Create controlling area in sap:

Create controlling area in SAP involves a simple step in transaction code ‘OKKP’ and controlling area comes under configuration part.

Please note that performing creation of controlling area configuration requires appropriate authorization and understanding of your organization’s specific requirements.

Here’s a simplified guide:

Access Transaction Code: OKKP ( Create controlling area)

Open the SAP GUI and enter transaction code OKKP in the command field.

Enter Company Code:

• Enter your company code for which you want to create the controlling area.

Define controlling area:

– Click on the “New Entries” button to define a new controlling area.

Always try to give in Numerical values for Example “4444″ or 2120 or any thing as per client requirements. SAP Suggests numerical values because when a organisation take over another organisation it doesn’t need to modify.

Provide Controlling Area Details :

– Enter a unique identifier for the controlling area and fill in the other required details, such as name, currency, and language.

Save Your Entries –

After entering the necessary information, save your entries.

Activate Components:

– Go back to the initial screen (transaction OKKP) and select the controlling area you just created. –

Click on the “Activate Components” button to activate the components for your controlling area.

Activate the components which your client wants to configure for example projects etc….

Check the Configuration – Ensure that the controlling area is configured as per your organizational structure and requirements

Assign controlling area to company code

– Finally, assign the controlling area to your company code. This can be done in transaction code OX19.

Save and Confirm

Remember to consult with your SAP system administrator or consultant to ensure that your configuration meets your organization’s requirements and policies. In addition, ensure that you have the necessary SAP authorizations to perform these configuration steps.

what is controlling area:

In SAP ERP, a controlling area is an organizational unit used in the Controlling module to represent a closed system for cost accounting purposes. It helps in managing and controlling costs within specific boundaries, allowing for detailed tracking and analysis of financial data.

Company code and Controlling area Differences

In SAP, both the company code and controlling area are organizational units, but they serve different purposes within the system.

1. Company Code:

• Represents a legally independent accounting entity.
• Each company code has its own set of financial accounts and produces its own financial statements.
• It is primarily associated with Financial Accounting (FI) and handles external reporting requirements for legal purposes.

1. Controlling Area:

• Represents an organizational unit used for internal controlling purposes.
• It is part of the Controlling (CO) module and is used for cost tracking, analysis, and internal reporting.
• While a company code is associated with external financial reporting, a controlling area focuses on internal management accounting and controlling functions.

In summary, a company code is more aligned with external financial reporting and legal entities, whereas a controlling area is designed for internal management and cost control within the SAP system.

Integration of Controlling Area

The Controlling (CO) module in SAP integrates with various other modules to provide comprehensive control and analysis of an organization’s financial processes. Here are some key integrations:

1. Integration with Financial Accounting (FI):

• Controlling and Financial Accounting are closely linked. CO provides detailed information on costs, while FI focuses on external financial reporting.
• Cost elements, cost centers, and internal orders in CO are linked to general ledger accounts in FI.

1. Integration with Materials Management (MM):

• Cost centers and internal orders in CO can be linked to materials in MM for tracking and analyzing material-related costs.

1. Integration with Sales and Distribution (SD):

• CO integrates with SD for profit center accounting, allowing organizations to analyze the profitability of sales areas, distribution channels, and products.

1. Integration with Production Planning (PP) and Plant Maintenance (PM):

• CO integrates with PP and PM for tracking and analyzing costs related to production and maintenance activities through the use of internal orders and other CO elements.

1. Integration with Project System (PS):

• Internal orders in CO are often used for project-related cost tracking, and there is integration with the PS module for more complex project management functionalities.

1. Integration with Profitability Analysis (CO-PA):

• CO-PA integrates with SD, MM, and other modules to analyze the profitability of market segments, customers, and products.

These integrations help create a holistic view of an organization’s financial processes, enabling effective management and decision-making across various business functions.