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Controlling 2012 Systematic Guidelines for Reconciling CO-PA to the General Ledger

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In this presentation, you will learn how to overcome one of the most common frustrations with CO-PA – the inability to easily reconcile it with the SAP General Ledger. We’ll cover:
1. Overview of costing & accounting-based CO-PA, including ways that data flows into CO-PA
2. Demonstration of how and why costing-based CO-PA ties to the SAP General Ledger
3. Tips for matching the cost-of-sales G/L account with its corresponding value field
4. Additional CO-PA reconciliation issues to be on the lookout for
5. Options for reposting documents in CO-PA only
Get instructions for synchronizing the data flows in CO-PA with the SAP General Ledger and best practices for easily analyzing and fixing reconciliation issues.

Controlling 2012 Systematic Guidelines for Reconciling CO-PA to the General Ledger

  1. 1. Systematic Guidelines forReconciling CO-PA to theGeneral Ledger Paul Ovigele Ovigele Consulting © 2012 ERP Corp. All rights reserved.
  2. 2. Introduction • Learn the difference between Costing and Account-based CO- PA • Discover what to look out for when reconciling CO-PA to the General Ledger • Learn how to match the Cost-of Sales G/L account with its corresponding CO-PA value field • Find out how to repost documents in CO-PA only3
  3. 3. Topics • Overview of costing and accounting-based CO-PA • How costing-based CO-PA ties to the General Ledger • Matching the cost-of-sales G/L account to CO-PA • Additional CO-PA reconciliation issues • Reposting documents in CO-PA only • Summary Start of first section: List the main points in your presentation and insert this slide at the start of each new topic. Move the highlighted box down for each new section. This divides your presentation into easy to follow sections.4
  4. 4. Overview of Controlling Profitability Analysis • Collects Revenues and Costs from various modules in order to analyze profitability • Inherits the characteristics that are associated with those revenues and costs • Examples of Characteristics are Customer, Product, Region, Salesperson, etc. • Excellent tool for analysis but not easily reconcilable with the General Ledger5
  5. 5. Costing Based CO-PA • Groups costs and revenues into Value Fields • Value fields are mapped to Conditions, G/L Accounts, Cost Components and Variance Categories • This was the original model of CO-PA • When people say CO-PA they are normally referring to “Costing- Based” CO-PA6
  6. 6. Advantages and Disadvantages Advantages Disadvantages • Splits the cost of sales value • Does not show G/L Accounts into its different cost hence not as easily components reconcilable • Can classify production • More complicated to set up as variances into their different it requires mapping of value categories fields to various objects • Better visibility of contribution margin as fixed and variable costs can be broken out7
  7. 7. Account-Based CO-PA • Uses Accounts as a basis for reporting • All P&L Accounts would need to be created as cost or revenue elements • Categories of cost and revenue elements are classified according to cost element groups • This type of CO-PA was introduced because accountants complained about not being able to reconcile costing-based CO-PA to the general ledger8
  8. 8. Advantages and Disadvantages Advantages Disadvantages • Displayed according to G/L • You cannot break out cost of Accounts so it is easier to sales into their fixed and reconcile to the General Ledger variable costs • As you can still report by • You cannot analyze variances characteristics, it can also be into their respective categories compared with Costing based • You cannot analyze cost of CO-PA reports sales according to cost components9
  9. 9. Data Flows into CO-PA10
  10. 10. Data Flows into CO-PA (cont.) • Flow of Actuals in Profitability Analysis • Flow from the Sales and Distribution (SD) Module • Flow from Billing Document • Flow from the FI/MM – direct postings • General Ledger Posting • MM Postings • Flow from the Product Costing • Transfer of Cost Components to PA • Flow from Cost Object Controlling • Settlement of Production Variances to PA • Flow from Project Systems • Settlement of Results Analysis to PA11
  11. 11. Topics • Overview of costing and accounting-based CO-PA • How costing-based CO-PA ties to the General Ledger • Matching the cost-of-sales G/L account to CO-PA • Additional CO-PA reconciliation issues • Reposting documents in CO-PA only • Summary Start of first section: List the main points in your presentation and insert this slide at the start of each new topic. Move the highlighted box down for each new section. This divides your presentation into easy to follow sections.12
  12. 12. Billing Document Postings Sales Condition is Mapped to a Value Field Sales Condition is also mapped to an account key and subsequently a G/L Account If a value field is not mapped to a sales condition, the billing document is not passed to FI13
  13. 13. Finance Postings • Finance transactions are assigned to a PA transfer structure • This PA transfer structure includes source and target objects • Source objects are cost elements (or groups) • Target objects are value fields • When posting a Finance document, click on the Prof.Seg. Arrow and enter the characteristicsClick on “Prof.Seg” arrow toenter the characteristics14
  14. 14. Inventory Postings • G/L Accounts are assigned to relevant inventory transactions in OBYC • These G/L Accounts are mapped to value fields in PA transfer structure • Include G/L Accounts in automatic account assignment transaction OKB9 • Check the Profitability Segment box15
  15. 15. Production Settlement • Settlement Structure for Production is assigned to a PA transfer structure • PA transfer structure contains various assignments • These assignments have source and target objects • Source objects are the variance categories • The target objects are specific value fields16
  16. 16. Project Systems Settlement • Results analysis line IDs are assigned to cost elements • Settlement Structure for Projects is assigned to a PA transfer structure • PA transfer structure contains different assignments • These assignments have source and target objects • Source objects are the project systems cost elements • The target objects are specific value fields17
  17. 17. Cost Center Assessments • Cost Centers (or groups) are entered as senders in Assessments • CO-PA Characteristics are designated as receivers • Value fields to be posted to are assigned in these assessments • Normally used for expenses that are not part of cost of sales18
  18. 18. Cost Components • Cost Components are set up to break out the standard cost into its respective elements • Cost elements are assigned to these cost components • These cost components are assigned to value fields19
  19. 19. Topics • Overview of costing and accounting-based CO-PA • How costing-based CO-PA ties to the General Ledger • Matching the cost-of-sales G/L account to CO-PA • Additional CO-PA reconciliation issues • Reposting documents in CO-PA only • Summary Start of first section: List the main points in your presentation and insert this slide at the start of each new topic. Move the highlighted box down for each new section. This divides your presentation into easy to follow sections.20
  20. 20. Timing difference of Goods Issue Transaction General Ledger CO-PA Sales Order Not Updated* Not Updated Goods Issue Updated (COS) Not Updated Billing Document Updated (Revenue) Updated (COS & Revenue) • * Note: CO-PA can be updated from sales orders if you activate “Transfer of Incoming Sales Orders”21
  21. 21. Copying Condition VPRS to ZPRS • You can copy condition VPRS to ZPRS in transaction V/06 • Assign this condition to your pricing procedures (V/08)22
  22. 22. Assigning Condition ZPRS to CO-PA Value field • Go to transaction KE4I • Assign Condition ZPRS to the Cost of Sales value field • You can overwrite the mapping of the current cost of sales condition (which is normally “VPRS” but could be something else) with condition ZPRS23
  23. 23. Assigning Condition to an account Key • Create an account key “ZPR” using the menu path: Sales and Distribution -> Basic Functions -> Account Assignment/Costing -> Revenue Account Determination -> Define and Assign Account Key • Assign this account key to the ZPRS condition in the pricing procedure (transaction V/08) Account key “ZPR” assigned to condition ZPRS24
  24. 24. Configuring “Shipped not Billed Account” • Create “Shipped Not Billed” account in transaction FS00; • Make this account an “Open Item managed Account” with the “Only Bal. in Local Currency” flag checked25
  25. 25. Configuring “Shipped not Billed” Account (cont.) • Go to transaction OBYC, enter this account under transaction Key GBB and Account Modification VAX • The cost of sales account would have previously been configured in this setting. You need to overwrite that account with the “Shipped not Billed Account” • This way, the “Shipped not Billed” account will be debited during a Goods Issue transaction26
  26. 26. Making Cost of Sales Account a Cost Element • Go to transaction KA01 and enter the cost of sales cost element; • Enter a Cost Element Category of “12 – Sales Deduction”27
  27. 27. Assign Account Key to G/L Accounts • Go to transaction VK0A and assign the account key ZPR to the G/L Accounts “Shipped not Billed” and “Cost of Goods Sold” • This way, when you bill a customer, the “Shipped not Billed” account will be credited and the “Cost of Goods Sold” will be debited “Shipped not Billed” “Cost of Sales” Account Account28
  28. 28. Topics • Overview of costing and accounting-based CO-PA • How costing-based CO-PA ties to the General Ledger • Matching the cost-of-sales G/L account to CO-PA • Additional CO-PA reconciliation issues • Reposting documents in CO-PA only • Summary Start of first section: List the main points in your presentation and insert this slide at the start of each new topic. Move the highlighted box down for each new section. This divides your presentation into easy to follow sections.29
  29. 29. Stock Transport Order Variance Issue • A Stock Transport Order Variance which is posted using transaction VL02N does not get posted to CO-PA • This is because this transaction is posted as a goods issue. Goods Issues do not pass to CO-PA because they are expected to be billed; • However, STO‟s are not billed, so there is a discrepancy • You need to apply SAPNote 116743930
  30. 30. Credit/Debit Memos with no Inventory Adjustments • Some credit/debit memos relate to price adjustments alone; • However, if you enter an inventory material number in them the system will determine their standard cost • This means that a cost will be transferred to CO-PA even though there has been no inventory movement • You may need to disable the VPRS condition for these type of Credit/Debit Memos; • Alternatively, you can use a text material (which does not have any standard cost)31
  31. 31. Cost Element category for Sales Order Condition • Sales conditions that are mapped to value fields should be assigned to the appropriate G/L Accounts • These G/L accounts are mapped to sales conditions through the use of account keys • The G/L Accounts should be set up as cost elements with Cost Element category 11 or 1232
  32. 32. Making Production Variance Account a Cost Element • Variances are posted to CO-PA through the mapping of variance categories to value fields • A variance G/L account is also posted to at the same time (configured in transaction OBYC – Transaction Key: PRD-PRF) • This G/L account should not be a cost element as this could lead to a double-posting in CO-PA33
  33. 33. Negative Discount Conditions • A negative sales condition (i.e. deduction from Revenue) shows up in CO-PA as a negative number • However, Revenue shows up in CO-PA as a positive number • This means that if your CO-PA reports contain a formula that deducts discounts from Sales, this will be a double negative (hence an addition to sales); • If you therefore add these (negative) discounts to revenue, be careful about FI generated discounts as they appear in COPA as positive amounts; • The recommendation is to use different value fields for Sales Condition Discounts which are negative and FI Generated discounts which are positive34
  34. 34. Work-in-process account • WIP account is posted to when an incomplete production order s settled • In the G/L it is posted to a balance sheet and a P&L account • The P&L Account is not to be set up as a cost element • CO-PA is not updated with WIP postings, and hence there can be an imbalance with the General Ledger35
  35. 35. Cost Center Allocations not fully Absorbed • If you have created cost center assessments to CO-PA, these need to be executed every month • This will ensure that all cost center costs eventually flow to CO- PA • You need to check all the cost centers at month end to ensure that they are zeroed out36
  36. 36. Posting in CO-PA without corresponding G/L entry • COPA-only postings can be made using transaction KE21N • However, if these postings are made without a corresponding FI entry, then this can lead to an imbalance • These postings should only be used in emergency cases or when a reconciliation issue needs to be fixed37
  37. 37. Topics • Overview of costing and accounting-based CO-PA • How costing-based CO-PA ties to the General Ledger • Matching the cost-of-sales G/L account to CO-PA • Additional CO-PA reconciliation issues • Reposting documents in CO-PA only • Summary Start of first section: List the main points in your presentation and insert this slide at the start of each new topic. Move the highlighted box down for each new section. This divides your presentation into easy to follow sections.38
  38. 38. Reasons for Making Manual CO-PA Postings• You can manually post documents to CO-PA only by using transaction KE21N• This should only be used when it is too late to go back to the source module to make the posting (e.g. when the period closing for that module has been carried out)• Make sure that only certain users have access to this transaction as it could lead to an imbalance with the general ledger if not used correctly
  39. 39. Manual Posting to CO-PA Enter a Record Type and Posting Date in the initial screen
  40. 40. Manual Posting to CO-PA (cont.) Enter the relevant characteristics and value fields
  41. 41. Reasons CO-PA may not be Originally Updated • CO-PA was not set up when the finance posting was made • The cost element that was linked to the condition type‟s account key was not set up with Category „11‟ or „12‟ • There was an incorrect mapping of an SD condition type to a CO-PA Value field • A technical system error occurred which did not complete the document‟s posting to CO-PA42
  42. 42. Subsequent CO-PA Posting Choose business transaction and document origin • You can restrict the selection by document number, document, posting date or creation date43
  43. 43. Subsequent CO-PA Posting (cont.)• You can also subsequently repost documents that originated from the Sales and Distribution and Materials Management modules by using transaction KE4S and KE4SMM respectively
  44. 44. Reasons for Reversing CO-PA Documents• You made the initial posting by using the CO-PA document transaction KE21N• You made a CO-PA configuration change but it is too late to reverse the source document, hence you need to cancel and repost the CO-PA document alone• There is an external interface that was posted incorrectly into CO-PA and needs to be corrected in SAP only
  45. 45. Displaying CO-PA Documents to be Deleted• You need to be specific about the data that you want to delete otherwise you could delete a CO-PA document inadvertently• It is therefore advisable to display the CO-PA documents first before carrying out the reversal• You can use transaction KE24 to display the CO-PA documents.
  46. 46. Using Transaction KE4S00• Minimum data that needs to be entered: • Operating Concern • Record Type • Company Code
  47. 47. Using Transaction KE4S00 (cont.) • When you execute the transaction you will get a log of the line items read and cancelled:• Double-click on the relevant line to see the document numbers that have been read or cancelled
  48. 48. Topics • Overview of costing and accounting-based CO-PA • How costing-based CO-PA ties to the General Ledger • Matching the cost-of-sales G/L account to CO-PA • Additional CO-PA reconciliation issues • Reposting documents in CO-PA only • Summary Start of first section: List the main points in your presentation and insert this slide at the start of each new topic. Move the highlighted box down for each new section. This divides your presentation into easy to follow sections.49
  49. 49. Resources • Paul Ovigele, 100 Things You Should Know About Financial Accounting with SAP (July 2011) • Provides little-known tips to optimize the Financial Accounting module, including reconciling the general ledger cost of sales account with CO-PA • http://help.sap.com/saphelp_erp60_sp/helpdata/en/7a/4c48c64a 0111d1894c0000e829fbbd/frameset.htmSAP • SAP Help website contains comprehensive information about the CO-PA module including the various data flows from the other modules such as the general ledger50
  50. 50. Five Key Ideas • Costing-based CO-PA is more effective than Account-based CO- PA for cost of sales and variance analysis but is more difficult to reconcile to the general ledger • Data flows into CO-PA from billing documents, general ledger and inventory postings, production order and project systems settlements, cost components and cost center assessments • Cost of sales are posted to the general ledger when the goods are issued, but posted to CO-PA when a billing document is created • A cost element that is linked to a sales condition which posts to CO-PA should have a cost element category of “11” or “12” • You can post documents to CO-PA only using transaction KE21N51
  51. 51. Questions • Now: • Ask questions now for immediate answers • Later: • Contact me at paul@ovigele.com Q&A52
  52. 52. DisclaimerSAP®, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver®, Duet®, PartnerEdge, and other SAP® products andservices mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG inGermany and in several other countries all over the world. All other product and service names mentioned are thetrademarks of their respective companies. ERP Corp is neither owned nor controlled by SAP.

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