SAP CO Module
The SAP CO
(Controlling) Module provides supporting information to Management
for the purpose of planning, reporting, as well as monitoring the
operations of their business. Management decision-making can be
achieved with the level of information provided by this module.
Some of the
components of the CO(Controlling) Module are as follows:
Cost Element Accounting
Cost Center Accounting
Activity-Based Costing ( ABC)
Product Cost Controlling
Profit Center Accounting
Element Accounting component provides information which
includes the costs and revenue for an organization. These postings
are automatically updated from FI (Financial Accounting) to CO
(Controlling). The cost elements are the basis for cost accounting
and enables the User the ability to display costs for each of the
accounts that have been assigned to the cost element. Examples of
accounts that can be assigned are Cost Centers, Internal Orders,
WBS(work breakdown structures).
provides information on the costs incurred by your business. Within
SAP, you have the ability to assign Cost Centers to departments and
/or Managers responsible for certain areas of the business as well
as functional areas within your organization. Cost Centers can be
created for such functional areas as Marketing, Purchasing, Human
Resources, Finance, Facilities, Information Systems, Administrative
Support, Legal, Shipping/Receiving, or even Quality.
Some of the
benefits of Cost Center Accounting : (1) Managers can set Budget
/Cost Center targets; (2) Cost Center visibility of functional
departments/areas of your business; (3) Planning ; (4) Availability
of Cost allocation methods; and (5) Assessments/Distribution of
costs to other cost objects.
Orders provide a
means of tracking costs of a specific job , service, or task.
Internal Orders are used as a method to collect those costs and
business transactions related to the task. This level of monitoring
can be very detailed but allows management the ability to review
Internal Order activity for better-decision making purposes.
allows a better definition of the source of costs to the process
driving the cost. Activity-Based Costing enhances Cost Center
Accounting in that it allows for a process-oriented and
cross-functional view of your cost centers. It can also be used with
Product Costing and Profitability Analysis.
allows management the ability to analyze their product costs and to
make decisions on the optimal price(s) to market their products. It
is within this module of CO (Controlling) that planned, actual and
target values are analyzed. Sub-components of the module are:
Product Cost Planning which includes
Material Costing( Cost estimates with Quantity structure, Cost
estimates without quantity structure, Master data for Mixed Cost
Estimates, Production lot Cost Estimates) , Price Updates, and
Reference and Simulation Costing.
Cost Object Controlling includes
Product Cost by Period, Product Cost by Order, Product Costs by
Sales Orders, Intangible Goods and Services, and CRM Service
Actual Costing/Material Ledger includes
Periodic Material valuation, Actual Costing, and Price Changes.
allows Management the ability to review information with respect to
the company’s profit or contribution margin by business segment.
Profitability Analysis can be obtained by the following methods:
which uses an account-based valuation approach. In this analysis,
cost and revenue element accounts are used. These accounts can be
reconciled with FI(Financial Accounting).
Analysis uses a
costing based valuation approach as defined by the User.
provides visibility of an organization’s profit and losses by profit
center. The methods which can be utilized for EC-PCA (Profit Center
Accounting) are period accounting or by the cost-of-sales approach.
Profit Centers can be set-up to identify product lines, divisions,
geographical regions, offices, production sites or by functions.
Profit Centers are used for Internal Control purposes enabling
management the ability to review areas of responsibility within
their organization. The difference between a Cost Center and a
Profit Center is that the Cost Center represents individual costs
incurred during a given period and Profit Centers contain the
balances of costs and revenues.
Primary configuration considerations
several configuration steps that must be considered when
implementing the CO (Controlling) Module. Creating the Controlling
area is one of the first steps in the CO (Controlling) configuration
process. SAP has provided standard controlling areas and company
codes which can be utilized as a basis for creating your company’s
Controlling Area. The SAP Standard for Controlling Area is “0001”
and for company code is “0001”.
recommended that these be used as a basis to create the Controlling
Area or Company Code that you would like to define . Certain
defaults setting such as number ranges have already been set-up in
the standard SAP settings, thereby eliminating the need to redo this
configuration requirement. Through the SAP Configuration process,
you can create a copy of the Standard Controlling Area and Company
Code, then update the other fields as needed including the four
character alpha numeric field which identifies these areas. (You may
want to change the controlling area from “0001” to “A001” and the
Company Code from “0001” to “ AA01” as an example.)
Keep in mind
that Company Codes are assigned to Controlling Areas and affect the
COA (Chart of Accounts), the Fiscal Year Variants, and Currency
set-ups. Cost Center hierarchy and Reconciliation ledger settings
are also include in the Controlling Area set-up.
Indicator activates and deactivates certain functions in the
Controlling Area. The Controlling Area can also be used for
cross-company code business transactions. To enable this function
the Controlling Area must be assigned to all company codes used for
cross-company code accounting.
in the CO (Controlling) Modules requires maintenance of number
ranges for documents generated from business transactions. A
systems’ generated document number is assigned for every CO
(Controlling) posting. These numbers are sequential and are required
to be assigned to number range groups. The number range groups
consists of two number intervals, one for internal document
numbering and one for external document numbering. The SAP R/3
system keeps track of those document numbers that are externally
generated and fed to SAP via batches and User manual input,
otherwise, the system generates the next internally assigned
document number for the transaction posted.
stated when defining the Controlling Area, you have the ability to
copy the Standard SAP Controlling Area “0001” which already has the
number ranges defined eliminating the need for maintenance of
number ranges. Keep in mind that you also have the flexibility to
change number ranges and number range groups to meet your business
needs. As a caution, never overlap number intervals in a group . For
example, if you decide to assign number range interval 10000000
thru 199999999 to the number range group “05”, you can not assign it
to number range group “06”. Number ranges should never be
transported for data consistency purposes, therefore create these
manually in each system.
Within the CO
(Controlling) Module, you can configure Plan Versions. Maintaining
Plan Versions allows for set-up of planning assumptions and
determination of plan rates for allocation and plan activity
purposes. The SAP Standard Version “000” is created for a five year
fiscal year plan. It is recommended that the standard version be
utilized for your plan/actual comparisons if you do not require
multiple plan versions. SAP always allows the flexibility to create
additional Plan versions by coping the Standard Version “000” and
changing certain fields as required. There is also the option of
defining and creating a totally new Plan Version.
Controlling Area, Number Ranges, and Plan Versions have been defined
and maintained, then settings for the other components in the
CO(Controlling) Module should be maintained. (Cost Center
Accounting, Cost Element Accounting, Activity-Based Costing,
Internal Orders, Product Cost Controlling, Profitability Analysis,
and Profit Center Accounting. )
Assignment Logic allows configuration for Validation and
Substitution Rules whose purpose is to check certain input values as
defined by the User.
specifically, Validations allow for business transactions to either
post or not post documents based on the criteria defined in the
validation rule. Certain input conditions are checked as defined by
the User and if those conditions are met then the document(s) are
updated and/or posted in the system. If the condition is not met,
then an error message is generated to the User with a brief
explanation of the error. These messages are defined in
Configuration and can be identified as a warning, error, or a note.
You also have the option to deactivate messages.
on the other hand, checks input values and replaces the values with
another value if the criteria as defined is met.
Currency and Valuation Profiles allows for the definition of
valuation approaches to be used in accounting components . These
valuation profiles are checked in the system when activated in the
Controlling Area. Certain rules apply if there is a need to maintain
the currency and valuation profiles: (1) Company Code Currency must
be assigned to a legal valuation approach, (2) Valuation
approaches must also be maintain in the material ledger, and (3)
Profit Center valuations can only be maintained if you are using
Profit Center Accounting.
CO(Controlling)Module has multiple configuration steps that must be
followed for complete implementation of this module. Each
sub-component of the CO (Controlling) Module has it’s level of
configuration requirements. Once you have defined your business
needs in the Controlling Area, a determination can be made as to
what should be configured and what you do not need.