CO FI Reconciliation in SAP new GL

CO FI Reconciliation in SAP new GL

Overview

CO to FI reconciliation is one of the significant process improvements in SAP new GL.  Cross company code postings in Controlling ledger is the main cause of difference between FI ledger and CO ledger. If users post cross company code in CO ledger, the corresponding “legal” effect (i.e. cross company billing and accounting) of this transaction does not reflect in FI. Previously, users had to process a job at month end to allow the system to reconcile the differences and post corresponding entries in FI ledger. With new GL, this reconciliation and posting of entry in FI ledger occurs real time. We will use a cross company allocation example to examine how new GL reconciles CO Ledger with FI Ledger.

 

CO FI Ledger Reconciliation

When allocations are made within Controlling, they might post to two cost objects or two cost centres that belong to different company codes. In legal terms, one company code has charged cost to another company code. Since this allocation occurs in Controlling, the legal impact of cross company allocation is required to be reflected in Financial Accounting.

Cross company code allocation in Controlling

Cross company code allocation in Controlling

 

With previous versions of SAP, business users are required to execute a period end job to reflect this posting in Financial Accounting.

With new GL, SAP posts documents in Financial Accounting simultaneously with the cross company allocation posting in Controlling. The obvious advantage of this is faster period end close because users do not have to execute the period end job to reconcile the ledgers. New GL ensures integrity of data between the two ledgers is maintained throughout.

CO FI Reconciliation postings in FI Ledgers

CO FI Reconciliation postings in FI Ledgers

What am I demonstrating?

I will demonstrate how new GL handles COFI reconciliation. As an example, I will process a cross company code cost centre allocation in Controlling. This posting should generate a real-time cross-company posting in Financial Accounting.

Assumptions for this blog

One of the pre-requisites is that SAP new GL is active. It is not essential to have document splitting active; for the purpose of this blog document splitting is active. All configuration steps documented in blog “SAP delivered pre-configuration for document splitting in SAP new GL” are configured for the demonstration in this blog.

Profit Centre 1300 is assigned only to Company Code V001 and Profit Centre 5001 is assigned only to Company Code V005.

I will demonstrate COFI Real-Time Integration for a cross-company code posting. The similar logic and configuration step applies to cross profit centre, cross functional area, or any of the other new GL scenario.

For the purposes of demonstration, I will perform a cross-profit centre assessment. However, the logic and the process described in this blog will work for all processes that post cross-company code eg. distribution, activity allocation, manual repostings etc

SAP new GL design driving COFI Reconciliation

The below configuration has to be done to enable COFI reconciliation.

  • Define Variants for Real-Time Integration
  • Assign Variants for Real-Time Integration to Company Codes
  • Define Account Determination for Real-Time Integration
  • Define rules for selecting CO Line items
  • Transfer CO Documents retrospectively

 

Define Variants for Real-Time Integration

Here we define parameters for Real-Time Integration.

  • Select the indicator to activate Real-Time Integration
  • Key Date: is the date from when the Integration is active. If you decide to put a date in the past, you can execute “Transfer CO documents retrospectively” if no transfer was made previously. It is recommended that you put the key date as the first date of the next fiscal period.
  • Account determination: This will use the account determination rules, which you will configure in the next step, to post the accounting entry in Financial Accounting. It is recommended that you always select this indicator. If you do not select this indicator, and
    • Post an allocation using a primary cost element, SAP will use that GL account to post back into FI.
    • Post an allocation using a secondary cost element, SAP will not post an entry back into FI.
  • Assign Document Type for COFI Reconciliation postings.
  • Leave Ledger field blank. FI document will post to all ledgers.
  • You could either select scenarios for which you want FI reconciliation documents to be posted; or use BAdI to select scenarios; or define Rules to select scenarios. You can, for example, select all cross-profit centre documents (within the same company code) to be posted back to FI as well.
  • Avoid selecting transfer of all CO allocation Line Items or Trace – this will impact performance of the processes.

Variant for Real-Time Integration can be defined in IMG menu path

Financial Accounting (New) > Financial Accounting Global Settings (New) >Real-Time Integration of Controlling with Financial Accounting > Define Variants for Real-Time Integration

Variants for real time integration CO FI

Variants for real time integration CO FI

 

Assign Variants for Real-Time Integration to Company Codes

Variants for Real-Time Integration can be assigned by Company Code. Assign your variant to all Company codes within the Controlling Area.

Assignment of Variant for Real-Time Integration can be defined in IMG menu path

Financial Accounting (New) > Financial Accounting Global Settings (New) >Real-Time Integration of Controlling with Financial Accounting > Assign Variants for Real-Time Integration to Company Codes

Assign variants to company code

Assign variants to company code

 

Account Determination for Real-Time Integration

There are two tables to be configured:

  • Define Intercompany Clearing
  • Define Account Determination for Real-Time Integration

Define Intercompany Clearing

This is generally configured as a part of general Finance configuration. There is no additional configuration required here. When COFI Reconciliation posting is made in Financial Accounting, this table is used to populate the Inter Company customer and Inter Company Vendor account.

You can check this configuration in IMG menu Path

Financial Accounting (New) > Financial Accounting Global Settings (New) >Real-Time Integration of Controlling with Financial Accounting > Account Determination for Real-Time Integration > Define Intercompany Clearing

Define cross company code posting parameters

Define cross company code posting parameters

 

Define Account Determination for Real-Time Integration

When COFI Reconciliation posting is made in Financial Accounting, this table is used to populate the COFI Reconciliation clearing account.

You can define the COFI reconciliation GL account in IMG menu Path

Financial Accounting (New) > Financial Accounting Global Settings (New) >Real-Time Integration of Controlling with Financial Accounting > Account Determination for Real-Time Integration > Define Intercompany Clearing

Define account for automatic posting of CO FI reconciliation

Define account for automatic posting of CO FI reconciliation

 

Define rules for selecting CO Line items

You can define your own rules to determine which CO line items should be selected for transfer to Financial Accounting. You assign this rule in the variant for COFI Reconciliation. Selection of checkboxes in the variant is the standard way to activate the transfer; define rules only if you business process has special requirements (eg. certain cross company code postings should not transfer back to Financial Accounting).

 

Transfer CO Documents retrospectively

You would only need to perform this if you activate COFI Reconciliation retrospectively in the variant definition for Real-Time Integration.

 

Cross Company code Allocation in Controlling

I created a simple cross company allocation cycle to allocate IT costs from Cost Centre 1322 in Company Code V001 to Cost Centre 5001 in Company Code V005.

Maintain CO assessment allocation cycle

Maintain CO assessment allocation cycle

 

Once the allocation is performed, the system posts an entry into Controlling as shown below.

CO document from assessment

CO document from assessment

 

Costs are allocated from Company Code V001 to Company Code V005. This is a charge of costs across legal entities. Hence, the posting should reflect in the legal books as well.

With COFI Reconciliation active and the tables configuration as shown above, the system has posted a cross company document in Financial Accounting as shown below.

FI document from CO assessment

FI document from CO assessment

 

The General Ledger view of the two documents in Company code V001 and V005 is shown below.

 

Conclusion

With new GL COFI Real-Time Integration functionality, users can now expect FI documents posted in real time for all cross company code (or any of the new GL scenarios) allocations in CO. This eliminates the need to perform period end job to transfer CO postings to FI and has greatly help reduce the period end processing time.

 

Please Share

I hope this blog has helped you understand the configuration behind document splitting. Please do leave your comments below whether this article was helpful; and whether you have any suggestions/ comments; or if you would like to share your experience with document splitting.

I strongly recommend you share this blog with your network using one of the social media icons at the top or bottom of this page.

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______________________________________________________________________________________________________________

Rajesh has implemented new GL features for several customers. Rajesh has 12 years experience implementing SAP / IT / BPM Finance solutions for several customers globally; he also has 7 years experience working in the business in Finance and Accounting functions. His business process knowledge combined with his IT expertise enables him to provide his customers with best-of-breed advice on business process / IT implementations.

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Comments

  1. Dear Rajesh,
    thanks for this well done documentation. I have a question for you: in order to avoid tons of FI documents posted in FI due to the real time integration do you know if it is possible to use the reconciliation ledger or a COFI “on demand” integration? I would like to avoid so many documents and in the same time we need only the reconciliation (may be few lines summarized by each object we need to reconcile such as profit center, functional area,….)and not an FI posting for each single CO line.

    Thanks in advance, Paolo

    • Hi Paolo

      I am not aware of any functionality to post Reconciliation documents in batches. One of the features of newGL in ECC is to expedite period end processing by eliminating “technical” reconciliation jobs (document splitting, COFI reconciliation etc). This expressly means documents should not post in batches.

      If your concern is about volume of data in SAP table, in my opinion, SAP ECC is structured to handle additional volume load on tables from document splitting, COFI reconciliation. I am not aware of any significant deterioration of performance in ECC compared to R3.

      COFI reconciliation entries post to clearing accounts (like with R3); hence, you should not overtly worry about postings to these accounts. The documents contain audit trail if you ever want to go back and see where the posting originated.

      Hope I have answered your question.

      Regards

      Rajesh Shanbhag
      http://www.slideshare.net/rshanbhag
      http://www.linkedin.com/in/veritysolutions

  2. Dear Mr. Rajesh,

    I have read all your articles and I liked them all. You make this very easy to understand.

    Can I make you one request? Would you explain How COGM and COGS value is calculated? and relationship between

    consumption of RM/SF material and COGM. Can I get COGM calculation in any Table?

    I am confused.

    Thanks and Regards

    Avinash

    • Hi Avinash

      This question has several sub-questions under it? Is it COGM from Financial Accounting perspective or for COPA or for Product Costing?

      Generally speaking, COGM/ COGS is the cost of materials sold calculated as number of items sold times the standard price/ moving average price in the Material Master. This is the value posted in SAP. For a manufactured product, there are several RM/ SF goods that go into the Bill of Material of that product. You would ideally use SAP Product Costing to cost the RM and roll up the cost to the manufactured product. Hence, when you issue raw material to production (i.e. against a production order) the system would charge the production order for COGM of the Raw Material. When manufactured product is completed and delivered to warehouse, the system credits the production order for COGM of the manufactured product. The net balance on the production order (assuming all production is completed as planned) would represent production variances for that batch of production.

      There are no specific tables for COGM.

      If you have specific questions, I would be glad to elaborate.

      Cheers

      Rajesh

  3. Hi Rajesh

    All your blogs are very good,clear in concepts and easy to understand.

    One small suggestion is give your details in Table form by point wise,it is easy to understand and remember by the readers.

    T&R
    idreddy
    Hyderabad,India

  4. Hey there, You have done an excellent job. I will definitely digg it and in my opinion suggest to my friends. I am confident they’ll be benefited from this site.
    Sherman Demiter recently posted..1My Profile

  5. Dear Rajesh

    Thank you for the article it´s been really useful.

    Just one question: Instead of assessment it can be used with distribution too?

    Regards

    • Thank you, Alfred.

      Yes, this logic will work for distribution as well. Thanks for pointing this out; I have updated the blog with the following sentence:
      “For the purposes of demonstration, I will perform a cross-profit centre assessment. However, the logic and the process described in this blog will work for all processes that post cross-company code eg. distribution, activity allocation, manual repostings etc”

      Regards

      Rajesh

  6. Hi Rajesh

    Thank you for your article…

    I have question regarding CIFI reconciliation postings.

    I have activated CO-FI real time integration (New GL and Doc. splitting is active) for cross company, cross profit center and cross functional area and system is posting FI documents whenever allocations are performed across cross company / profit center / cross functional area. But Functional area is not getting updated in FI documents. If i activate “Derive Functional are a in Assessment cycle header, Functional area is getting updated only for receiver side of entry but not sender side. Could you please let me know what could cause for this ?

    Thanks in advance
    Ratnakar K

  7. Hi Rajesh,
    Excellent work. This makes everything very easy.

    I have one small question. When we say distribution, Is COPA top down distribution included in this?

    I want to use COPA top down distribution to derive correct profit center.
    IF not, can we create user defined rules.

    E.g If There is any cross profit center posting during top down distribution then activate CO-FI recon?

    Again, Thanks for great help.

    Regards,
    Ketan

  8. Hi Rajesh,

    U r doing a gr8 job…this article cleared all my doubts on Cross Co.code Postings.
    Please keep posting and i do follow u r blog regularly.

    Thanks

  9. Hi Rajesh,

    Thank you for your article, it is a good work.

    I have a question about the the COFI reconciliation GL account.

    It is the first time Iam working with New GL, and in my company the account wich was defined for automatic posting of CO FI reconciliation is not a Cost Element Accounting, but a balance Sheet Account (Zero Balance Accounting).

    It is correct?

    Regards

    Augusto

    • Hi Augusto

      If the Zero Balancing account is set as a cost element, it will require a default account assignment (OKB9).
      If it is not set as a cost element (i.e. set as a P&L Account not as a cost element or as a Balance Sheet Account), then make sure you have defined (in Document Splitting rules) how the Profit Centre should be derived on these line items (assuming Profit Centre is mandatory field).

      Regards

      Rajesh

  10. Hi,

    Rajesh,

    One more question about COFI reconciliation GL account:

    During the Transfer posting from CO to FI, if the document has more 999 line itens, the system automatic split the posting in several documents. To do this, is necessary to inform an account in transaction OBX2 (Automatic Posting Accounts).

    The account which must be informed in OBX2,should be a “Balance Sheet Account” or a “Cost Element Account”?

    In my company the account wich was informed is a “Cost Element Account” and we are having the following situation:

    “The line wich is created to split the document does not have the information about the the “Business Area”. The field GSBER is not filled.”

    In my conpany the document splitting is based only in Business Area and we have more than one Business Area for each company code

    Regards

    Augusto

    • Augusto
      Have you defined document splitting rule for this cost element account? You should define a default business area/ profit centre.
      If you have not defined a splitting rule, it would give you this error.
      I am not very familiar with newGL + Business Area combination because none of my customers used Business Areas in newGL.
      If the above does not help, please send me more information and I will see how I can help.

      rajesh

  11. Hi Rajesh,

    Excuse me if I am disturbing you, but Iam not very familiar with new GL and document splitting. It is the first time that I am working on it . I started working here after the SAP implementation. In my opinion there are somethings that are not working properly.

    The main question in relation of OBX2 (Automatic Posting Accounts) is:

    – I am thinking to create a specific account to the automatic split the posting (OBX2), because the account which was informed is used to other postings (SALARY);
    – This new accoutn will be created as P&L statement account, but not a cost element;
    – In Financial Accounting (OBBH)I will create a rule to fill the field “GSBER” for the new account (OBX2);

    In this way I will try to fill the field “GSBER” when the system automatic splits the document accounting based on the OBX2 trsnsaction. The rules of the document splitting will happen after this procedure.

    Thank you very for your attention.

    Regards

    Augusto

  12. I want to configure a rule, to always post fi posting for certain process business transaction from CO, please write if some has done it before, an example will be much appreciated.

    • Hi Pankaj

      If you want to select what you want to transfer to FI (as opposed to sending all cross-posting documents to FI), you should select option “Use BADI” and set up BADI FAGL_COFI_LNITEM_SEL. with parameters of which CO line items should trigger postings to FI.

      Rajesh

  13. Hi Rajesh,

    Nicely written blog. I have a doubt however. Why do you say that New GL needs to be active for real time COFI? I believe it will work in Classic GL too. Is that not so?

    Thanks,
    Debayan

    • Hi Debayan

      Not sure if real time can be done without activating newGL. I think the FI (New) menu appears only when newGL is activated.
      I have not had this requirement from any customer nor worked on something like this; so cannot comment.

      Rajesh

  14. Hi Rajesh, Your blog has been very helpfull to me. I have a requirement to capture the trading partner on the FICO reconciliation account when cross company code allocations occur in CO. In your example I see that you were able to derive the trading partner. Can you please let me know how you acheived this. I was thinking that I could use a substitution rule (user exit).

    Thanks,
    Jyothi

    • Hi Jyothi
      Trading partner is automatically derived in x-cocode transactions even in Classic GL. If you configure “Company” and assign company to company code, I believe, it should derive trading partner.

      Rajesh

  15. hi,

    I need your inputs on a particular error that I am facing while going for manual cost allocation in secondary cost element from one cost center to another. The system gives the error GL account not created in COA. Whereas I am allocating costs from a secondary cost element, which requires no GL.

    The GL number that system is displaying in error msg is not created, then how can the system pick up such a random number?

    We are using new GL functionality.

    Pls advise.

    Thanks
    Akruti

  16. Hello Sir

    Thanks for these well done documentation. Great job sir, it help me to understand new GL CO-FI reconciliation process.

    Best

    Oye

  17. Hi Rajesh,

    Nice blog. I have a question. I am using parallel ledger and one is for GAAP and the other one local GAAP
    in my case the non leading ledger is not moving to CO to use allocation. In some blogs I read about COGM activation to move my non leading ledger costs to CO. But when I run allocation its taking the full amount of leading ledger and non leading ledger together.

    my requirement is do the allocation separately for each ledger as the calculation is different. when COFI integration is active the allocation documents hitting back only leading ledger and not non leading ledger.

    Did you face or hear this scenario?

    Thank you
    Savy

    • Hi Marcela – standard keys are used for standard transactions – like when ou post vendor invoice. Ideally you should use standard settings where possible. Using custom settings could have implication on other standard processes.

      Rajesh

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