Controlling

SAP Controlling (CO) is used for managing and recording of costs and providing
information to the management for internal assessment regarding performance of the
units. SAP CO involves recording both the consumption of production factors and the
services provided by an organization.
The cost element is the main integration point between FI and CO.
P&L A/c’s  GL account in FI = Cost element in CO

GL account is nothing but nature of financial transaction whereas cost element is

nothing but nature of expenditure.

The key submodules of SAP controlling system are listed below −

 Cost Element Accounting (GL in FI)− Cost and Revenue Element Accounting
provides you with an overview of the costs and revenues that occur in an
organization. Most of the values are moved automatically from Financial
Accounting to Controlling.
 Cost Center Accounting − Cost Center Accounting is used for controlling
purposes within your organization. Similar to departments where cost is loaded
 Profit Center Accounting − It is used to evaluate profit or loss of individual,
independent areas (Business Units) within an organization. These areas are
responsible for their costs and revenues.
 Internal Orders − Internal orders in SAP CO are used to collect and control
according to the job that incurred them. You can assign budgets for these jobs
that is system monitored to ensure that they are not exceeded from the set
budgets.
 Product Cost Controlling − It calculates the cost for manufacture a product,
or to provide a service. It allows you to calculate the price at which you can
profitably marketed it.
 COPA – Controlling and Profitability Analysis − It is used to analyze the
profit or loss of an organization by individual market segments. Profitability
Analysis provides a basis for decision making. For example, it is used to
determine price, conditioning, customer, distribution channel, and market
segment.
 Organization Structure in Controlling

OPERATING CONCERN:

It is the highest organizational unit, in the controlling module and at this level it
records, tracks and analyses of marketing related activities and also we can do the
market segment profitability analysis. The operating concern is required only for
Controlling Profitability Analysis (COPA) purpose.

CONTROLLING AREA:

It is the CO organizational unit and at this level it records and analyses the overhead
related activities (cost element, cost center accounting, and internal orders),
manufacturing related activities (product costing) and also activities of internal units
analysis or evaluation of the internal unit analysis (profit center accounting).

COMPANY CODE:
An Organizational Unit/Business where separate financial statements can be
prepared.

ASSIGNMENT OF COMPANY CODE TO CONTROLLING AREA:

We can assign multiple company codes to one controlling area subject to the
following conditions:

• Chart of accounts should be the same between company code and

controlling area. The Fiscal Year variant and Posting period structure should be
same.
• Group Costing and Transfer Pricing will be easy if Multiple Company codes are
assigned to same Controlling Area

LEADING AND NON LEADING LEDGERS:

If the above conditions are not satisfied between company code and controlling area
then we need to create more than one controlling area or if we want to use the same
controlling area for all the company codes, then we need to use the concept of leading
and non leading ledgers.

Earlier it was called as special purpose ledgers. Normally we adopt one leading
ledger for the parent company, and can be used parallel ledgers in order to address
local requirements.

LEADING LEDGERS:

• In the leading ledger, we will maintain the fiscal year and chart of accounts as per
parent company (Group Company).

• The leading ledger only integrated with CO module and logistic module.

• We can have only one leading ledger per client

NON LEADING LEDGERS:

• Used to address the local legal requirements or accounting principles.

• Non leading ledgers are also called as parallel ledgers.

• Non leading ledger is not integrated with CO and logistics module.

• In non leading ledgers, we can maintain additional currencies in addition to the

leading ledger and also we can maintain different fiscal years and different posting
periods.

• For the same company code also we can have number of non leading ledgers to
address different accounting standards/accounting principles.

NOTE: There is no problem related to currency, each company code have their own
local legal currency but in controlling area they need to maintain one common
currency (it is only for management reporting purpose and not for legal requirements)
ex: Euro, same way with the operating concern currency also.
 Basic Settings- Controlling

1. Maintain Controlling Area: - OKKP

SPRO  Controlling General Controlling Organization Maintain Controlling

Area.

Fiscal Year of Company Code and Controlling Area should be Same.

2. Assignment of Company code to Controlling Area

Multiple company codes can be assigned to One controlling Area

2. Activate components/control indicators

4. Maintain Number Ranges for Controlling Documents - KANK

Same Path Maintain Controlling Area  2502  Click on Maintain Groups(F6)

From Menu, Group, Insert/Create

Text = Primary postings, Give Number Range and Save

Create One more Group for Secondary Postings and another Group for Planning
and save

Assign Element Groups to Elements Created as below.

5. Maintain Version – OKEQ

Select Version “0” Settings for Each Fiscal Year Double Click on Current
Year Select parameters
6. Define New Version for Planning Purpose
 Cost Element Accounting
For every profit & loss type G/L account type, corresponding cost elements are to be
Cost element is an item in the chart of accounts, which is used in controlling area to
record the values assigned consumption of production factors like raw material,
utilities, etc. cost elements are divided in to two types i.e.

1. Primary Cost / Revenue Elements

2. Secondary Cost Elements

Primary Cost Elements: –

Primary cost elements describe the costs that occurs outside of controlling. It links to
SAP financial accounting (FI) expenses account (corresponding to G/L account
required for costs). Primary cost element is other way called a general ledger (G/L) in
SAP finance accounting module. The creation of G/L account is mandatory for creation
primary cost elements in SAP.

Cost Element Categories: – You need to assign a particular cost element

category when you are implementing cost element accounting in SAP.

 01 – Primary costs / cost reducing revenues

 11 – Revenues
 12 – Sales deductions
 22- External Settlement
Secondary Cost Elements

It describes the costs flows that occurs only within controlling like allocations,
overhead cost calculations, etc. No link to SAP FI expense accounts.

Secondary Cost element category: – Similarly you need to assign a cost

element category when you are creating secondary cost elements. Some of the
important secondary cost element categories are

 21 – Internal Settlements
 31 – WIP/Order/ Project results analysis
 41 – Overhead
 42 – Assessment
 43 – Internal activity allocation

Cost Element Categories

The cost elements can be created in two ways i.e.

1. Manual Creation of Cost Elements – FS00

On create cost element : basic screen, select cost element category as

1 (Primary cost/ cost reducing revenues).
2. Creation of Cost Elements from CO

Easy Screen Accounting Controlling  Cost Element Accounting 

Master Data  Cost Element Individual Processing  Create Primary Cost
Element  KA01
3. Automatic Generation of Cost Elements – OKB2

From 400300 to 400310 , Category 01

From 300000 to 300104, Category 11

Create Batch Input Session- OKB3 & SM35

4. Display Cost Element Report – KA23

 You can also create CE’s automatically from - OB13

5. Creation of Secondary Cost Elements – OKB2 OKB3  SM35

6. Creation of Secondary Cost Element Manually – KA06

7. Automatic creation of Cost Element – OKB2

(Don’t mention “Account to” )

You can also create through Batch Input using OKB3 and SM35
 Display Cost Element Master data Report – KA23

8. Define Cost Element Groups – KAH1

Easy Access Accounting  Controlling Cost Element Accounting

Master Data Cost Element Group Create

9. OBC4  Change GL – Field status variant to G004, In G004, you have to

keep Additional Assignments  Cost center as Mandatory

Cost Center Accounting

Set Controlling Area - OKKS

Cost center std Hierarchy

• Highest node in CCTR hierarchy. • Represents all cctr in CO

A Cost Center is defined as a component in an organization that adds to the cost and
indirectly adds to the profit of the organization. Examples include Marketing and
Customer Service.
A company can classify a business unit in three ways −

 Profit center,
 Cost center, or
 Investment center.
The simple and straightforward division in an organization can be classified as cost
center because cost is easy to measure.

Cost Center Hierarchy

The hierarchy of a cost center looks as follows −
Define Cost Centre Categories:

Define Standard Hierarchy:

Accounting  Controlling  Cost center Accounting Master Data Define Std

Hirearchy
OKEON  Enter Group Name
Create Cost Center Groups – KSH1
Accounting  Controlling  Cost center Accounting Master Data Cost Center
Group

Create a cost center, T-code KS01 – Table - CSKS

Enter the Controlling Area in the next screen and click the tick mark.
In the next window, enter the following details and click the Master Data.

 New cost center number.

 Validity dates of the new cost center.
You can also create a new cost center with a reference.

Once you click Master Data, a new window will open. Enter the following details in
the basic data tab −

 Enter the name of the new cost center.

 Enter a description for the new cost center.
 Enter the User and Person Responsible.
 Cost Center Category.
 Hierarchy area.
 Company Code.
 Profit Center.
Next, click the Control tab and select the correct indicator.
At the end, click the save icon at the top.

Similarly Create Admin, R&D, Production, Other cost Centers for Practise Purpose

Add Cost centres created to the Group.

To post to a cost center, use the T-code F-02/ FB50

FB03: Environment  Accounting Document
To view Controlling Documents – KSB5

Cost Center Report – S_ALR_87013611

Profit Center

SAP CO Profit Center is used for managing internal controlling. When you divide your
company into profit centers, it allows you to delegate responsibility to decentralized
units and treat them as separate companies in a company. It also allows you to
calculate key figures in cost accounting like ROI, Cash flow, etc.
Profit Center is a part of Enterprise Controlling module and is integrated with a new
General Ledger Accounting.
Key Features of SAP CO Profit Center
Profit Center Accounting is used to determine profit for internal areas of responsibility.
It lets you determine profits and losses using either period accounting or the cost-of-
sales approach.
It allows you to analyze fixed assets by profit center, thus using them as investment
centers. It allows to expand profit centers to investment centers.

Why Do We Create Profit Center?

The main aim of creating a Profit Center in SAP CO is to analyze the cost of a product
line or a business unit.
You can also generate P&L accounts according to a Profit Center and also generate
balance sheets, however a Profit Center should only be used for internal reporting
purpose.
The key components of a profit center include – name of the profit center, the
controlling area under which it is assigned, time period, person responsible for the
profit center, standard hierarchy, etc.

1. Assign Scenarios and Customer Fields in Ledger  Activation of PCTR in

New GL
Financial Accounting New  Financial Accounting Global Settings  Ledgers
Ledger  Assign Scenarios & Customer Fields to Ledgers

Select 0L Leading Ledger

Click On Scenarios
Scenario = FIN_PCA
Save

2. Deactivate Profit Center Accounting in Classic GL Accounting – OKKP

Deselect Profit Center Accounting in Classic GL
Assign Profit Centre Hierarchy to Controlling Area – 0KE5 (0=Zero)

Define Profit Center Standard Hirearchy in Controlling Area

IMG Financial Accounting  General Ledger Accounting Master Data

Profit Center Define Profit Center Standard Hierarchy in Controlling Area

Define Profit Center Standard Hierarchy = PCTR-2505

Save
 Define Profit Center Group – KCH1

Define Segment

MANF - Manufacturing
SERV – Services
Define Profit Center: KE51 – SAP Table- CEPC
Accounting → Controlling → Profit Center Accounting → Master Data → Profit Center
→ Individual Processing → Create.
To activate the profit center, click the icon as shown in the following screenshot.

Create Another Profit Center :

Profit Center by Groups

Assign Profit Center to Cost Center – KS02

To post to a Profit Center, use the T-code FB50. It will take you to the following
window.

Enter the Document date and the Company code. Thereafter, provide input data in
the fields as shown in the following screenshot.

After entering the line items, select the debit line item and click the button Detail Item
button. Refer the following screenshot.
A new window will open. Enter the Profit Center and click the Save icon at the top.
SAP CO Profit Center standard hierarchy, known as tree structure, that contains all
the profit centers in a controlling area.
If you want to create/change the structure of a standard hierarchy, it can be done at
two places −

 In the Profit Center Accounting

 In Customizing for Profit Center AccountingGo to SPRO → SAP Reference
IMG → Controlling → Profit Center Accounting → Assignments of Account
Assignment objects to Profit Center → Assign Cost Centers → Execute.

Enter the Cost center to be assigned to the Profit center.

In the next screen, enter the profit center to which the cost center is assigned and
click the Save icon at the top.

Default Account Assignment of Cost Center & Profit Center – OKB9

Post FB50 and Check the Condition

What Is Reposting, Distribution And Assessment – The Difference Between
These Three?
Transactions are not posted directly into controlling module. It flows from
different module. Reposting, distribution and assessment in SAP used in
controlling module to allocate costs within the module between cost centers
and other cost objects.
Reposting in SAP is used to rectify incorrect postings.
Reposting by line-item
Reposting by cost.
Both methods produce the same result. The costs being transferred from a cost
object and collected in another cost object.
Distribution of Overheads : A business transaction that allocates primary costs
from one cost object to another cost object. The original cost elements are
retained in the receiver cost center. Information about the sender and the
receiver is documented in the Controlling document.
1. Define Number Ranges in Controlling Activity “RKIV”- Actual Over heads
Distribution.
T- Code  KANK
Click on Maintain Group  Double Click on “RKIV” Controlling transaction
Select Secondary Postings Check box  Click on “Assign Element Group”Save
2. Post Transaction  FB50 Using one Cost Element and Cost Center.
3. Create Distribution Cycle – KSV1
Cycle : AD2505
Start Date: 01.04.2022  Text = Actual Distribution Cycle 2505
Select Iterative Click on Attach Segment
Segment Name and Segment Description
Sender Rule = Posted Documents
Share in % = 100%
Select “Actual Values” Radio Button”
Receiver Rule = Fixed Percentage
Click on Senders/ Receivers Tab
Sender Cost Center= 2505001
Cost Element – Give Particular CE or 1 to 999999

Click on Receiver Cost Center Group = AllocCtr1

Keep the Cursor on Group Name
Menu  Extras  Create Group Group Name =
Keep the cursor on Group Name and Click on Insert Cost Center Give
Cost Center  Save
Back Arrow  Click on “Receivers Tracing Factor”tab
Cost Center = 2505002 = 60%
Cost Center = 2505003 = 40%

Run Distribution Cycle Month end/Execute – KSV5

Period 1-4/4-4 Fiscal Year : 2022
Select Detailed List, Cycle
Assessment in SAP is a method of allocating primary and secondary costs in Cost
Center Accounting.
The following information is passed on to the receivers:
The original cost elements are combined into assessment cost elements (i.e.
secondary cost elements).The original cost elements are thereby lost.
The sender and receiver information (the sender cost center and the receiver
cost center or order) are documented in line items.
The above methods of allocation of cost are maintained through cycle-
segments. A cycle is a collection of rules for cost allocation. A specific cycle
contains a number of segments. Cycles are valid only in the environment in
which they are defined.
A Segment consists of the elements like Sender objects & Receiver objects. The
sender-receiver relationships defined in a cycle are processed iteratively.

Actual Overhead Assessment :

KSU1

AA2502

Actual Assessment Canteen Cycle

Select Iterative and click on “Attach Segment”

Segment : Canteen

Name: Canteen Actual Assessment Cycle

Assessment Cost Element : 942000 (CE Category.42)

Sender Rule: Posted Amount

Share in percentage : 100

Select :Actual Value Origin

Receiver Rule : Fixed %

Go to Sender/Receiver tab

Sender Cost center : 25020001 (Canteen)

Receiver Cost center : 25020002 (Production)

Go to Receiver Tracing factor

Save

KSU5 Execute

KSB1  to check assessment cycle details

 Difference between ECC Vs S4HANA
SAP S/4HANA updates features from SAP ECC to reduce costs and boost business efficiency. This
means some features have changed, some features are replaced or combined into new. In-memory
database designed to dramatically accelerate SAP applications

SAP S/4HANA can only run on the SAP HANA database. SAP S/4 HANA is faster and more efficient than
SAP ECC as it reads data from the main memory (RAM) instead of the Hard disk. The tables in SAP
S/4HANA are column-based instead of row-based.

SAP S/4HANA introduces a new user interface, SAP Fiori. We can also create custom enterprise apps
that work consistently across devices.

Difference between ECC Vs S4HANA

1. ACDOCA  The Single Source of Truth

SAP S/4HANA combines several data modules into a single table called ACDOCA (the Universal
Journal). This includes asset accounting (AA), GL, ML, management accounting (MA), FI, and CO-PA.
ACDOCA removes many aggregate and index tables, which greatly reduces your data footprint. It's
also a much more efficient system.

Picture-1

ECC: S4HANA

Picture - 2

Along with ACDOCA we still have BKPF & BSEG tables, COBK (CO Header Data) & BSET (Tax)
SE16N-ACDOCA

View as below:

2. Business Partner (BP)

A Business Partner can be a person, organization, Vendors or Customers in which a company

has a business interest.

In SAP ECC, customers and vendors are separate data objects. SAP S/4HANA integrates
customers and vendors into a unified master data object called Business Partners. Due to one
business partner have multiple roles, it reduces data footprint.

It is the single point of entry to create, edit, and display the master data for business partners,
customers and vendors. A Business Partner consists of general data like name, address, bank
information, etc. as well as role specific information

General Business Partner is Mandatory Role

Vendor Role
Customer Role
Transaction Code is BP

You will get a default role 000000 (Business Partner General). -

Enter the details and Save These are master data details

You can extend the BP roles to Vendor (FLVN00) and Customer ( FLCU01)

Vendor: VD01
Customer: XD01
 Below snap showing BP role for Customer.

3. Asset Accounting:

The New General Ledger is now officially called the SAP S/4HANA General Ledger
New GL was active in ECC 6.0 Version, but you had a choice to switch to Classic GL.
But in S4HANA, It is only New GL and it is mandatory.

The actual components of the asset module haven’t changed much, so you still assign your
company code to a local chart of depreciation where you have most of the local rules for
calculating the depreciation, such as straight line or reducing balance methods, and whether
to start depreciating at the beginning, middle or end of a period and so on. The account
assignment, screen layout and default useful lives are still linked to asset classes, which group
together assets of a similar nature, and you still have the concept of depreciation areas to
record different values for different accounting principles.

The reason that the asset value can be posted to the asset and to the general ledger
simultaneously is because most of the asset value tables have been replaced. During the time
of Asset Acquisition through KR document, AA document is also posted and hence no periodic
activity is ABST2 is not required (Reconciliation Analysis FI-AA)

In S/4HANA, Finance and Controlling have been merged; and Asset Accounting and
even Profitability Analysis all create entries directly to the ACDOCA table in Finance.

Additional accounting principles no longer have to be posted periodic ally; instead all
accounting principles post real-time and at the same time. Because the accounts are
reconciliation accounts in all ledgers, you can’t post only to the general ledger and not
to the asset.

One of the migration prerequisites by the way, is to complete all periodic postings
before the migration, as you won’t be able to post them afterwards without that
transaction.
Depreciation Areas and Ledgers

In Asset Accounting, different accounting principles are managed by setting up different

depreciation areas.

Depreciation area one posted to the leading ledger real-time and you could map the other
depreciation areas to the parallel ledgers and post them at the end of the period; but for
technical reasons you also had to create delta depreciation areas.

With S/4HANA, in order to map a depreciation area to a ledger, you assign an accounting
principle to the depreciation area in the asset accounting configuration. You also assign an
accounting principle to the ledger group in the financial configuration as per below figure.

You also no longer need delta depreciation areas, but, if you want to have additional
currencies in one ledger you have to set up additional depreciation areas for those currencies
in the asset module.

Tables are replaced by ACDOCA with Header Level Data still @ BKPF

The Technical Clearing Account is a new account that has been introduced for accounts that
cannot be posted to in a single ledger only. If you’ve set up parallel ledgers in the New General
Ledger

In S/4HANA, when you have an integrated posting in asset accounting, such as an asset
acquisition with a posting between the asset and the supplier for example.
The Technical Clearing Account allows you to do this by posting the first document to all
ledgers, crediting the supplier and debiting the technical clearing account. This is called the
operating part of the posting. Then you can post the other side in two separate documents
one to each ledger. (0L & 2L)

You can also have more than one technical clearing account.

Depreciation:
Depreciation, not only one document for each asset, but it will post a separate line item in the
general ledger for each asset,
1. Notice when you enter the depreciation transaction AFAB, is that the selection screen is
simplified
2. You can still run the depreciation for all accounting principles at the same time, or you can
choose to run it for the different accounting principles separately.
4. Cost Elements:
With S/4HANA Finance, the universal journal includes a single field account that covers
both the general ledger (G/L) account and the cost element. This means that where
you used to create primary cost elements using transaction code KA01, you now are
directed to transaction code FS00

The primary cost elements represent the profit-and-loss accounts used to classify your
journal entries. In S/4HANA Finance, the G/L account and the primary cost elements
merge into one.

The secondary cost elements record the value flows within CO, such as the charging
of utility costs from a support cost center to an operational cost center or the charging
of machine-hours to a production order.

Primary Costs and Revenue Elements

As you go through the screens, notice that the old Default Assignment tab in the cost
element master record is gone, so the only way to set up the default account
assignments is to use transaction code OKB9

In the past, secondary cost elements were created using transaction code KA06, but
in S/4HANA Finance, you again are redirected to transaction code FS00
You can see the cost element categories by selecting the Control Data tab
Because the secondary cost elements are now G/L accounts, you won’t need to map the CO business
transactions to reconciliation accounts in FI.-KALC

5. Fiori:

SAP Fiori is a design system that enables you to create business apps and tiles are arranged based on
the Sub module wise and by authorization groups of Users.

Fiori Apps for Finance:

FB50 entry screen in Fiori App :

Other tiles which can be tagged to My Home Tab:

Fiori can be used in Laptop, tabs and Mobiles. The data for the slides will get refreshed
frequently and the data can be seen on the face of the screen.
Few Major differences in S4 HANA