Reconciliation Ledger and Functional area in CO-OM-CEL Cost Element Accounting (CO-OM-CEL)

Use Cost Element Accounting is the area of cost accounting where you track and structure the costs incurred during a settlement period. It is thus not an accounting system as such, but rather a detailed recording of data that forms the basis for cost accounting. Integration In an integrated accounting system such as the SAP system, you do not need to enter cost data separately. This is because each business transaction that involves costs updates the CO component with detailed information on the cost element and on the account assignment object itself. Each consumption transaction in Material Management (MM), each billing in Sales and Distribution (SD) (= revenue), and each external transaction for invoice verification flows directly through the G/L Account (= cost element) to the corresponding account assignment object. Features You can restrict the entry of cost data to part of the valuation differences and additional costs. While you can transfer depreciation costs from Asset Accounting for the depreciation of fixed assets, for example, you must use accrual calculation in cost accounting for management income. Cost accounting in the system also has the task of identifying the costs incurred in subareas of the company and tracing the cost flows. The system provides complete information on the costs for all types of account assignment objects (such as cost centers, orders, and projects). For cross-company-code or cross-business-area cost accounting, the cost flow in Controlling may require reconciliation between internal and external accounting. The necessary reconciliation is also one of the tasks of Cost and Revenue Element Accounting. If you are using new general ledger accounting and real-time integration, you do not need to have a reconciliation ledger. General Ledger Accounting is then always reconciled with Controlling.

Reconciliation Ledger
Definition The reconciliation ledger is a tool used to portray transaction figures in Controlling in a summarized form. Use The reconciliation ledger has the following tasks: It reconciles Controlling with Financial Accounting.

If you use New General Ledger Accounting and real-time integration, you do not need to have a reconciliation ledger. General Ledger Accounting is then always reconciled with Controlling. It provides reports with which you can monitor the CO/FI reconciliation for each account. It can show value flows that were posted in Controlling across company codes, functional areas, or business areas. This value flow can be used in Financial Accounting as the basis for summarized clearing entries. Clearing entries represent value flows within Controlling that have an effect on the legal closing of an organization (balance sheet, profit and loss account). You can either enter the clearing entries using the values determined or let the system execute them automatically. It provides an overview of all the costs incurred. The reconciliation ledger reports provide an overview of the costs and are thus a suitable starting point for analysis. For example, in the reconciliation ledger reports you can analyze an item of the Profit and Loss Account, which is displayed in the Financial Information System (FIS), to see the costs assigned. For detailed analysis, you can use the reconciliation ledger reports to call up reports from other CO components.

Reconciliation Ledger and Functional area in CO-OM-CEL

Reconciliation Ledger Structure

Use The reconciliation ledger portrays a summarization of CO data, so all CO documents that are created by internal and external postings. This contains information about data flows: Which business transaction causes the data flow? Between which object type, object classes (see: Object Type and Object Class) Between which company codes, business areas, functional areas (see: Functional Area) The system summarizes information about which costs were incurred on which objects (cost centers, orders and so on). It also summarizes data for objects of the same object type, company code, business area, object class, and functional area. Postings in the reconciliation ledger are differentiated according to the following criteria: Company Code Business area Functional area Origin (subdivision of the cost element) Object type (cost center, internal order, project, and so on) Object Class The system stores in the reconciliation ledger all sender and receiver information from the affected documents for value flows occurring in Controlling (due to reposting, internal activity allocation, assessment, distribution, and so on). You can use the reconciliation ledger to evaluate the amounts crossing company code and business area borders. Profit centers are only recorded statistically in CO. The system therefore does not record value flows between profit centers in the reconciliation ledger. In addition, the system updates records according to the posted business transaction and according to debit and credit records. It also updates three currency amounts each time (controlling area currency, company code currency, and group currency) as well as a quantity. The following graphic shows the most important fields in the reconciliation ledger structure:

Data is summarized from the object (such as the Cafeteria cost center) via the object type through to the Account.

Reconciliation Ledger and Functional area in CO-OM-CEL

The system stores in the reconciliation ledger in summarized form all actual data from the CO application component, that is, all CO line items for actual data (Value Type 04) in Version 0. You should consider the following when allocating company codes to Profitability Analysis: Costing-based Profitability Analysis is active. When cost centers are allocated to Profitability Analysis, the system makes a posting to a reconciliation object in Profitability Analysis. In the reconciliation ledger, the "Reconciliation object" object type is used for updates. Accounting-based Profitability Analysis is active. When cost centers are allocated to Profitability Analysis, the system makes a posting to a reconciliation object in Profitability Analysis. In the reconciliation ledger, the "Profitability segment" object type is used for updates. Both account-based and costing-based Profitability Analysis components are active. When cost centers are allocated to Profitability Analysis, the system makes a posting to a reconciliation object in Profitability Analysis. In the reconciliation ledger, the "Profitability segment" object type is used for updates. Auxiliary account assignments from Financial Accounting to Costing-Based Profitability Analysis are entered using a reconciliation object. The graphic below shows how data is summarized.

You can evaluate data using the information system. You activate the reconciliation ledger in the controlling area data, which is not fiscal year dependent.

Posting In The Reconciliation Ledger If the reconciliation ledger is active, the system posts the following CO documents (value type 04 only) to this ledger: CO documents that are posted for CO internal postings, for example, assessments or distributions CO documents that are posted using the CO interface, from FI to CO Statistical postings, splits and planning data are not posted in the reconciliation ledger When documents are posted in the reconciliation ledger, the system only updates totals records, but not line items. The system only writes line items at the end of a period for the CO-FI reconciliation posting. These line items represent the source documents for the reconciliation documents that are created in FI (see also: Posting Logic in The Reconciliation Ledger)

Reconciliation Ledger and Functional area in CO-OM-CEL

Example For The Reconciliation Ledger Structure In CO-OM-CCA an activity is allocated internally from administrative cost center one, company code one to production cost center one, company code two. The activity type to be allocated is AHR (admin hours) 200 AHR are allocated, valuated at 50 USD/AHR. The corresponding record in the reconciliation ledger contains the following information. Which business transaction triggered the posting? RKL Internal activity allocation Which quantities and values were allocated? 200 AHR and 200 AHR x $50/AHR = $10,000 To which cost elements or accounts are these quantities and values posted? 613 000 Internal activity allocation To which organizational units (company code, controlling area) and object classes do the sender and receiver belong? Cost center one: Company code one, object class GKOST Cost center two: Company code two, object class GKOST To which object type do the sender and receiver belong? Cost center one: Cost center Cost center two: Cost center To which functional area do the sender and receiver belong? Cost center one: Administration Cost center two: Production

Functional Areas
Definition Functional areas break down corporate expenditure into different functions, in line with the requirements of Cost of Sales Accounting. These functions are: Production Administration Sales and Distribution Marketing Research and development Integration You can enter the functional area in the master data of the following objects: G/L accounts/primary cost elements Secondary cost elements Cost centers Orders WBS elements Networks Activities For primary and secondary postings, the functional area is derived according to fixed rules (see Deriving Functional Areas) and is included in FI or CO documents and in the totals tables of the reconciliation ledger and Profit Center Accounting.

Deriving Functional Areas

Use During cost of sales accounting corporate expenditure is broken down according to functional area. Integration From a business perspective, allocations between Controlling (CO) objects can involve a change of functional area. This then causes the affected items to be moved in the profit and loss statement (P&L). Therefore, this business transaction needs to be posted back to FI as a reconciliation posting.

Reconciliation Ledger and Functional area in CO-OM-CEL

All allocations in CO are logged by the reconciliation ledger. The reconciliation ledger also displays the differences between functional area balances in FI and CO, which were created due to CO internal postings where an FI-relevant account assignment was changed (company code, business area, or functional area). At the end of the period you can generate adjustment postings for FI using the data in the reconciliation ledger. The postings lead to credits and debits for the relevant functional areas. Once these postings have been made, you can then draw up a reconciled profit and loss statement. Features The system derives the functional area for both primary postings (FI postings) and secondary postings (allocations within the controlling area) using a three stage method. For postings internal to CO, the functional area is derived for both the objects involved in the allocation. 1. The system checks whether a functional area is entered in the master data of the CO object to which the posting is made, and uses this functional area if entered. 2. The system checks whether a functional area is entered in the master data of the G/L account or cost element, and uses this functional area if entered. The functional area belonging to the G/L account or cost element takes precedence over any functional area derived from the master data of the CO object. 3. The system derived the functional area using substitution from the account assignment elements that already exist in the document. Activities You define functional areas in Customizing under the settings for cost of sales accounting. In Customizing, choose Financial Accounting Financial Accounting Global Settings Company Code Cost of Sales Accounting.

Object Class
Definition The object class is used to classify controlling objects such as cost centers, orders, and cost objects, and to display the cost flows within CO from a business perspective. Structure

Reconciliation Ledger and Functional area in CO-OM-CEL

The following object classes are defined by SAP: Overhead costs (GKOST) Investments (INVST) Production (FERTG) Profit and sales (ERGEB) The assignment of the cost center, cost object, sales order, and profitability segment to an object class is fixed by SAP, but you can assign other objects as you require. The table below shows an overview of the objects in CO with fixed assignments, and the objects that can be freely assigned. If you do not assign an object, then the default setting applies.

The objects not assigned to an object class can be assigned in the respective master data records. For example, in each set of master data, you can assign orders in the general parameters to control the object class. You assign a cost object to an object class regardless of its cost object type. Assignments between cost object and object class is predefined according to cost object type. The following assignments apply: Cost Object Type 01 Cost object hierarchy 02 General cost objects 03 Product group Object Class FERTG GKOST FERTG

Reconciliation Ledger and Functional area in CO-OM-CEL

Note that once you make an assignment, you cannot change it if transaction data for an object already exists. Subsequent changes to the assignment can cause inconsistencies in the reconciliation ledger. Period-End Closing Once all postings for CO period-end closing are completed, and thus all allocations have been made, the following situations should apply: Cost centers and internal orders are completely credited Objects in the Investment" class are still debited with values for works under construction Objects in the "Production" class display "Work in Process" (WIP) Objects in the "Profit" class display the operating profit. The requirements are listed in the table below:

Use The object class is used in the following applications: Cost Element Accounting As a characteristic in the information system for the Cost Elements: Object Classes in Columns report. As selection criteria for the definition of rules for account determination Profit Center Accounting In Profit Center Accounting, the system updates the object class in the transaction data if the corresponding posting contains the object class. You can use the object class as a characteristic in the information system.

Object Type
Definition The object type is a piece of technical information. It tells you what type of account assignment objects are posted. For example, all postings to a cost center or cost center/activity type are updated in the reconciliation ledger under the object type "Cost Center". Structure The object types below are recorded in the reconciliation ledger. Cost center Network Order Reconciliation object

Reconciliation Ledger and Functional area in CO-OM-CEL

Business process Cost object Work breakdown structure element Sales document item

The object type is used in the information system. It is needed for line item identification and for going to reconciliation ledger reports from the information systems of the different CO applications (Cost Center Accounting or Overhead Orders, for example).

Working in Cost Element Accounting

The following section describes how Cost Element Accounting is structured in the Controlling (CO) component. It also describes the sequence of IMG activities you need to carry out to use the reconciliation ledger effectively. You need to carry out further activities in Cost Element Accounting as well as the preparatory IMG activities for this.

If you use New General Ledger Accounting and real-time integration, you do not need to have a reconciliation ledger. General Ledger Accounting is then always reconciled with Controlling.

Preparatory IMG Activities

Purpose To make full use of the reconciliation ledger functions you need to process some preparatory IMG activities: Process Flow ... 1. Configure Cost Element Accounting using the Implementation Guide (IMG). ... a. Reconciliation ledgers, activating The reconciliation ledger is updated online for all CO postings (see the IMG for Cost Element Accounting under Reconciliation Ledger Activate Reconciliation Ledger)

In the basic data for maintaining controlling areas, you can only display this indicator. This is because a deactivation with subsequent activation could cause data inconsistencies. Any CO data that you post during the deactivation phase is not transferred to the reconciliation ledger. This data is not included during a CO-FI reconciliation. b. Choose a document type for the reconciliation ledger You can store a document type for the reconciliation ledger in the basic data of the controlling area. The document type determines which document number interval is used for the FI documents. If you did not store a document type in the controlling area, you need to make an entry during the reconciliation posting under Extras Posting parameters. c. Maintain expense accounts. For expense accounts, to which reconciliation postings are to be assigned, you must select Posting without tax allowed in the master record of the account.

Reconciliation Ledger and Functional area in CO-OM-CEL

d. Create adjustment accounts in Financial Accounting (FI). These adjustment accounts must be profit and loss accounts (see Defining Adjustment Accounts). e. Maintain account determination To be able to make reconciliation postings in the FI component, you must define the adjustment accounts for secondary cost elements (see Account Determination). Configure Cost Center Accounting (CO-OM-CCA) using the IMG. Configure any other CO applications you require

2. 3.

To configure the various CO applications, see the information in the appropriate Implementation Guide (IMG). 4. Make postings to the CO applications and to external systems. 5. Follow-up postings for the reconciliation ledger may be necessary and can be made at any time for a period interval. (see Follow-Up Postings to the Reconciliation Ledger) . You can create cost elements in the menus for Cost and Revenue Element Accounting or Cost Center Accounting.

Select Company code validation for primary postings in your controlling area. When making a primary posting in Financial Accounting, you specify an account assignment object, for example, a cost center. If the reconciliation ledger is active, you can activate the validation indicator to ensure that the account assignment object (such as a cost center) is not assigned to a company code that differs from the one specified in Financial Accounting. Select the appropriate indicator in the control indicator for your controlling area. If you want to carry out reconciliation evaluations using the business area, you should assign each cost center to a business area. To do so, you need to select Business area balance sheets for the company codes assigned to the controlling area during the system settings for Financial Accounting. See the IMG Financial Accounting Global Parameters Business Area Enable business area balance sheet.

The system then sets the Business area field as an obligatory field in the cost center master data. The fiscal year variants of your controlling area and the correspondingly assigned company codes may only differ in the number of accrual calculation periods. For follow-up postings to the reconciliation ledger, the system reads both the totals files and the line item files. This adversely affects system performance if large data volumes are involved. You should therefore run your follow-up postings in the background. For cross-company-code cost accounting you should also record the group currency in the general ledger (ledger GLT0). This is particularly necessary if the company codes assigned to the controlling area are managed in different currencies. The values from FI and CO can then be compared in the group currency for all company codes.

Activities in Cost Element Accounting

Purpose

Reconciliation Ledger and Functional area in CO-OM-CEL

When you have configured the system settings, you can use execute a variety of functions within Cost Element Accounting. Process Flow 1. Analyses using the information system. You can carry out cross-application evaluations for the Reconciliation Ledger and identify which costs have been incurred. You can view costs from the following perspectives: Object types, functional areas, object classes, company codes or business areas. See also: The Information System In Cost Element Accounting 2. Reconciliation Postings Reconciliation postings allow you to clear any differences between Financial Accounting and Controlling. See also: Reconciliation Postings. You should only use master data maintenance and Accrual Calculation functions if you have not yet executed them in Cost Center Accounting.

Master Data Maintenance

Use Once you have entered the settings for Cost Element Accounting, you can create master data there such as cost or revenue types. This procedure is described below: Processing Master Data Processing Cost Elements). Processing Master Data Groups Cost Element Group For information on accrual orders, see the SAP Library under AC - Accounting CO-Controlling Internal Orders (see: Internal Orders).

Processing Cost Elements

Use You can use the following functions to create, change and display cost elements: Integration When you create primary cost elements, the SAP System checks whether a corresponding general ledger (G/L) account exists in Financial Accounting (FI). If no account exists, you can go directly from the cost element initial screen to the master data maintenance screen in Financial Accounting by choosing Environment Create G/L account. You can create a G/L account in the chart of accounts or in the company code In the basic screen, choose Environment Display G/L account to display the G/L account for the cost element. If you use the reconciliation ledger (see: Reconciliation Ledger) and you want to use reconciliation reports to compare the data in Financial Accounting with that from Controlling, note that the primary cost elements in question must be valid on January 1 of the corresponding fiscal year. Features The following graphic depicts the functions for the processing of cost elements:

Reconciliation Ledger and Functional area in CO-OM-CEL

In Customizing, you can also specify that the system create cost elements automatically. For more information, see the Implementation Guide (IMG), under Controlling Overhead Cost Controlling Cost and Revenue Element Accounting Master Data Cost Elements Automatic Creation of Primary and Secondary Cost Elements. See also: Creating, Changing and Displaying Master Data Deleting Master Data.

Cost Element Groups

Definition You can collect cost elements with similar characteristics in cost element groups. Use The following graphic shows an example of a cost element group.

Reconciliation Ledger and Functional area in CO-OM-CEL

You can use cost element groups in the information system, for example. You can use the cost element group structure to define the row structure of your reports. Totals are calculated in the report for each node. You can also use cost element groups whenever you want to process several cost elements in one transaction. For example, in cost center planning, distribution or assessment. You want to plan Personnel costs. To do this, you want to plan and display all personnel costs in one business transaction. To do this, select the Personnel costs group.

You want to further allocate operating supply costs using assessment. You want to process these cost elements in one business transaction. To do this, select the Operating supplies group. Processing Cost Element Groups To create, change, or display cost element groups, choose Accounting Controlling Cost Element Accounting (or Cost Center Accounting) Master data Cost element groups Create/Change/Display. To copy cost element groups, choose Accounting Controlling Cost Element Accounting (or Cost Center Accounting) Master data Cost element groups Create/Change/Display Group Copy.

Groups or subgroups (nodes) (such as, personnel costs, material costs, and so on) do not represent cost elements. See: Creating or Changing Master Data Groups. Copying Master Data Groups Processing Cost Element Groups.