Controlling AreaDefinitionControlling area is an organizational unit from the Accounting component in the R/3 System, usedto represent a closed system for cost accounting purposes.In the standard R/3 System, the controlling area constitutes the framework for planning, allocationand monitoring of costs.UseIf your enterprise has or plans to have uniform controlling structures , it makes sense to set upuniform structures for cost accounting.Before you do this, decide whether to have one or more logical controlling areas. This decisiondepends on your company’s corporate policy, that is on whether your company has centralized ordecentralized management structures.For more information, see:Controlling area: NotesIntegrationControlling Area: Integration (Applications)Controlling Area: Integration (Organizational Unit)Controlling (CO)Organizational unit within a company, used to represent a closed system for cost accountingpurposes.A controlling area may include single or multiple company codes that may use differentcurrencies. These company codes must use the same operative chart of accounts.All internal allocations refer exclusively to objects in the same controlling area.Controlling Area: NotesOne controlling areaWhen you have one controlling area:• The same operative chart of accounts is used.
Each enterprise entity in the controlling area only uses the specific accounts it requires. You canuse a country chart of accounts to record country-specific requirements.• Posting periods are always the same. Special periods are, however, an exception.• You must agree on controlling master data, for example for cost elements, activity types, costcenters. Uniform procedures should exist for maintaining master data.• Work on period-end closing must be coordinated (planned and actual work). You must agree ona time schedule for work on period-end closing. You must define how costs are allocated andprices are calculated for services per cost center / cost center group• You have a choice of three currencies. Controlling area currency, object currency andtransaction currency. For cost accounting for several company codes and several countries, theobject currency corresponds to the transaction currency.• You have unlimited use of the project management function. You can work with one projectdefinition, one project structure plan and one network. You have unlimited use of projectmanagement and reporting functions.• You have unlimited use of the cost distribution functions (cost center assessment and internalactivity allocation.Several controlling areasYou can define several controlling areas if you do not want to merge enterprise units in costaccounting. Ensure that the organizational structure provides for harmonized procedures andstructures for cost accountingWhen you have more than on controlling area:• You can define a separate operative chart of accounts for each controlling area. You can usethe group chart of accounts for consolidation.• You can work with different posting periods. Controlling areas that are assigned to the sameoperating concern use the same posting periods.• Work on period-end closing do not need to be coordinated (planned and actual work).• You define controlling master data such as cost elements, activity types, cost centers for eachspecific controlling area.• You must ensure that the organizational structure caters for comprehensive projectmanagement. You can work with one project definition, one project structure plan and onenetwork for each controlling area. You have unlimited use of project management and reportingfunctions within each controlling area. You may use the Executive Information System (EIS) if youwould like project reporting to cover all controlling areas (cost elements, cost centers, orders).• You can use the Special Purpose Ledger (FI-SL) or Consolidation (EC-CS) components to drawup reports for all controlling areas. Ensure that you consolidate the appropriate elements fromdifferent controlling areas.
For more information on cost accounting for several controlling areas see OSS note 107293.Controlling Area: Integration (Applications)When you work with the following components, you are in one controlling area: • Overhead Cost Controlling (CO-OM)Cost element accounting, cost center accounting • Product Cost Controlling (CO-PC) Cost object controlling, costing • Profit Center Accounting (EC-PCA) • Project System (PS)Controlling Area: Integration (OrganizationalUnits)You define technical aspects of a controlling area at client level. It is possible, and in the case ofdistributed systems even recommendable, to conduct joint cost accounting for all clients (ALEscenarios).Controlling areas and cost centersOne or several controlling areas can be assigned to a controlling area. A cost center is assignedto exactly one controlling area.Controlling areas and profit centersOne or several profit centers can be assigned to a controlling area.A profit center is assigned to exactly one controlling area. Costs relevant for the profit center areentered in this controlling area.Controlling areas and operating concernsAn operating concern can be assigned to one controlling area. The profitability analysis for thiscontrolling area is carried out in this operating concern.Several controlling areas can be assigned to one operating concern.The costs of the assigned controlling areas are included in the profitability analysis and areavailable in the operating concern.Controlling areas and company codesSeveral company codes are assigned to one controlling area. These company codes are includedin cost accounting within that controlling area.
You can assign a controlling area to one company code. Cost accounting for the company codeis conducted in this controlling area.You can assign several company codes to one controlling area when you conduct joint costaccounting.For G/L accounting, you may only use the same posting periods for company codes as you usefor the controlling area to which they are assigned.