Sap Controlling Month End Activities For Senior

Month-End Closing comprises activities involved in closing a posting period. The process is divided into 17. This documentation describes SAP transactions under SAP version: SAP R/3 4.6.C. At the end of each period (month) you can compare the plan and actual costs collected on the orders by calculating variances. Period-End Closing in Product Cost by Order: Scenario. The costs were assigned directly to the manufacturing orders. If manufacturing orders are linked to product cost collectors, these manufacturing orders are ignored in the period-end closing activities of Cost Object Controlling during the processing of the production orders and process orders. Subject: RE: [sap-acct] Month End Closing - List of transactions (SAP R/3 - 4.3) Hi, Below is list of MEC transactions reqd usually see what applys in Your case.

Product Cost Controlling (CO-PC) in SAP is very simple and easy.

But why is everyone saying that Product Costing is one of the most complicated topics in SAP?

The reason is that 99% of the learning material available for Costing and Controlling is completely useless. You can’t learn how the system works by listening for hours how someone is mechanically going through different configuration screens one by one, mostly just reading training materials provided by SAP itself that are too cryptic to offer you any clue what different configuration options actually mean in practice.

I too first struggled with costing and could not really grasp the overall picture how things really work in the system. Everything changed when one of my colleagues saw my pain and showed me how product costing was maintained for one of the companies he was working for. After spending just a few hours in the system, I had a crystal-clear understanding of how costing in SAP works. All it took was a one real-life example to see how simple the topic actually is.

This is what this course will be offering to you. We will be building a realistic end-to-end costing scenario that is based on a real-life example.

In this course, we will not be going through every single costing related configuration screen in detail as this is usually just a waste of your time. Once you understand how one complete costing scenario is set up and how the costs are flowing inside the system, it is fast and easy for you to start expanding your knowledge on your own and become a true expert of the topic.

As Product Costing can’t be discussed without also discussing Cost Elements and Cost Centers, we will also go through all the fundamentals of Controlling (CO). So you do not need to have any prior experience with the Controlling module to take this course.

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The structure of this course is the following. We will first start with a short slide set that introduces our costing scenario that is based on a real-life company. The slide deck also introduces the most fundamental terms and concepts related to product costing. I know that I have made a big fuss about explaining costing through a real example in the system and not through slides but please bear with me. We will not use too much time going through the slides and we will be playing around in the system before you know it.

After we have finished our short theory session, we will start looking at how costs are planned in the system. Cost planning is essential for the creation of material costs estimates that decide how goods are valued in financial postings and in a company’s balance sheet. Cost planning also gives us information that can be used for managerial decision making and allows us to compare actual costs to cost estimates.

The final part of the course is about the actual costs: We will go through what happens in costing during actual manufacturing process and will see how cost controlling is linked with Production Planning and Financial Accounting.

This course is especially designed for people who have started to read a 1,000 pages SAP Controlling manual and given up after the first 100 pages after countless chapters of irrelevant background information and no realistic examples how things actually work in practice. The unfortunate truth is that SAP consultants don’t know how to teach SAP. But I’m too shy to claim that I make an exception to this rule. Every second of my video lectures is designed to expand your knowledge as fast as possible.

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• If you want to learn how Product Cost Controlling in SAP works through a realistic end-to-end costing scenario, this is the course for you.

All indirect costs need to be allocated to the appropriate cost objects during the closing process irrespective of the industry.

In general, two main types of allocations are noticed in upstream companies:

• First: Recover the costs of operations from partners and equitably spread the costs among the joint ventures i.e. JVA Allocations

• Second: Allocation of corporate cost following the OECD (Organization for Economic Co-Operation and Development) guidelines.

Let’s understand these two types of allocations.

First – JVA Allocations: Recover the costs of operations from partners and equitably spread the costs among the joint ventures.

• Joint Operating Agreements (JOA) & Business units are the decision makers for these type of allocations.

• The fact what cost is recoverable is quite important here to understand and if the situation appears where government is part of the contracts then the Joint Operating Agreements (JOA) & Production sharing contracts (PSC) governs the recoverable costs.

• Ultimate bottom-line in this case would be to bill the appropriate ventures.

Following could be the example of the costs that can be allocated using this allocation process:

• Vehicle Usage
• Lease Operating Expenses (LOE)
• Facility Expenses (FE)
• Area Administration costs (AAC)
• Insurance etc.

Now we might have a questions what are the drivers used in these type of allocations:

The allocation drivers in this case would be:

• Well Count
• Oil or Gas throughput
• Water production or
• a combination of items

How do we handle this in SAP

As we have spoken about Joint Venture so it is certain that we need to use the Joint Venture Allocation Cycles (be it Assessment or Distribution based on the basic principle whether business wants to post costs using a secondary cost elements or post back to the primary cost elements).

Transaction Code to be used:

• Create the JVA Actual Assessment Cycle – Transaction Code GJF1
• Change the JVA Actual Assessment Cycle – Transaction Code GJF2
• Display the JVA Actual Assessment Cycle – Transaction Code GJF3
• Execute JVA Actual Assessment Cycle – Transaction Code GJF5
• Create the JVA Actual Distribution Cycle – Transaction Code GJG1
• Change the JVA Actual Distribution Cycle – Transaction Code GJG2
• Display the JVA Actual Distribution Cycle – Transaction Code GJG3
• Execute JVA Actual Distribution Cycle – Transaction Code GJG5

JVA Allocations utilize recovery indicator manipulation rules to drive costs appropriately. So we will notice Recovery Indicator & Manipulation Rule fields in a JVA Assessment/Distribution Cycle Master Data.

Refer below in case you want to know what is Recovery Indicator & Manipulation Rule:

• Recovery Indicator: The particular recovery indicator assigned to a posting line determines whether the expense is billable to partners. It can be like Billable expense, Billable adjustment, Non-billable expense, Suspense expense, Suspense adjustment etc.

• Manipulation Rule: This is to define the rules that will control how recovery indicators will be assigned to the records of sending and receiving cost objects during allocations.

Second: Allocation of corporate cost following the OECD guidelines

The type of corporate costs need to be allocated in this case could be:

• Regional Infrastructure
• Time writing
• Shared service costs etc.

Different drivers can be used in order to allocate different type of costs in this case i.e.

• Regional Infrastructure – SKF i.e. Headcount or Square feet
• Time-writing could be based on percentage
• The allocation drivers for Shared Service costs can be: production barrels, Capex/Opex, reserves, etc.

How do we handle this in SAP

In this case Controlling Allocation cycles (Assessment or Distribution) are used. Transaction Code to be used are:

• Create Actual Assessment Cycle – Transaction Code KSU1
• Change Actual Assessment Cycle – Transaction Code KSU2
• Display Actual Assessment Cycle – Transaction Code KSU3
• Execute Actual Assessment Cycle – Transaction Code KSU5
• Create Actual Distribution Cycle – Transaction Code KSV1
• Change Actual Distribution Cycle – Transaction Code KSV2
• Display Actual Distribution Cycle – Transaction Code KSV3
• Execute Actual Distribution Cycle – Transaction Code KSV5

A generic question pops up sometimes i.e. Which SAP Modules are used for implementation in these cases:

• Financials (FI)
• Controlling (CO)
• Joint Venture Accounting (JVA)
• Time & Expense (T&E)
• CATS

Challenges in Maintaining & Executing Allocation Cycles:

• Sender & Receiver Cost Center groups, Cost Element groups must be updated regularly to reflect correct mapping and proper allocation.

• Revisiting the Allocation Cycles Master Data to ensure the information’s are correct.

• Huge volume of data to handle.

• Month End Closing performance issues (Longer execution times because of comparatively larger Cycles Master Data i.e. many segments in a particular cycles)

• Validation of data from external sources i.e. multiple SKF quantities are derived from external sources for corporate cost allocations.

• There can be situations where receiver cost object in first cycle can be sender in second cycle and again receiver in second cycle can be sender in third cycle and so on. These types of cases are generally referred as tiered allocations and business always has difficulty to find out the actual source cost elements (i.e. different primary costs) from the subsequent cycles.

• Manual reconciliation of Cost Allocation becomes quite tedious and time consuming task due to non-availability of standards automated tool in system.

Dictionary

• Breakdown of allocation details with specific information (i.e. as per sender/receiver company codes, types of expenses, JV for Sender/Receivers.

Month End Activities

Important considerations:

• All primary costs i.e. first spent must be recorded before we execute the allocations so that receiver share can be billed accordingly.

• Consideration must be given for the ordering/sequencing of cycles & allocation of costs at execution to make sure that no costs remain un-allocated after month end close.

Is Month End Hyphenated

• Prior month allocations cannot be reversed using the SAP reversal functionality once the period is closed. Only posting a manual entry in the current month would be the option in case any correction to a prior month is needed.