business process
What are the Basic setting in your client?
-Chart of Accounts
-Fiscal Year
-Currencies.
Account
Assignment Objects: Assigning the information from
GL accounts to the controlling objects using account assignment objects.
GL acct
----- Cost Object
Salary Acct Cost Center i.e. Service cost center
Purpose: Operating results from profit
center can be analyzed using either the cost of sales approach or the period
accounting approach.
Difference
Between the Cost Center
and Profit Center
Profit center determine profit or loss from
particular segment.
Profit center responsible both costs and
revenues.
Business
Area vs. Profit Center
Both are responsible for particular segment
wise report.
But Profit center is used for only internal
purpose, where business are is used for external purpose. And where in Business
area we can get the reports segment wise only, where in profit center we can
get the reports product wise, segment wise etc..
MM
to FI Integration:
Valuation Class: Assignment of a material
to a group of GL accounts.
The valuation class determines the GL
accounts that are updated as a result of a valuation relevant transactions or
event such as goods movements.
The Valuation class it Possible to:
** Post the stock values of materials of
the same material type to different GL accts.
**Post the stock values of materials of
different material types to the same GL accts.
Material
Type: A grouping together of materials with the
same basic attributes such as raw materials, semi finished product, and
finished products.
Account
Determination: An automatic function that
determines the accounts in posting amounts in financial accounting.
Material
Movement Type: A classification key indicating the
type of material movement.
e.g. Goods receipt, goods issue, physical stock
transfer.
The Movement type enables the system to
find predefined posting rules determining how the accounts of the financial
accounting system are to be posted and how the stock fields in the material
master records are to be updated.
The link between the valuation class and
the material types is setup via the account category reference.
The account category reference is a
combination of valuation classes. Precisely one account category reference is
assigned to a material type.
There are two types of Price control in the SAP R/3 System:
V-Moving
Average Price: Price that changes in consequence of
goods movements and the entry of invoices and which is used for valuating a
material.
S-Standard
Price:
Constant price with which a material is valuated without taking into
account goods movements and invoices.
**For each material, you must specify the
price control in the material master record according to which the material is
to be valuated. You can do so using the price control induction.
Process:
- Define valuation class in material master in MM screen OMWB
- Account code define in GL at valuation class in materials. OBYC
- Define the account determination key.
- Define workflow variant releasing the same for account through FI module.
- Define GR/IR clearing account in GL and post material to the stock account.
- Verification of vendors invoice for material through MM Screen.
Movement Type
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Account Category reference
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Valuation Class
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Valuation Area
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Valuation Grouping Code
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Cost
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Transaction Key
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Account Modification
BDC: Batch Data Communication is the method of transferring data from
the legacy system to SAP information tables.
Use of BDC: The entire data from the legacy
system is converted into a flat file.
This flat file is then converted into
internal tables using ABAPers help.
How do you extend cost center from another
period?
Ans: At the time of creation of cost center
select “ Valid from Period to Period” at KS01.
Assessment
vs. Distribution:
Assessment:
- Sender cost centers are credited with a special secondary cost element.
- Receiver cost centers are debited with the same assessment cost element.
- Information on senders and receivers is contained in the document.
- List of origins is not maintained in the cost accounting document.
- Primary & secondary cost elements will be settled here.
Distribution:
- Re posting of primary costs.
- Sender cost centers are credited with a primary cost element.
- Receiver cost centers are debited with a primary cost element.
- Only the Secondary Cost elements can be settled here.
Controlling
Area Currency:
If we select co.code-co area field, R/3
uses the default setting of 10, i.e. company code currency.
**If we select cross company cost
accounting, then use any currency.
Company code Currency – 10: If you want
company code currency , must be maintained all company codes same currency.
Any Currency – 20
Group Currency – 30: It is maintained at
client level, use this option to reconcile FI and CO ledgers.
Hard Currency – 40
Index Currency – 50
Global Currency – 60
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