SAP Financial and Controlling Overview gives the out look of using this module to run the business in a effective way.he R/3 System application part Controlling (CO) comprises all accounting features mandatory for efficient controlling. If an organization divides accounting into inner and external viewpoints,CO represents the internal accounting perspective, because it offers information for managers those who are inside an organization and are charged with directing and controlling its operations.CO includes value and revenue accounting. Together with the Enterprise Controlling (EC) utility components Revenue Center Accounting (EC-PCA) and Executive Information System (EC-EIS), CO covers all elements of managerial accounting. It gives a broad collection of functional tools that can be used to offer managerial accounting data with out being limited to legal requirements.Monetary statements required for exterior reporting functions (e.g. balance sheet and P&L assertion) are created in FI. These external reporting necessities are sometimes established by normal accounting requirements like GAAP or IAS, as nicely as numerous legal necessities mandated by regulatory authorities.
Whereas there are sometimes different accounting information necessities for inside and exterior customers, a lot of the underlying information could also be relevant for each purposes. However that very same data may be introduced in very different ways to fulfill the different requirements.Standardized accounting intended for exterior customers is sometimes termed “financial accounting”.The term “management accounting” generally refers to the non-standardized accounting strategy that supports the administration determination-making process.Monetary accounting studies typically required embrace the earnings statement (or profit & loss statement), and steadiness sheet. Administration accounting experiences may be completely distinctive, although a widespread instance could be departmental actual vs. plan costs for the present accounting period.
The various CO components can be categorized into totally different groups. The classification indicates the general goal of a given component.Management of an enterprise requires the usage of totally different tools for different situations. If you need to analyze revenue, for instance, you then want a instrument appropriate to the view you want to take (e.g.: by product or by responsibility middle). The Profitability Management component group has two instruments (parts) which can be obtainable for addressing this business need (Profitability Evaluation and Profit Heart Accounting).Similarly, the Overhead Cost Controlling and Product Price Controlling part groups offer instruments applicable to different varieties of enterprise requirements.
CO Components
How do we scale back our overhead prices? Overhead Value Controlling (CO-OM) is the CO part that provides instruments to help reply that question. In many organizations, overhead prices have taken an enormous upward leap, including prices which the organization can not assign on to either products or services. While manufacturing areas often show great progress in controlling prices and optimizing processes, overhead continues to show little value transparency, so it is tough to get a clear image of why these costs are incurred.What prices occur within our group? Price Aspect Accounting (CO-OM-CEL) classifies the prices and revenues that are posted to CO, and supplies the aptitude for reconciliation of prices in CO with the Monetary Accounting (FI) module.
What are the manufacturing prices of a product? Product Value Controlling (CO-PC) has two main areas of focus. It's used to develop estimates of what it can price to supply a product (or even a service). It also has capabilities to track the precise costs of production, and offers extensive instruments for price analysis.How profitable are particular person market segments? Profitability Evaluation (CO-PA) supplies a focus on the outcomes of an organization’s doing business with the external marketplace. It provides the flexibility to define which points or segments of that market are related for analyzing working outcomes, akin to revenue by customer, product, geographic area, gross sales organization, etc. And it affords multi-dimensional drill-down reporting, to offer extremely versatile views of working results.How worthwhile are particular person ente rprise areas? Profit Center Accounting (EC-PCA) offers a focus on inner areas of a company which have duty for achieving certain revenue or productiveness goals.
Cost and Revenue Accounting
Cost and Income Aspect Accounting (CO-OM-CEL) is part of the Overhead Value Controlling part group. It offers the construction for project of CO information by the classification of transaction line items according to the nature of the associated fee or income being posted to a given controlling object (e.g. value middle, inner order, etc.).The price flows in CO can lead to the necessity for reconciliation between internal and exterior accounting in sure cases. Price and Revenue Factor Accounting is the CO component offering functionality that supports this possible requirement. The Reconciliation Ledger provides reporting capabilities for figuring out the variations in costs between FI and CO, as properly as a instrument for creating reconciliation postings to FI, if desired.
Cost Center Accounting
The Price Center Accounting part (CO-OM-CCA) tracks the place costs happen in your organization. The price heart is an organizational unit in a controlling area. Value centers can be defined in protecting with a quantity of completely different design approaches. A typical strategy may very nicely be for an enterprise to outline a price middle for every low-level organizational unit that has duty for managing costs. As prices are incurred, they're assigned or posted to the appropriate price center.These costs could embrace payroll costs, rent and utility prices, or some other costs assignable to a given value center.Every value center is assigned to a category, e.g. Administration price middle, manufacturing price heart, etc. Every value center grasp document has a field for the identify of the particular person responsible for the associated fee center.The posting and project of costs to cost facilities not only makes managerial accounting potential;however is a vital step for using the opposite Controlling components. As noted above, cost centers will be set up in line with completely different design approaches, including useful necessities, allocation criteria, activities or companies provided, geographic location and/or space of responsibility. However whichever method is chosen, it needs to be consistent all through the enterprise.
Cost facilities could be grouped together to supply abstract price information. In fact, a fundamental requirement for implementing Cost Center Accounting is the creation of a normal hierarchy for a controlling area. The usual hierarchy consists of all value centers in that controlling area, and gives the ability to analyze abstract costs at each node of the structure.
Internal Orders
An Inside Order is an especially flexible CO tool that can be utilized for a large variety of purposes to monitor prices and, in some circumstances revenues, inside a controlling area. Inner orders present capabilities for planning, monitoring, and allocation of costs.Inner orders may be used for quite a lot of purposes, and might be grouped into 4 general categories:
Profitability Analysis (CO-PA) allows you to analyze profits and contribution margins for market segments of your company. The target of CO-PA is to assist gross sales, product administration, and corporate-vast planning and resolution-making, utilizing an external view from a market-oriented perspective.A profit middle is a administration-oriented organizational unit used for internal controlling purposes.Dividing your organization up into profit facilities allows you to analyze areas of accountability and to delegate duty to decentralized models, thus treating them as "companies inside the firm".EC-PCA allows you to set up your revenue centers in accordance with product (product traces, divisions),geographical areas (regions, workplaces or production websites) or operate (production, sales).
Revenue Middle Accounting (PCA) permits you to calculate internal measurements of profitability. This internal view of profitability, then, displays the success of a given profit middle at assembly the profitability goal for which it was given responsibility.The Data System offers a software for evaluating plan and precise data. Quite a few standard reports are offered, and you can create your personal customized reviews as well. Stories could be executed for Profit Facilities or Revenue Center groups. Profit Center Accounting can report on selected stability sheet items, such as Belongings, AR/AP, Material Inventory, and Work in Process. This permits the calculation of certain monetary key ratios equivalent to ROI (Return on Investment). Other reporting capabilities embody detailed information on the source objects (e.g. value centers, internal orders) that contributed prices posted to profit centers.
Profitability Management parts are also tightly built-in with Overhead Value Controlling and Product Cost Controlling. Profit Heart Accounting, by advantage of its fundamental design, receives statistical cost postings from virtually all different CO components.In addition to direct postings from FI, Profitability Analysis can obtain value assessments from cost facilities and ABC processes, settlements of price from inside orders, and production variances settled from value objects.
Organizational Units
The Controlling Space is the elemental organizational unit in Controlling. A controlling space represents a closed system for value accounting purposes. Cost allocations can only be carried out inside a controlling area. They cannot contain objects in numerous controlling areas. A quantity of firm codes may be assigned to one controlling space, which gives the flexibility to perform cross company-code controlling.The controlling space and its assigned firm codes must at all times use the identical working chart of accounts and will need to have the same fiscal year (solely the variety of particular periods could be different).Profitability Analysis (CO-PA) is carried out inside the Operating Concern. It is an organizational unit representing the construction of external market segments for the enterprise. You can assign several controlling areas to an operating concern to investigate them together.
The company code is an independent accounting unit. Balance sheets and profit and loss statements are ready at the company code stage to fulfill legal reporting requirements.The plant represents a production facility. It is a crucial organizational unit within the SAP R/3 Supplies Management and Production Planning application components. Plants are assigned to firm codes when organizational structures are defined.
Multiple Assignment
By assigning multiple company codes to a controlling area, you can perform cross-company-code
value accounting. You may make allocations in CO that seek recommendation from multiple firm code.In cross-firm-code accounting, you assign a forex, a chart of accounts, and a fiscal 12 months variant to the controlling area.In cross-company-code price accounting, the controlling area and firm codes might have different currencies. You presumably can outline the controlling area currency to be the identical as one of many firm code currencies, or it may be totally different from the Forex of any firm code assigned to it.Chances are you'll make probably the most of three currencies in CO:
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Whereas there are sometimes different accounting information necessities for inside and exterior customers, a lot of the underlying information could also be relevant for each purposes. However that very same data may be introduced in very different ways to fulfill the different requirements.Standardized accounting intended for exterior customers is sometimes termed “financial accounting”.The term “management accounting” generally refers to the non-standardized accounting strategy that supports the administration determination-making process.Monetary accounting studies typically required embrace the earnings statement (or profit & loss statement), and steadiness sheet. Administration accounting experiences may be completely distinctive, although a widespread instance could be departmental actual vs. plan costs for the present accounting period.
The various CO components can be categorized into totally different groups. The classification indicates the general goal of a given component.Management of an enterprise requires the usage of totally different tools for different situations. If you need to analyze revenue, for instance, you then want a instrument appropriate to the view you want to take (e.g.: by product or by responsibility middle). The Profitability Management component group has two instruments (parts) which can be obtainable for addressing this business need (Profitability Evaluation and Profit Heart Accounting).Similarly, the Overhead Cost Controlling and Product Price Controlling part groups offer instruments applicable to different varieties of enterprise requirements.
CO Components
How do we scale back our overhead prices? Overhead Value Controlling (CO-OM) is the CO part that provides instruments to help reply that question. In many organizations, overhead prices have taken an enormous upward leap, including prices which the organization can not assign on to either products or services. While manufacturing areas often show great progress in controlling prices and optimizing processes, overhead continues to show little value transparency, so it is tough to get a clear image of why these costs are incurred.What prices occur within our group? Price Aspect Accounting (CO-OM-CEL) classifies the prices and revenues that are posted to CO, and supplies the aptitude for reconciliation of prices in CO with the Monetary Accounting (FI) module.
What are the manufacturing prices of a product? Product Value Controlling (CO-PC) has two main areas of focus. It's used to develop estimates of what it can price to supply a product (or even a service). It also has capabilities to track the precise costs of production, and offers extensive instruments for price analysis.How profitable are particular person market segments? Profitability Evaluation (CO-PA) supplies a focus on the outcomes of an organization’s doing business with the external marketplace. It provides the flexibility to define which points or segments of that market are related for analyzing working outcomes, akin to revenue by customer, product, geographic area, gross sales organization, etc. And it affords multi-dimensional drill-down reporting, to offer extremely versatile views of working results.How worthwhile are particular person ente rprise areas? Profit Center Accounting (EC-PCA) offers a focus on inner areas of a company which have duty for achieving certain revenue or productiveness goals.
Cost and Revenue Accounting
Cost and Income Aspect Accounting (CO-OM-CEL) is part of the Overhead Value Controlling part group. It offers the construction for project of CO information by the classification of transaction line items according to the nature of the associated fee or income being posted to a given controlling object (e.g. value middle, inner order, etc.).The price flows in CO can lead to the necessity for reconciliation between internal and exterior accounting in sure cases. Price and Revenue Factor Accounting is the CO component offering functionality that supports this possible requirement. The Reconciliation Ledger provides reporting capabilities for figuring out the variations in costs between FI and CO, as properly as a instrument for creating reconciliation postings to FI, if desired.
Cost Center Accounting
The Price Center Accounting part (CO-OM-CCA) tracks the place costs happen in your organization. The price heart is an organizational unit in a controlling area. Value centers can be defined in protecting with a quantity of completely different design approaches. A typical strategy may very nicely be for an enterprise to outline a price middle for every low-level organizational unit that has duty for managing costs. As prices are incurred, they're assigned or posted to the appropriate price center.These costs could embrace payroll costs, rent and utility prices, or some other costs assignable to a given value center.Every value center is assigned to a category, e.g. Administration price middle, manufacturing price heart, etc. Every value center grasp document has a field for the identify of the particular person responsible for the associated fee center.The posting and project of costs to cost facilities not only makes managerial accounting potential;however is a vital step for using the opposite Controlling components. As noted above, cost centers will be set up in line with completely different design approaches, including useful necessities, allocation criteria, activities or companies provided, geographic location and/or space of responsibility. However whichever method is chosen, it needs to be consistent all through the enterprise.
Cost facilities could be grouped together to supply abstract price information. In fact, a fundamental requirement for implementing Cost Center Accounting is the creation of a normal hierarchy for a controlling area. The usual hierarchy consists of all value centers in that controlling area, and gives the ability to analyze abstract costs at each node of the structure.
Internal Orders
An Inside Order is an especially flexible CO tool that can be utilized for a large variety of purposes to monitor prices and, in some circumstances revenues, inside a controlling area. Inner orders present capabilities for planning, monitoring, and allocation of costs.Inner orders may be used for quite a lot of purposes, and might be grouped into 4 general categories:
- Overhead orders: Used to monitor overhead costs incurred for a particular purpose, similar to conducting a trade fair, or monitoring prices for maintenance and repair work.
- Funding orders: Used to monitor prices incurred within the creation of a onerous and fast asset, corresponding to building a storage facility.
- Profitability Reporting:Profitability Evaluation (CO-PA) enables you to analyze the profitability of segments of your external market. These segments will be defined based on merchandise, customers, geographic areas, and numerous other traits, in addition to your inside organizational models akin to company codes or enterprise areas. The goal is to provide your government administration, sales, advertising,planning, and other teams in your organization with resolution-support from a market-oriented viewpoint.
- Accountability Reporting:EC-PCA lets you analyze internal profit and loss for revenue centers. This makes it attainable for you to judge completely different areas or units within your company. You may structure revenue centers based on region (department workplaces, crops), operate (production, gross sales), or product (product groups, divisions). Profit Heart Accounting is a component of the "Enterprise Controlling" module.
Profitability Analysis (CO-PA) allows you to analyze profits and contribution margins for market segments of your company. The target of CO-PA is to assist gross sales, product administration, and corporate-vast planning and resolution-making, utilizing an external view from a market-oriented perspective.A profit middle is a administration-oriented organizational unit used for internal controlling purposes.Dividing your organization up into profit facilities allows you to analyze areas of accountability and to delegate duty to decentralized models, thus treating them as "companies inside the firm".EC-PCA allows you to set up your revenue centers in accordance with product (product traces, divisions),geographical areas (regions, workplaces or production websites) or operate (production, sales).
Revenue Middle Accounting (PCA) permits you to calculate internal measurements of profitability. This internal view of profitability, then, displays the success of a given profit middle at assembly the profitability goal for which it was given responsibility.The Data System offers a software for evaluating plan and precise data. Quite a few standard reports are offered, and you can create your personal customized reviews as well. Stories could be executed for Profit Facilities or Revenue Center groups. Profit Center Accounting can report on selected stability sheet items, such as Belongings, AR/AP, Material Inventory, and Work in Process. This permits the calculation of certain monetary key ratios equivalent to ROI (Return on Investment). Other reporting capabilities embody detailed information on the source objects (e.g. value centers, internal orders) that contributed prices posted to profit centers.
Profitability Management parts are also tightly built-in with Overhead Value Controlling and Product Cost Controlling. Profit Heart Accounting, by advantage of its fundamental design, receives statistical cost postings from virtually all different CO components.In addition to direct postings from FI, Profitability Analysis can obtain value assessments from cost facilities and ABC processes, settlements of price from inside orders, and production variances settled from value objects.
Organizational Units
The Controlling Space is the elemental organizational unit in Controlling. A controlling space represents a closed system for value accounting purposes. Cost allocations can only be carried out inside a controlling area. They cannot contain objects in numerous controlling areas. A quantity of firm codes may be assigned to one controlling space, which gives the flexibility to perform cross company-code controlling.The controlling space and its assigned firm codes must at all times use the identical working chart of accounts and will need to have the same fiscal year (solely the variety of particular periods could be different).Profitability Analysis (CO-PA) is carried out inside the Operating Concern. It is an organizational unit representing the construction of external market segments for the enterprise. You can assign several controlling areas to an operating concern to investigate them together.
The company code is an independent accounting unit. Balance sheets and profit and loss statements are ready at the company code stage to fulfill legal reporting requirements.The plant represents a production facility. It is a crucial organizational unit within the SAP R/3 Supplies Management and Production Planning application components. Plants are assigned to firm codes when organizational structures are defined.
Multiple Assignment
By assigning multiple company codes to a controlling area, you can perform cross-company-code
value accounting. You may make allocations in CO that seek recommendation from multiple firm code.In cross-firm-code accounting, you assign a forex, a chart of accounts, and a fiscal 12 months variant to the controlling area.In cross-company-code price accounting, the controlling area and firm codes might have different currencies. You presumably can outline the controlling area currency to be the identical as one of many firm code currencies, or it may be totally different from the Forex of any firm code assigned to it.Chances are you'll make probably the most of three currencies in CO:
- Controlling space foreign money
- Firm code currency OR object currency In cross-company-code value accounting, the object currency defaults from the company code currency, and cannot be modified. If there is solely one company code assigned to the controlling area, then the article forex is freely assignable for every controlling object (such as value heart).
- Transaction Foreign money :The transaction forex is the foreign money wherein a doc is posted to CO.A quantity of firm codes from completely different nations can nonetheless be linked to a single controlling area, even when among the companies are required to provide nation-specific external reports. All firms inside the controlling area have to make use of the identical working accounts, but these accounts could additionally be linked to nation-specific accounts by approach of the alternative account quantity discipline on the account grasp record.The fiscal yr variants assigned to the controlling space and assigned company codes can differ solely in the number of particular periods.
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