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Reconciling CO-PA with Financial Accounting (Part 1)

by Paul Ovigele

November 21, 2011

Paul Ovigele, Ovigele Consulting

One of the biggest issues that accountants have with the Controlling Profitability Analysis (CO-PA) module, is that is not easy to reconcile it with the Financial Accounting (FI) module. Some users have said that they were told that CO-PA was not meant to reconcile with FI, and should be accepted it as an analysis tool for evaluating the contribution margin for the various market segments of the organization. However, in order for accountants to validate the figures reported by CO-PA, they need to ensure that they are reconciled with accounts in the general ledger.

There is the option of using account-based profitability analysis. The idea is that you can create CO-PA reports using cost elements as opposed to value fields. However, I do not find this option to be particularly advantageous because it simply shows the information according to profit and loss accounts, which is the same thing that an income statement will do. Therefore, any of the reconciliation issues that occur between CO-PA and the general ledger will also occur between costing-based CO-PA (which is the version of CO-PA that this blog is based on) and account-based CO-PA.

In order to address the reconciliation issues, we need to identify the different ways that actual data flows into CO-PA. They are as follows:

- Conditions from Sales Document: Sales order conditions (such as revenue, discounts, commissions, etc) are mapped to CO-PA value fields. These conditions are also mapped to account keys which are linked to G/L accounts. You can therefore look at the accounts that are linked to these account keys and tie them back to the value fields that the conditions are assigned to.

- PA transfer str uctures: General Ledger accounts can be assigned directly to value fields by using PA transfer structures. These G/L accounts are normally either posted directly to, during a financial posting or posted to automatically during an inventory-related posting. Also, variance categories from Cost Object Controlling are mapped to value fields to reflect the production variances that arise when a manufacturing order is settled. The total of the variance categories should be equal to the general ledger account that is posted to for the production variances (this is the account that is configured in transaction OBYC, under transaction key PRD and general modification PRF).

- Assessments: These are created to map the postings to a cost center (for all or specific cost elements in that cost center) to value fields in CO-PA. Assessments to CO-PA are normally used for costs that do not pass through the Sales and Distribution module, such as Research and Development costs, General and Administration Costs and indirect selling expenses.

- Manual Posting: By using transaction KE21N you can directly post to a CO-PA value field. This only updates CO-PA and not the general ledger. It is normally used when there are adjustments that need to be made to CO-PA only, either for legacy balances or in cases where there are errors which can no longer be corrected in the source data.

As you can see from the above methods, most value field assignments are either directly or indirectly linked to a general ledger account (cost element). Therefore, in most cases you should be able to identify groups of cost elements that  should be reconciled with their corresponding value fields.

In my next blog I will highlight a few areas where you can expect differences to occur between CO-PA and FI. This will allow you to easily pinpoint the value fields which will need to be investigated when reconciliation issue occur.

For more information on how to optimize your S AP Financials landscape, I've put together my top tips in the book 100 Things You Should Know About Financial Accounting with SAP  which is published by SAP Press.

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