1.Systematic Guidelines forReconciling CO-PA to theGeneral Ledger Paul Ovigele Ovigele Consulting 2012 ERP Corp. All rights reserved.

2. Introduction Learn the difference between Costing and Account-based CO-PA Discover what to look out for when reconciling CO-PA to theGeneral Ledger Learn how to match the Cost-of Sales G/L account with itscorresponding CO-PA value field Find out how to repost documents in CO-PA only3 3. Topics Overview of costing and accounting-based CO-PA How costing-based CO-PA ties to the General Ledger Matching the cost-of-sales G/L account to CO-PA Additional CO-PA reconciliation issues Reposting documents in CO-PA only Summary Start of first section: List the main points in your presentation and insert this slide at the start of each new topic. Move the highlighted box down for each new section. This divides your presentation into easy to follow sections.4 4. Overview of Controlling Profitability Analysis Collects Revenues and Costs from various modules in order toanalyze profitability Inherits the characteristics that are associated with thoserevenues and costs Examples of Characteristics are Customer, Product, Region,Salesperson, etc. Excellent tool for analysis but not easily reconcilable with theGeneral Ledger5 5. Costing Based CO-PA Groups costs and revenues into Value Fields Value fields are mapped to Conditions, G/L Accounts, CostComponents and Variance Categories This was the original model of CO-PA When people say CO-PA they are normally referring to Costing-Based CO-PA6 6. Advantages and DisadvantagesAdvantagesDisadvantages Splits the cost of sales value Does not show G/L Accountsinto its different cost hence not as easilycomponentsreconcilable Can classify production More complicated to set up asvariances into their differentit requires mapping of valuecategoriesfields to various objects Better visibility of contributionmargin as fixed and variablecosts can be broken out7 7. Account-Based CO-PA Uses Accounts as a basis for reporting All P&L Accounts would need to be created as cost or revenueelements Categories of cost and revenue elements are classifiedaccording to cost element groups This type of CO-PA was introduced because accountantscomplained about not being able to reconcile costing-basedCO-PA to the general ledger8 8. Advantages and DisadvantagesAdvantagesDisadvantages Displayed according to G/L You cannot break out cost ofAccounts so it is easier to sales into their fixed andreconcile to the General Ledger variable costs As you can still report by You cannot analyze variancescharacteristics, it can also be into their respective categoriescompared with Costing based You cannot analyze cost ofCO-PA reports sales according to costcomponents9 9. Data Flows into CO-PA10 10. Data Flows into CO-PA (cont.) Flow of Actuals in Profitability Analysis Flow from the Sales and Distribution (SD) Module Flow from Billing Document Flow from the FI/MM direct postings General Ledger Posting MM Postings Flow from the Product Costing Transfer of Cost Components to PA Flow from Cost Object Controlling Settlement of Production Variances to PA Flow from Project Systems Settlement of Results Analysis to PA11 11. Topics Overview of costing and accounting-based CO-PA How costing-based CO-PA ties to the General Ledger Matching the cost-of-sales G/L account to CO-PA Additional CO-PA reconciliation issues Reposting documents in CO-PA only SummaryStart of first section:List the main points in your presentation and insert this slide atthe start of each new topic. Move the highlighted box down foreach new section. This divides your presentation into easy tofollow sections.12 12. Billing Document PostingsSales Condition is Mapped to a Value Field Sales Condition is also mapped to an account key and subsequently a G/L Account If a value field is not mapped to a sales condition, the billing document is not passed to FI13 13. Finance Postings Finance transactions are assigned to a PA transfer structure This PA transfer structure includes source and target objects Source objects are cost elements (or groups) Target objects are value fields When posting a Finance document, click on the Prof.Seg. Arrow and enter the characteristicsClick on Prof.Seg arrow toenter the characteristics14 14. Inventory Postings G/L Accounts are assigned to relevant inventory transactions in OBYC These G/L Accounts are mapped to value fields in PA transfer structure Include G/L Accounts in automatic account assignment transaction OKB9 Check the Profitability Segment box15 15. Production Settlement Settlement Structure for Production is assigned to a PA transfer structure PA transfer structure contains various assignments These assignments have source and target objects Source objects are the variance categories The target objects are specific value fields16 16. Project Systems Settlement Results analysis line IDs are assigned to cost elements Settlement Structure for Projects is assigned to a PA transfer structure PA transfer structure contains different assignments These assignments have source and target objects Source objects are the project systems cost elements The target objects are specific value fields17 17. Cost Center Assessments Cost Centers (or groups) are entered as senders in Assessments CO-PA Characteristics are designated as receivers Value fields to be posted to are assigned in these assessments Normally used for expenses that are not part of cost of sales18 18. Cost Components Cost Components are set up to break out the standard cost into its respective elements Cost elements are assigned to these cost components These cost components are assigned to value fields19 19. Topics Overview of costing and accounting-based CO-PA How costing-based CO-PA ties to the General Ledger Matching the cost-of-sales G/L account to CO-PA Additional CO-PA reconciliation issues Reposting documents in CO-PA only SummaryStart of first section:List the main points in your presentation and insert this slide atthe start of each new topic. Move the highlighted box down foreach new section. This divides your presentation into easy tofollow sections.20 20. Timing difference of Goods Issue TransactionGeneral LedgerCO-PA Sales OrderNot Updated*Not Updated Goods IssueUpdated (COS) Not Updated Billing Document Updated (Revenue) Updated (COS &Revenue) * Note: CO-PA can be updated from sales orders if you activateTransfer of Incoming Sales Orders21 21. Copying Condition VPRS to ZPRS You can copy condition VPRS to ZPRS in transaction V/06 Assign this condition to your pricing procedures (V/08)22 22. Assigning Condition ZPRS to CO-PA Value field Go to transaction KE4I Assign Condition ZPRS to the Cost of Sales value field You can overwrite the mapping of the current cost of sales condition (which is normally VPRS but could be something else) with condition ZPRS23 23. Assigning Condition to an account Key Create an account key ZPR using the menu path: Sales and Distribution -> Basic Functions -> Account Assignment/Costing -> Revenue Account Determination -> Define and Assign Account Key Assign this account key to the ZPRS condition in the pricing procedure (transaction V/08) Account key ZPR assigned to condition ZPRS24 24. Configuring Shipped not Billed Account Create Shipped Not Billed account in transaction FS00; Make this account an Open Item managed Account with the Only Bal. in Local Currency flag checked25 25. Configuring Shipped not Billed Account (cont.) Go to transaction OBYC, enter this account under transaction Key GBB and Account Modification VAX The cost of sales account would have previously been configured in this setting. You need to overwrite that account with the Shipped not Billed Account This way, the Shipped not Billed account will be debited during a Goods Issue transaction26 26. Making Cost of Sales Account a Cost Element Go to transaction KA01 and enter the cost of sales cost element; Enter a Cost Element Category of 12 Sales Deduction27 27. Assign Account Key to G/L Accounts Go to transaction VK0A and assign the account key ZPR to the G/L Accounts Shipped not Billed and Cost of Goods Sold This way, when you bill a customer, the Shipped not Billed account will be credited and the Cost of Goods Sold will be debited Shipped not BilledCost of Sales Account Account28 28. Topics Overview of costing and accounting-based CO-PA How costing-based CO-PA ties to the General Ledger Matching the cost-of-sales G/L account to CO-PA Additional CO-PA reconciliation issues Reposting documents in CO-PA only SummaryStart of first section:List the main points in your presentation and insert this slide atthe start of each new topic. Move the highlighted box down foreach new section. This divides your presentation into easy tofollow sections.29 29. Stock Transport Order Variance Issue A Stock Transport Order Variance which is posted using transaction VL02N does not get posted to CO-PA This is because this transaction is posted as a goods issue. Goods Issues do not pass to CO-PA because they are expected to be billed; However, STOs are not billed, so there is a discrepancy You need to apply SAPNote 116743930 30. Credit/Debit Memos with no Inventory Adjustments Some credit/debit memos relate to price adjustments alone; However, if you enter an inventory material number in them the system will determine their standard cost This means that a cost will be transferred to CO-PA even though there has been no inventory movement You may need to disable the VPRS condition for these type of Credit/Debit Memos; Alternatively, you can use a text material (which does not have any standard cost)31 31. Cost Element category for Sales Order Condition Sales conditions that are mapped to value fields should be assigned to the appropriate G/L Accounts These G/L accounts are mapped to sales conditions through the use of account keys The G/L Accounts should be set up as cost elements with Cost Element category 11 or 1232 32. Making Production Variance Account a Cost Element Variances are posted to CO-PA through the mapping of variance categories to value fields A variance G/L account is also posted to at the same time (configured in transaction OBYC Transaction Key: PRD-PRF) This G/L account should not be a cost element as this could lead to a double-posting in CO-PA33 33. Negative Discount Conditions A negative sales condition (i.e. deduction from Revenue) shows up in CO-PA as a negative number However, Revenue shows up in CO-PA as a positive number This means that if your CO-PA reports contain a formula that deducts discounts from Sales, this will be a double negative (hence an addition to sales); If you therefore add these (negative) discounts to revenue, be careful about FI generated discounts as they appear in COPA as positive amounts; The recommendation is to use different value fields for Sales Condition Discounts which are negative and FI Generated discounts which are positive34 34. Work-in-process account WIP account is posted to when an incomplete production orders settled In the G/L it is posted to a balance sheet and a P&L account The P&L Account is not to be set up as a cost element CO-PA is not updated with WIP postings, and hence there canbe an imbalance with the General Ledger35 35. Cost Center Allocations not fully Absorbed If you have created cost center assessments to CO-PA, these need to be executed every month This will ensure that all cost center costs eventually flow to CO- PA You need to check all the cost centers at month end to ensure that they are zeroed out36 36. Posting in CO-PA without corresponding G/L entry COPA-only postings can be made using transaction KE21N However, if these postings are made without a corresponding FI entry, then this can lead to an imbalance These postings should only be used in emergency cases or when a reconciliation issue needs to be fixed37 37. Topics Overview of costing and accounting-based CO-PA How costing-based CO-PA ties to the General Ledger Matching the cost-of-sales G/L account to CO-PA Additional CO-PA reconciliation issues Reposting documents in CO-PA only SummaryStart of first section:List the main points in your presentation and insert this slide atthe start of each new topic. Move the highlighted box down foreach new section. This divides your presentation into easy tofollow sections.38 38. Reasons for Making Manual CO-PA Postings You can manually post documents to CO-PA only by usingtransaction KE21N This should only be used when it is too late to go back to thesource module to make the posting (e.g. when the periodclosing for that module has been carried out) Make sure that only certain users have access to thistransaction as it could lead to an imbalance with the generalledger if not used correctly 39. Manual Posting to CO-PAEnter a Record Typeand Posting Date in theinitial screen 40. Manual Posting to CO-PA (cont.)Enter the relevantcharacteristics andvalue fields 41. Reasons CO-PA may not be Originally Updated CO-PA was not set up when the finance posting was made The cost element that was linked to the condition types account key was not set up with Category 11 or 12 There was an incorrect mapping of an SD condition type to a CO-PA Value field A technical system error occurred which did not complete the documents posting to CO-PA42 42. Subsequent CO-PA Posting Choose business transaction and document origin You can restrict the selection by document number, document, posting date or creation date43 43. Subsequent CO-PA Posting (cont.)You can also subsequently repost documents that originated from the Sales and Distribution and Materials Management modules by using transaction KE4S and KE4SMM respectively 44. Reasons for Reversing CO-PA Documents You made the initial posting by using the CO-PA documenttransaction KE21N You made a CO-PA configuration change but it is too late toreverse the source document, hence you need to cancel andrepost the CO-PA document alone There is an external interface that was posted incorrectly intoCO-PA and needs to be corrected in SAP only 45. Displaying CO-PA Documents to be Deleted You need to be specific about the data that you want to deleteotherwise you could delete a CO-PA document inadvertently It is therefore advisable to display the CO-PA documents firstbefore carrying out the reversal You can use transaction KE24 to display the CO-PA documents. 46. Using Transaction KE4S00 Minimum data that needs to be entered: Operating Concern Record Type Company Code 47. Using Transaction KE4S00 (cont.)When you execute the transaction you will get a log of the line items read and cancelled: Double-click on the relevantline to see the documentnumbers that have beenread or cancelled 48. Topics Overview of costing and accounting-based CO-PA How costing-based CO-PA ties to the General Ledger Matching the cost-of-sales G/L account to CO-PA Additional CO-PA reconciliation issues Reposting documents in CO-PA only SummaryStart of first section:List the main points in your presentation and insert this slide atthe start of each new topic. Move the highlighted box down foreach new section. This divides your presentation into easy tofollow sections.49 49. Resources Paul Ovigele, 100 Things You Should Know About Financial Accounting with SAP (July 2011) Provides little-known tips to optimize the FinancialAccounting module, including reconciling the general ledgercost of sales account with CO-PA http://help.sap.com/saphelp_erp60_sp/helpdata/en/7a/4c48c64a 0111d1894c0000e829fbbd/frameset.htmSAP SAP Help website contains comprehensive information aboutthe CO-PA module including the various data flows from theother modules such as the general ledger50 50. Five Key Ideas Costing-based CO-PA is more effective than Account-based CO- PA for cost of sales and variance analysis but is more difficult to reconcile to the general ledger Data flows into CO-PA from billing documents, general ledger and inventory postings, production order and project systems settlements, cost components and cost center assessments Cost of sales are posted to the general ledger when the goods are issued, but posted to CO-PA when a billing document is created A cost element that is linked to a sales condition which posts to CO-PA should have a cost element category of 11 or 12 You can post documents to CO-PA only using transaction KE21N51 51. Questions Now: Ask questions now for immediate answers Later: Contact me at paul@ovigele.comQ&A52 52. 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