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SAP Controlling (SAP CO) - An Overview
The SAP Controlling module is part of SAP Finance in the ERP system (Enterprise Resource Planning). While SAP Controlling is its own independent module, it is often referred to as SAP FICO (Financial Accounting and Controlling). The SAP CO module is an essential module for any organization to facilitate management decisions to improve the company's profitability.
The module reflects the expense and income flow from the transactions taking place within the company for internal management accounting purposes - as opposed to the FI module, which is designed to support external accounting.
Controlling also helps monitor internal costs within the organization and is, therefore, a management resource that lets the business stakeholders evaluate how well the business is doing. The purpose of the FI and CO modules is similar; however, SAP FI is used for external reporting, while SAP CO is used for internal reporting of profit and loss statements and balance sheets.
The SAP CO module facilitates planning, recording, and tracking of business transactions. It also includes methods of monitoring and managing costs required for financial reporting. In other words, it deals with the coordination, optimization, and monitoring of all the business processes within the organization.
The controlling module helps one to schedule, monitor, execute, and report on costs. Controlling involves managing and configuring typical master data such as cost elements, cost centers, profit centers, internal orders, functional areas, and many more.
Are you new to SAP Controlling and want to get a good overview of what the module does? Then this SAP Controlling Overview course is for you.
SAP FI vs. SAP CO
The SAP accounting modules FI & CO are designed to simplify an organization's accounting systems. The SAP FI module is the finance and accounting module most popularly used. SAP ERP systems automatically handle various accounting activities, such as holding ledgers, balance sheets, and profit and loss statements, etc. Further, the SAP FI module assists in the management of fixed assets. The SAP CO module, on the other hand, takes care of cost management.
Additionally, the SAP EC (Enterprise Controlling) module takes over the complete integration of company information to achieve set organizational objectives, including the components Consolidation (EC-CS) and Profit Center Accounting (EC-PCA).
Components of SAP CO
The SAP S/4HANA Controlling module (CO) is one of the most critical modules in SAP. The SAP CO module is compromised of many sub-components, such as:
- Cost Center Accounting
- Cost Element Accounting
- Profit Center Accounting
- Internal Orders
- Profitability Analysis
- Product Cost Controlling
- Activity Based Costing
Cost Center Accounting
The Cost Center Accounting component is related to the cost of internal divisions such as the production of materials, sales, marketing, or human resources. It mainly focuses on expenses rather than revenue. Learn how to work with cost centers with this simulation course: SAP Cost Center Accounting.
Cost Element Accounting
The Cost Element component includes the analysis of both the company's costs and profits based on reports of profit and loss statements. Cost elements represent their matching cost and revenue element accounts in the General Ledger component of the FI module. Cost element accounting defines the costs' origin and the cost components incurred by the company.
Profit Center Accounting
As the name suggests, the Profit Center Accounting component manages all the profit related to the different business lines of the company. Unlike cost center accounting, which deals only with costs, profit centers manage both costs and revenues.
Learn more about Profit Center Accounting in this hands-on SAP Profit Center Accounting course.
Internal orders
The Internal Orders sub-module deals with the expenses incurred for internal projects within the organization. These projects tend to be relatively simple in structure and duration (otherwise, they would be managed with the SAP PS - Project System module). Also, these projects can be expense or capital in nature.
Internal Orders record the expenses of the project activities until it is time to close the project and settle the costs to a cost receiver. If the project was a capital project, then the receiver typically is a fixed asset master record. For expense projects, the receiver commonly is an expense account in the General Ledger. Learn more about working with Internal Orders with this hands-on course: Basic SAP Internal Orders.
Profitability Analysis
Profitability Analysis provides insight into the company's profitability for each product or service offering. It is critical in making decisions on product pricing, distribution networks, and target consumer segments. It also enables levels of detail in the analysis of profitability, such as for each region or country, product types, and channels of distribution. This simulation course provides in-depth training: SAP Profitability Analysis.
Product Cost Controlling
Product Costing Controlling manages the cost data required to generate the products and services of the company. Detailed analysis of product costing helps control production costs, which, in turn, drives company profitability. Are you looking to know more about product cost controlling? Start with these courses: Product Cost Controlling: End-to-End Scenario and SAP Product Costing - Cost Object Controlling.
Looking for more SAP CO Training?
Sign up for live access to our SAP S/4HANA systems and practice CO transactions in a hands-on environment. If you are already an experienced end-user with substantial expertise with the CO module, consider learning how to configure the controlling area settings next: SAP Central Controlling Configuration.
