SAP Management Accounting on S/4HANA follows the complete process of SAP CO and uses the advancement of S/4HANA technology. It is based on the HANA platform, which works on cloud technology. It also includes the migration of the financial process to HANA along with all updates in the architecture of Management Accounting, Further, it carries the functionalities of Master data management, Ledger Posting, data model etc.
The Controlling elements describe all elements that you should consider as you are setting up a Controlling organizational structure.
Let us understand some of these in detail.
The controlling area is the major organizational element within controlling. Without the controlling area, no configuration in SAP Management Accounting is possible. Further, no postings will effectively hit the Controlling module.
In SAP ERP (ECC) It is possible to run Financial Accounting without activating Controlling, but not the other way around.
Sometimes small finance companies or holding don’t use Controlling. This is because they have a very limited number of postings and also they do not do management reporting for those entities.
However, in S4 HANA Controlling Area activation is almost mandatory as Management Accounting (CO Area) is an integral part of the Universal Journal (ACDOCA) Table.
The segment is an account assignment object in the New General Ledger that enables you to create a Full P & L and balance sheet on the segment level. If you activate segment reporting in the New General Ledger, the maintenance of a segment in the profit center becomes mandatory.
We can also represent the segment with the help of profit center groups.
Beginning with the arrival of the New General Ledger, SAP differentiates between the new Profit center Accounting and the classic Profit Center Accounting. The major difference is the storage of the data. While the new profit center Accounting stores all data in the Financial Accounting module data tables. The classic Profit Center Accounting stores all the data in Controlling modules data tables.
The cost element is now G/L accounts is also a known concept for a while. We have a Universal journal that represents a single concept. That means that even if you create an internal posting in CO (CO internal allocation between two cost centers), you will obtain an FI document with an FI header ( BKPF not BSEG).
Learn more: Tables in Sap FICO
A very important subject of SAP S4 HANA Management Accounting is Product Costing which is used to calculate the cost of production of the organization. Likewise, we have profitability analysis which we use to analyze the internal cost and profitability of the company.
Both carry a high weight in this subject.
This new version of SAP Management Accounting integrates and can modify business processes such as Purchase to pay, order to cash & production cycle.
Product Costing further has many components such as Product cost planning, cost object controlling and more. Each has its separate role in SAP Management accounting.
Read Related: SAP Controlling Interview Questions
As total tables are not in place anymore and in ECC most of the Controlling Reporting was based on totals tables.
So how these reports are now working in SAP S4 HANA?
The answer is because of the non-disruptive CDS view (Compatibility view mechanism) that ensures that we can redirect the reports and continue to work.
Former tables like COEP, COSP & COSS are replaced by views of the same name as the CDS view that aggregate the data in the Universal Journal on the fly by the old table structures.
Read related: Know what’s new in SAP CO in S/4HANA
Before the Finance’s real-time integration, we use the Controlling Reconciliation Ledger concepts in ECC to keep aligned with CO.
For Example, one Cross Cost center CO posting belonging to different Profit Centers or Business Areas or company codes could create misalignment between FI & CO. In ECC if you had an FI posting of 100 USD on Cost center A => Profit center A.
And then CO internal allocation from Cost center A to Cost Center B=> Profit center B you would have Controlling report, both cost Center and profit center not aligned with Financial Reporting.
Whereas, in S4 HANA, an internal CO document will generate a Finance document.
If we had done the allocation by using secondary cost elements, then to allow the posting in FI, we could represent the Secondary Cost Element with a Specific G/L account. This is because we cannot do FI posting on the secondary cost element.
In S4 HANA, with the concept of the universal journal, secondary cost elements are G/L accounts. Every CO posting is represented in Universal Journal. Therefore you do not need a Reconciliation ledger or Real-time integration concept anymore.
With Universal Journal, SAP Management Accounting internal postings are written in ACDOCA – Universal Journal. Additionally, CO internal postings are now written on document types (as per FI documents). You need to select the CO document type for each Business Transaction.
In ECC two types of CO-PA are available
In ECC most of the customers who used Profitability Analysis opted for Costing Based since it was more powerful. Likewise, it gives more confidence to customers as it is integrated with Product Costing.
For example, it allowed the use of valuations to import in COPA Sales Orders, and billing documents also it has functionalities to import COGS split into COPA value fields.
Using Value Fields, writing on different tables and sometimes not completely aligned with the General Ledger document postings (Goods deliver to customer). It will create a reconciliation issue.
SAP decided to use the integrated ECC Account-based COPA as a base to build the new SAP S/4 HANA Margin Analysis concept became a new version of Account-based COPA in Universal Journal. Though, we can still use Costing-based CO-PA in SAP S/4 HANA. However, Margin Analysis will be the only solution in future.
In Costing-Based CO-PA
In Account-Based COPA
In Marginal Analysis, we assign the Costs of Goods sold postings to an account/cost element at the time of the goods issue. We also have new functions available to split the COGS postings to multiple accounts by the relative weight of the assigned cost components.
We can update this split with the results of the actual costing.
With Predictive Accounting we can bring in SAP S/4 HANA Sales orders in a specific ledger (Extension Ledger) and obtain automatic reversal of these postings once the related Financial documents are posted.
As already said, SAP S/4HANA Management Accounting, contains the complete architecture of SAP Controlling, with all features of S/4HANA. It also includes Organizational structures and master data in overhead cost control.
When the data, which is relevant to costs, flow from Financial Accounting to SAP Controlling, the system assigns the costs and revenues to different CO account assignment objects, such as cost centers, business processes, projects or orders. All these play a vital role in the functioning of S4 HANA Management Accounting.
SAP CO – Controlling is the support system to the Organization’s Management in its decision-making. Be it in terms of planning, monitoring, or reporting of the business processes. Subsequently, it assists in the coordination, monitoring, and optimization of the business processes of the organization.
Additionally, SAP Controlling keeps & records all the data regarding product consumption and services delivered by the organization.
You may be interested in SAP ECC Vs. R/3 system
SAP CO or SAP Controlling work on ECC Model, on which SAP has upgraded and launched this module on the HANA platform and named SAP S/4HANA Management Accounting. An application that is as valuable and important as SAP S4 HANA Finance (commonly called SAP Simple Finance). We may consider it as the advanced version of SAP Controlling as it is the latest and has come with a high number of features that have enhanced user-friendliness.
There are many interesting & important facts and features of SAP Controlling on the HANA Platform like Product costing, profitability analysis, CO-PA and more. Visit our SAP Product Costing online training page on our website for a better understanding.
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