controlling module

[#1]

Can you please let me why controlling module is required and what are the advantages of using controlling module in a company

[Former Member · Accepted solution]

Hi Yaminsri,

Purpose of Controlling Module:

Controlling provides you with information for management decision-making. It facilitates coordination, monitoring and optimization of all processes in an organization. This involves recording both the consumption of production factors and the services provided by an organization.

As well as documenting actual events, the main task of controlling is planning. You can determine variances by comparing actual data with plan data. These variance calculations enable you to control business flows.

Income statements such as, contribution margin accounting, are used to control the cost efficiency of individual areas of an organization, as well as the entire organization.

Integration

Controlling (CO) and Financial Accounting (FI) are independent components in the SAP system. The data flow between the two components takes place on a regular basis.

Therefore, all data relevant to cost flows automatically to Controlling from Financial Accounting. At the same time, the system assigns the costs and revenues to different CO account assignment objects, such as cost centers, business processes, projects or orders. The relevant accounts in Financial Accounting are managed in Controlling as cost elements or revenue elements. This enables you to compare and reconcile the values from Controlling and Financial Accounting.

Features of Controlling Module:

Cost Element Accounting:

Cost and Revenue Element Accounting provides you with an overview of the costs and revenues that occur in an organization. Most of the values are moved automatically from Financial Accounting to Controlling. Cost and Revenue Element Accounting only calculates costs which either do not have another expense or only one expense in Financial Accounting.

If needed, reconciliation of the values in Financial Accounting and Controlling takes place in Cost and Revenue Element Accounting.

Cost Center Accounting:

You use Cost Center Accounting for controlling purposes within your organization. It is useful for a source-related assignment of overhead costs to the location in which they occurred.

Activity-Based-Accounting:

Activity-Based Costing analyzes cross-departmental business processes. The goals of the whole organization and the optimization of business flows are prioritized.

Internal Orders:

You use internal orders to collect and control according to the job that incurred them. You can assign budgets for these jobs, which the system monitors, to ensure that they are not exceeded.

Product Cost Controlling:

Product Cost Controlling calculates the costs that occur during manufacture of a product, or provision of a service. It enables you to calculate the minimum price at which a product can be profitably marketed.

Profitability Analysis:

Profitability Analysis analyzes the profit or loss of an organization by individual market segments. The system allocates the corresponding costs to the revenues for each market segment.

Profitability Analysis provides a basis for decision-making, for example, for price determination, customer selection, conditioning, and for choosing the distribution channel.

Profit Center Accounting:

Profit Center Accounting evaluates the profit or loss of individual, independent areas within an organization. These areas are responsible for their costs and revenues.

Profit Center Accounting is a statistical accounting component in the SAP system. This means that it takes place on a statistical basis at the same time as true accounting. In addition to costs and revenues, you can display key figures, such as, Return on investment, working capital or cash flow on a profit center.

Hope this helps you to understand...

Srikanth Munnaluri

Edited by: Srikanth Munnaluri on Apr 30, 2009 3:00 PM

[Former Member]

Hi Sri,

Controlling is used mainly for Management Reporing Purpose, It not necessary for All Private Sectors depending on they Requiremnent,

In Controlling Have several Topics is Covered,

1) Like Planning & Budgeting for Making Finished Product and compare with Actual.

2) To Know Expenses Incurred for Each Department like Admin, Sales etc.,

The above example is small brief about Controlling

[iklovski]

Hi,

Controlling module is almost a 'must' for any private sector implementation. It's functionality allows you to perform costing analysis of the expenses/revenues of your organizations on different leveles (based on the components within CO which will be activated).

Regards,

Eli

[Former Member]

The information that comes out of FI cannot serve as management information, the reporting level is too high. In CO we will focus on management reporting.

Each P&L posting in FI can come into CO. An account in FI will be a primary cost element in CO. In CO there is additional information needed on each cost element in order to gather management information. That additional information is a u201Ccost objectu201D. We post the cost element on the cost object.

In CO we can further allocate between cost objects. This is done with secondary cost elements which are invisible in FI.

Controlling provides you with information for management decision-making. It facilitates coordination, monitoring and optimization of all processes in an organization. This involves recording both the consumption of production factors and the services provided by an organization.