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SAP Controlling overview


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SAP Controlling overview

  2. 2. Agenda 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.
  3. 3. The rule of SAP-CO in the businessenvironment Controlling (CO) is the term by which SAP refers to“Managerial Accounting”. Managerial accounting is concerned with the provisions anduse of accounting information to managers withinorganizations, to provide them with the basis to makeinformed business decisions that will allow them to be betterequipped in their management and control functions.
  4. 4. Managerial VS Financialaccounting
  5. 5. Components of SAP-CO Cost Center Accounting Profit Center Accounting Internal Orders Product Costing Profitability Analysis
  6. 6. Implementation Consideration Controlling implementation depends on howwell is the implementation of the othercomponents: FI-MM-SD-PP-HR SAP recommends Controlling implementationto be carried out in 3 phases: Foundation. Stabilization. Enhancement and Optimization.
  7. 7. Controlling Integration Financial module plays the role of a “Feedersystem”. All Financial transactions relevant to profit and lossaccounts are updated in the controlling in “realtime”. 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 lossare updated in controlling instantly.
  8. 8. Integration in event- based posting
  9. 9. Organizational Structure
  10. 10. Cost Center Accounting Used for internal controlling purposes andmake the costs more transparent in anorganization. If you have overhead costs, they need to beallocated to the actual department that ownsthat cost. Focus is on managing cost per plan. Performance is managed by comparingplanned and actual costs.
  11. 11. Cost Center Accounting-Cont’d The structure of cost centers is heavilydependent on each organization. Before creating a cost center, you shouldoutline the standard hierarchy of the costcenters. Standard hierarchy allows you to visualize theorganization from the controlling perspective.
  12. 12. Activity types and planning Used to measure the output or the contribution ofcost centers to the organization. Ex: Quality control cost center ,the output whichis “Inspection Hours” is an activity type. Activity inputs -which are primary cost elements-and activity output quantities and prices areplanned and compared to actual values so thatany variance can be measured and analyzed.
  13. 13. Activity flow and allocation
  14. 14. Cost center: Budget Planning Cost center accounting also allows you to setup a monthly budget by cost center. You can compare the actual values against thebudgeted values and establish timelyavailability checks in case the budget isexceeded.
  15. 15. Profit Center Accounting Primarily used for management-relatedreporting for internal purposes. Defining an organizational element as a profitcenter entails that the unit is being managedindependently by a person who is responsiblefor the profit(revenues and costs). Difference between profit center accountingand profitability analysis.
  16. 16. Internal Orders Used for managing small projects that need to bebudgeted and managed independently . Ex: setting up a marketing kiosk in a culturalevent. Internal orders accounting allows you to plan,budget, collect ,and settle the costs of a miniproject in a process oriented fashion. Real and statistical orders. Settlement process and receivers (Fixed Assets-Cost Centers-Profitability Segment-WBS).
  17. 17. Internal orders
  18. 18. Product Costing The basic question that CO-PC aims toanswer is this: what is the material cost of aproduct? Measuring the value added by each processand organizational unit. Supports make or buy decisions. Determine true inventory and COGS values. Come up with price floor for unit cost.
  19. 19. Product costing integration CO-PC is heavily integrated with PP and iseffective only in conjunction with PP and MM. All of the master data of CO-PC depends onPP for BOM, routing, work centers, and relieson cost center accounting for activity typesprices. Product cost planning and standard costestimate. Planning with or without Quantity structure.
  20. 20. Costing Variant
  21. 21. Profitability Analysis (CO-PA) The key difference between CO-PA and profitcenter accounting (EC-PCA) is that PA is theexternal view of the organization while PCA isthe internal view of the organization formanagement reporting. CO-PA is a market oriented perspective, youcan report profitability by customer, customergroup, division, product, productgroup, distribution channel, and so on.
  22. 22. Reporting features, an example
  23. 23. CO-PA Integration
  24. 24. Conclusion Controlling can help your organization: Improve productivity and insight. Reduce costs through increased flexibility. Support changing industry requirements. Provide immediate access to enterpriseinformation.
  25. 25. Questions/Discussions
  26. 26. Thank You