What can be done with the functional area in the global hierarchies?

[seonjoong]

Hello Community

 I have some questions about global hierarchies and functional areas

• System: S/4HANA Cloud

• Question: After checking the “activate functional area” option in Global Hierarchies and then setting up a functional area hierarchy, for what purpose can this actually be used?

It seems that I cannot assign G/L accounts under the functional areas, nor can I build any special tree structure.

Can anyone share an example?

Thank you.​​

[Chris1973 · Accepted solution]

Good day @seonjoong 

Thank you for your question

You can use the Activate functional area in Manage Global Hierarchies to build a hierarchy of functional areas for your reporting needs. It is not designed to assign G/L accounts. The Functional area is like a cost center or segment which the system derives from your master data or stored on your postings, then the functional area hierarchy is used to aggregate those postings in your reports. 

Here is a reference:

https://help.sap.com/docs/SAP_S4HANA_CLOUD/c56f622a2edf491b9f1b596b55587009/0e1df3837a7f4bf68c94083c...

Basically, saying that you cannot attach G/L accounts directly under functional areas in the hierarchy app. You should first ensure that your functional areas are maintained in the relevant master data before selecting Functional Areas as a dimension and choosing your global hierarchy.

As an example, you may consider the following scenario:

When you define functional areas:

• 1000 Production
• 2000 Sales
• 2100 Domestic Sales
• 2200 Export Sales

In Manage Global Hierarchies, you can build a hierarchy looking like this:

Operating Expenses

• Production (1000)
• Sales (2000)
  • DOM_SALES (2100)
  • EXP_SALES (2200)

In your Master Data:

Cost centers for production carry functional area 1000

Sales Cost Centers carry 2100 or 2200, etc.

• OPERATING_EXPENSES
• PRODUCTION (1000)
• SALES (2000)
• DOM_SALES (2100)
• EXP_SALES (2200)

So, when your posting hit those cost centers, the functional area is derived. So, you select your functional area hierarchy and the system will aggregate all your postings e.g., your total Operating Expenses accordingly.

Have a look at the following references for more details:

https://help.sap.com/docs/SAP_S4HANA_CLOUD/c0c54048d35849128be8e872df5bea6d/c19642b1e9844fc8837c7a27...

https://help.sap.com/docs/SAP_S4HANA_CLOUD/f0d042517a434458b171ff5867b18445/c8de66216fde46cfb0e77199...

Best regards

Chris