In the previous post, we focused on the essential changes in SAP S/4HANA Finance. This time around we will be focusing on the Management Accounting area or Controlling from a functional and technical perspective.
This post will cover the overall changes related to Controlling that should be expected or considered during a system conversion from SAP ECC to SAP S/4HANA. A separate post will be done for a high-level overview on the actual system conversion as well as project management, architecture related impact, readiness check, etc.
Here is the itemized overview of this post:
- Following the new financial architecture in SAP S/4 HANA, there will be integration benefits
- Unified Master Data Maintenance
- Data Flow (CO Postings)
- Compatibility Views for Non-Disruptiveness
- Material Ledger, Actual Costing, Transfer Pricing
- Mandatory Material Ledger in SAP S/4HANA
- Data Model for Actual Costing
- Effect on Period Lock
- Default Account Assignment
- Optimized Transactions
- Enhancements on Profitability Analysis
- Vision on Universal Allocation
- Helpful Links
Following the new financial architecture in SAP S/4 HANA, there will be integration benefits
Previously, we discussed the benefits of the new financial architecture, its impact on Financial Accounting (FI), and the introduction of the universal journal (ACDOCA). You may recall them through some of the following statements:
- Controlling is fully embedded in the General Ledger.
- Single Source of Truth: One-line item table with full details of both FI and CO components.
- All Cost Elements (even secondary cost elements) are now GL Accounts
- Data is stored only once. Elimination of redundant data and reconciliation.
- Structural capability to support additional currencies and multi-GAAP.
- Multi-dimensional reporting is possible without the need to replicate data to BI
- If BI is needed, only one extractor (instead of multiple) will be needed.
- New Closing Concepts are possible.
- Available options for Machine Learning (AP, Allocations, and Tax).
These full benefits are in consideration to the pre-requisite that the Profitability Analysis is in the universal journal.
Unified Master Data Maintenance
Since all cost elements will now be created as GL Accounts, take note of the following changes:
- Cost Element master data transactions like KA01, KA06, etc. considered outdated and can no longer be used in S/4HANA since they will be created as GL Accounts through FS00.
- GL Account Type
- Only 1 GL Master will be required.
- GL Accounts of Type Secondary Costs or Revenues update the CSK* and SK* tables
- Account Settings in Controlling (Cost Element Category)
- There will be a Cost Element Category (CElem category) field in the Control Data Tab of the GL Master.
- This field will allow you to specify which transactions can use the cost element.
- Accounts of type “secondary costs” can be used for CO-internal allocations.
- Secondary cost elements should now be included in the profit and loss structure of FSV (Financial Statement Version) in FI for reporting. If not, it would be blank.
Data Flow (CO Postings)
Recall that the universal journal or ACDOCA stores full details. As such, it is good to know the following changes in CO posting data flow.
- Data previously found in Tables COEP, ANEP, MLIT etc. are now stored in ACDOCA.
- Note that non-actual data are still stored in CO table COEP.
- Table BSEG will contain data for affected open-item managed accounts. Example: for cross-company postings.
- Table BSEG will have a primary purpose of handling open items for accounts payables, accounts receivables, and taxes.
- Profit Center Accounting (PCA) and Special Purpose (FI-SL) ledger will still work.
- In the case that FI-SL was posted through activity “COFI” (real time integration CO-FI), secondary cost elements (now GL Accounts) are now posted directly. No mapping to a primary cost element.
- Consolidation System (EC-CS) works as before with new GL real-time integration but now including secondary cost elements (now GL Accounts). The system works with the original CO activities like RKU1 instead of using the activity “COFI”.
- Components that have been built with FI-SL technology work as before
- Cost-based CO-PA works as before but it is recommended to activate account-based COPA in S/4HANA directly after conversion. There is no plan to enhance costing-based COPA in the future.
Compatibility Views for Non-Disruptiveness
Some of you may be worried about the existing custom code and reports in the current ECC system. Especially those that were utilizing the old tables in ECC. Note that SAP provides compatibility views so there would still be read access from the perspective of an ABAP program.
- The compatibility views redirect the select statements in S/4HANA. As such, custom ABAP programs that read directly from tables like FAGLFLEXA or COSP through select statements continue to run as before.
IMPORTANT: The statement above is an exception for material ledger due to the changes in actual costing. It is not backwards compatible, so no compatibility view is available.
- There is a difference between non-actual and actual data. Non-actual data are still stored in Table COEP and COS*_BAK but actual data will be stored in ACDOCA. This means that if entries are viewed in SE16 or if data is read from COEP by a custom program, the selection is redirected to a view that reads actuals from ACDOCA AND non-actuals from COEP.
Okay, but what if I want to see the original content from table COEP after conversion?
- For original content views, you have to use the corresponding view. For example, the view V_COEP_ORI for entries in COEP.
During a conversion, data from tables or index tables that are not used in S/4HANA (like FAGLFLEXT or GLT0) are moved into “backup tables”. These backup tables have indicators such as “_BAK” for CO and “_BCK” for FI. In our example, we see “GLT0_BCK” and “COSP_BAK”.
Remember to avoid confusion:
- Recall that CO Tables COSS_BACK and COSP_BAK are still used for non-actual data.
- Table BSEG is still used to keep the prime note for document entry view but BSEG won’t contain ALL GL Postings anymore in S/4HANA. This is because its purpose will be used for open item management.
- Postings from Controlling such as assessments and distributions will not be creating entries in Table BSEG. The same goes for foreign currency valuation postings. They will be found directly in ACDOCA.
Material Ledger, Actual Costing, Transfer Pricing
Let us now consider the following notable changes for Material Ledger, Actual Costing, and Transfer Pricing.
- If material ledger is currently not active, it should be activated during the accounting conversion process.
- From the previous post, it was mentioned that the material ledger can store up to 3 currencies and uses the currencies defined for the leading ledger in financials.
- Stock valuation in parallel currencies is automatically activated during migration.
- Prices and stock values are automatically translated into parallel currencies.
- For additional information, you can refer to SAP Note 2267834.
Actual Costing in Material Ledger
- Given that material ledger is mandatory in S/4HANA, it should be noted that actual costing remains optional.
- It will not be possible to activate actual costing during conversion.
- Data structure for actual costing has been simplified. Moreover, the steps at month end for actual costing has been redesigned from version 1610 onwards.
- If actual costing was active, material ledger data is migrated into new tables (MLDOC and MLDOCCCS) during accounting conversion. The results will be available in ACDOCA.
- For additional information, you can refer to SAP Note 2354768.
- If multiple valuations are active, the values for legal, group, and profit center valuations are stored in the same ledger.
- These valuations are stored in a separate amount column in the same ledger in the universal journal. This approach is called multi-valuation ledger.
- Multi-valuation ledger is the default option for a system conversion.
- For additional information, you can refer to this SAP Help Document.
Mandatory Material Ledger in SAP S/4HANA
As mentioned, Material Ledger is required for ALL SAP S/4HANA customers. Here are some key clarifications for guidance:
- Material ledger and finance are now responsible for material valuation
- Only one solution (ML) and not two in parallel material ledger + materials management.
- This means that data won’t be stored in 2 different tables where ML and FI have separate tables. As such there wont be extra work every month end.
- The check mark “Material Ledger Active” will be set
- Material valuation is now stored in ML tables and not MM.
- Most customers will experience no consequences of the SAP development decision.
Data Model for Actual Costing
The data model has been greatly simplified with SAP S/4HANA 1610 onwards. Here are some key points:
- Accelerated overall settlement. Significant reduction in runtime of the whole closing cockpit CKMLCP (minutes instead of hours). As such, ML close should be achievable on a single working day including rework and resettlements.
- Settlement now refers to the four processes merged in a single step. These merged processes are: single-level settlement, multi-level settlement, revaluation of consumption, and WIP.
- Data structure was simplified so that 20+ relationally coupled tables are replaced by 2 column store tables.
- Calculation logic has been simplified so algorithms are unified.
- Fewer restrictions so it is possible to change the standard price during the period anytime even after goods movement.
Effect on Period Lock
Additional 3rd period interval is introduced in S/4HANA transaction OB52 (finance open and close posting periods). The new 3rd interval specifies the open and closed posting periods for postings FROM Controlling to Financial Accounting. It is entered with account type “+”.
Default Account Assignment
In S/4HANA, the default account assignment that used to be maintainable in the cost element master has been removed. It is now defined in OKB9.
There are optimized transactions for Controlling period-end close. They are developed in line with the new data structure and end with “J”. For example: KO8GH, KKS1H, CO88H etc. For additional information, you can refer to SAP Note 2541629.
Enhancements on Profitability Analysis
There are significant enhancements to profitability analysis in S/4HANA. In general, account-based COPA is now recommended by SAP for S/4HANA.
The traditional account-based COPA in ECC had a posting logic that implied variances and cost of goods sold would be mapped to a single GL Account or Cost Element only. This could be limiting for some business users who preferred an in-depth break up of their Cost of Goods Sold. This in-depth break up would be present in costing-based COPA ECC.
This time around, S/4HANA enhanced account-based COPA such that you can get the same break up as how costing-based COPA would provide in ECC. The usage of account-based COPA in S/4HANA now ensures that there will no longer be a need for reconciliation. I plan to discuss some COPA-related concerns in another post but here are some key notes to consider:
Account Based COPA in S/4HANA
- The universal journal or ACDOCA can be extended by customer-specific fields (like in COPA).
- Split of cost-of-goods-sold posting on multiple accounts (by cost component) is possible.
- Split of production variances posting on multiple accounts (differentiation of price/quantity effects) is possible.
- There are 3 new quantity fields in the line items + BADI for conversion of logistic quantities to common quantities. An example use case would be products sold in different box sizes but KPI in Finance is calculated on tons / KG of products).
- Real-time derivation of market segment information from cost postings (cost center, order, WBS Element) is possible.
- Immediate availability for reporting (P&L, B/S) based on ACDOCA.
- Faster soft and hard close for periods.
Costing Based COPA in S/4HANA
- Product continues to exist and be supported but there will be no enhancements with SAP Accounting
- Customers can run account-based and costing-based CO-PA in parallel.
- Customers should assess their valuation in FI versus valuation in costing-based COPA.
Aside from the information provided above, you can refer to SAP Note 2176823 for COPA Frequently Asked Questions.
Vision on Universal Allocation
The existing allocation method in ECC lacks some key features so it was decided to build a universal allocation tool. This universal allocation tool should in turn cover General Ledger, Profit Center Allocation, Cost Center Allocation, Profitability Analysis, Joint Venture Accounting, Special Purpose Ledger, and Intercompany.
It is good to take note of the vision for Universal Allocation: “Simplify allocations by combining various capabilities under one umbrella”. See the list of future direct features below.
- Provides one architecture for FI and CO allocations
- Combines actual and plan
- Provides simulation capabilities
- Includes actual and predictive data (ledgers)
- Presents data in a common structure
- Provides all required reporting currencies
- Shows currency breakdown
- Can be enhanced/extended
- Provides traceability of the value flow
- Simplifies the process with guided procedures and validations
|PCA||Profit Center Accounting|
|CCA||Cost Center Accounting|
|JVA||Joint Venture Accounting|
|IO or CO-OM-OPA||Internal Orders|
|WBS||Work Breakdown Structure|
|ABC||Activity Based Costing|
NOTE: SAP S/4HANA is not fully there yet. As a first step, profit center and cost center allocation is planned to be delivered as part of SAP S/4HANA 1909 release.
IMPORTANT: Universal allocation will not initially cover activity allocation and settlements (such as IO and WBS Elements).
If you are looking for a planning application that is well integrated with SAP S/4HANA, SAP Analytics Cloud should be your first consideration. The analytics cloud is the strategic direction for overall analytics covering planning, reporting, and analytics capabilities in one platform.
|SAP Analytics Cloud||SAP BPC|
|Standalone planning||For customers requiring an on-premise solution.|
|With SAP S/4HANA and other cloud applications||SAP BPC optimized can still be used for real-time planning on SAP S/4HANA on-premise. Note: SAP BPC version for SAP BW/4HANA is recommended for standalone on-premise deployment|
|Material Ledger||SAP Note 2267834|
|Actual Costing in Material Ledger||SAP Note 2354768|
|Transfer Pricing||SAP Help Document|
|Optimized Transactions||SAP Note 2541629|
|Enhancements on Profitability Analysis||SAP Note 2176823|
I hope this helps. Goodluck! 😊