Last Updated on September 28, 2022 by Pradeep
SAP S4 HANA Controlling has got many new features in the new S4HANA versions. With Universal Journal and ACDOCA, Controlling has got much-improved functionality. Not only this, Controlling has become more integrated and user-friendly in SAP S4 HANA Finance.
What is there in this article: I.e. Components with Changes:-
- Universal Journal
- Dealing with Reports
- Cost Elements
- CO-PA (Profitability Analysis)
- Predictive Accounting
- Currency Options
- Material Ledger
Here we go in their details.
Universal Journal in SAP S4 HANA Controlling
Universal Journal is the surface for the single source of truth in S/4HANA. However, it is not a new concept now. Surely it is with us for a long time. But SAP Controlling in S4 HANA has brought even more functionalities and features. So we will talk about its general benefits in brief.
- It eliminates differences in OLTP and OLAP and also eliminates the ETL process.
- It removes the need for reconciliation between different ledgers (E.g. FI & CO).
- Universal Journal allows enhancement in system performance.
- The tables here are now simplified with the unification of sub-ledgers (E.g. FI, CO, AA & ML).
- It further allows the elimination of totals concepts.
Do Checkout: SAP S4 HANA Controlling Training By Pradeep Hota
Dealing with Reports in S/4HANA Vs. ECC
Here I try to explain to you the difference between the process on how reports were generated in SAP Controlling under ECC Model. And how this process changed with the new features in the S/4HANA series of Controlling.
Reports in ECC – Old Model
In ECC most of the controlling Reports were based on total tables but now total tables are not in place anymore. Here the next question arises. How do these reports now work in SAP S/4 HANA?
Reports in SAP S4 HANA
Compatibility View – There is a non-disruptive compatibility view mechanism. This mechanism ensures that the reports are redirected to the new system and continue to work smoothly.
CDS View – Importantly, the old tables like COEP, COSP and COSS are replaced by views of the same name called CDS views or compatibility views.
These new views tables aggregate the data in the universal journal on the fly following the old table structure. Although, the old reports continue to work based on the universal journal or ACDOCA table.
SAP CO Fiori on ACDOCA – Secondly, the CO Fiori Apps also are based on the ACDOCA as well. In simple words, your reporting source is now ACDOCA/Universal Journal.
Likewise, the Payables, Receivables, Assets, Controlling and material ledger also, are now in the same universal journal table (ACDOCA).
However, Universal Journal/ACDOCA is much more than a technical concept.
It is a single place where we can find every information.
I explain this with a good example.
We raise a purchase order for the project. In this case, we consider the materials as Capital Expenses. Therefore, we can redirect the receipt of the goods to the WBS element/Order. Subsequently, the WBS element/Order is settled to an Asset Under Construction (at period end). It is further settled to the Final Asset (End of internal construction).
After a while, we raise an invoice and then post the payment.
Now let us compare.
In ECC, to keep together the information from purchase order to payment, we need to probably create a custom report among different tables.
Whereas in S4 HANA with Universal Journal/ACDOCA we can find every record in one single table. This is the power of Universal Journal.
Real-time Integration
In SAP S/4 HANA the secondary cost elements are now G/L accounts and part of the Chart of Accounts. This is again possible with the concept of Universal Journal.
Likewise, the Universal journal/ACDOCA also represents every internal Controlling posting. Therefore, you do not need Reconciliation Ledger or a Real-time integration concept anymore.
Now next question arises here how it will work then?
Now you can write SAP S4 HANA Controlling’s (CO) internal Postings on document types in Finance (FI). Surely, you have to select one document type example “CO” for each CO Business Transaction.
Furthermore, you can also Assign the CO version to the leading ledger or every standard ledger.
Cost Element in SAP S4 HANA Controlling (S/4HANA Finance)
In the new SAP S4 HANA Finance, both the Primary & Secondary Cost Elements, are now G/L accounts and are part of the chart of accounts. For example, for doing the CO internal allocation between two cost centers. If you create an internal posting in CO, the system will generate one FI document for it with an FI header (BKPF not BSEG).
Anyway, the total impact of the secondary element is zero because you use them only to move costs from one cost object to another. Thus, you should not worry about them in total but only among Controlling objects.
You may be interested in: SAP Controlling Interview Questions- Cost Elements
Controlling Profitability Analysis – CO-PA in SAP FICO
In ECC there were two types of Controlling Profitability Analysis (CO-PA)
- Costing Based (Using Value Fields)
- Account-Based (Integrated with G/L accounting and using G/L accounts)
We use Profitability Analysis and opted for costing-based because it was much more powerful and very integrated with Product Costing. It is more useful as it allowed the use of valuations to import in CO-PA sales order statistical conditions.
But if talk about the COPA process flow in SAP FICO, it has a lot of issues being based on value fields not on G/L accounts. Writing on different tables and sometimes not completely aligned with the General Ledger Document postings.
An example of this is the Goods issue.
In costing-based CO-PA, we can only generate accounting documents but there was no update in CO-PA. Therefore, we could not easily reconcile it with General Ledger.
Related: Scenarios in SAP General Ledger Accounting
CO-PA in SAP S4 HANA Controlling (S/4HANA Finance)
In SAP S/4 HANA, we have the integrated approach of the Universal Journal. Thus, here SAP has decided to use the integrated ECC Account-Based CO-PA as a base to build the new SAP S/4 HANA Margin Analysis.
Although we can still use the Costing-based CO-PA in SAP S/4 HANA, Account-based CO-PA would be the future in S/4 HANA. Earlier, the Account-based COPA was not easy to adopt for customers. This is because the Costing-based CO-PA offered more functionalities.
But then, with every new release SAP improved the Account-based CO-PA in Universal Journal with new functionalities. A good example of this is the COGS splitting, which SAP has included.
Related: SAP Profitability Analysis 2020 – Main Updates
Predictive Accounting
Predictive accounting deals with a dedicated part of P/L Sales Orders in real-time. Before it becomes an actual posting it may help customers to anticipate their month-end closing and reporting.
We have the option to bring in SAP S/4 HANA Sales orders in a specific ledger (extension ledger). Similarly, we can obtain automatic reversals of these postings once the related financial documents are posted (from Outbound Delivery).
The good thing about predictive accounting is that the “predictive postings” are automatically adjusted with the actual postings.
Material Ledger
Material Ledger in SAP S/4HANA is mandatory. This does not mean that you will be forced into actual costing. Importantly, the table structures in SAP ECC Material Ledger are complex. Whereas in S/4 HANA data structure has been simplified.
Sub-ledgers for Inventory valuation
The objective positions the ML as a sub-ledger for inventory valuation.
If an organization records inventory on its balance sheet, then it needs a sub-ledger for inventory postings. This subsequently provides more granular details about inventory transactions than G/L postings like AP, AR and Fixed Asset.
Sub-Ledgers of SAP GL
Further, these GL postings are also sub-ledgers of SAP General Ledger.
The inventory “sub-ledger” already exists in SAP ECC in the form of inventory valuation tables.
Examples of these tables are EBEW, EBEWH, MBEW, MBEWH, OBEW, OBEWH etc.
SAP enhanced these tables in S4 HANA just as it did with Universal Journal. The actual costing functionality is still optional and this is what causes the most confusion. Therefore companies that do not need to report their inventory and cost of sales at actual cost do not need to activate this functionality.
Related: SAP S4 HANA Finance – Ledgers
Currency Options in S/4HANA Finance
S/4 HANA offers a few new currency options too. It offers new ways of evaluating Material Ledger Data.
Currency Integration with ML in Controlling in SAP S/4 HANA
Currency settings are available in the Universal Journal as integrated with ML. Multiple currencies or parallel currencies is a functionality that allows companies to record transactions in more than one currency for every transaction posted to FI.
This parallel currency functionality has been extended to ML for any inventory transactions, which can be viewed in Material Ledger reports.
You may be interested in: Asset Accounting in SAP FICO
Summary
With the launch of S4HANA, many things have changed in SAP upgraded. As you understood with the information I mentioned above, Controlling too got many updates in S4 HANA. These changes have made Controlling advanced and work better. S/4HANA technology has updated all modules for the better. Accordingly, SAP consultants who do configurations and implementations should be the best updated with changes. Obviously for their SAP career growth and also for scaling their portfolio.
Controlling itself is a very important part of SAP Financial and Management Accounting. Good companies do look for a capable SAP S/4HANA Finance Consultant who can work efficiently on controlling also.
So, if you are a beginner, then I advise you to learn ECC-based SAP Controlling first then go for S/4HANA Controlling as the next step.
Watch Related YT Video: Document Types in SAP S4 HANA Controlling
