1. business and industrial

SAP CONTROLLING
FUNCTIONALITY AND IMPLEMENTATION
Muhammad Hani
Agenda
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The role of SAP-CO in the business environment.
Main components of SAP-CO.
Controlling integration with other SAP modules.
Implementing SAP-CO.
Overview of the organizational structure.
Cost center and profit center accounting.
Internal Orders.
Product Costing
Profitability analysis.
Conclusion, Questions, and discussion.
The rule of SAP-CO in the business environment
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Controlling (CO) is the term by which SAP refers to “Managerial
Accounting”.
Managerial accounting is concerned with the provisions and use
of accounting information to managers within organizations, to
provide them with the basis to make informed business decisions that
will allow them to be better equipped in their management and
control functions.
Managerial VS Financial accounting
Components of SAP-CO
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Cost Center Accounting
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Profit Center Accounting
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Internal Orders
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Product Costing
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Profitability Analysis
Implementation Consideration
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Controlling implementation depends on how well is
the implementation of the other components:
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FI-MM-SD-PP-HR
SAP recommends Controlling implementation to be
carried out in 3 phases:
Foundation.
 Stabilization.
 Enhancement and Optimization.
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Controlling Integration
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Financial module plays the role of a “Feeder system”.
All Financial transactions relevant to profit and loss
accounts are updated in the controlling in “real time”.
This happens in real time through the component “Cost
Element Accounting”.
Any transaction in non-financial modules like MM-SD that
have a financial impact on profit and loss are updated
in controlling instantly.
Integration in event- based posting
Organizational Structure
Cost Center Accounting
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Used for internal controlling purposes and make the
costs more transparent in an organization.
If you have overhead costs, they need to be
allocated to the actual department that owns that
cost.
Focus is on managing cost per plan.
Performance is managed by comparing planned
and actual costs.
Cost Center Accounting-Cont’d
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The structure of cost centers is heavily dependent on
each organization.
Before creating a cost center, you should outline the
standard hierarchy of the cost centers.
Standard hierarchy allows you to visualize the
organization from the controlling perspective.
Activity types and planning
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Used to measure the output or the contribution of cost
centers to the organization.
Ex: Quality control cost center ,the output which is
“Inspection Hours” is an activity type.
Activity inputs -which are primary cost elements- and
activity output quantities and prices are planned and
compared to actual values so that any variance can
be measured and analyzed.
Activity flow and allocation
Cost center: Budget Planning
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Cost center accounting also allows you to set up a
monthly budget by cost center.
You can compare the actual values against the
budgeted values and establish timely availability
checks in case the budget is exceeded.
Profit Center Accounting
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Primarily used for management-related reporting
for internal purposes.
Defining an organizational element as a profit
center entails that the unit is being managed
independently by a person who is responsible for
the profit(revenues and costs).
Difference between profit center accounting and
profitability analysis.
Internal Orders
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Used for managing small projects that need to be
budgeted and managed independently .
Ex: setting up a marketing kiosk in a cultural event.
Internal orders accounting allows you to plan, budget,
collect ,and settle the costs of a mini project in a process
oriented fashion.
Real and statistical orders.
Settlement process and receivers (Fixed Assets-Cost
Centers-Profitability Segment-WBS).
Internal orders
Product Costing
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The basic question that CO-PC aims to answer is
this: what is the material cost of a product?
Measuring the value added by each process and
organizational unit.
Supports make or buy decisions.
Determine true inventory and COGS values.
Come up with price floor for unit cost.
Product costing integration
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CO-PC is heavily integrated with PP and is
effective only in conjunction with PP and MM.
All of the master data of CO-PC depends on PP for
BOM, routing, work centers, and relies on cost
center accounting for activity types prices.
Product cost planning and standard cost estimate.
Planning with or without Quantity structure.
Costing Variant
Profitability Analysis (CO-PA)
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The key difference between CO-PA and profit
center accounting (EC-PCA) is that PA is the external
view of the organization while PCA is the internal
view of the organization for management reporting.
CO-PA is a market oriented perspective, you can
report profitability by customer, customer group,
division, product, product group, distribution
channel, and so on.
Reporting features, an example
CO-PA Integration
Conclusion
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Controlling can help your organization:
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Improve productivity and insight.
Reduce costs through increased flexibility.
Support changing industry requirements.
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Provide immediate access to enterprise information.
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Questions/Discussions
Thank You