Controlling Area

Controlling Area

Definition

A Controlling Area is an organization unit used for Cost accounting purpose. A controlling area can be assigned to multiple company codes at the same time.

Controlling Area is a very important organization unit in SAP Controlling. This organization unit contains the most important configurations required for whole controlling module.

Use

Controlling Area receives primary costs from other modules like Finance, Sales & Distribution, Material Management, Production Planning, Project Systems etc. Controlling Area has its own processing of values, which is done using Cost Elements. These costs are broadly known as Secondary Costs.

Implementation Consideration

IMG Path: Controlling > Controlling > Organization > Maintain Controlling Area > Maintain Controlling Area

Here we can create a new Controlling Area.

Upon creation of Controlling Area, following assignments/settings are to be done for the same

Name

Enter the appropriate name for the Controlling Area.

Person Responsible

Here we can assign the User ID of the person responsible for this Controlling Area.

CoCd -> CO Area (Allocation Indicator)

Here we specify whether

The controlling area will be assigned to multiple company codes

The controlling area will be assigned to single company codes. In this case, the code of Company Code and Controlling Area has to be the same. For e.g. Company Code 1000 and Controlling Area 1000.

Currency Type

The controlling area currency type determines which currency is allowed as controlling area currency and whether the CO area currency can differ from the currency of the assigned company codes.

The assignment control indicator, together with the currency type, determines the controlling area currency and whether to activate or deactivate the Other company code currency indicator. The following settings are possible:

You can select currency type 10 only if all company codes assigned to the controlling area use the same currency.

 If you select 1 as the assignment control, the system uses the default setting 10 as the currency type.

Currency

Enter the currency. If the allocation control indicator is set to 1, the SAP system makes an entry in the field automatically. If the indicator is set to 2, you must make an entry in the field yourself.

Chart of Accounts

Enter the Chart of Accounts here, note that the Company Code(s) assigned must use same Chart of Account as assigned here.

Fiscal Year Variant

Enter the Fiscal Year Variant here, note that the Company Code(s) assigned must use same Fiscal Year Variant as assigned here.

Cost Centre Standard Hierarchy

Enter the Hierarchy here.

Tags#

Activation of Components in Controlling Area, Assign COA & Fiscal year Variant to Controlling Area, Assignment of Company Code to Controlling Area, SAP Controlling Area, 

The creation of Controlling Area is further divided into Activation of Components and Assignment of Company Codes.

Activation of Components:

In this section, we have to activate the relevant components as explained below:

Cost Centres

The cost centre accounting is activated here. We have following options with regards to CCA activation

Inactive

CCA is not activated

Active

CCA is activated without limitations and cost centres can be used as account assignment objects

Active with validation

CCA is not active. Cost centers are validated against the cost center master. The cost centers can be used as account assignment objects but the relevant CO files are not updated on posting. If CCA is implemented at a later date, you can subsequently post the cost-relevant business transactions in cost centers to the relevant CO files.

Active for existence checks

Same as Active. The only difference is that the cost centers are not  created in full, but only in part using the "Rough entry" function.

Account Assignment Activity type active

This indicator controls whether the activity types can be used as account assignment objects for actual postings.

If this indicator is selected, actual primary costs can be assigned directly to the activity type of a cost center.

Order Management

This indicator controls the setting for order management

InactiveOrder are not validated and can’t be used as account assignment object.

ActiveOrder management is active without limitations. Orders are validated and can be used as account assignment object.

Active for validationsOrder management is inactive. Orders are validated against master data and can be used as account assignment objects, but the corresponding CO files are not updated.

Active for existence validationFunctions the same as indicator Active except that orders are checked to see if they exist and not whether they are allowable for the relevant posting transaction.

Commitment Management

Controls whether commitments are updated for the controlling area or not.

Profitability Analysis

Activation of Profitability Analysis is done separately in CO-PA component of Controlling Module.

Activity Based Costing

Indicates whether Activity Based Costing component of Controlling is active or not.

Profit Centre Accounting

Indicates whether PCA component of Controlling is active or not.

Projects

This indicator controls whether CO files are to be updated as additional account assignments for posting transactions that use WBS elements and networks or not.

Indicator selectedCO files are updated. The WBS element and network numbers are validated with the corresponding master data. Indicator not selectedCO files are not updated. Note that, even if you do not select this indicator, the system validates the master data for additional account assignments to a WBS element. The network number, however, is not validated.

Select this option if you are planning to implement PS Module.

Sales Order

This indicator controls the use of Sales Orders in Make to Order production.

Indicator selected

System allows following

Posting of actual costs and revenues to the Sales Order.

Production Order, Networks to settle the costs to the Sales Order Item.

Result Analysis

Indicator not selected

If the indicator is not active, the SAP system neither checks the CO object for sales order items during posting to Financial Accounting, nor updates costs and revenues to the sales order item.

Variance

This indicator activates calculation of variance.

This Indicator controls whether the system calculates price variances for primary cost postings by transaction (that is, by posting) and posts them in the Controlling component (CO). If the indicator is active, the system makes the calculations and postings.

Assignment of Company Codes

In this section we assign the Company Codes to Controlling Area. The Company codes can be assigned to controlling area if following conditions are met:

Controlling Area and Company Codes have same Chart of Accounts

Controlling Area and Company Codes have same Fiscal Year Variant

If any of above two conditions are not met, system does not allow assignment of company code to the controlling area.

Reference Material

Controlling Area I

Controlling Area II

  

Controlling Area III

Tags#
Activation of Components in Controlling Area, Assign COA & Fiscal year Variant to Controlling Area, Assignment of Company Code to Controlling Area, SAP Controlling Area,