1.
CO Module Introduction
1.1 Introduction
Controlling (CO) contains all accounting functions necessary for effective decision-
making process. If an organization divides accounting into internal and external
viewpoints, CO represents the internal accounting perspective.
It provides information for managers - those who are inside an organization and are
vested with directing and controlling its operations. CO covers both the operational and
the strategic aspects of management.
1.2 CO VALUE FLOWS IN SAP
The following graphic illustrates the integration within CO Value Flows:
2. CO MODULE INTEGRATION WITH OTHER MODULES
3.
4. CO MASTER DATA
4.1 COST CENTER STANDARD HIERARCHY
The Standard Hierarchy is a unique structure that collects together all the cost centers created
in a Controlling Area, using a drill-down system. To the highest node - the root of the hierarchy,
there are attached the nodes for each company code.
The cost center is the main SAP structure used to allocate costs in the exact point of their
appearance. The criteria used to create them are:
● Function
● Activities
● Locations
● Responsibility areas
No cost center can be created without an allocation to one level in the standard hierarchy.
For AWASR, the Organizational Chart will be used to define the levels of the cost center
hierarchy.
AWASR’s cost center hierarchy is presented as below:
4.2 COST ELEMENTS
In SAP, Controlling Module will have its own set of data for the purpose of Cost accounting &
Controlling.
All expense related G/L accounts in FI are made Primary Cost Elements in CO. Other than this,
to measure the internal flow of costs between Cost objects, some objects are created only in
CO termed as Secondary Cost Elements
Detailed explanation is as below:
Primary cost elements
The primary cost elements are the reflection in Controlling of a financial account, used to assure
the instant reconciliation of the postings.
Secondary cost elements
Secondary cost elements are accounts created in controlling only, without any effect in Finance
module, used to measure the internal flows of values between different cost objects.
Secondary cost elements are used for allocations and settlements. These are not represented
by GL accounts in FI.
4.3 INTERNAL ORDERS
An instrument used to monitor costs and, in some instances, the revenues of an organization.
Internal orders can be used for the following purposes:
● Monitoring the costs of short-term jobs
● Monitoring the costs and revenues of a specific service
● Ongoing cost control
5. BUSINESS PROCESS MAPPING
5.1 COST ELEMENT ACCOUNTING
Cost Element Accounting is the area of cost accounting where we track and structure the costs incurred during a
settlement period.
In this case, the cost element represents the link between the account in Financial Accounting (FI) and the cost
element in Controlling (CO). Further cost elements can be created specifically for allocating costs from Cost Center
Accounting to Profitability Analysis.
The cost element category determines which cost elements can be used for which business
transactions. SAP distinguishes between:
Primary Cost Element Categories
Secondary Cost Element Categories
PROFIT CENTER STANDARD HIERARCHY
The Profit Center Standard Hierarchy is similar to that of the Cost Center Standard Hierarchy
that collects
together all the profit centers created in a Controlling Area, using a drill-down system. To the
highest node -
the root of the hierarchy, these are attached the nodes for each company code.
The profit center is the main SAP structure used to allocate costs in the exact point of their
appearance. The criteria used to create them are: divisions, areas of operation. No profit center
can be
created without an allocation to one level in the standard hierarchy. There can be only one
Standard
Hierarchy for a company code.
Profit Center Accounting evaluates the profit or loss of individual, independent areas within an
organization. These areas are responsible for their costs and revenues. Profit Center
Accounting is a statistical accounting component in the SAP system. This means that it takes
place on a statistical basis at the same time as true accounting.
The cost centers are linked to profit centers.
5.2 COST CENTER MAINTENANCE
ACTIVITY TYPE MAINTENANCE
STATISTICAL KEY FIGURE MAINTENANCE
COST ALLOCATION
INTERNAL ORDERS
PROFIT CENTER ACCOUNTING
PROFITABILITY ANALYSIS
Overhead
Maintenance order
Inventory valuation
