Excerpt from

A Practical Guide to Navigating your Controlling Options in SAP

Rohana Gunawardena Quality Systems & Software
Copyright 2013 Wellesley Information Services, Inc. All rights reserved.

Topics

Introduction CO Overview Overhead Costing Product Costing Profitability Analysis Enterprise Controlling & PCA CO Structures Wrap-Up

Introduction

The SAP Controlling (CO) module is a complex area with many sub-modules. Overview of the different sub-modules and comparison of their functionality Encourage the user to explore all options Using only what you know can be suboptimal Maximize the potential of the CO module Matrix to compare the different sub-modules Clarity of understanding of the different financial modules in SAP

Introduction (cont.)

This session will provide an overview of the different sub-modules in CO It will not go down to the configuration level

Introduction (cont.)

Some common problems that occur when a new reporting requirement is found: Shoehorn a solution into modules you know Users unaware of all the modules in SAP Poor system performance due to the wrong module f e.g., using Profitability Analysis (CO-PA) when Material Ledger would be the best choice Unwilling to learn or invest in new modules

Introduction (cont.)

At one customer site, a user thought Profitability Analysis (COPA) and Profit Center Accounting (EC-PCA) were different names for the same module At that time EC-PCA was called CO-PCA. Changing module names confuses users. f At different times FI-SL has been referred to as GLX, FI-GLX, SPL, or SL f CO-BPM CO-EIS Executive Information System (EC-EIS) f Flex Ledger New G/L SAP G/L SAP white papers give a very high-level view of modules, which makes it hard to distinguish what each module is best suited for
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Case Study

User requirements At a client site, I was requested to investigate how to add data to a Purchase Order (PO) and have this data appear in the allocation field of the FI posting for indirect purchasing

Case Study (cont.)

Actual requirement On further investigation, I found the users were recording costs for a Research and Development (R&D) process using manual Journal Vouchers (JVs) The costs were charged to a balance sheet account The allocation field was used to store the specific R&D project They had recently started indirect purchasing for these R&D projects and wanted to apply the same logic to POs

Case Study (cont.)

Solution Record costs using an internal order Enter the internal order in the PO account assignment The internal order settles to an asset under construction Once the R&D project is finished, the cost is amortized over five years using fixed asset functionality Benefits This is a simple solution Uses standard SAP Low development cost

Topics

Introduction CO Overview Overhead Costing Product Costing Profitability Analysis Enterprise Controlling & PCA CO Structures Wrap-Up

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What Does CO Do?

Controlling is a tool used by management to answer many business questions: On what have we spent the money? Where have we spent the money? From where does the money come? On what are we making the money and in what area of accountability? As well as recording actual costs there is a strong emphasis on planning As standard has many Plan vs. Actual Reports
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Business Questions
Sub-Module Overhead Cost Controlling Cost Element Accounting Cost Center Accounting Product Cost Controlling Material Ledger Profitability Analysis Profit Center Accounting Code CO-OM CO-OM-CEL CO-OM-CCA CO-PC CO-PC-ACT CO-PA EC-PCA What it Answers How much has been spent on overhead? What costs have occurred? Where have costs occurred? What are the standard costs of manufacturing a product? What are the actual costs of manufacturing a product? How profitable are individual market segments? How profitable are individual enterprise areas?

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CO Modules
COPA

Profitability Analysis
COPC
Internal Order Cost Objects

Profitability Segment Product Cost Controlling

Material Valuation

ECPCA

Profit Center Accounting

CO- Overhead Cost OM Controlling

ABC Process Cost Center

Mat .

Labor

Ovh .

Pro ces s.

Cost Element Accounting

FI

Financial Accounting Human Resource

Assets

HR

PP Production Planning

LO

Logistics MM/SD

PP

BOM Routing

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GPK Accounting

Grenzplankostenrechnung (GPK) is a German management accounting philosophy which is the basis for the CO module In early releases CO functionality focused on GPK exclusively, now the functionality has been rounded out In the US it is better known as Resource Consumption Accounting (RCA) which has built on the foundation of GPK GPK accounting is very popular in Germany, but relatively unknown in the US. Much confusion on the functionality CO provides is due to different management accounting philosophies

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CO vs. FI

Controlling (CO) and Financial Accounting (FI) are independent modules of SAP There are strong dependencies between CO and FI f Tight transactional integration f Master data dependencies All data relevant to costs flows automatically to CO from FI

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CO vs. FI Objectives Controlling (CO) Internal Accounting Management Accounting Valuation Ad Hoc Analysis Planning/Forecasting Cost Accounting Financial Accounting (FI) External Accounting Financial Statements Legal Requirements Regulatory Compliance Historical GAAP Reporting

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CO Data Sources

The majority of data in CO is the result of transactions flowing through from FI In turn the majority of FI transactions are the results of postings from other modules, e.g.: MM Material Movements SD Invoicing HR Payroll Very few transactions are the result of direct postings in CO or FI

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CO Data Sources - Transactions MM SD FI HR PP

Goods Receipts, Goods Issues, Misc. postings Billing docs, Sales Orders, Credit/Debit memos Cost Centers Orders Profit Segment Cost Centers Orders Cost Centers Orders Production Orders
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Direct Postings

Time Entry (CATS), Travel Expense, Payroll Goods Issues, Labor Confirmation

FI Transaction

Any FI document which posts to a G/L account linked to a primary cost element will have a related CO document

FI document has related CO, CO-PA and EC-PCA documents

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Transactions RWIN Interface

RWIN is the interface used to post FI data to multiple modules Sender modules

CO

FI-GL

RWIN interface
Receiver modules
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CO-PA

EC-PCA

FI-SL

CO Modules

Cost Element Accounting (CO-OM-CEL) Cost Center Accounting (CO-OM-CCA) Internal Orders (CO-OM-OPA) Activity-Based-Accounting (CO-OM-ABC) Product Cost Controlling (CO-PC) Material Ledger (CO-PC-ACT) Profitability Analysis (CO-PA) Profit Center Accounting (EC-PCA) Executive Information System (EC-EIS) Business Planning (EC-BP)

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Topics

Introduction CO Overview Overhead Costing Product Costing Profitability Analysis Enterprise Controlling & PCA CO Structures Wrap-Up

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Cost Element Accounting (CO-OM-CEL)

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Topics

Introduction CO Overview Overhead Costing Product Costing Profitability Analysis Enterprise Controlling & PCA CO Structures Wrap-Up

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Additional Resources: Information Sources

SAP Help Web Site http://help.sap.com SAP Business Suite SAP ERP SAP ERP Central Component SAP ERP Central Component English SAP ERP Central Component Controlling (CO) f http://help.sap.com/saphelp_erp60_sp/helpdata/en/1e/e92935 04e1fd77e10000009b38f889/frameset.htm

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Additional Resources: Information Sources

SAP ERP Financials Knowledge Base http://service.sap.com/co * f Contains a range of information on many aspects of SAP Controlling modules f Use your SAP Notes ID to log on to the Web site

* Requires login credentials to the SAP Service Marketplace

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Additional Resources: Information Sources

RCA Institute http://www.rcainstitute.org/ f Contains a range of information on RCA accounting CAM-I (The Consortium of Advanced Management, International) http://www.cam-i.org/ f Involved in development of RCA accounting

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Additional Resources: Insider Learning Network Material

Rohana Gunawardena, Cant Get There? Find the Right Transaction to Display CO Documents (Financials Expert, March 2007). Rohana Gunawardena, Do You Mean CO Object or Cost Object? (Financials Expert, February 2003). Rohana Gunawardena, SAP GL Data Sources: Which Tables Should You Use? (Financials Expert, February 2009).

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Additional Resources: Information Sources

Marco Jordy, Dont Wait Until After Go-Live to Set Up CrossCompany Code Controlling (Financials Expert, September 2006). Kurt Goldsmith, Demystifying CO Module "Actual Costs" and "Actual Revenues (Financials Expert, January 2002). Kurt Goldsmith, Understand RCA Concepts to More Easily Evaluate Your Ever-Expanding CO Module Functionality Options (Financials Expert, November 2002). Birgit Starmanns, A Guide to Selecting the Appropriate Cost Object to Support Your Manufacturing Process (Financials Expert, July 201).

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Additional Resources: SAP

SAP Press Janet Salmon Controlling with SAP - Practical Guide f Understand how your controlling processes relate to SAP SAP Guide R/3 System Product Costing Made Easy Typical Costing Scenarios for Various R/3 Manufacturing Processes

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7 Key Points to Take Home

Consider all of the options within CO Dont shoehorn a solution in to what you know Financial Accounts and Management Accounts dont need to match The SAP philosophy is that different requirements need different reporting solutions SAP GL simplifies FI/CO integration No need for reconciliation ledger or separate PCA ledger

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7 Key Points to Take Home

Use CO for planning Each module has strong planning functionality Many standard plan vs. actual reports CO is highly integrated to operational modules CO receives most of its data from operational transactions Controlling areas can be reorganized after go-live It is difficult but possible Allows the most effective use of CO

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7 Key Points to Take Home

Internal Orders are one of the most under used parts of CO Highly flexible functionality Good integration to operations modules Good reporting tools

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Your Turn!

How to contact me: Rohana Gunawardena [email protected]

Please remember to complete your session evaluation

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Disclaimer
SAP, R/3, mySAP, mySAP.com, SAP NetWeaver, Duet, PartnerEdge, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Wellesley Information Services is neither owned nor controlled by SAP.

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