SAP CO

There can be either a one-to-one relationship or there can be a one-to-many relationship between Controlling Areas Versus Company Codes. Hence, CO becomes the governing module that oversees the consolidation of costing data whereby management can analyze the data to make management decisions. CO-PA supports two forms of Profitability Analysis: Costing-based & Account-based.

SAP CO (Controlling)

Controlling (CO) is the term by which SAP refers to “Managerial Accounting”. The Organizational Elements in CO are Operating Concern, Controlling Area, and Cost Centers. Hence, the SAP CO Module helps management by providing reports on cost centers, profit centers, contribution margins, profitability, etc. It focuses on internal management and operational reporting, in contrast to FI – which focuses on data drawn for external reporting and statutory compliance. The transactions posted in FI are transferred to CO for cost accounting processing, analytical reporting, and audit-controlling spectrums.

Costing-Based Profitability Analysis group's costs and revenue according to value fields and costing-based evaluation approaches. Both of these may be defined by the client. It provides the client with a complete short-term profitability reporting capability at all times.

Account-Based Profitability Analysis is organized in accounts using an account-based valuation process. Its use of cost and revenue elements gives it a distinguishing characteristic. This provides the client with a profitability report that is permanently reconciled with financial accounting.

The SAP Control (CO) Module is integrated with FI, AA, SD, PP, and HR. While FI is the main source for data for CO, the others such as SD, MDD, and PP have many integration points with CO. Revenue postings in FI will result in postings in CO-PA & EC-PCA. The HR Module also generates various types of costs to CO.

The purpose of the Controlling (CO) module in SAP is to provide organizations with a method of slicing and dicing data to view costs from an internal management perspective and provide a view of profitability beyond that of basic financial reporting. This allows the organization to create information in a manner that is tailored to their specific internal business measurement needs and supports management analysis and business intelligence.

Controlling allows an organization to:

• Plan and track overhead costs within the company's specific management structure
• Track costs related to specific projects or events and either capitalize those costs or charge them to appropriate departments/cost centers upon completion.
• Perform "Activity Based Costing"
• Perform Product Costing, measuring production cost, and variances.
• Report profitability by product line, division, or another internal measurement
• Report sales and gross profitability by external measures such as market segments or customer groups
• Controlling consists of all master data, configuration, and reporting required to analyze both spend and revenues, both within and across organizations.

The business process associated with the SAP CO module:

1. Cost Centre Accounting (CO - CCA)
2. Overhead Cost Controlling (CO-OM)
3. Internal Order Accounting (CO-OM-OPA)
4. Cost Element Accounting (CO-OM-CEL)
5. Activity-Based Costing (CO-OM-ABC)
6. Activity-Based Coding (CO - ABC)
7. Product Cost Controlling (CO - PC)
8. Profitability Analysis (CO-PA)
9. Material Ledger (CO - ML)
10. Profit Center Accounting (CO-PCA)