SAP S/4HANA, FIN Controlling, SAP S/4HANA Cloud, SAP S/4HANA Finance

Has Account Based CO-PA Evolved Enough to be Recommended in S/4HANA?

Purpose

SAP has started recommending Account Based CO-PA in S/4HANA products (S/4HANA and S/4HANA Finance) based on three main innovations (COGS split, variance posting Categories wise, and additional quantity fields) in Account Based CO-PA. We need to understand first if these three things were only missing in Account Based CO-PA earlier, and because of it all the organizations (at least all manufacturing org.) were using Costing Based CO-PA and SAP also used to recommend Costing Based CO-PA before advent of S/4HANA products or there was more? Let’s find out.

Secondly I have always liked SAP Controlling over SAP Finance and this is the area where I have been more comfortable. I realised that I have written more blogs on S/4 HANA Finance than S/4 HANA Management Accounting. Trying to balance out with this.

Fairly, we will cover below items:

  • Understanding of costing based CO-PA and account based CO-PA
  • Actual Data in COPA
  • Planning Data in COPA
  • What’s New in S/4HANA
  • Comparison Between Costing Based and Account Based CO-PA and much more

Comparison Between Costing Based and Account Based CO-PA

This comparison table is for them who just skim and don’t go into the details, rest can go through entire article.

Base Costing Based CO-PA Account Based CO-PA
Postings Data is transferred to COPA as soon as sales order is created Data is transferred when accounting document is posted to Financial Accounting
Data Carrier Data is transferred with Value Fields to costing based COPA tables Data is transferred with Cost and Revenue elements to ACDOCA tables
COGS Posting COGS is posted with billing document posting COGS is posted with post goods issue (PGI)
Reconciliation Reconciliation value field with GL is difficult Always reconciled with Financial Accounting
COPA Currencies Storage in operating concern currency and company code currency Storage in controlling area currency and company code currency and transactional currency
Variance Settlement Settle the variance categories to costing-based CO-PA, assign the combination of variance categories and cost elements to the specific value fields. Settle the variances to account-based CO-PA, use the Price Difference Splitting Profile to assign the combination of cost elements and variance categories to the scheduled target accounts.
Other Settlement In costing-based CO-PA, costs are settled from the original cost elements to the value fields to which they are assigned in the PA transfer structure. Settlement – In account-based CO-PA, costs are settled to the settlement cost element specified in the settlement structure.
Parallel Valuation Costing based COPA provides 6 parallel valuations for calculating the cost of goods sold (COGS). This enables you compare the standard cost for sales processes with different production opportunities in different plants. NA
Top Down Distribution (Actual) Top Down Distribution for actual postings is available at detailed level in costing based COPA Top-Down distribution works in account based COP as well, selection criteria must be account/cost element
Top Down Distribution (Plan) Top Down Distribution for plan data is available in costing based COPA Top Down Distribution for plan data is available in account based COPA
Sales Order Analysis In the costing-based Profitability Analysis, you can transfer the sales order data to Profitability Analysis so that an early analysis of profit forecast can be carried out. This Function not available in account based COPA
Planning In costing-based CO-PA, you use the SAP Fiori apps for planning. The data is updated in the CO-PA tables In account-based CO-PA, the plan data is updated in tables COEJ (plan line items) and COSP (plan total).
Bottom Up Planning Plan values are planned bottom-up, and merging of plan values can occur in several steps. Plan values are planned bottom-up, and merging of plan values can occur in several steps.
SAP COPA Tables & Data Structure Costing based COPA Stores Data in CE1XXXX to CE1XXXX tables:
CE1XXXX is actuals data
CE2XXXX is Plan data
CE3XXXX & CE4XXXX contain aggregated and segment level data
XXXX = Operating Concern
Account based COPA Stores data in general CO tables, as below:
Line item actual data in ACDOCA
Line item plan data in ACDOCP
Actual line item in COEP value type, not equal to 4 and not equal to 11
Plan line item in COSP & COEJ specific value types
Future Innovations in S/4HANA No future innovation for costing based COPA in S/4HANA Account based COPA will be innovation path always in S/4HANA. Since ACDOCA is the primary table in S/4HANA and account based COPA only update ACDOCA tables

 

Basic Concept of COPA

The basic concepts of CO-PA include the following:

  • Characteristics

Characteristics are those entities that you want to report on. These include divisions, regions, products, and customers.

Note: In addition to the fixed characteristics, up to 50 non-fixed characteristics can be added to an operating concern. So use them wisely. Refer SAP Note. 10293911029391.

  • Characteristic Values

Characteristic values are the values that the characteristics in your report should display. For example, region is a characteristic with south as its value, and company code is a characteristic with 1000 as its value.

  • Profitability Segments

Profitability segments are the technical definitions of combinations of several characteristics and their values. For example, a combination of North region, T-F100 product, and Sales Rep Miller.

  • Value Fields (Costing Based COPA)

Value fields are the amount and quantity fields with which performance can be measured and analysed. Examples include gross sales, surcharges, discounts, and cost of sales.

Note: Maximum 200 values fields can be created, so use them wisely. Refer SAP Note. 10293911029391.

  • Cost Elements (Account Based COPA)

Cost Elements plays similar role account based COPA as Value fields in costing based COPA. Amount and quantity fields with which performance can be measured and analysed are posted to account based COPA through Cost Elements.

SAP S/4HANA, FIN Controlling, SAP S/4HANA Cloud, SAP S/4HANA Finance

Data Structure and COPA Tables

Copy the required characteristics and value fields (applicable for costing-based CO-PA) to the operating concern, save them, and activate the data structures. With activating the data structures, all the necessary tables are created. When assigning characteristics and value fields, activation is required. Otherwise the assignment will be lost.

During the generation process, the system creates the tables CE1XXXX through CE8XXXX

Note that the data in costing-based Profitability Analysis (CO-PA) is stored in separate tables, and the data for account-based CO-PA is stored in the same tables as the other Controlling (CO)modules.

SAP S/4HANA, FIN Controlling, SAP S/4HANA Cloud, SAP S/4HANA Finance

COPA – Actual Data

Revenues and discounts are transferred to profitability segments in Profitability Analysis (CO-PA) at the point of billing in sales order management.

The value fields in the costing-based CO-PA contain the amounts and quantities that you want to report on. The value fields represent the finest level of detail at which costs and revenues are broken down. One of the most important tasks in Customizing for the costing-based CO-PA is to assign your costs and revenues to the required value fields. This assignment enables you to calculate the contribution margins that your organization requires in Information System. Contribution margin can also be analysed in account-based CO-PA. This analyses the COGS (using define splitting scheme) and also the different variance categories (using define Accounts for Splitting Price Differences).

Top Down Distribution

Top-down distribution of actual data is a periodic function. This function enables you to distribute the aggregated data to extensive levels (such as the division level or the customer level in CO-PA), based on reference information (such as the data from the previous year).

Periodic valuation is only available in costing-based CO-PA. It requires Material Ledger (ML), which is automatically activated in SAP S/4 HANA

The actual costing, which previously could only be performed after a final closed period, can now be transferred to costing-based CO-PA after the actual costing run. This function does not update the FI-Table ACDOCA.

Note: Actual top-down distribution cannot be performed across business areas.

COPA – Plan Data

The Integrated Business Planning (IBP) for SAP Simple Finance applications provide a consistent view of the planning process. From the UI perspective, all planning applications can be accessed by a Microsoft Excel front-end to provide a homogeneous look and feel. There are no longer silos for the planning data. All planning data is now contained in a real-time info cube of the local Business Warehouse (BW), which is optimized for SAP HANA. Actual data and master data are accessed directly in real time without any replication that would be necessary in a standalone BW.

In costing-based CO-PA, you use the SAP Fiori apps for planning. The data is updated in the CO-PA tables.

In actual release 1610, you cannot transfer the data to FI GL and Profit Center Accounting (PCA) in New GL.

In account-based CO-PA, the plan data is updated in tables COEJ (plan line items) and COSP (plan total).

Bottom Up Planning

Plan values are planned bottom-up, and merging of plan values can occur in several steps. For example, the default plan values can be created automatically (copied or revaluated) and then used as a plan basis for individual sales representatives.

Integrated Microsoft Excel allows sales representatives to create their sales plan data locally.

Finally, the individual plans can be merged into a single version and valuated with the operative prices and costs of goods manufactured.

What’s New in S/4HANA

There are some glaring changes in S/4HANA in regard to account based CO-PA, mentioned below.

1. Define Accounts for Splitting the Cost of Goods Sold

In this Customizing activity, you can refine the settings for changes in inventory or COGS postings to split the amount and post it to different accounts according to the cost components that are used in the underlying costing sheet. The respective cost component amount is then used for the corresponding journal entry line item.

Path: IMG → Financial Accounting (New) → General Ledger Accounting (New) → Periodic Processing → Integration → Materials Management→ Define Accounts for Splitting the Cost of goods sold.

SAP S/4HANA, FIN Controlling, SAP S/4HANA Cloud, SAP S/4HANA Finance

2. Define Accounts for Splitting Price Differences

This customizing helps in posting production variances as per variances categories.

Path: IMG → Financial Accounting (New) → General Ledger Accounting (New) → Periodic Processing → Integration → Materials Management→ Define Accounts for Splitting the Cost of Goods Sold

SAP S/4HANA, FIN Controlling, SAP S/4HANA Cloud, SAP S/4HANA Finance

3. Define Additional Quantity Fields

This customizing helps you having additional quantity fields in your transactions and reporting.

Path: IMG a Controlling a General Controlling a Additional Quantities a Define additional quantities

SAP S/4HANA, FIN Controlling, SAP S/4HANA Cloud, SAP S/4HANA Finance

Conclusion

Has Account Based COPA Evolved Enough to be Recommended?

Having jotted down all the points I am not very comfortable to advise a manufacturing organization to implement account based COPA over costing based COPA. There are many values need to be taken to COPA starting from sales order and many of them are statistical too (though for this also workaround is there in Account Based COPA, like create extra condition types with GL postings to FI twice during billing which will post to COPA and it won’t have impact on the FI. Later on select required data in the COPA reporting).

Leave a Reply

Your email address will not be published. Required fields are marked *