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Financials tip from Rohana Gunawardena: Controlling Areas pitfalls and cross-company controlling

by The Tip Doctor and Rohana Gunawardena

March 12, 2013

In his latest SAPexperts article, “Reasons to Perform a Controlling Area Reorganization Rohana Gunawardena writes:

The project team makes multiple basic configuration decisions that affect the life of the SAP system, based on the best options available to them at the time:

    • Company code to controlling area mapping
    • Controlling area currency
    • Group currency
    • Chart of accounts (length of account)

These decisions may have been the correct choice at go-live, but the business process or organizational requirements have changed over time, and in retrospect, the project team realizes that it could have made better choices. Of course, the project team is not omnipotent and cannot anticipate activities such as the company merging with another company, starting a new line of business, or acquiring a foreign subsidiary.

Rohana Gunawardena goes into great detail about his best practices for setting up controlling areas and the reasons to reduce controlling areas, and explores the possibilities of, for long-standing FI systems, reducing and reorganizing your Controlling Areas.

Do you want to set up your system for multiple company codes to be mapped to a single controlling area? Or one company code to be mapped per controlling area?

For a clearer understanding of exactly what Controlling Areas are and why  significant structural changes are often warranted, we'll take a look at Rohana'ss Financials 2013 session, “A practical guide to navigating your Controlling options in SAP, ” Rohana touches on Controlling Area structures as part of his full session on making the most of CO modules and transactions, including CO-PA, Profit Center Accounting, and Material Ledger

Controlling Areas - Enterprise Structure

  • Rules for organizational relationships are hard-coded
    •  Controlling area to a single operating concern
    • Company code to a single controlling area
    • Cost object to a single company code
  • Linked Operating Concerns, Controlling Areas & Company Codes must use the same chart of accounts and fiscal year variant
  • Note a Profit Center is not a cost object

Controlling Area

  • The Controlling Area (CoAr) is the key organizational element in CO
    • Important to understand it is more wide ranging than the FI Company Code (CoCd)
    • It sets the key currency code for reporting across the whole Controlling Area
      • This may cover multiple company codes with their own local currency codes
  • It is common to have only one Operating Concern and one Controlling Area for the whole enterprise

Controlling Area – Changing Structure

  • Initially, CO was configured with one CoAr per CoCd; now you want a single CoAr
    • This often occurs if analysts had a FI centric view of CO and now want to implement cross-company controlling
    • Your company has CoAr currency EUR and FI-GL uses Group Currency USD and you want to align the systems
    • See SAP Notes 27621 and 39919

For those who are now “stuck” with configuration that is out of synch with CO requirements, Rohana's SAPexperts article describes the solution- a reimplementation of the system -- or another option, a complex correction to current structures which, he notes, while involved, can be a good option but does require outside expertise.

 

For more from Financials expert Rohana Gunawardena,  read his recent Q&A with our members in the Financials discussion thread here, and meet him in person and attend his sessions at SAPinsider’s Financials 2013 conference  in Las Vegas, March 19-22.

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COMMENTS

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Alex Ciampi

9/25/2013 9:05:37 PM

Great post!


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