Sappress Optimize Your Sap Erp Financialsaaaaaa

Shivesh Sharma
Optimize Your SAP ERP Financials Controlling Implementation
Bonn Boston
Contents at a Glance
PART I Foundation 1 2 3 SAP ERP Implementation . ........................................................ Controlling: An Introduction . ................................................... Choosing the Optimal Controlling Enterprise Structure .............. 25 49 61
PART II Basic Controlling Processes 4 5 Controlling Business View . ....................................................... 79 ptimizing Cost Element Accounting, Cost Center O Accounting, Profit Center Accounting, and Internal Order Accounting ...................................................................... 119
PART III Budgeting 6 7 ptimizing Capital Budgeting Using Investment O Management ............................................................................. 191 sing Funds Management to Optimize Public Sector U Budgeting . ............................................................................... 223
PART IV Product Costing 8 ptimizing Product Costing Decisions using Product O Cost Controlling ........................................................................ 301
PART V Reporting 9 ptimizing Profitability Reporting Using Profitability O Analysis (CO-PA) ....................................................................... 367
10 Reporting in Financials and Controlling . .................................... 403 11 Concluding Remarks .................................................................. 445 Appendices A
B C Glossary and SAP Abbreviations ........................................................... 449 Bibliography.......................................................................................... 453 The Author............................................................................................ 455
Contents
Acknowledgments ........................................................................................ 15 Preface .......................................................................................................... 17
PART I Foundation 1 SAP ERP Implementation ........................................................... 25

1.1 1.2 1.3 1.4 Reasons for Implementing SAP ERP .............................................. The SAP ERP Solution Stack ........................................................... Types of SAP Implementations ....................................................... SAP Implementation Methodologies ............................................. 1.4.1 Evolution from ASAP to ValueSAP to Solution Manager ....... 1.4.2 ASAP Methodology ............................................................. 1.4.3 ValueSAP Methodology ....................................................... 1.4.4 Solution Manager ............................................................... SAP Best Practices Solution Set ...................................................... 1.5.1 Building Blocks .................................................................... 1.5.2 Best Practices Installation Assistant ...................................... 1.5.3 eCATT Procedures ................................................................ 1.5.4 Business Conguration Set ................................................... The Role of SAP ERP Financials and Controlling Consultants in SAP ERP Implementations ............................................................. 1.6.1 Management Reporting Perspective .................................... 1.6.2 Integration Perspective ........................................................ 1.6.3 Accounting and Audit Perspective ....................................... Summary ....................................................................................... 25 26 29 32 32 33 35 35 40 42 42 43 44 44 45 46 46 47
1.5
1.6
1.7
Controlling: An Introduction
2.1 2.2 2.3
..................................................... 49
49 52 54 54 56
Key Requirements for the SAP ERP Financials Solution ................... SAP ERP Financials Direction: A Historical Perspective ................... SAP ERP Financials: A Snapshot View ............................................ 2.3.1 SAP ERP Financials Solution Stack: The Big Picture .............. 2.3.2 SAP Easy Access for SAP ERP Financials/Controlling Components ........................................................................
Contents
2.4 2.5
SAP ERP Controlling Roadmap ....................................................... 58 Summary ....................................................................................... 60
Choosing the Optimal Controlling Enterprise Structure ............ 61

3.1 Controlling Organizational Entities ................................................ 3.1.1 Operating Concern .............................................................. 3.1.2 Controlling Area .................................................................. 3.1.3 Cost Center ......................................................................... 3.1.4 Prot Center ........................................................................ Assignment of Organizational Entities ........................................... 3.2.1 Company Code to Controlling Area (N:1 or 1:1) .................. 3.2.2 Controlling Area to Operating Concern (N:1 or 1:1) ............. 3.2.3 Inheritance Principal ............................................................ 3.2.4 Standard Hierarchy Versus Alternative Hierarchy .................. 3.2.5 Time Dependency of Enterprise Organizations ..................... Key Controlling Mapping Decisions and Best Practices .................. 3.3.1 One Operating Concern Versus Multiple Operating Concerns by Region ............................................................. 3.3.2 Currencies in Controlling ..................................................... 3.3.3 One Controlling Area Versus Multiple Controlling Areas by Region ............................................................................ 3.3.4 Cost Centers Standard Hierarchy Denition: By Department or By Division ............................................ 3.3.5 Prot Center Hierarchy Denition ........................................ Summary ....................................................................................... 62 62 64 64 65 66 66 68 69 70 71 71 71 72 73 74 74 75
3.2
3.3
3.4
PART II Basic Controlling Processes 4 Controlling Business View ......................................................... 79

4.1 4.2 Layers of Controlling Reporting ...................................................... Basic Conguration Settings ........................................................... 4.2.1 Maintain Controlling Areas .................................................. 4.2.2 Maintain Number Ranges for Controlling Documents .......... 4.2.3 Maintain versions ................................................................ Basic Concepts in Controlling ........................................................ 4.3.1 Account Assignment of Controlling Objects ......................... 80 82 82 85 86 87 87
4.3
Contents
4.3.2 Commitments Management in Controlling .......................... 89 4.3.3 Settlement in Controlling ..................................................... 90 4.4 Procurement Process: Purchase Requisition to Check Writing ........ 90 4.4.1 Commitment Management Flow in Procurement ................. 92 4.4.2 Actuals Flow in Procurement ............................................... 92 4.5 Production Planning and Manufacturing Process Integration .......... 93 4.6 Managing Projects and Capital Budgeting Integration .................... 93 4.6.1 Integration of Cost Planning with Project Systems ............... 94 4.6.2 Cost Settlement in Project Systems ...................................... 96 4.7 Plant Maintenance Integration ....................................................... 97 4.7.1 Integration of Plant Maintenance Master Data to Controlling ...................................................................... 97 4.7.2 Integrating Plant Maintenance Orders with Controlling ....... 98 4.8 Sales Order to Cash Application Process Integration ...................... 101 4.9 Human Capital Management Integration ....................................... 103 4.9.1 Master Data in Human Resources and Linkage to Controlling ..................................................................... 104 4.9.2 Personnel Cost Planning in Human Resources .................... 104 4.9.3 Position Budgeting and Control ......................................... 106 4.10 Controlling and Finance Integration .............................................. 107 4.10.1 Reconciliation Ledger ...................................................... 108 4.10.2 Real-time Integration of Controlling with Financial Accounting ...................................................................... 110 4.10.3 Transfer Controlling Documents Retrospectively ............... 115 4.10.4 Default Account Assignments for Controlling .................... 116 4.11 Summary ...................................................................................... 118
Optimizing Cost Element Accounting, Cost Center Accounting, Prot Center Accounting, and Internal Order Accounting ........ 119
5.1 Cost Element Accounting .............................................................. 5.1.1 Types of Cost Elements ....................................................... 5.1.2 Cost Element Group ........................................................... Cost Center Accounting ............................................................... 5.2.1 Cost Center Accounting Master Data .................................. 5.2.2 Cost Center Planning .......................................................... 5.2.3 Resource Planning .............................................................. 5.2.4 Cost Center Budget Planning .............................................. 5.2.5 Commitment and Funds Commitment ............................... 120 121 123 125 126 136 139 145 147
5.2
Contents
5.3
5.4
5.5
5.2.6 Overhead Costing Sheets .................................................... 5.2.7 Allocations ......................................................................... 5.2.8 Year-End Closing ................................................................ Prot Center Accounting ............................................................... 5.3.1 Prot Center Master Data ................................................... 5.3.2 Prot Center Master Data Assignment Monitor and Assignments ................................................................ 5.3.3 Number Ranges and Document Types ................................ 5.3.4 Choose Additional Balance Sheets and P&L Accounts ......... 5.3.5 Period-End Closing ............................................................. Internal Order Accounting ............................................................ 5.4.1 Internal Order Master Data ................................................ 5.4.2 Create Order Type .............................................................. 5.4.3 Status Management ............................................................ 5.4.4 Internal Order Settlement Process ...................................... 5.4.5 Budgeting and Availability Control in Internal Order Accounting ......................................................................... Summary ......................................................................................
153 156 157 158 160 163 164 166 168 169 170 175 179 182 184 187
PART III Budgeting 6 Optimizing Capital Budgeting Using Investment Management 191
6.1 Investment Management .............................................................. 6.1.1 Investment Program: An Introduction ................................. 6.1.2 Investment Program: Master Data ...................................... 6.1.3 Investment Program: Budgeting .......................................... 6.1.4 Appropriation Requests ...................................................... 6.1.5 Appropriation Request Types .............................................. 6.1.6 Investment Measures: Integration with Asset Accounting .... 6.1.7 Orders Versus Projects as Investment Measures .................. 6.1.8 Investment Prole .............................................................. 6.1.9 Assign Investment Prole to Model Order .......................... Investment Management Year End Closing ................................... 6.2.1 Open a New Approval Year for the Investment Program ...... 6.2.2 Commitments and Budget Carryforward of Investment Measures ............................................................................ 6.2.3 Carryforward Budget of Old Investment Program ................ 192 194 195 206 208 209 213 213 214 216 217 218 219 220
6.2
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6.3
6.2.4 Close Old Approval Year ..................................................... 221 Summary ...................................................................................... 222
Using Funds Management to Optimize Public Sector Budgeting ................................................................................. 223

7.1 7.2 Funds Management: An Introduction ........................................... Basic Settings ................................................................................ 7.2.1 Activate Account Assignment Elements .............................. 7.2.2 Allow BLANK as the Value for Account Assignment Elements ............................................................................ 7.2.3 Activate Functions .............................................................. 7.2.4 Dene a Funds Management Area and Its Global Parameters ........................................................................ 7.2.5 Assign Fiscal Year Variant to Funds Management Area ...... 7.2.6 Enterprise Structure with Reference to Funds Management ...................................................................... Master Data .................................................................................. 7.3.1 Activate Year-Dependent Master Data ............................... 7.3.2 Commitment Items ............................................................. 7.3.3 Funds Center ...................................................................... 7.3.4 Fund .................................................................................. 7.3.5 Funded Program ................................................................. 7.3.6 Functional Area .................................................................. 7.3.7 Subdivision ID .................................................................... 7.3.8 Budget Structure in Budget Control System (BCS) ............... 7.3.9 Account Assignment Derivation ......................................... 7.3.10 Status Management ............................................................ Budgeting .................................................................................... 7.4.1 Activate the Account Assignment in the Budget Control System .................................................................. 7.4.2 Dene Budget Category ...................................................... 7.4.3 Budget Types ...................................................................... 7.4.4 Budget Entry Documents .................................................... Availability Control ....................................................................... 7.5.1 Activate/Deactivate Availability Control for Applications .... 7.5.2 Activity Groups ................................................................... 7.5.3 Tolerance Proles ............................................................... 224 227 227 228 229 232 234 234 235 235 236 241 246 250 253 254 256 259 260 261 263 264 265 267 274 275 277 278
7.3
7.4
7.5
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Contents
7.6
7.7 7.8
7.5.4 Availability Control Ledger ................................................. 7.5.5 Dene Activation of Availability Control ............................ Integration/Actual and Commitment Update ................................ 7.6.1 Assign Update Prole to Funds Management Area ............ 7.6.2 Override Update Prole ..................................................... 7.6.3 Make Other Settings ......................................................... 7.6.4 Number Ranges for Actual Data Documents ....................... 7.6.5 Activate/Deactivate Funds Management ............................. Closing Operations ....................................................................... Summary ......................................................................................
280 286 287 289 290 291 293 294 295 297
PART IV Product Costing 8 Optimizing Product Costing Decisions using Product Cost Controlling ................................................................................. 301
8.1 8.2 Product Cost Controlling: An Introduction .................................... Product Cost Planning .................................................................. 8.2.1 Integration ......................................................................... 8.2.2 Production Cost Planning Components and Costing Sequence ........................................................................... 8.2.3 Cost Component Structure ................................................. 8.2.4 Costing Variant ................................................................... 8.2.5 Price Update ...................................................................... Cost Object Controlling ............................................................... 8.3.1 Integration ......................................................................... 8.3.2 Product Cost by Period: An Introduction ............................ 8.3.3 Product Cost by Period and Product Cost Collector ............. 8.3.4 Product Cost by Period: Preliminary Costing Estimate ......... 8.3.5 Product Cost by Period: Simultaneous Costing .................... 8.3.6 Period-End Closing (Work in Process) ................................. 8.3.7 Period-End Closing ............................................................ Actual Costing/Material Ledger (CO-PC-ACT) ............................... 8.4.1 Integration ......................................................................... 8.4.2 Learning Path ..................................................................... 8.4.3 Basic Settings ..................................................................... 8.4.4 Material Update ................................................................. 8.4.5 Actual Costing .................................................................... Summary ...................................................................................... 301 303 304 305 307 311 317 321 323 324 325 326 331 332 342 347 348 349 350 356 359 363
8.3
8.4
8.5
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Contents
PART V Reporting 9 Optimizing Protability Reporting Using Protability Analysis (CO-PA) .................................................... 367
9.1 Protability Analysis: An Introduction ........................................... 9.1.1 Types of Protability Analysis .............................................. 9.1.2 Major Differences Between Costing-Based and Account-Based CO-PA ........................................................ Operating Concern ....................................................................... 9.2.1 Dening the Operating Concern ......................................... 9.2.2 Maintaining Value Fields .................................................... 9.2.3 Maintaining Protability Segment Characteristics ................ Master Data .................................................................................. 9.3.1 Characteristic Values ........................................................... 9.3.2 Dene Characteristic Hierarchy ........................................... Flow of Actual Values: Integration of SD, MM, and Financial Accounting, with CO-PA ............................................................... 9.4.1 Initial Steps: Setting up Number Ranges, Characteristic Groups and Value Field Groups .......................................... 9.4.2 Transfer of Incoming Sales Orders/Billing Documents .......... 9.4.3 Order and Project Settlement ............................................. 9.4.4 Direct Postings from FI/MM ............................................... 9.4.5 Settlement of Production Variances .................................... Summary ...................................................................................... 368 368 368 372 372 379 381 382 382 383 385 385 392 395 398 398 401
9.2
9.3
9.4
9.5
10 Reporting in Financials and Controlling .................................... 403

10.1 Reporting in SAP ERP Financials and Controlling ........................... 10.2 SAP ERP Financials Reports ........................................................... 10.2.1 Financial Accounting Reporting ........................................ 10.2.2 Controlling Component (CO) Reporting ............................ 10.3 Variants and Variables in Reporting ............................................... 10.3.1 Variants ............................................................................ 10.3.2 Variables in Reporting ....................................................... 10.4 Drilldown Reporting in SAP ERP Financials ................................... 10.5 Summary ...................................................................................... 404 407 407 417 432 432 435 436 443
13
Contents
11 Concluding Remarks .................................................................. 445
Appendices ...................................................................................... 447

A Glossary and SAP Abbreviations ............................................................. 449 B Bibliography ............................................................................................ 453 C The Author .............................................................................................. 455 Index ............................................................................................................. 457
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This introduction to the various tools and techniques will simplify and allow you to design optimal processes for your organization from a Controlling perspective. Another important thing to consider while reading this chapter is that most of these processes follow the same architectural structure.
Optimizing Cost Element Accounting, Cost Center Accounting, Profit Center Accounting, and Internal Order Accounting
In this chapter, you will learn how to configure and implement cost element accounting, cost center accounting, profit center accounting, and internal order accounting. We will clarify some of the key features of each of these components so that you can standardize and optimize your existing Controlling processes. It is extremely important for you to think through and map the overall structure of your organization into these four components. This allows you to launch yourself into a learning cycle where you can get increased benefits from implementing additional components. You will proceed from defining your cost center and profit center hierarchies along with the cost element and internal order definition, to performing planning in cost center accounting that can be replicated across other components because the overall architecture of planning remains the same. You will also learn how to implement budgeting in cost center accounting and internal order accounting with availability control setup. The concept of funds commitment is also highlighted, which allows you to map out your future commitments. This helps tremendously in analyzing the overall risk that your organization has in terms of future liabilities. Internal order lifecycle from creation to settlement is discussed from a functional and configuration perspective. The tools discussed allow you to optimally design
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Optimizing Cost Element Accounting
your internal order lifecycle per your organizations requirements. In addition, you will learn about the period-end and fiscal year-end activities that need to be performed to support the closing processes in Controlling. Figure 5.1 covers the cost element accounting, cost center accounting, and profit center accounting structures. Lets dive into cost element accounting now.
Cost Element Accounting
Primary Cost Element
Secondary Cost Element
Cost Element Group
Master Data Cost Center Accounting
Planning
Budgeting
Commitment Allocations & Funds Management
Year End Closing
Profit Center Accounting
Master Data
Assignments of Profit Centers
Planning
Periodic Postings
Internal Order Accounting
Master Data
Planning
Settlement
Budgeting & Availability Control
Figure 5.1 Basic Controlling Processes
5.1
Cost Element Accounting
The basic question that cost element accounting answers is the detailed understanding of what costs have been incurred. Cost element accounting is not a typical accounting system but a mechanism to record data from Financial Accounting that forms the basis of cost accounting. In this component, no routine transactions are recorded. So the most important aspect in cost element accounting is the master data that should be created when the relevant GL account is created. Lets tackle cost element master data first.
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CostElementAccounting
5.1
5.1.1
Types of Cost Elements
Lets learn about the key attributes of cost elements and the process of creating cost elements:
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Primary cost elements Tied to a P&L GL account these elements can either be directly created at the time the GL account was created or by clicking on Edit cost element or via the menu path in cost element accounting. You need to have a GL account created before creating a primary cost element. The costs for a primary cost element originate outside of Controlling. Secondary cost elements These are primarily used for allocation cycles and can be created solely in Controlling. Secondary cost elements are used either as intermediary receivers or senders that must not have real costs. The menu path is SAP Menu Accounting Controlling Cost element accounting Master Data Cost Element Individual Processing Create Primary/Create Secondary/Change/Display/ Delete/Display changes. The Transactions are KA01/KA06/KA02/KA03/KA04/ KA05.
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Figure 5.2 illustrates how a primary cost element can be changed. Lets review these steps: 1. Enter the Cost Element 610100, the Controlling Area, which is seen as US01, and a Valid From and to date. 2. On the Basic Data tab, to enter a Name and Description.
Figure 5.2
Changing a Cost Element
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OptimizingCostElementAccounting
The other options seen on this screen are described here:

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CElem category identifies the cost element category and can be selected as follows:
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1: Primary Costs/Costs reducing revenue 3: Accrual/deferral per surcharge 4: Accrual/deferral per debit=actual 11: Revenues 12: Sales deduction 22: External settlement
The cost element category allows you to distinguish between primary and secondary cost elements. These can be used to distinguish within the primary cost elements whether it is a cost element (expense account) or revenue element (revenue account):
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Attribute mix This can be used to further distinguish the cost elements per your requirements. Functional Area This allows you to represent your departments as functional areas such as production, sales, marketing, administration and so on. This allows you to create P&L accounting per cost of sales accounting. The functional area entered in the corresponding GL master flows to the cost element master data as well and cannot be entered from this screen.
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In Figure 5.3, you can see the indicators for recording quantity, where the unit of measure can also be entered.
Figure 5.3
Defining Indicators
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CostElementAccounting
5.1
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Record qty This flag allows you to record quantities against the cost element. Unit of Measure This identifies the unit of measure for posted activities.
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Selecting the Default Acct Assgnmt tab brings you to the screen shown in Figure 5.4.
Figure 5.4
Defining Default Account Assignment for Cost Element
This is where you can define the default cost center or order for a particular cost element. This setting is useful only if cost elements map to the same cost center across all company codes. Remember, you learned about defaulting cost centers and orders by valuation area and cost element earlier in Chapter 4. The History tab records all the changes made on the cost element.
5.1.2
Cost Element Group
The cost element group is a grouping of similar cost elements for reporting purposes. By using cost element groups, you can build a hierarchical cost element structure that can be extremely useful for reporting purposes. You can use cost element groups in all the Controlling transactions such as cost center planning and allocation cycles. This allows you to process all the cost elements in one transaction. The menu path is SAP Menu Accounting Controlling Cost element accounting Master Data Cost Element Group Create/Change/Display. The Transactions are KAH1/KAH2/KAH3. Figure 5.5 shows the screen for changing an existing cost element group, CANA.
The cost element groups are broken into these headings: Manufacturing, Operating Expenses, Other Expenses, and Secondary Cost Elements. Manufacturing is then broken up into SAP Manufacturing Clearing Accounts, Inventory Reserves, and Manufacturing Variances. Primary cost elements (510000 to 510099) are then assigned to SAP Manufacturing Clearing Accounts.
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Figure 5.5
Changing an Existing Cost Element Group
To change an existing cost element group, assign new cost elements or change the assignment of cost elements to a different level. The Same Level and Lower Level buttons help create a cost element group at the same level or creates a new lower level below the same level, respectively. The other two buttons for Cost Element allow you to insert a cost element or to display a cost element attached to a cost element group. Now lets move on to cost center accounting.
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Cost Center Accounting
5.2
5.2
Cost center accounting (CO-OM-CCA) is used for internal Controlling purposes and to make the costs more transparent in an organization. The overall objective of CO-OM-CCA is to trace the source of a cost. If you have overhead costs, they need to be allocated to the actual department that owns that cost. Table 5.1 shows you the three types of decision-making responsibilities that a manager can have.
Responsibility Areas Cost Center Profit Center Responsibility of Manager Managing costs per plan Manages costs and responsible for generating revenues. Owns the overall profit of the group. Manages costs and revenues and can make investment decisions. Performance Metrics Plan versus Actual Costs Operating Results of the Profit Center Examples HR department, IT department Manufacturing units
Investment Center
Return on Investment
Business unit
Table 5.1 Types of Responsibility Areas
Cost center accounting focuses only on costs allowing you to detail out the costs and makes the managers responsible for the costs incurred by their departments.
Note Cost center accounting is typically one of the earliest components that an organization implements.
Figure 5.6 shows you the process involved. Lets examine master data first.
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Master Data
Cost Center
Cost Center Group
Cost Center Standard Hierarchy
Activity Type & Group
Statistical Key Figures & Group
Resources
Periodic Activities
Planning
Manual Planning
Resource Planning
Formula Planning
Allocations
Budget Management
Budget Profile
Commitment and Funds Commitments
Activate
Document Types
Number Ranges
Field Control
Overhead
Costing Sheets
Costing Sheet Components
Allocations
Assessment
Distribution
Activity Allocation
Year End Closing
Commitment Carryforward
Figure 5.6 Cost Center Accounting
5.2.1
Cost Center Accounting Master Data
First you will learn about the various master data elements of cost center accounting such as cost center, cost center group, cost center standard hierarchy, activity type and activity type group, statistical key figures, and resources. Then you will learn about the following cost center accounting business transaction. The most important aspect in cost element accounting is the master data.
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CostCenterAccounting
5.2
Cost Center Cost centers are the organizational units where costs are incurred. These can be created from a variety of perspectives such as responsibility, physical location, and functional area. The structure of the cost center is heavily dependent on each organization and mimics the organization structure. Before creating a cost center, you should outline the standard hierarchy to guide the overall structure and set of the cost centers. Each cost center needs to be assigned to the standard hierarchy. Standard hierarchy needs represent a grouping of all the cost centers for a particular Controlling area. This allows you to visualize your organization from the Controlling perspective. The menu path to follow for creating, changing, displaying change is SAP Menu Accounting Controlling Cost center accounting Master data Cost Center Individual Processing Create/Change/Display/Delete/Display Change. The Transactions are KS01/KS02/ KS03/KS04/KS05. To understand more about a cost center, lets take a look at how a cost center looks in cost center accounting. Figure 5.7 shows you the Basic data tab of the cost center screen where you can change the Cost Center 10100. All the cost centers are created for a Controlling Area US01 with Valid From and to dates.
Figure 5.7
Entering Basic Data in Cost Center Master Data
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You need to maintain the following parameters identifying the cost center:
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Name and Description This identifies the name and description of the cost center. User Responsible This is the SAP user ID of the responsible person. Person Responsible This is free form text with which you can maintain the responsible person even if you have not created a SAP user ID. Department This can be used to capture the department of your organization and is used for reporting purposes. Cost Center Category This identifies the category of the cost center and can be used to build additional logic for activity types. Typical examples for a cost center category are production, sales, and administration. Hierarchy area This can be used to map the cost center to the standard hierarchy components. You have to choose a predefined hierarchy area for your cost center. Business Area This can be used to link the business area to the cost center. Functional Area This can be used to establish the link between the cost center and the functional area. Currency This identifies the currency of the cost center. Profit Center This can be used to assign profit centers to the cost center.
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Figure 5.8 displays the screen for maintaining the control parameters. You can choose to record quantity by flagging the Record Quantity. You can choose to lock the parameters for data entry for the cost center. For example, in this case, we have chosen to not record any Actual revenues or Plan revenues for the identified cost center.
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5.2
Figure 5.8
Control Parameters for Cost Center Master Data
Figure 5.9 shows you a view of the Templates tab and the information you will need to populate it with.
Figure 5.9
Cost Center Templates
This is where you can maintain the various cost models that are relevant for the formula planning, activity and business process allocation, and overhead rates. You will learn more about these in the planning Section 5.2.2. On the Address tab, you need to maintain the correspondence address details. The Communication tab has the data related to telephone numbers, fax number, and printer destination. The History tab has the details pertaining to any changes that were made in the cost center. Now that you understand the cost center, lets take a look at the cost center group. Cost Center Group Cost center groups allow you to depict your organizational structure by grouping similar types of cost centers in a group. The menu path to create, change or dis-
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play the cost center group is SAP Menu Accounting Controlling Cost center accounting Master data Cost Center Group Create/Change/Display. The Transactions are KSH1/KSH2/KSH3. Figure 5.10 shows you the cost center group US01 that has been set up. You have the broad classification of Sales, Marketing, Manufacturing, General & Administration, and Assessments. Within General & Administration, you can have further cost center groups of G & A Finance, G & A- Human Resources, and G & ALegal. The cost center is ultimately assigned to a cost center group because 10100, defined in the previous step, is assigned to Sales cost center group 101.
Figure 5.10 Cost Center Group
Cost Center Standard Hierarchy By combining all the cost center groups together for an organization, you essentially build up your standard hierarchy. This includes all the cost centers for a given period that are active, which allows you to look at your organization from an overall Controlling perspective. The menu path is SAP Menu Accounting Controlling Cost center accounting Master data Standard hierarchy
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5.2
Change/Display, and the Transactions are OKEON/OKENN. Figure 5.11 shows you the screen depicting your standard hierarchy US01. The maintenance screen is divided into four broad areas:
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The top-left pane is the search area where you can find a cost center or cost center group by search criteria. The bottom-left pane shows the results of your search. The top-right pane shows the overview area. The bottom-right shows the details for cost center sales that you have selected in the overview area.
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Figure 5.11 Maintaining the Standard Hierarchy of Cost Center
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You can drag and drop the cost centers that you find in your search list into the overview pane. As you can see, this is similar to the cost center group structure that you saw in the previous step. However, the distinction is that every cost center should be part of the standard hierarchy, which is not the case with the cost center group. Activity Type This allows you to enter the different activities in cost center accounting for your Controlling area. You can also record quantities that are measured in activities. You can then use activities to set up your rules for allocation cycles. Activity types can be directly tied to a cost center also. The menu path is SAP Menu Accounting Controlling Cost center accounting Master data Activity Type Individual Processing Create/Change/Display/Delete/Display changes. The Transactions are KL01/KL02/KL03/KL04/KL05. Figure 5.12 shows you how to create an Activity Type KWH by Controlling Area. On the Basic Data tab, the Name and Description of activity type KWH is Power KwH and Power Units consumed per month, respectively. The activity unit is identified as KWH, whereas the cost center category is marked as W, which represents administration. You can also set Allocation default values for the activity type, which is used when you are running your allocation cycles. Lets take a look at the various types now:
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ATyp category identifies the method of activity quantity planning and activity allocation. Allocation cost elem is the secondary cost element that is used to allocate the activity type. Actual qty set allows you to manually enter the quantity that you want to receive in the receiver. The Average price flag means that the activity process for the activity remains the same throughout the year. Plan quantity set sets the plan quantity and prevents you from changing it during planning.
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5.2
Figure 5.12 Create Activity type
You can lock this activity by marking the Lock indicator in the Indicators tab. Output unit and Output factor can be maintained in the Output tab. The History tab records any changes that happen for the activity type. Activity Type Group This allows you to group similar activity types together so that you can use these when executing transactions in cost center accounting. The menu path is SAP Menu Accounting Controlling Cost center accounting Master data Activity Type Group Create/Change/Display, and the Transaction is KLH1/KLH2/ KLH3. Figure 5.13 shows that KWH and FST are grouped in the POWER activity group. You can use Same Level to add more activity types to this group. You can create subgroups and attach them to this main activity group by using Lower Level.
Figure 5.13 Defining the Activity Type Group
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Statistical Key Figures Statistical key figures can be used to represent cost centers, activity types, orders, business processes, profit centers, or real estate objects. These are primarily used as parameters for running allocations such as distribution or assessment. The menu path is SAP Menu Accounting Controlling Cost center accounting Master data Statistical Key Figures Individual Processing Create/Change/ Display/Delete. The Transactions are KK01/KK02/KK03. Figure 5.14 shows you the statistical key figure MITARB that represents Employees. You need to define a unit of measure for your statistical key figure. For units with no dimensions, ST can be used.
Figure 5.14 Display Statistical Key Figure
The statistical key figure can be defined as either Fxd val. (fixed value) or Tot. values (totals values). Fixed values are constant and are applied through the rest of the fiscal year. On the other hand, totals values are applied only for the fiscal period in which the allocation cycle is run. Statistical Key Figure Group Statistical key figures allows you to group statistical figures together so that they can then be used in cost center accounting transactions. Statistical key figures used as tracing factors can then be collected in groups during allocation processing. Follow SAP Menu Accounting Controlling Cost center accounting Master data Statistical Key Figure group Create/Change/Display. You can also use Transactions KBH1/KBH2/KBH3. Figure 5.15 shows you the statistical figure EMPLOYEE that has been created for statistical figure MITARB.
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5.2
Figure 5.15 Create Statistical Key Figure Group
Resources Resources are goods and services that are used in various business processes. Resources can be used to generate detailed planning activities for cost center planning, orders, and WBS elements. These provide you with one more layer of reporting other than cost elements. The menu path is SAP Menu Accounting Controlling Cost center accounting Master data Resources group Create/Change/ Display, and the Transactions are KPR2/KPR2/KPR3. Figure 5.16 shows how to add a resource by CO Area (Controlling area). You need an identifier for Resource Machine1 with Valid From and Valid To dates. The unit of measure also needs to be maintained. In the Name field, you can enter a general description of the resource. Cost ele.. refers to the cost element for which the resource can be planned. If nothing is entered then the resource can be used across all the primary and secondary cost elements. Plnt specifies the logistics plant for which the resource can be planned.
Figure 5.16 Create Resources
Note Resource cannot be used for actual costs. It can only be used for planning. All other objects can be used for planning and actuals
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5.2.2
Cost Center Planning
Cost center planning forms the part of short-term planning that typically has the time span of a fiscal year. In cost center planning, you enter the plan values for costs, activities, and statistical key figures for a particular cost center and planning period. This is done prior to you recording the actuals and allows you to compare the variances between actuals and plan values. Any large variances act as a signal to take corrective action and fix any business processes. Typically, organizations implement cost center planning initially, get in the rhythm of using the information, and then move on to complex Controlling initiatives. But this forms the building block of all your Controlling activities and is a strong prerequisite before you implement standard costing. Cost center planning allows you to monitor, control, and plan the Controlling business structure by clearly outlining the goals and targets and then measuring them against it. Here you will learn to define the parameters for manual planning, resource planning, and formula planning and to recognize when you will use each type of planning.
Note It is very important that the planning done in cost center planning lead to actionable items. If it is just a report spat out by the system and nobody does anything about it, then it is merely an academic exercise, carried out as a chore every month by accountants. Take action based on what you see.
In this section, you will learn about the key settings of manual cost center planning that can be used to plan statistical key figures, activity types, primary costs, secondary costs, budget planning, and so on. You can integrate manual planning with internal orders and PS as well. It is also possible to interface manual planning via the managers desktop. Even though managers desktop is primarily meant for administrative and organizational management tasks, you can use it to support manual planning functions in Controlling. You can customize the planning profiles and planning layouts per the managers requirements, which allows them to perform routine manual planning tasks directly from the managers desktop. Lets see how we can perform manual planning using primary costs as a simple example.
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Costing Variants Defining costing variants is the first step towards enabling you to plan at a level below the cost element. For example, if you want to track the cost at each cost center by material rather than by the cost element, you need to define a costing variant. You can follow the menu path IMG Controlling Cost center accounting Planning Manual Planning Detailed Planning of Primary Cost Elements Define Costing Variants, or use Transaction OKY4. Figure 5.17 shows a costing variant comprised of Costing Type and Valuation Variant. In our example, Costing Type has been chosen as Primary Cost Element, whereas the Valuation Variant is also chosen as Vltn-Primary Cost Element. These get defaulted and cannot be changed for Costing Variant PP. You can define a new costing variant to choose a different combination.
Figure 5.17 Define Costing Variant
Tip Dont create two costing variants with the same costing type and valuation variant because results of the detailed planning execution for one of the variants can override the other. It is recommended that you use different valuation variants to each costing variant that you save.
Valuation Variant This contains a strategy sequence for selecting prices from the material master. The menu path is IMG Controlling Cost center accounting Planning Manual Planning Detailed Planning of Primary Cost Elements Define Valuation Variants, and the Transaction is OKY8. Figure 5.18 shows you the valuation variants
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that can be selected for a costing variant. For our example, 013: Vltn-Primary Cost Elem has been selected.
Figure 5.18 Define Valuation Variant
By double-clicking on this, you will reach the screen shown in Figure 5.19 where you can maintain the Strategy Sequence in which the material price will be determined. The identified sequence is shown under Strategy Sequence, which is the sequence in which the system searches for prices in the accounting view of the material master.
Figure 5.19 Define Valuation Variant Details
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5.2
Now that you understand how you can set up an additional layer of reporting for cost center planning, lets take a look at resource planning, which can be used to support the cost center planning.
5.2.3
Resource Planning
Resource planning helps you carry out detailed planning by resources. This allows you to plan the cost elements from a resource perspective by identifying the quantity of resources consumed. You can maintain the price of the resources separately, which allows you to calculate the consumption value of the resources. Resource planning allows you to capture an activity whose origin is external rather than internal, which is used when you perform activity input planning. The posting in resource planning happens on the primary cost element. Price Table definition In this step, you need to either select the pricing table (that you want to use) or copy an existing table and modify it to define your own price table for resource planning. You can follow IMG Controlling Cost center accounting Planning Resource Planning Define Price Tables, or use Transaction KPRI. The following standard tables are available:
EE EE EE EE EE
132: Price per Cost Center 136: Price per Controlling Area 137: Price per Country/Region 138: Price per Company Code/Business Area 139: Price per Profit Center
After defining your table, you need to configure your access sequence (AS) for resource planning. Access Sequence Definition This allows you to search valid prices for each condition type. The menu path to follow is IMG Controlling Cost center accounting Planning Resource Planning Define Access Sequence. Figure 5.20 shows you the standard access sequence (AS) K001: Cost Center Resources that can be used for resource planning.
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Figure 5.20
Define Access Sequence
If you select K001 and click on Accesses, you reach the next screen shown in Figure 5.21. Lets look at the tables that can be used for entering the resources by cost centers:
EE EE EE
132: Price per Cost Center 137: Price per Country/Region 136: Price per Controlling Area
As you can see, the AS moves from more specific prices (By Cost Center) to general prices (By Controlling Area). The Exclusive indicator stops any further searching if the correct combination of resource per prices has been found.
Figure 5.21
Define Access and the Table Sequence
By selecting Table 132 and clicking on Fields you reach the screen shown in Figure 5.22. This identifies the parameters by which you can enter the resource prices. For our example, you can enter the resource prices by Controlling area, version, resource, and cost center.
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5.2
Figure 5.22
Identify the Fields and Tables
Condition Types Condition types control how you enter the prices of resources: an absolute amount, percentage, manually specified price, or derived from the material master. Each condition type requires you to maintain the AS that allows you to search the system per your requirements. The menu path is IMG Controlling Cost center accounting Planning Resource Planning Define Condition Types and the Transaction is KPR4. Figure 5.23 shows how to maintain the condition type for maintaining the resource prices. It ties the condition type (CEl..) CQ01 with access sequence (AcSq) K001.
Figure 5.23
Define Condition Types for Resource Prices
By selecting the condition type CQ01 and selecting Condition records, the popup shown in Figure 5.24 appears. Here you can need to choose an appropriate access from the AS. In our example, we chose Price per Cost Center.
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Figure 5.24
Choose the Access Sequence
On pressing Enter, you reach the next screen shown in Figure 5.25, where you will choose the Controlling Area US01. If you want, you can further narrow it down with Version and Fiscal Year. Application and Usage get defaulted as CQ and A, respectively, and cannot be changed.
Figure 5.25
Select the Controlling Area, Version, and Year
Upon pressing Enter, you can maintain the resource prices in the next screen as shown in Figure 5.26. Here you need to maintain the Resource, FrP (Fiscal Period from which the Price is effective), Cost Ctr (Relevant Cost Center), Amount, Curr. (Currency of resource price), and PrUn. (Price unit).
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5.2
Figure 5.26
Enter the Resource Name and Prices
Costing Sheets Costing sheets is the equivalent of the pricing procedure in purchasing and SD in cost center accounting. You specify the selected condition types you will be using and identify the sequence in which the condition types will be used for resource planning. The menu path is IMG Controlling Cost center accounting Planning Resource Planning Define Costing Sheets. The Transaction is KPRC. Figure 5.27 shows you the RES1: CO Resource Prices costing sheet.
Figure 5.27
Define Costing Sheets
By selecting RES1: CO Resource Prices and clicking on Costing Sheet Rows you will reach the next screen as shown in Figure 5.28 where you can choose the steps of Costing sheet Rows. Here the condition type Resource prices is maintained as shown earlier in the condition type definition.
Figure 5.28
Define Costing Sheet Rows
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Valuation Variant: You learned earlier about valuation variant in 5.2.2. In this step, you will learn to define the valuation variant from the resource planning perspective. Valuation variant essentially houses the costing sheets. This is where it all comes together as far as resource planning is concerned. Valuation variant determines the processing sequence of the costing sheets. You can follow this menu path IMG Controlling Cost center accounting Planning Resource Planning Define Valuation variants. The Transaction is KPR8. Figure 5.29 shows you the valuation variant for resource planning. The valuation variant needs to be defined by Controlling area. C.Analysis allows you to test whether your condition types are working properly. These should not be flagged in normal operations.
Figure 5.29
Define Valuation Variants
Assign Costing Sheets to Valuation Variants In this step, costing sheets are assigned to the valuation variant. The menu path is IMG Controlling Cost center accounting Planning Resource Planning Assign Costing Sheets To Valuation Variants. The Transaction is KPR8. Figure 5.30 shows how you can assign the costing sheet (Proc.) RES1 to the valuation variant (Var) 100.
Figure 5.30
Assign Costing Sheets to Valuation Variants
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5.2
5.2.4
Cost Center Budget Planning
Cost center accounting also allows you to set up your monthly budget by cost center. It allows you one more tool to plan in addition to primary cost planning and secondary cost planning. You can compare the actual values against the budgeted values and establish timely availability checks in case the budget is exceeded. This is where you will learn the process of budgeting from cost center accounting and the relevant settings that you will need to make to enable the budgeting process. The prerequisite to implementing budget planning is to create a budget profile. Budget Profile The budget profile allows you to establish the structure of budgeting in cost center accounting. The menu path to follow: IMG Controlling Cost center accounting Budget Management Define Budget Planning Profiles. The Transaction is OKF1. Figure 5.31 shows you the standard cost center budget profiles that are available. You can copy these to create your own profile that meets your unique requirements.
Figure 5.31
Define a Cost Center Budget Profile
Lets take a look at the COST00 by double-clicking on the profile. This takes you to the Figure 5.32 where you can maintain the properties for the budget profile.
Figure 5.32
Detailing a Cost Center Budget Profile
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Lets review these now:

EE
Time Frame Here you can maintain the budgeting analysis period in the Past and in the Future. You can also maintain the start period for the budgeting process. In addition, by flagging Annual Values and Period Value, you can indicate that you want to perform budgeting for the whole fiscal year and for the individual fiscal periods, respectively. Distribution Key This identifies how the values are distributed across the fiscal periods. The various options follow:
EE EE EE EE EE EE EE EE
EE
0: Manual distribution. 1: Equal distribution. 2: Distribution as before. 3: Distribution by percentage. 4: Distribute according value to following no-value periods. 5: Copy values to following no-value periods. 6: Carry forward single value. 7: Distribute according to number of days in period.
Decimal factors and Scaling factors control how the data will be shown when you output the data. After setting the budget profile, you can enter the cost center budgets using the transaction described next.
Entering Cost Center Budgets Here you can enter the budgets against the cost centers. The menu path SAP Menu Controlling Cost center accounting Planning Cost center budgets Change/Display. The Transaction is KPZ2/KPZ3. Figure 5.33 shows you the screen for entering the budget. You need to enter the Profile and Cost Center or Cost center group to enter your budget.
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5.2
Figure 5.33
Change Budget Planning
Figure 5.34 shows how you can enter the budget for Cost Center 10100, Controlling Area US01, and current year 2007 Period 1 as 10,000.00 USD.
Figure 5.34
Enter the Budget by Period and Cost Center
This can then be compared against the actual values, and you can monitor if the budget is within the limits.
5.2.5
Commitment and Funds Commitment
This allows you to enter commitments in Controlling that happen only via Financial Accounting. Funds commitment is used to reserve the budget in case you do not know how the actual transactions will happen and when, but you want to keep the budget as a reserve for forecasted revenues and expenses. Funds commitment
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can be used to reserve the budget for cost centers, internal orders, and projects. In this subsection, you will learn about the configuration setting of commitments and funds commitments. Figure 5.35 shows the process by which commitments and funds commitments are configured.
Activate Commitments and Funds Commitment (OK01)
Define Number Ranges (OK60)
Assigned
Define Document Types
Define Field Status Variant (FMU3)
Define Field Status Group (FMU5)
Assign
Assign Field Status Variant to Company Code (FMU5)
Assign
Assign
Define Field Selection String (FMU7)
Hide
Display
Optional
Required
Figure 5.35 Configuring Funds Commitment in Cost Center Accounting
Lets examine this process now. Activate Commitments Management In this step, you activate the commitments management in the Controlling area. You already learned how to activate components in Chapter 4, so we will not go into the details. The menu path IMG Controlling Cost center accounting
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5.2
Commitments and Funds Management Activate Commitments Management Activate Commitments Management in Controlling Area. The Transaction is OK01.
Define Number Ranges for Funds Commitment In this step, you define the number range for document types to be posted in funds commitment. The menu path is IMG Controlling Cost center accounting Commitments and Funds Management Define Number Ranges for Funds Commitment. The Transaction is OK60. Figure 5.36 shows you the screen for maintaining the number ranges for funds commitments documents. You need to click on Interval and then define the number ranges with the range of documents. The figure shows the number range (No.) 01 with the document numbers From number 0000000001 To number 0099999999.
Figure 5.36
Define Number Ranges for Funds Commitment
Document Types for Funds Commitment Now you need to define the attributes of document types. The menu path is IMG Controlling Cost center accounting Commitments and Funds Management Define Document Types for Funds Commitment. Figure 5.37 shows you the screen for maintaining the document types for funds commitment. This shows the broad heading of Document Types for Earmarked Funds.
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Figure 5.37
Define Document Types for Funds Commitment
The parameters for document types are:

EE
DT/ Doc. type description This identifies the document type with the document type description. Numb.. This identifies the number range that is assigned to the document type. FstG This is the field status group that is tied to the document type. Type This is the group key for the earmarked fund copying template. Work.. This will indicate what the posting time will be when you request it via workflow. Nega This indicates that only negative amounts are allowed in this document type.
EE
EE
EE
EE
EE
Field Status Variant In this step, you will define the field status variant. The field status variant, the field status group, and the field selection string allow you to control which fields are required, displayed, optional, or suppressed. You can follow this menu path
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5.2
for defining the field status variant: IMG Controlling Cost center accounting Commitments and Funds Management Field Control for Funds Commitment Define field status variant. You can also use Transaction FMU3. Figure 5.38 shows the field status variant FMRE that has been defined for funds reservations.
Figure 5.38
Define Field Status Variant
Assign Field Status Variant to Company Code Now you need to assign this to your company code. To do this you will need to follow this menu path: IMG Controlling Cost center accounting Commitments and Funds Management Field Control for Funds Commitment Assign field status variant to company code. Define Field Status Group This is the point at which you define the field status group. You will need to follow the menu path IMG Controlling Cost center accounting Commitments and Funds Management Field Control for Funds Commitment Define field status group, or use Transaction FMU5. Figure 5.39 shows the Field status group G001.
Figure 5.39
Define Field Status Group
Define Field Selection String Field selection string allows you to outline which fields will be hidden, display only, optional entry, or will be required entry. The menu path to follow is IMG Controlling Cost center accounting Commitments and Funds Management
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Field Control for Funds Commitment Define field selection string. The Transaction to be used is FMU7. Figure 5.40 shows you the screen for maintaining the Field sel. (field selection string) MITTELRESER: Funds Reservations.
Figure 5.40
Define Field Status String
By selecting MITTELRESER and then clicking on Maintain Field Status for Field Selection String, you will see the screen shown in Figure 5.41. In this screen, you can maintain the individual fields such as Fund as Opt. entry; whereas Funds Center is a Req. Entry.
Figure 5.41
Define the Field Status Selection String
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5.2
Assign Field Status String In this step, you assign the field status string to the field status variant and the field status group. The menu path is IMG Controlling Cost center accounting Commitments and Funds Management Field Control for Funds Commitment Assign field status string, and the Transaction is FMUN. Figure 5.42 shows you the screen where you can assign Field selctn string (field selection string) MITTELRESER to the Field Status Variant FMRE and Field Status group G001.
Figure 5.42
Assign Field Status String
5.2.6
Overhead Costing Sheets
Labor and material costs form one component of the overhead costs. Overhead costing is used to allocate the overhead. The basis of the overhead calculation is based on the primary cost elements that are classified as overhead costs. These costs can then be allocated by either percentage or quantity. Overhead costing can be allocated both on the plan data and actual values. Before you begin configuring the costing sheet, you need to define secondary overhead costing elements with the cost element type of 41. Define Costing Sheet As you learned earlier, the costing sheet pulls all the things together in one neat package. It integrates all the components of overhead costing. You can follow this menu path: IMG Controlling Cost center accounting Actual Costing Period End Closing Overhead Define Costing Sheets. Figure 5.43 shows how you can define a costing sheet for overhead costing. As you can see, Costing Sheets are identified in the right pane. You can, however, define the Costing sheet rows that have the all the details, including the base rate, overhead rate, and credit details by rows.
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Figure 5.43
Define Costing Sheets
If you select the costing sheet (Costin) A00000:Standard in the right pane and click on Costing sheet rows on the left pane, then you will reach the next screen shown in Figure 5.44. As you can see, basic Material cost and Material OH (material overhead) have been maintained. These options are then added to Wages and Salaries along with the Manufacturing OH (manufacturing overhead) to give you the Cost of goods manufactured. This when added with Administration OH and Sales OH gives you the Cost of goods sold.
Figure 5.44
Define Costing Sheet Rows
You can maintain each of these components separately by identifying which cost elements pertain to which type of calculation Base. You have to click on Base to maintain these, which will take you to next screen as shown Figure 5.45. This
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5.2
screen shows you the Calculation base of B000: Material. Here the range of Cost Elements 510000 and 510040 are maintained as pertaining to material costs.
Figure 5.45
Define Base
Clicking on Overhead rate (Figure 5.45) brings up the screen seen in Figure 5.46, which is where the overhead rates can be maintained.
Figure 5.46
Define Overhead Rate
The O/H rate C000: Material OH has been maintained as 25 % for Ovrhd type 1. You can maintain the following overhead types:
EE EE EE
1: Actual overhead rate. 2: Planned overhead rate. 3: Commitment overhead rate.
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If you click on Credit, you can maintain the Cost Element and Cost Center for the credit element in the costing sheet as shown in Figure 5.47. Here the Cost Elem. 840000 and Cost Center 30100 have been maintained for the Credit E01: Credit Material.
Figure 5.47
Define Credit in the Costing Sheet
5.2.7
Allocations
The allocation process in cost center accounting allows you to transfer costs across your organization according to predefined business rules. Allocations allow you to transfer costs collected in a cost center to receivers per a predefined rule and allow you to record costs as they occur. Then on the basis of business rules you can allocate them at period end to get an accurate picture.
Example If you treat finance as administrative overhead, then you will want to record the employee wages and salaries initially in the finance cost centers because it would be highly inefficient to record this transaction when it actually occurs. However, at month end, you need to allocate the costs to business units per predefined rule such as number of employees in each department or number of financial transactions recorded for each department.
Allocation methods simplify data entry and are easy to use because these rules are defined only once and then the allocations are run at month end. There are two types of allocations:
EE
Assessment, which is used in allocating primary and secondary costs in cost center accounting and activity-based costing
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5.2
EE
Distribution, which is used in allocating primary costs in cost center accounting
Table 5.2 highlights the difference between distribution and assessment allocation processes per important parameters. This will allow you to distinguish between these two processes.
Parameters Original Sender Cost Element Assessment Sender cost elements are assigned cumulatively and are not recorded in receivers. Controlling document contains the sender and receiver information. When you do not want to know the composition of costs. For example, you just want to know the overall administrative overhead applied and not the details such as the cost of writing paper, cost of cafeteria, and so on. Distribution Primary cost element is retained in the receiver.
Sender and Receiver Information Utility
Controlling documents line item has the sender and receiver information. This is important if you want the details pertaining to individual costs that make up the composition of the overhead. For example, when you are trying to understand what percentage was sales administration versus sales marketing, which added as an overhead to the sales.
Table 5.2 Difference Between Assessment and Distribution
5.2.8 Year-End Closing

Now you will learn how to carry forward commitments to the next fiscal year. During year end, you can carry forward commitment values from purchase requisitions, open purchase orders and contracts, and fund commitments. You can follow SAP Menu Accounting Controlling Cost center accounting Year End Closing Commitment Carryforward, or use Transaction KSCF. Figure 5.48 shows the selection parameters (Cost center range) for carrying forward commitments to the new fiscal year.
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Figure 5.48
Fiscal Year Carryforward of Commitment
After you execute this transaction, the commitment will show up in the period 1 of the new fiscal year. You can execute this in Test run before you run it for real. If you want to reverse the commitment carryforward, you can check the Reversal flag and execute the transaction. Lets move to profit center accounting now.
5.3
Profit center accounting (PCA) is primarily used for management-related reporting for internal purposes. It is primarily used for profit center reporting by either the cost of sales method or the period accounting method. Defining an organizational unit as a profit center entails that the unit is managed independently by a person who is responsible for the profit (revenue and costs) of the unit. There is always some confusion about the role of PCA and how it is different from other components such as profitability analysis and special purpose ledger. All these can be used to support profitability reporting, but they have different perspectives. The key differences are highlighted in Table 5.3.
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5.3
Parameters Focus Functional viewpoint Technology viewpoint
Profit Center Accounting Internal Responsibility and person focused Special case of special purpose ledger
Profitability Analysis External Market oriented
Special Purpose Ledger Can be both Primarily for accounting; not for reporting Very custom solution that can be used to enhance profit center accounting Can have its own account assignment objects
Based on a different concept altogether of characteristics and value fields Highly integrated. profitability segment is a key account assignment object
Integration with operative accounting
Separate and independent of account assignment objects
Table 5.3 Distinctions Among CO-PCA, CO-PA, and FI-SL
Figure 5.49 shows you the process for profit center accounting.
Master Data
Profit Center
Profit Center Dummy Group Profit Center
Materials
Assignment Monitor
PP & CO Production Orders Maintenance Orders
Projects
Cost Centers
Business Processes
Fixed Assets
Process Orders
Internal Orders
Sales Orders
Real Estate Object
Cost Object
Periodic Activities
Basic Settings
Number Ranges and Document Types
Choose Additional B/S and P&L
Period End Closing

Figure 5.49 Profit Center Accounting
Carryforward
Transferring Payables/ Receivables
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Lets start by learning about the profit center master data.
5.3.1
Profit Center Master Data
In this subsection, you will learn the key attributes of profit center and the process of creating a profit center. Create Profit Center Profit center represents the management-oriented organization unit that allows you to understand how costs and revenues are being managed within a responsibility area. The menu path is SAP Menu Accounting Enterprise Controlling Profit center accounting Master data Profit Center Individual Processing Create, and the Transaction is KE51. Figure 5.50 shows you the Basic data for profit center maintenance. Profit center is always created for a Controlling Area US01. You need to maintain the Name, Long Text, and Analysis Period. Initially, the Status will be Inactive: Create when you are first creating your profit center. You need to maintain the User Responsible, Person Respons., Department, and Profit Ctr Group. Profit center group should be the part that conceptually is similar to the standard cost center hierarchy.
Note With the introduction of the new GL, you can also maintain the Segment for a profit center.
Figure 5.50
Create Profit Center
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Profi tCenterAccounting
5.3
Clicking on the Indicators tab brings you to the screen shown in Figure 5.51.
Figure 5.51
Indicators within the Profit Center Master
Here you can check Lock Indicator if you do not want any postings to happen to this profit center. You can also maintain the Formula Planning Template (Form. Planning Temp.). If you click on the Company codes tab, you will see all the CoCd (company codes) assigned automatically to the profit center, which belong to the Controlling area as shown in Figure 5.52 You can choose to dis-associate some company codes from the profit center if desired.
Figure 5.52
Company Code Assignment
Address and Communication details can be maintained in their respective tabs. The History tab displays all the changes that you make in the profit center.
Create Profit Center Group You can create profit center groups to group similar profit centers that can then be used in various reporting tools. This allows you to create a hierarchical structure of profit centers. The process of creation is similar to the cost center group creation. The standard hierarchy of profit centers is a special case of profit center groups that contain all the profit centers of your organizations for a Controlling area. The 161
menu path to follow is SAP Menu Accounting Enterprise Controlling Profit center accounting Master data Profit Center Group Create. You can also use Transaction KCH1. Create Dummy Profit Center You need to create a dummy profit center in profit center accounting so that if the system does not find any assigned profit centers for some objects, it posts the dummy profit center. This allows you to post the financial data and keep that in sync. The menu path is IMG Enterprise Controlling Profit center accounting Master data Profit Center Create Dummy Profit Center, and the Transaction is KE59.
Tips E Do not use the dummy profit center as a dumping ground for your postings to be allocated later. It can create a major month-end close headache, and it is never advisable to run allocation cycles from the dummy profit center. E Dummy profit centers need to be thoroughly analyzed at month end and should be cleaned up every month. Otherwise, you will not get a true picture of your profitability by responsibility area.
Figure 5.53 shows how you can create a DUMMY profit center.
Figure 5.53
Define Dummy Profit Center
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5.3
This covers all of the crucial aspects of master data in profit center accounting.
5.3.2
Profit Center Master Data Assignment Monitor and Assignments
Because profit center is a statistical cost object, you need to assign it to a real cost object so that the posting flows to a profit center. Other than assignment, you do not need anything else to post data to profit center accounting. The moment you assign the profit center, the data will come from all over the place.
Note This assignment is an important event of discovery that allows you to understand how your organization is split up. It allows you to visualize your organization from the responsibility perspective at a granular level.
Assignment Monitor allows you to track and manage your assignments of profit center to other cost objects. The menu path is SAP Menu Accounting Enterprise Controlling Profit center accounting Master data Current Settings Assignment Monitor. The Transaction is 1KE4. Figure 5.54 shows you the Assignment Monitor. You can use this to find the cost centers that are not assigned to any profit center, cost centers that are assigned to profit centers, and profit centers that are not assigned to a cost center. You can do a similar exercise for all other cost objects.
Figure 5.54 Assignment Monitor (1KE4)
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Table 5.4 shows the transaction codes that allow you to assign profit centers to different cost objects.
Assignment of Profit Center to: Materials/Fast Assignment Materials/Master Sales Order/Substitution Sales Orders PP Production Orders Process Orders Controlling Production Orders Cost Objects Projects Cost Center Internal Orders Maintenance Order Business Processes Real Estate Objects Fixed Assets Transaction Code S_ALR_87003972 S_ALR_87004117 S_ALR_87004101 S_ALR_87004092 S_ALR_87004086 S_ALR_87004078 S_ALR_87004070 S_ALR_87004060 S_ALR_87004296 S_ALR_87004478 S_ALR_87004473 S_ALR_87004460 S_ALR_87004465 S_ALR_87004447 S_ALR_87004454
Table 5.4 Transaction Codes for Profit Center Assignments
In the next subsection, you will learn about the number ranges and document types for local documents that need to be created only in profit center accounting.
5.3.3 Number Ranges and Document Types

In this section, you will learn the menu paths and transaction codes for profit center planning and actual postings that need to be made only in profit center accounting. Table 5.5 shows you the menu path and transaction codes for creating number ranges and document types for profit center planning and recording actual profit center postings that occur only in profit center accounting.
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Area Profit Center Planning
Basic Setting Maintain document types for local documents Maintain document types for rollup Define number ranges for local documents Maintain number ranges for rollup Maintain document types for actual postings Maintain number ranges for local documents
Menu Path
IMG Enterprise Controlling Profit center accounting Planning Basic Settings for Planning Maintain Document Types Maintain Document Types for Local Documents IMG Enterprise Controlling Profit center accounting Planning Basic Settings for Planning Maintain Document Types Maintain Document Types for Rollup IMG Enterprise Controlling Profit center accounting Planning Basic Settings for Planning Maintain Document Types Define number ranges for Local Documents IMG Enterprise Controlling Profit center accounting Planning Basic Settings for Planning Maintain Document Types Maintain number ranges for Rollup IMG Enterprise Controlling Profit center accounting Actual Posting Basic Settings: Actual Maintain Document Types Maintain Document Types for Local Documents IMG Enterprise Controlling Profit center accounting Actual Posting Basic Settings: Actual Maintain Document Types Maintain number ranges for Local Documents
Trans.Code
GCBA
Profit Center Planning
GCBR
GB02
GL20
Profit Center Actual
GCBX
Profit Center Actual
GB02
Table 5.5 Defining Document Types and Number Ranges for Local Postings in Profit Center Accounting
In the next subsection, we will cover how you can map additional balance sheet and P&L accounts that cannot be mapped via a cost object to profit center accounting.
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5.3.4
Choose Additional Balance Sheets and P&L Accounts
The goal for profit center accounting is to map each and every account to a profit center to be able to generate balance sheets by profit centers. This requires that balance sheet accounts that do not have a cost object assigned to them, such as AP, AR, inventory, work in progress, and so on, also require a profit center to be defaulted to these. Using the configuration settings detailed here, you can maintain the default profit centers for a range of balance sheet accounts. You can follow the menu path IMG Enterprise Controlling Profit center accounting Actual Posting Choose Additional Balance Sheet and P&L account Choose Accounts. You can also use Transaction 3KEH. Figure 5.55 shows you the screen where you can maintain the range of accounts (Account from) 100000 and (Account to) 20000 and the default profit center (Def. PrCtr) 10101, which will get populated after you make this entry. This setting needs to be made for CO Area US01.
Figure 5.55
Choose Accounts
However, as you can see, that this is a very simplistic setting that might not be useful to organizations that have more complex rules for determining the profit center than just a direct GL assignment. You can use the derivation rules functionality to map the profit center in much more flexible fashion. The menu path IMG Enterprise Controlling Profit center accounting Actual Posting Choose Additional Balance Sheet and P&L account Derivation Rules for Finding the Profit Center, or use Transaction 3KEI. Figure 5.56 shows how you can set up default determination for the profit center. Based on your requirement, you need to identify the Source Fields as RACCT: Account Number and the Target Fields as PRCTR: profit Center. If you want, you can add more source fields to this to make the determination more specific such as company code, plant, and so on.
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Figure 5.56
Define a Derivation Rule for Profit Center Determination
After you define the source fields, you can maintain the conditions that must be fulfilled for the system to determine the profit center on the Condition tab as shown in Figure 5.57.
Figure 5.57
Define Condition for Derivation Rule
After defining the conditions, you can maintain the Attributes as shown in Figure 5.58 where you can Issue error message if no value found. You can also branch to additional steps if required.
Figure 5.58
Define Attributes for the Derivation Rule
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After you have set up the derivation rule, you can maintain the rule values by clicking on Maintain Rule Values button shown in Figure 5.56. This will allow you to enter the values for the profit center by the source fields as shown in Figure 5.59.
Figure 5.59
Maintain Rule Values for the Derivation Rule
5.3.5
Period-End Closing
If you have posted actual transactions in profit center accounting or have used additional accounts defined in Section 5.3.4, you need to carry forward the balances to the new fiscal year or new period within the same fiscal year. The menu path is SAP Menu Accounting Enterprise Controlling Profit center accounting Actual Posting Period End Closing Balance carryforward. The Transaction is 2KES. Figure 5.60 shows you the parameters for carrying forward actual balances in profit center accounting to the new fiscal year. You need to enter the Company Code and Carry Forward to Fiscal Year and then execute the transaction. This will carry forward all of the balances to the new fiscal year for the company code.
Figure 5.60
Balance Carryforward
The menu path is SAP Menu Accounting Enterprise Controlling Profit center accounting Actual Posting Period End Closing Transfer Payables/receivables, and the Transaction is 1KEK. Except for receivables and payables, all the transactions in profit center accounting are transferred in real time. However, you
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5.4
need to transfer payables and receivables periodically at the end of each period. This allows you to generate balance sheet on a profit center basis. Figure 5.61 shows you the screen that you can use to carryforward the payables and receivables to the profit center accounting for a fiscal period. You need to enter the Period and Fiscal year. The system automatically picks up all the company codes assigned to the Controlling area. You can choose to transfer all the Line items or just the balances.
Figure 5.61
Transfer Payables/Receivables
5.4
Internal Order Accounting
Figure 5.62 shows you the process that underpins the discussion in this section. Internal order accounting is primarily used for managing small projects that need to be budgeted and managed independently, for example, setting up a marketing kiosk in a cultural event. Internal orders is a general term that can be used for overhead cost orders, capital investment orders, internal orders with revenues, accrual orders, and so on. Internal order accounting allows you to plan, collect,
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and settle the costs associated with a mini project in a process-oriented fashion, so it mimics exactly the way business operates. You can, however, use internal orders for multiple Controlling-oriented activities as listed here:
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Orders for transient activities These are one-off mini projects that are not regular and occur for a limited timeframe, for example, sales kiosks at a SAP Financials conference. Long-term cost monitoring activities You can also set up long-term internal orders that occur at regular intervals and allow you to establish a pattern, such as quarterly maintenance activities. Statistical internal orders These are not true cost objects, and you cannot settle these to any other cost object. However, these allow you to track and report specific parameters of costs recorded. In this case, you need a real cost object, but you can use internal orders to provide an additional layer of reporting.
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Master Data
Internal Order Master
Order Group
Business Transactions
Order Types
Status Management
Settlement
Budgeting & Availability Control
Budget Profile
Tolerance Limits
Figure 5.62 Internal Order Learning path
5.4.1
Internal Order Master Data
Internal order master data is used to monitor the costs. Following are the types of internal orders with their business significance:
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Overhead cost orders used for monitoring overhead costs that are recorded during internal order execution Investment orders that you know will be later converted to fixed assets
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Accrual orders used to track the costs incurred on a periodic basis Orders with revenues used to record revenues in internal orders
Internal Order In this step, you will learn the key attributes of internal orders and the process of creating an internal order. The menu path to follow is SAP Menu Accounting Controlling Internal Orders Master data Order manager Special Functions Order Create/Change/Display, and the Transactions are KO04/KO01/KO02/ KO03. An internal order needs to be created by Controlling area. Figure 5.63 shows you the screen for maintaining internal orders by using an order manager transaction. To define an internal order, you have to define an Order type. The figure shows how you can maintain the Assignments along with the Description General Marketing Campaign.
Figure 5.63 Internal Order: Assignments
In the order manager transaction, you can find your internal orders by maintaining the Selection Variant in the left pane and maintaining your Personal worklist that allows you to maintain your own range of internal orders. The various assignments that can be maintained are Company Code, Business Area, Plant, Functional
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Area, Object Class, Profit Center, WBS Element, Sales Order, Tax Jurisdiction, and External Order no. Other fields that are not so obvious are explained here:
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Responsible CCtr (cost center) and Requesting Co. Code This is integrated with investment management, and the cost center and company code that you enter here will get transferred to the AuC. Requesting Order This is the order to which other orders can be assigned.
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Figure 5.64 shows you the screen for maintaining the Control data for an internal order. While you are creating, the internal order, system will automatically set the System status as CRTD. The system status essentially controls which transactions are allowed for the internal order.
Note From SAP ERP 5.0 onward, you can also define your User status, which you can change as desired.
Figure 5.64
Internal Order: Control Data
In addition, you can maintain the following Control data parameters:

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Currency Here you can maintain the currency for the internal order. Order category This helps you define the technical properties of an order type. You need to pick an order category that pertains to internal order accounting.
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Statistical order This flag marks the internal order as statistical. Actual posted CCtr If you mark the cost center as statistical, then you can also specify which cost center will receive the real postings. Plan-integrated order This flag is only checked if you are using integrated planning for internal orders. Revenue postings This flag controls whether the internal order will allow revenue postings.
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Figure 5.65 shows you the screen for maintaining the period-end closing activities. The following parameters can be maintained in this screen:
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Results Analysis Key This is used to define the valuation of the internal order. For sales orders, you can use results analysis to valuate nonvaluated stock at month end and the stock that has been delivered but not invoiced yet. For projects, you can use the results analysis key to valuate work in progress. Costing Sheet and Overhead Key These can be maintained for calculating the overhead, and the Interest Profile allows you to define the rules for calculating interest.
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Figure 5.65
Internal Order: Period-End Closing
You can also define one receiver for the internal order by identifying the settlement cost element, cost center, and GL account. Figure 5.66 shows you the screen of general data related to administrative details pertaining to internal orders, such as estimated costs, processing group, work start, end of work, and so on.
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Figure 5.66
Internal Order: General Data
Figure 5.67 shows you the Investments tab for maintaining the investment-related data for an investment order. Using this screen, you can tie the internal order to investment management, which will be discussed in more detail in Chapter 6. Here you can maintain the following parameters:
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Investment profile This allows you to automatically create an AuC when creating an internal order and can help you default the asset class for the AuC and the depreciation simulation. Scale This can be used to categorize your investments from the amount of capital required. Investment program/Position ID This allows you to define the investment program and position ID within the investment program to which the internal order should be assigned.
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You can define the Asset class and Capitalization date for assets that will be created from the settlement of this internal order.
Figure 5.67
Internal Order: Investments
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5.4
Now that you have learned to define an internal order, you will next learn about creating an order group. Create Order Group Order groups group together similar internal orders that allows you to perform reporting, settlement, and overhead calculation. The menu path is SAP Menu Accounting Controlling Internal Orders Master data Order Group Create/Change/Display. The Transactions are KOH1/KOH2/KOH3. Figure 5.68 shows how you can maintain an order group (SALES_MKTG) that has the orders pertaining to SALES and MARKETING. In the Marketing order group, the internal order 100000: General Marketing has been assigned.
Figure 5.68 Create Order Group
5.4.2
Create Order Type
Order types allow you to classify internal orders. This is one of the main configuration activities that you need to make for defining the types of internal orders, and it ties all the other components of internal order customizing settings together. Order types define the order category, number range assignments, and control indicators that allow you to control the partner update, order classification, settlement profile, planning profile, budgeting profile, and status management. You can follow IMG Controlling Internal Orders Order Master data Define Order Types, or use Transaction KOT2_OPA. An alternate menu path is SAP Menu Accounting Controlling Internal Orders Master data Current Settings Order Types, or Transaction S_ALR_87005266. Figure 5.69 shows you the different order types that come predefined in the system. You can copy these to create your own order type. The ones that we are more interested in for internal order accounting range from 0100 to 0400.
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Figure 5.69 Define Order Types
Order types need to be assigned to an order category that allows you to define the multitude of attributes for an order type. The following order categories can be defined for an order type that is relevant for internal order accounting:
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01 Internal Order (Controlling) 02 Accrual Calculation Order (Controlling) 03 Model Order (Controlling)
If you double-click on order type 0100: Internal orders: Development in Figure 5.69, you can maintain the characteristics of the order type as shown in Figure 5.70. You can maintain the following parameters:
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Number range interval Here you can choose the number range by clicking on the pencil icon. Settlement profile This allows you to define the parameters that can be used for controlling the settlement process of internal orders. You will learn more about the settlement process in subsequent sections. Planning profile/Execution profile/Budget profile This can be used to default the internal order planning, execution services, and budgeting parameters.
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5.4
Figure 5.70
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Order Type Configuration Details
Object Class This allows you to classify the cost objects as overhead, production, production, or profitability. CO Partner Update This allows you to reduce the number of totals records by setting the indicator as Semi-active or Not Active. Commit. Management This flag activates commitment management in Controlling for the internal order type. Revenue postings This allows you to post revenues. Integrated planning This flag activates integrated planning for the order type.
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Status Profile This allows you to choose an appropriate status profile for an order type. Release immediately If you check this indicator, then the internal order is released automatically. Master data display If you click on Field selection Change (pencil icon) you will reach the next screen shown in Figure 5.71. Here you can maintain how the various fields will look when you are trying to create an internal order. Using this setting, you can get rid of useless fields and make the most important fields a required entry (Req. entry).
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Figure 5.71
Field Selection by Order Type
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5.4
5.4.3
Status Management
An internal order goes through its lifecycle starting from CRTD, which you saw when you created the internal order. Status management allows you to control how the status will move from CRTD to other statuses. This allows you to control the business transactions that are allowed for an internal order at any given moment. After the order is created, you need to release the internal order for it to start receiving actual postings. This is done by setting the status as REL. When the order is in REL status, then most of the business transactions are allowed. After the internal order is done, you can mark it technically complete (TECO), which means that now you cannot perform actual postings on the internal order because the order has been completed. After you have settled the order, then you can mark it as settled and closed (SETC). This prohibits any further postings to the internal order. You can achieve all this by maintaining the status profile, which allows you to define a status profile, assign it to a user status, and then control the transactions based on the user status. As you learned earlier in Section 5.4.2, status profile is assigned to the order type, which is maintained in the internal order master. So lets discuss how to create a status profile. The menu path you can follow is IMG Controlling Internal Orders Order Master data Status Management Define Status Profiles. The Transaction is OK02. Figure 5.72 shows you the screen where you can maintain the status profiles. It is best to create your own status profile by copying an existing status profile.
Figure 5.72
Define Status Profile
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If you double-click on Status Profi.. 00000002: Internal Orders, then you will reach the next screen as shown in Figure 5.73. This has two statuses LKD: Locked and PLIM: Write Plan Line Items. The following parameters can be maintained:
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Status This is the status number that determines the sequence in which user statuses are determined. The lower the number, the earlier the status gets activated. The status numbers need to be arranged in an ascending order. Status/Short Text This is the identifier with the details for the status of the internal order as it completes its lifecycle. Init. St If you set this indicator, then the internal order will get created with this status initially. Lowest This lowest status number determines the status number that the next status should have. Highest This helps you in checking whether the old statuses can be deactivated after you have moved to a new status number. The system compares the new status number against the number in the field, and if it is less than that, then it deactivates the previous status. Posit This identifies the line in which the allowed status will get displayed. Priority This identifies the status display priority at a particular position.
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Figure 5.73
Define Status and Properties of Status
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If you double-click on LKD, you will reach the next screen shown in Figure 5.74.
Figure 5.74
Define Status Profile: Status= Locked
Here you can maintain which Business Transactions do not have any influence (No inu..), which are Allowed, which will give you a Warning, and which are Forbidden (Forbidd). So this is essentially the field status group for statuses. However, you can maintain the following subsequent actions for each business transaction:
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No acti This ensures that the transaction does not have any impact on the status. Set This ensures that if this transaction is executed on an internal order, then the corresponding status (LKD, PLIM, etc.) will be set up. Delete If you indicate this indicator for any business transaction, then the corresponding status to which the business transaction is tied is deleted.
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Figure 5.75 shows you the details of the PLIM.
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Figure 5.75
Define Status Profile: Status = Write Plan Line Items
This allows you to configure that if the Release business transaction occurs, then you can write plan line items because PLIM will become active.
Note Business transactions are tied to user status, which is tied to status profile, which is tied to order type, which needs to be maintained in the internal order master.
Now that you understand the integrated master data and business transaction mapping of internal orders, you will learn about the internal order settlement process.
5.4.4
Internal Order Settlement Process
The basic purpose of an internal order is to receive the costs during its life and then pass on these costs to one or more receivers as part of the settlement process. Fixed assets, cost centers, and profitability segments can be valid receivers for an internal order settlement. There are two types of settlements that are possible in an internal order:
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Settlement to one receiver This can be a straightforward settlement process based on the master data that is maintained in the internal order. Note that this functionality was not available prior to SAP ECC 5.0. Comprehensive settlement This follows the standard settlement process in which you can settle costs to multiple receivers with different distribution rules.
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In this section, you will also learn to maintain the settlement profiles that are again assigned to the order type, which is then assigned to the internal order master.
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5.4
The menu path is IMG Accounting Controlling Internal Orders Planning Manual Planning Maintain Settlement Maintain Settlement Profiles. Figure 5.76 shows you the screen for maintaining the Settlement profile: 50: Investment measure.
Figure 5.76
Define Settlement Profile
The settlement profile essentially controls the following aspects:

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Actual Costs/Cost of Sales You can choose to define whether the settlement needs to be done in full (To be Settled in Full), or whether the settlement is even allowed (Not for Settlement). Choosing Can Be Settled allows you to settle partially. Default values You can maintain the default values of the allocation structure, source structure, profitability transfer structure, and default object type. Valid Receivers Here you can specify the valid receiving objects that are not allowed and that are optional.
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Other Parameters Here you can specify the document type, the maximum number of distribution rules, and the archiving time before you archive the posted settlement documents. Indicators This lets you define the various indicators for the settlement profile.
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100%-validation: The system checks whether the cumulative percentage against all the receivers total to 100%. % Settlement: This allows you to use percentages in the settlement distribution rules. Equivalence numbers: You can use equivalence numbers (e.g., 2:3:3) to distribute the settlement amount to receivers. Amount settlement: This allows you to directly enter amounts to receivers. Variances to Costing-Based PA: This indicator allows you to transfer the variances to costing-based profitability analysis during the settlement process.
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5.4.5 Budgeting and Availability Control in Internal Order Accounting

You learned about the budgeting process in Chapter 4 where we discussed setting up an original budget and then updating the budget using budget supplements and returns. This makes up the current budget against which the system will check whether the actual postings have exceeded the budget. Lets now move on to learning about maintaining budget profiles and availability controls. Maintain Budget Profile A budget profile allows you to control whether availability control needs to be active and which budget values need to checked. For internal order accounting, the budget check happens against the current budget, whereas for PS, the check can be either against the current or released budget. You can follow IMG Accounting Controlling Internal Orders Budgeting and Availability control Maintain Budget profiles Maintain Budget Profile, or use Transaction OKOB.
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5.4
Figure 5.77
Maintain Budget Profile for Internal Order
Figure 5.77 shows you the screen for maintaining a budget profile. The following parameters can be maintained in a budget profile:
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Time Frame Here you can maintain the number of years you can go back in the Past and forward in the Future. The field Start allows you to specify how many years from the current year the budgeting process should start. Total values and Annual values allow you to plan/budget total and annual values, respectively. Program type budget This allows you to specify the program position. If you enter a program position here, then the internal order need to be assigned to one of the program positions for it to be relevant for budgeting. Activation Type This setting forms the core of the availability control by specifying the following activation types:
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0: Cannot be activated. 1: Automatic activation with budget allocation. 2: Background activation.
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Usage Here you can enter tolerance in % of Assigned to Budgeted value, which if exceeded will trigger the automatic background activation if option 1 was selected as the Activation Type. Overall This counts the overall budget rather than just the annual values. Object currency This forces the system to check the budget in the internal order currency. Budgeting currency You can specify your budgeting currency as the Controlling area currency, object currency, or transaction currency. Currency Translation: Overall Budget Here you can maintain the exchange rate type and the value date that will be used to translate the internal order transactions to compare against the budgeted value.
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After you have defined the availability control, you need to define the tolerance limits, which will tell the system what to do in case the budget is exceeded. Define Tolerance Levels for Availability Control Tolerance levels allow you to define the system checks that happen when the budget reaches a certain percentage. The menu path is IMG Accounting Controlling Internal Orders Budgeting and Availability control Define Tolerance Levels for Availability control. Figure 5.78 shows you the screen for maintaining the tolerance limits for availability control, which allows you to define the following parameters:
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COAr This identifies the Controlling area. Prof This represents the budget profile that was defined in the previous step. Tr. Grp The ++ signs indicate that all the transaction types are selected for defining the tolerance limits.
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Summary
5.5
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Act This identifies the action that needs to be taken on the basis of the three parameters:
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1: Warning. 2: Warning with mail to responsible person. 3: Error message.
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Usag. Here you can specify the tolerance levels, which if crossed, trigger the action identified in the previous step. Abs. Variance This allows you to specify the maximum permissible absolute variance beyond which the action will be triggered regardless of the usage percentage defined in Usag.
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Figure 5.78 Define Tolerance Limits for Availability Control
5.5
Summary
In this chapter, you were introduced to the basic methods of budgeting, such as cost center budgeting and internal order budgeting. Cost element accounting, cost center accounting, profit center accounting, and internal order accounting are typically the Controlling components that are easiest to implement and which also give you the maximum value out of implementing SAP ERP. This is because you can tailor your Controlling processes in more detail as you build on these to determine your optimal Controlling structure. In this chapter you also learned about setting up primary and secondary cost elements and cost element groups in cost element accounting. Then you were introduced to cost centers, cost center groups, cost center standard hierarchies, activity
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types and groups, statistical key figures, and groups and resources definition. These form the basis of performing cost center planning manually, and were followed by a detailed explanation of the resource planning concept in cost center accounting. These planning tools will get you rolling quickly to get your planning process ironed out. The various features and functionalities that make your planning exercise faster and more customized to your needs were also discussed. From learning about budgeting in cost center accounting to learning about cost center planning and implementing funds commitment, you gained an understanding of capturing future funds being locked up, providing you with an overall commitment exposure for your organization. You also learned about the overhead costing sheets that can be set up in cost center accounting to calculate the cost of goods manufactured. Cost center accounting was followed by profit center accounting where you learned about profit center, profit center group, and the assignment of profit centers to other cost objects. You also learned about some of the key settings that allow you to create a balance sheet by profit centers. We then proceeded to key period-end and fiscal year-end closing activities for profit center accounting. Internal order accounting allows you to track short-term projects that need to be capitalized or transferred to other cost objects. You learned about the internal order master and internal order group. This was followed by an explanation of order types and how this relates to status management and the settlement process in internal order accounting. Finally you learned about activating budgeting and availability control. In Chapter 6, you will learn about budgeting using investment management.
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Index
A
Account assignment, 109 assignment derivation, 259 Default, 116 Account Balances, 408 Account based CO-PA, 369 Account determination Extended, 113, 114 Accounting Cost center, 20, 80 Cost element, 20, 80 Accounting and audit perspective, 46 Accounts Receivable, 409 Activate account assignment elements, 227 actual cost component split, 362 functions, 229 multiyear budget execution, 232 Activity group, 277 Activity type, 132 Group, 133 Actual/Actual Comparison, 419, 422 Actual costing, 347 Actual costing/material ledger, 302, 303, 347, 429 Actual costing/material ledger information system, 429 Advantages of one global operating concern, 72 Advantages of regional operating concern, 72 Allocation cycle , 134 Alternative hierarchy, 239 Application of funds, 249 Appropriation requests, 208 Architecture of drilldown reporting, 437 ASAP methodology, 33 ASAP phases of an SAP implementation, 33 Assessment, 156 Asset, 96
Asset accounting, 100, 247, 414 Asset Balances, 414 Asset under construction (AuC), 96 Assign budget profile to program type, 207 Assign investment profile to model order, 216, 217 Assignment Monitor, 163 Assignment of organizational entity, 66 Assignment/RA key, 334 Assign operative objects to program type, 198 Assign orders to the position, 205 Attribute mix, 122 Auditor and regulator, 51 Authorization group, 239 Automatic posting, 116 Availability control, 186, 224 Availability control ledger, 280
B
Balance carryforward, 168 Balanced entry, 262 Balance sheet Additional, 166 Bank Accounting, 413 Base object cost estimate, 311 Best Practice, 67, 71, 72, 74, 75 Best Practices Installation Assistant, 42 Bill of Exchange Accounting, 413 Budget Integration, 106 carryforward, 297 Control System (BCS), 224 entry document, 267 planning, 224 profile, 145, 233 profile , 184 structure, 224 type, 265
457
Index
Budgeting, Availability control, 225 Building blocks Concept, 42 Business area, 116 Business Blueprint, 34, 71 Business configuration set, 44 Business Information Warehouse, 105 Business manager, 51 Business processes Order to cash, 18 Procure to pay, 18 Business requirements, 50 Business transactions, 388
C
Capital budgeting, 191 Carryforward budget and commitments for orders and projects, 220 Carryforward budget of old investment program, 220 Carryover, 262 Cash application, 101 Changes in values, 431 Characteristics, 378 Defining new, 379 Hierarchy, 383 Typical, 378 Value, 382 Check writing, 90 Choose accounts, 166 Choosing the optimal Controlling enterprise structure, 61 Close old approval year, 221 Closing open items, 297 Closing operations, 224, 225 Commitment, 147 Management, 89 Commitment carryforward, 297 Commitment item, 236, 238 In Controlling, 92 Commitment processor, 107 Commitments Activation, 148 Company code Definition, 66
Multiple, 67 Company code to Controlling area (N1 or 11), 66 Compensation management, 105, 106 Configure dynamic price change, 354 Configure the output type, 441 Consolidation, 431 Consolidation Information System, 432 Controlling, 49, 79, 247 Actual cost, 92 Assignment, 96 Basic concepts, 87 Business structure , 136 Collecting cost, 90 Commitments management, 89 Component, 80 Default account assignments, 107, 116 Document, 85, 342 Enterprise, 65 Functions, 20 Integration with Finance, 81 Integration with nonfinancial components, 81 Internal, 125 Level, 361 Map to HR structure, 104 Object, 88 Payroll integration, 103 Profitability Analysis (CO-PA), 368 Profit center, 65 Settlement, 90 Without real-time integration, 115 Controlling area, 64, 82, 135 Creation, 83 Parameters, 83 Valid fiscal year, 84 Controlling area and operating concern (11/N1), 68 Controlling area currency, 72, 316 Controlling area to operating concern (N1 or 11), 68 Controlling component (CO) reporting, 417 Controlling-Investment Management (CO-IM), 100, 192 Controlling objects Account assignment, 87 Controlling organizational entity, 62
458
Index
Controlling Overhead Cost Management (CO-OM), 100 Controlling-Profitability Analysis CO-PA, 63 Custom characteristics, 382 Enterprise structure, 372 Integrated view, 371 Tables, 375 Corporate governance, 55 Cost Actual, 326 Additive, 309, 315 Analysis, 302, 303 Breakdown, 304 Comparision, 304 Estimate, 318 Modified estimate, 306 Of goods manufactured, 304 Reasons for increase, 307 Target, 345 Work in process, 326 Cost accounting, 416 Cost center, 64, 127, 128 Allocation, 103 Budget planning, 145 center group, 130 center planning, 136 Cost center accounting, 119, 125, 145, 418 Default account assignment, 116 Integration with MM, 103 Cost Center Accounting Information System, 420 Cost centers standard hierarchy definition By department or by division, 74 Cost components, 307 split, 350, 361, 362 structure, 307 view, 308 Cost element, 121, 307 Category, 122 group, 123 Primary and secondary, 122 Secondary, 109 structure, 123 Cost element accounting, 119, 120, 418 Cost estimate Inventory, 320 Standard, 319
Costing Actual, 301, 359 Aspect, 302 run, 317 sequence, 305 sheet, 143, 144, 153 Costing based CO-PA, 368 Costing estimate Preliminary, 326 Costing variant, 137, 138, 311, 326 Defining, 328 Parameters, 312 Cost object, 92, 342 Hierarchy, 325 Cost object controlling, 301, 302, 303, 321 Capabilities, 321 Components, 322 Functions, 321 Integration, 323 Transient, 90 Cost planning, 94 Easy, 94 Manual, 94 Network, 94 for Intangible Goods and Services, 322 Create and Generate Form, 440 Create dummy profit center, 162 fund, 247 fund group, 248 investment program position, 200 profit center group, 161 report with Report Painter, 437 investment program definition, 199 positions within the investment program, 206 Cross application tool, 28 Cross company costing, 316 Currencies in Controlling, 72 Currency, 95, 351 Type, 95 User-definable, 95 Current Settings, 430 Customer Balances, 409 Customer Line Items, 409
459
Index
D
Day-to-Day Activities, 416 Define a new variant, 434 characteristic values in columns, 439 characteristic values in rows, 439 costing sheet, 154 costing variant, 137 funds management fund type, 249 material ledger type, 352 new material ledger type, 352 order type, 176 program type, 196 Report, 430 settlement profile, 183 status profile, 260 tolerance profile, 279 value fields, 398 Deletion allowed, 334 Depreciation forecast, 416 Detailed Reports, 427, 429 For Base Planning Object, 426 For Material, 426 For Sales Order Cost Estimate and Order BOM Cost Estimate, 426 Display Line Item List, 430 Distribution, 157, 262 Document, 408 Document display, 418 Document type, 164 Document types For funds commitment, 149 Drilldown reporting in SAP ERP Financials, 436 Dummy profit center, 162
Evolution from ASAP to ValueSAP to Solution Manager, 32 Exchange rate difference, 347 Execution service, 94 Explanations for P&L, 414
F
Field selection string , 150 Field status group, 150 Defining , 151 Field status string Assign , 153 Field status variant, 150 Final Preparation, 34 Finance document, 110 Financial Accounting, 55, 65, 341 Requirements, 338 reporting, 407 Financial Analytics, 56 Financial and Management Reporting, 406 Financial information user, 52 Financial operations, 52 Financial Planning, Budgeting, and Forecasting, 406 Financial statements (Balance Sheet, Cash Flow Statements and Profit), 407, 433 Financial Supply Chain Management (FSCM), 53, 55 Fiscal year New, 157 Fiscal year change for Investment Management, 218 Fiscal year variant, 67, 233 FMSA, 241 Former budgeting, 224 Functional area, 122, 253 Fund, 227, 246 Fund balance carryforward, 297 Funded program, 250 Fund profile, 233 Funds center, 241 Funds commitment, 119, 147 Document, 149 Funds Management, 89, 100, 107, 223, 224 An introduction, 224
E
eCATT procedure, 43 Enhancing an existing SAP ERP implementation, 29 Enterprise Service Repository, 27 Equipment master, 100 Evaluation, 412
460
Index
Availability control (AVC), 274 Basic settings, 225, 227 Budgeting, 261 Closing operations, 295 Integration/actual and commitment update,287 Master data, 235 Optimizing public sector budgeting, 223 Process, 224 Further Reporting Functions, 431
G
General ledger (GL), 407 Account, 109 Financials, 103 New, 81, 107 Account, 339 Accounts, 369 General Ledger Information System, 408 Generate line items, 334 Global enterprise structure, 118 Global functions for BCS, 230 Go-Live & Support, 34 Goods receipt, 91 Grants management, 225
Interactive Reporting, 423 Internal order, 118, 171 accounting, 119, 169, 421 lifecycle, 119 settlement process, 182 Internal Order Information System, 421, 422 Inventory costing needs, 347 Inventory requirement, 306 Investment Management, 192 Investment profile, 214 Investment program, 194 Master data, 195 Budgeting, 206 Investment program budget carryforward, 221 Invoice Creation, 91 verification, 91
K
Key Controlling mapping decisions and best practices, 71 Key requirements for the SAP ERP Financials solution, 49
H
HCM Payroll Integration with Controlling, 103 Hierarchy variant, 243 History, 417 How this book is organized, 18 Human resources, 247
L
Ledger Reconciliation, 107 Legacy data transfer, 334 Line Item Reports, 424 Line Items, 408, 420, 422, 428 List-Oriented Reports, 423 Long-term cost monitoring activities, 170
I
IBM Websphere, 27 Implementation, 37 Individual Asset, 414 Inheritance principal, 69 Integration perspective, 46
M
Maintain Table TVARC with appropriate variables, 435 Maintenance order, 98 Management accounting, 55
461
Index
Management reporting, 79 Structure and setup, 118 Improving, 81 perspective, 45 Margin analysis, 101 Structuring, 102 Master data, 225, 409, 411 Cost element, 120 Internal order, 170 Objects relevant for Plant Maintenance, 97 Profit center, 160, 163 Master Data Indexes, 418, 420, 422 Material ledger, 347, 353, 356, 362 Activation, 350 Configuration, 350 document, 353 Material master, 137, 317, 343, 363 Price update, 317 View, 317 Materials Management Integration with general ledger, 103 Materials requirement planning, 93 Material update structure, 356, 358, 359 Message type, 319 Microsoft .NET, 27 More Reports, 421, 423, 427, 430 Movement type, 357 Movement type group, 357
Object currency, 72 Object list, 427, 429 Object list for base planning object, 425 Object list For material, 425 Objects Statistical controlling, 88 True controlling, 88 One Controlling area versus multiple controlling areas by region, 73 One operating concern versus multiple operating concerns by region, 71 Open a new approval year for the investment program, 218, 219 Operating concern, 62, 68, 372, 375 Maintaining attributes, 372 Maintaining characteristics, 378 Profitability segment characteristics, 373 Defining, 372 Operations, 37 Optimization, 38 Orders for transient activity, 170 Order type, 100 Organization management, 104 Organization units assignment, 202 Overhead cost and ABC analytics, 406 Overview, 418
P N
New GL Allocation functions, 110 Integration with Controlling, 110 New implementation, 31 Notes to financial statements, 414 Number range, 164, 269 Payment advice notes, 413 Payment behavior analytics, 406 Payroll, 105 Personnel cost plan, 105 Period-end closing, 168 Personnel administration, 105 Personnel budget plan management, 107 Personnel cost plan, 104, 105, 106 Process flow, 105 Plan/actual comparisons, 418, 421 Plan costs/preliminary cost estimate, 337 Planning reports, 419, 422 Plant maintenance Activities, 98 Order, 98 Order lifecycle, 98
O
Object comparisons, 427 Object comparisons for material, 427 Object Comparisons for unit cost estimate, 427
462
Index
Plant notifications, 98 Plan values , 136 Position budgeting and control, 106 Procurement process, 90 Preferred roadmap, 28 Preparation for closing, 416 Price change, 354 Price difference, 347 Price floor, 301 Prices, 420 Primary cost elements, 121 Procurement Actuals flow, 92 Product and service cost analytics, 406 Product cost by order, 322 Product cost by period, 322, 325 Product cost by period, by order, and by salesorder, 427 Product cost by sales order, 322 Product cost collector, 326 Product cost controlling, 301, 305 Key components, 302 Product costing, 80, 301, 324 By period, 325 Product costing by period and by sales order, 428 Product cost planning, 302, 303, 326, 425 Component, 306 Implementation rationale, 304 Integration, 304 Production order, 343 Production planning, 103 Master data, 303 Production support, 29 Production variance, 399 Profitability analysis, 101, 102, 372, 406 Optimization, 367 Type, 368 Profitability analysis, 430 Master data components, 373 Profit center, 65, 88, 161 Hierarchies, 74, 119 Profit center accounting, 118, 119, 158, 159, 341, 370, 423 Process, 159 reporting, 424
Project preparation, 34 PSM-FM, 223 Purchase requisition, 90, 92
Q
Quantity structure, 360
R
Realization, 34 Reconciliation document Controlling-Financials, 113 Reconciliation ledger Activation, 108 Functions, 108 Structure, 108 Relationship of company code and Controlling area, 67 Reporting Controlling, 80 External, 367 For internal purposes, 158 Management, 62 Reporting in Financials and Controlling, 403 Reporting in SAP ERP Financials and Controlling, 404 Requisition Purchase, 91 Resource planning, 139 Resources, 135 Results analysis, 87 Results of the opening of the new fiscal year, 219 Revenue budgeting, 191 Roadmap, 26 Role of SAP ERP Controlling consultants in SAP ERP implementation, 44
S
Sales and Operation Planning (SOP), 103 Sales inquiry , 101
463
Index
Sales quantity, 103 SAP Advanced Planning and Optimization (APO), 93 SAP BI Accelerator, 27 SAP CRM (Customer Relationship Management), 27 SAP Easy Access Interface, 56 SAP Easy Access for SAP ERP Financials Controlling components, 56 SAP ERP, 27, 49 Architecture, 19 As an integrated application, 101 Budgeting tools, 192 Core organization structure, 62 Enterprise structure, 20, 61 Organizational structure, 61 5.0 , 79 2005, ECC version 6.0, 17 Controlling roadmap, 58 SAP ERP Financials, 20 A snapshot view, 54 History, 52 Need for optimization, 18 Solution stack, 54 SAP ERP Financials direction A historical perspective, 52 reports, 407 solution stack,54 implementation, 25 implementation reasons, 25 landscape, 27 solution landscape, 27 Solution Map, 405 solution stack, 28 SAP executive search, 27 SAP implementation methodology, 32 SAP Plant Maintenance (PM), 97 SAP PLM (Product Lifecycle Management), 27 SAP Project Systems (PS), 93 SAP R/3 Financials system, 52 SAP Sales and Distribution (SD) , 101 SAP SRM (Supplier Relationship Management), 27 SAP Supply Chain Management (SCM), 27, 93 Sarbanes-Oxley Act, 53
Senior management, 50 Settlement process, 90 Shared services, 52 Shareholder, 51 Shop floor control, 93 Solution Manager Managing SAP implementation, 35 Solution Manager and interaction with helpdesk, 38 Solution Manager process, 36 Special Functions, 425 Specific Valuations, 416 Specify characteristic values, 440 Specify report options, 442 Speed up the data transfer, 391 Split creation/usage, 334 Stakeholders for finance, 50 Standard cost estimate, 337 Standard hierarchy versus alternative hierarchy, 70 Standard price , 303 Standard Reports, 431 Standard system, 356 Statistical cost objects, 88 Statistical internal orders, 170 Statistical key figure, 134 Defining , 134 Group, 134 Status control, 335 Status management, 179, 260 Status profile, 233 Subdivision ID, 254 Summarization Analysis, 425, 427 Summarization Reports, 423 Summary, 47, 60, 75, 443 Supplement, 262 Supply chain Planning process, 93
T
Target/actual comparison, 419 Target cost, 336 Taxes, 416 Time dependency of enterprise organizations, 71
464
Index
Tip, 412 Tolerance limits, 186 Tolerance profile, 278 Tools, 409, 410, 411, 417 Training and Event Management, 105 Transaction currency, 73 Transfer, 262 Transfer control, 328 Transfer document, 115 Types of SAP implementation, 29
Value fields, 379 Key characteristics, 379 ValueSAP implementation approach, 35 Variables in reporting, 435 Variance Calculation data, 87, 342 key, 343 Variant, 111, 432 Define for real-time integration, 111 Variants and variables in reporting, 432 Vendor balances, 410 Vendor items, 411
U
Unit product, 301 Update plan values, 335 Update/RA key, 334 Upgrading SAP ERP to a new version, 30 User experience, 27 Using SAP Best Practices solution, 40
W
Working capital and cash flow management, 406 Work in process, 341
V
Valuation area, 116 method, 336 variant, 137, 144
Y
Year-dependent master data, 235
465

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Shivesh Sharma

Optimize Your SAP ERP Financials Controlling Implementation

PART I Foundation 1 SAP ERP Implementation ........................................................... 25

SAP ERP Controlling Roadmap ....................................................... 58 Summary ....................................................................................... 60

Choosing the Optimal Controlling Enterprise Structure ............ 61

PART II Basic Controlling Processes 4 Controlling Business View ......................................................... 79

Using Funds Management to Optimize Public Sector Budgeting ................................................................................. 223

10 Reporting in Financials and Controlling .................................... 403

11 Concluding Remarks .................................................................. 445

Appendices ...................................................................................... 447

Optimizing Cost Element Accounting

Cost Element Accounting

Primary Cost Element

Secondary Cost Element

Cost Element Group

Master Data Cost Center Accounting

Commitment Allocations & Funds Management

Year End Closing

Profit Center Accounting

Assignments of Profit Centers

Internal Order Accounting

Budgeting & Availability Control

Figure 5.1 Basic Controlling Processes

Cost Element Accounting

Types of Cost Elements

Changing a Cost Element

The other options seen on this screen are described here:

Defining Default Account Assignment for Cost Element

Cost Element Group

Changing an Existing Cost Element Group

Cost Center Accounting

Cost Center Accounting

Table 5.1 Types of Responsibility Areas

Optimizing Cost Element Accounting

Cost Center Group

Cost Center Standard Hierarchy

Activity Type & Group

Statistical Key Figures & Group

Commitment and Funds Commitments

Costing Sheet Components

Year End Closing

Figure 5.6 Cost Center Accounting

Cost Center Accounting Master Data

Entering Basic Data in Cost Center Master Data

Optimizing Cost Element Accounting

Control Parameters for Cost Center Master Data

Cost Center Templates

Figure 5.10 Cost Center Group

Figure 5.11 Maintaining the Standard Hierarchy of Cost Center

Optimizing Cost Element Accounting

Figure 5.12 Create Activity type

Figure 5.13 Defining the Activity Type Group

Figure 5.14 Display Statistical Key Figure

Figure 5.15 Create Statistical Key Figure Group

Figure 5.16 Create Resources

Optimizing Cost Element Accounting

Cost Center Planning

Figure 5.17 Define Costing Variant

Figure 5.18 Define Valuation Variant

Figure 5.19 Define Valuation Variant Details