SAP University Alliances Version 2.

01

Authors Bret Wagner Stefan Weidner

Controlling (CO)

Product
SAP ERP 6.0 EhP4 Global Bike Inc.

Level
Beginner

Focus
Cross-functional integration Controlling

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Course Overview

Introduction to SAP
Navigation Introduction to GBI Sales & Distribution Materials Management Production Planning Financial Accounting

Controlling

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Unit Overview

CO Organizational Structure
CO Master Data CO Processes

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Goal of Controlling (CO)

Managerial Accounting also termed Controlling is designed to collect transactional data that provides a foundation for preparing internal reports that support decision-making within the enterprise.
These reports are exclusively for use within the enterprise and include:
- Cost center performance - Profit center performance - Budgets analyses

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Target Audience

Executives
Senior Management Department Managers Controllers Cost Accountants

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CO Organizational Structure

Represents the legal and/or organizational views of an enterprise

Forms a framework that supports the activities of a business in the manner desired by management Permits the accurate and organized collection of business information Supports the development and presentation of relevant information in order to enable and support business decisions

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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
United States Germany United Kingdom Australia

Assets

Liabilities & Owners Equity

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CO Organizational Structure

Chart of Accounts
A classification scheme consisting of a group of general ledger (G/L) accounts Provides a framework for the recording of values to ensure an orderly rendering of accounting data The G/L accounts it contains are used by one or more company codes. A self-contained, organizational unit for which the management of revenues and expenses can be performed May include one or more company codes; therefore, an enterprise can perform management accounting analyses and reports across several companies A way to identify and track where revenues and costs are incurred for evaluation purposes Represents a part of an organization for which the sales market is structured in a uniform manner A operating profit for the individual market segments can be calculated. Multiple controlling areas can be assigned to one operating concern.

Controlling Area
-

Operating Concern
-

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GBI 2.0 Structure for Controlling

Global Bike

Client

Global Concern

Operating Concern

Controlling North America Global Bike Inc.

Controlling Europe Global Bike Germany GmbH

Controlling Area

Company Code

Global Bike Chart of Accounts

Chart of Accounts

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GBI 2.0 Enterprise Structure in SAP ERP (Accounting)

Business Area
(see FI unit)

Business Area Bikes BI00

CC US00

CC DE00

Company Code Credit Control Area

(see FI unit)

Chart of Accounts (global) GL00

Credit Control Area (global) GL00

CA North Am. NA00 CA Europe EU00

CA Asia AS00

Controlling Area

Operating Concern (global) GL00 Client GBI

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Profit Center
-

CO Master Data

Responsible for revenue generation and cost containment Evaluated on profit or return on investment Enterprises are commonly divided into profit centers based on
Region Function Product

Cost Center
Responsible for cost containment, not responsible for revenue generation
One or more value-added activities are performed within each cost center. Unit that is distinguished, for example, by area of responsibility, location, or type of activity
Copy center Security department Maintenance department

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Internal Order
-

CO Master Data

Temporary cost center responsible for cost containment, not responsible for revenue generation It is used to plan, collect, and monitor the costs associated with a distinct shortterm event, activity, or project
Company picnic Trade show/Fair Recruiting campaign

Revenue Element
A one-to-one linkage (mapping) between General Ledger revenue accounts and CO revenue elements is established to permit the transfer of FI revenue information to CO. Posting in FI that impact revenue accounts lead to a posting in CO to a revenue element. In other words, revenue account = revenue element just different words depending on whether FI object or CO object.
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Cost Element
-

CO Master Data

A one-to-one linkage (mapping) between General Ledger expense accounts and CO cost elements is established to permit the transfer of FI expense information to CO. Postings in FI that impact cost accounts lead to a posting in CO to a cost element. In other words, expense account = cost element just different words depending on whether FI object or CO object.

Primary Cost Element

Originate in the General Ledger within FI and are automatically transferred to CO when an FI transaction is recorded in the General Ledger

Secondary Cost Element

Used exclusively in CO for allocations and settlements between and amongst cost centers

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Primary vs. Secondary Cost Elements

Managerial Accounting (CO)

Financial Accounting (FI)

Aggregated Cost Elements

General Ledger Accounts

Income Statement

Balance Sheet

Secondary Cost Elements

Primary Cost Elements

Expense Accounts Revenue Accounts

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CO Master Data

Statistical Key Figures

Provide the foundation for accurate and effective cost allocations between cost objects Utilized to support internal cost allocations involving allocations, assessments, and distributions Examples:
number of employees square footage minutes of computer usage

6 Hours Copy Center Activity (20 Hours) 10 Hours 4 Hours

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Executive Offices Maintenance Department IT Department

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CO Processes

Posting Primary Cost Element

Financial Accounting (FI) Supplies Expense Debit 1,500 Credit Cash Debit Credit 1,500

Managerial Accounting (CO)

Cost Center A

Primary Cost Element

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CO Processes

Posting Primary Cost Element

Financial Accounting (FI) (FI) Transaction Document Amount G/L Account # Cost Center 1900012432 (CO) Transaction Document Cost Center Cost Element 20000657
Supplies Expense Debit Credit 1,500 Cash Debit Credit 1,500

Managerial Accounting (CO)

Cost Center
1,500

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CO Processes

Posting Secondary Cost Element

Financial Accounting (FI) Supplies Expense Debit 1,500 Credit Cash Debit Credit 1,500

Managerial Accounting (CO)

Cost Center A CC 1 CC 2 Secondary Cost Element

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CO Processes

Posting Secondary Cost Element

Rent Expense

Executive Offices

Debit
1,500

Credit

1,800

Copy Center
1,500 2,500
Sec. Cost Element

Maintenance Department

Supplies Expense

Debit 2,500

Credit

3,000

2,000
Information Services

Labor Expense

Debit Credit 2,000

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1,200
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Distribution
-

Types of Allocation

Method for periodically allocating primary cost elements Primary cost elements maintain their identities in both the sending and receiving objects Sender and receiver cost centers are fully documented in a unique Controlling (CO) document.

Assessment
A method of allocating both primary 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.

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Distribution
Receiving cost centers
Primary cost element maintains its identity
D010 550 sft A005 400 sft A010 600 sft

Sending cost center

A010 Administration Rent Expense $1,500

Distribution
D005 900 sft

S010 100

A015 A020 150 100 S005 200

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Distribution
Receiving cost centers
Primary cost element maintains its identity
D010 $275 A005 $200 A010 $300

Sending cost center

A010 Administration Rent Expense $1,500

Distribution
D005 $450

S010 $50

A015 A020 $75 $50 S005 $100

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Assessment
Receiving cost centers
Primary and secondary cost elements

Sending cost center

D010 10%

A005 15%

A020 IT Software Expense $4,200 A020 IT Supplies Expense $500

A010 5%
D005 20%

Assessment
S010 10%

A015 10%
A020 0% S005 30%

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Assessment
Receiving cost centers
Primary and secondary cost elements

Sending cost center

A020 IT Software Expense $4,200 A020 IT Supplies Expense $500

A005 $705 D010 $470 D005 $940 A010 $235 A015 $470 A020 $0

Assessment
S010 $470

S005 $1,410

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SAP CO Module

Fully integrated with other SAP modules including, but not limited to:
Financial Accounting (FI) Materials Management (MM) Sales and Distribution (SD) Production Planning and Execution (PP)

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Special Purpose Ledger

Allows users to define the data from other SAP modules that they need to report on
Configure the system to post that data in SPL Summarize the data at a level of detail they desire using flexible report painter or report writer tools Mainly used for GAAP-Generally accepted accounting principle

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Profitability Analysis -PA

PA is one of the key components to financial reporting in SAP

It allows a company to examine the profitability of a no of different key indexes. It is a highly flexible tool that allows the user to determine for which segment of an organization profitability is to be measured. PA is part of CO module and therefore considered internal reporting. SAP likes to represent PA as a multidimensional cube allowing clients to slice and dice profitability from a no of different vantage points.

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The basic structure of PA is operating Concern.

Most companies measure profitability consistently across the organization and therefore requires only one operating concern. Only dramatic differences in this measurement would require more than one Operating Concern There are two different types of PA 1. COSTING BASED 2.ACCOUNT BASED

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Both the types allow users to configure the characteristics of the company for which they want to measure profitability.
Seventeen of these characteristics come standard when Operating Concern is generated. They include such structures as product, customer, profit center , company code and plant.

An additional 30 characteristics can be defined and used in PA. These may include characteristics pulled from nine standard SAP tables. They are fields that are found on sales tables, customer tables and material tables.

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E.g; some corporations may desire profitability by material group. Material group would then be activated as a characteristic in PA. Every time that a material in that material group is sold , the profitability is recorded.
Derived characteristics are another type of characteristic . They are created by using other characteristics to define them.For example a company may divide up the US into region based on Geographic's. A region called south west could be defined by deriving data from all of the plants within the region. Now the profitability of south west region is ready. A company should spend a lot of time to determine how it wants to measure profitability.

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Account based PA simply allows the analysis of these characteristics by the accounts defined in General Ledger.
most companies prefer costing based PA

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Account based PA simply allows the analysis of these characteristics by the accounts defined in General Ledger.
most companies prefer costing based PA

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