2. © 2012 ERP Corp. All rights reserved.
A Guide to Functional
Areas and Cost-of-Sales
P&L Reporting in the SAP
General Ledger
Paul Ovigele
Ovigele Consulting

3. Introduction
3
• Learn how to activate cost-of-sales (COS) functionality in the
SAP General Ledger
• Find out how to define and derive functional areas
• Receive step-by-step instructions for creating and running
functional area reports
• Discover tips for easily switching from period-based to COS
accounting using the same report

4. Topics
• Overview of cost-of-sales accounting
• Using functional areas for cost-of-sales accounting
• Using cost-of-sales accounting with SAP General Ledger
• Activating cost-of-sales scenario and deriving functional areas
• Creating cost-of-sales financial statements
• Summary
4
Start of first section:
List the main points in your presentation and insert this slide at
the start of each new topic. Move the highlighted box down for
each new section. This divides your presentation into easy to
follow sections.

5. Approaches to Profit and Loss Accounting
• Period-Based Accounting
• Sales are matched with cost-of-sales for
the period
• Cost-of-Sales Accounting
• Sales are matched with cost of goods
sold regardless of when produced
5

6. Comparing Accounting Methods
Period-Based Cost-of-Sales
• Revenues
• Sales deductions
• Changes in stock
• Work in process
• Revenues
• Sales deductions
• Cost-of-sales
(incl. period variances)
Total Output Gross Result
• Material Consumption
• Salaries
• Other Costs
• Sales and Distribution
• Administration
• Research & Development
Result Result
6

7. Extra G/L Accounts Approach
• A simpler approach to implement, as every classification is
dealt with using general ledger accounts
• Could lead to a significantly larger and unmanageable chart of
accounts
• Could make configuration of account assignments more
complicated
• e.g., which depreciation expense account category will you
assign to the asset class?
7

8. Costing-Based CO-PA Approach
• Value fields are mapped to sales conditions, G/L accounts, and
variance categories to reflect the source of the activities
• Characteristics help determine what dimensions to report on;
e.g., product line, customer, region, etc.
• Reconciliation with FI is sometimes difficult because value
fields are not always updated at the same time as general
ledger accounts
8

9. Functional Area Approach
• Allows you to classify your expense accounts into the different
functional areas in which they occurred
• e.g., you can identify whether a payroll expense is
production or marketing related
• With SAP General Ledger you can pull extra characteristics into
the FAGLFLEXT table and hence facilitate evaluations by
product, customer, country, etc., just as in CO-PA
• CO-PA is still more suitable for contribution margin reporting
and analyzing fixed vs. variable costs
9

10. Period Accounting Mapped to Functional Areas
Period Accounting
Net Revenue 5000 Production Admin R&D
Stock Change 50 50
Gross Profit 4950
Material Costs 600 400 100 100
Payroll 800 150 250 400
Depreciation 50 25 25
Other Costs 150 25 75 50
Total Costs 1600 650 425 575
Net Profit 3350
Cost of Sales Accounting
Net Revenue 5000
Production 650
Cost of Sales 4350
Admin 425
R&D 575
Net Profit 3350
Functional Areas
10

11. Topics
• Overview of cost-of-sales accounting
• Using functional areas for cost-of-sales accounting
• Using cost-of-sales accounting with SAP General Ledger
• Activating cost-of-sales scenario and deriving functional areas
• Creating cost-of-sales financial statements
• Summary
11
Start of first section:
List the main points in your presentation and insert this slide at
the start of each new topic. Move the highlighted box down for
each new section. This divides your presentation into easy to
follow sections.

12. Options for Deriving Functional Areas
12
Manual Entry
Internal
Orders
Cost
Centers
Cost
Collectors
Cost Objects
G/L AccountSubstitution
P&L Account

13. Functional Areas in Cost Objects
Cost Object
• Cost center
• Internal order
• Product cost
collector
• WBS element
• Network
• Profit center
Assignment
• Cost Center Category
• Cost Center Master Data
• Order Type
• Internal Order Master Data
• Order Type
• Cost Collector Master Data
• Project Profile
• Network Type
• Account Assignment
13

14. Multiple Cost Objects in One Line Item
• If, for example, a cost center and internal order are entered on
one line item, the order is treated as actual and the cost center
as statistical (due to the “actual assignment” rule)
• Hence the functional area of the order is derived
14
Whose functional
area is derived?

15. Functional Areas in G/L Accounts/Cost Elements
• If the G/L account is also a cost element, you can only enter the
functional area in the master record of the P&L account
• The functional area is then copied to the master data of the
cost element
• Since several company codes can be assigned to a controlling
area, the functional area field is assigned to the chart of
accounts area of the G/L account and cost element master data
• This ensures that the same functional area is entered in the G/L
account and its related cost element
15

16. Functional Areas in G/L Accounts/Cost Elements (cont.)
Scenario Derivation
You post to a G/L account for which
there is no cost element
System derives the functional area
from the G/L account
You post to a G/L account for which a
cost element exists
System derives the functional area
from the G/L account
You post to a cost element (in
controlling) for which there is no G/L
account
System derives the functional area
from the secondary cost element
16

17. Cost-of-Sales Substitutions
• Substitution is a process for checking a value entered in SAP
against a user-defined prerequisite
• If the prerequisite is met, then the value of a specific field is
replaced by substitute values
17
User defines rules
and field to be
replaced
Is
prerequisite
met?
Replace
field with
specified
value
Replace
field with
specified
value
No
Yes

18. Substitution vs. Cost Center Categories
• Substitutions
• Pro: Particularly useful in exceptions to normal
circumstances; for example, you want functional area ABC to
be derived only for postings to a specific cost element in that
cost center
• Con: Trickier to modify when business circumstances
change
• Cost Center Categories
• Pro: Simpler to set up. Easy way to ensure that all new cost
centers have a functional area assigned to them
• Con: Doesn’t take into account special situations where the
cost center category is not the only driver for the functional
area assignment
18

19. Manual Entry of Functional Areas
• Could be used in very unique circumstances where the
functional area will not be known until the time of posting
• Field status group for posting keys and chart of accounts
should be set to “optional” for functional areas
19
• This overrides all other methods of deriving
functional areas, so should be used only where
automatic derivation does not apply

20. Topics
• Overview of cost-of-sales accounting
• Using functional areas for cost-of-sales accounting
• Using cost-of-sales accounting with SAP General Ledger
• Activating cost-of-sales scenario and deriving functional areas
• Creating cost-of-sales financial statements
• Summary
20
Start of first section:
List the main points in your presentation and insert this slide at
the start of each new topic. Move the highlighted box down for
each new section. This divides your presentation into easy to
follow sections.

21. Cost-of-Sales Ledger in SAP General Ledger
• With SAP R/3 you needed to activate the Cost of Ledger (0F) in
order to use functional areas. Now with SAP ERP, the Cost-of-
Sales Ledger is included in SAP General Ledger
SAP ERPSAP R/3
•Reconciliation Ledger
• EC-PCA
• Special Purpose Ledger
• Cost-of-Sales Ledger
• Consolidation Staging
Ledger
21

22. Scenarios in SAP General Ledger
• A scenario determines what fields in a ledger are updated when
it receives posting from other application components
• If you want to update the functional area field in the SAP G/L
view of an accounting document, you need to assign the Cost-
of-Sales scenario (FIN_UKV) to the relevant ledger
• This updates the sender and receiver functional area fields
• Go to IMG path: Financial Accounting (NEW) Financial
Accounting basic settings (NEW) Ledgers Fields Display
Scenarios for General Ledger Accounting
22

23. Examples of Scenarios in SAP General Ledger
Scenario Description Fields Filled Technical
Field Name
FIN_CCA Cost center update Cost center
Sender cost center
RCNTR
SCNTR
FIN_PCA Profit center update Profit center
Partner profit center
PPRCTR
PRCTR
FIN_UKV Cost-of-sales
accounting
Functional area
Partner functional
area
RFAREA
SFAREA
• If you don't assign scenarios to the leading or non-leading
ledgers, the system updates only the account and company
code objects in the FAGLFLEXT table
23

24. Substitutions in SAP General Ledger
• When SAP G/L is active, you can activate functional area
derivation on the entry screen
• This means that the functional area is derived before you save
the document anytime you hit the “Enter” button
• This makes substitution call-up point “6” relevant for activation
(with classic G/L call-up point “5” is relevant)
• Financial Accounting (New) Financial Accounting Global
Settings (New) Tools Customer Enhancements Enhance
Functional Area Determination
24

25. Substitutions in SAP General Ledger (cont.)
25
This prerequisite states
that: If the account
number is “474240”
and the cost center
category is “5”…..
Then the functional area
to be derived in the posting
is “TEST1”
The substitution is activated
for the relevant company
code with call-up point “6”

26. Adding Characteristics to CO Totals Records
• When you activate SAP G/L, the functional area characteristic is
updated in the totals table of Controlling (CO)
• This means that credit postings can be made from the CO
sender objects using the functional areas during
assessments
• The menu path for this is: “Controlling  General
Controlling  Add Characteristics to CO totals records”
26
Sender Functional
Area is now available
in Assessments!!

27. Account Assignment Objects for Asset Accounting
• You can activate the functional area field as an account
assignment object in asset accounting
• This means that the functional area field will be available
during asset postings to the general ledger
• You then assign the functional area object to an account
assignment type (either APC posting or Depreciation posting)
• This is done per company code and depreciation area
• Financial Accounting (NEW)  Asset Accounting  Integration
with the General Ledger  Additional Account Assignment
Objects  Activate Account Assignment Objects / Specify
Account Assignment Types for Account Assignment Objects
27

28. Topics
• Overview of cost-of-sales accounting
• Using functional areas for cost-of-sales accounting
• Using cost-of-sales accounting with SAP General Ledger
• Activating cost-of-sales scenario and deriving functional areas
• Creating cost-of-sales financial statements
• Summary
28
Start of first section:
List the main points in your presentation and insert this slide at
the start of each new topic. Move the highlighted box down for
each new section. This divides your presentation into easy to
follow sections.

29. Creating and Deriving Functional Areas
29

30. Activating Cost-of-Sales Accounting
30
• In Preparation
 This enables the functional area to
be available for input in master
data such as G/L accounts, cost
centers, etc.
 No postings can be made to
functional areas
• Active
 This enables the functional areas
to be derived and updated during
posting
Options for Activation per Company Code

31. Activating Cost-of-Sales Accounting (cont.)
31
• When cost-of-sales is activated for a company code, the global
parameters will have “2” in the “Cost of sales accounting actv.”
field (this can be seen in transaction OBY6)
• The Functional Area field is ready for input in all company
codes of a client, provided that the status of cost-of-sales
accounting is either In Preparation or Active for at least one
company code of the client

32. Entering Functional Areas in Master Data
32
Master Data Transaction for
update
Assignment Level
G/L Account FSP2 Chart of Accounts
Cost Center KS02 Controlling Area
Cost Center
Category
OKA2 Client
Internal Order KO02 Controlling Area
Order Type KOT2 Client
Cost Element KA02 Chart of Accounts

33. Functional Areas in Cost Center Master
33
• Advantages of direct entry
• Allows for flexibility to change in case the cost center
categories propose placeholder functional areas in the
cost center
• The business may not want to create as many cost center
categories as there are functional areas
• Disadvantages of direct entry
• Users can accidentally overwrite the correct functional area
that was derived from the cost center category
• May make master data creation more time-consuming

34. Functional Areas in Internal Orders
34
• To ensure consistency of
the functional areas in the
master data of internal
orders, define the
Functional area field in
the field selection control
of the order type as an
output field. This will
make it impossible to
manually enter the
functional area in the
order type.
Is functional
area entered
directly in order
master?
Is functional area
entered directly
in order type?
Is functional
area entered in
responsible cost
center of the
order
Functional area
recorded in order
master
No
No
YES
YES
YES

35. Functional Areas in Secondary Cost Elements
35
• Be careful when trying to enter functional areas in secondary
cost elements
• Entering a functional area in a secondary cost element only
makes sense if, before the assessment, the CO object to be
credited was only debited under the functional area that is
also entered in the secondary allocation cost element
• Otherwise this could cause reconciliation issues if the
sender cost center has been debited with other functional
areas, in which case the functional area balance for this cost
center will not be zero
• For assessments or other allocations, it is advisable to derive
the functional area from the cost center or substitution rule

36. Changes to Functional Areas
36
• If you want to change the functional area in the master data
where postings with this functional area have been made, you
get the following error:
• “Transaction Data already exists”
• You can change this setting by either making the Error Message
(FH 600) a Warning Message or deactivating the message totally
• Go to Menu path : Financial Accounting (New)  Financial
Accounting General Settings (New)  Document  Default
Values  Change message Control for Document
Processing

37. Functional Areas in Field Status Groups
37
• Functional Area field status is found in Additional account
assignment section of posting keys transactions (OB41) and
chart of accounts (OBC4)
• Field statuses can be set to allow functional areas to be
suppressed, displayed, or required when documents are posted
• Set the field status for functional areas to “suppressed” to
eliminate possible user error

38. Topics
• Overview of cost-of-sales accounting
• Using functional areas for cost-of-sales accounting
• Using cost-of-sales accounting with SAP General Ledger
• Activating cost-of-sales scenario and deriving functional areas
• Creating cost-of-sales financial statements
• Summary
38
Start of first section:
List the main points in your presentation and insert this slide at
the start of each new topic. Move the highlighted box down for
each new section. This divides your presentation into easy to
follow sections.

39. 39
Reporting by Functional Area

40. 40
Options for Reporting by Functional Area
Other Report
Options
Drill-down
Reports
Report
Painter
• Since the functional area
field is made available in
the FAGLFLEXT
table, standard report
0SAPBSPL-01 can be
executed by functional area
• Other reporting tools can
also be used to tailor to
specific requirements
Standard
Reports

41. 41
Financial Statement Versions
 You must explicitly define
financial statement
versions as being
permissible by functional
area allowed indicator in
the configuration settings
of transaction OB58
 You then assign the
functional areas to the
lowest nodes
• You can assign either a functional area or an
account to a node in the Financial Statement
version, but not both

42. 42
Standard Report 0SAPBSPL-01
• This report can be executed
through transaction
S_PL0_86000028
• The functional area field
is available to selection
in the initial screen
• You enter the financial
statement version where
you set the functional
area as allowable

43. 43
Standard Report 0SAPBSPL-01 (cont.)
• When executed in
the drill-down
format, this report
can be displayed
using the standard
drilldown
functionalities
• Click on any of
the
characteristics on
the top left of the
screen to analyze
the data with that
characteristic

44. 44
Drill-Down Reports
• You can use the standard reports as a template for creating
your own custom drill-down report
• Financial Accounting (New)  General Ledger Accounting
(New)  Information System  Drilldown Reports (G/L
Accounts)
Standard Report
being copied
Custom Report

45. How to Copy and Modify a Standard Report
45
Identify the library that has the relevant
characteristics and key figures for Cost-of-
Sales reporting (0F1)
Create a “Set Variable” if you want to group
the functional areas into logical groupings
Create a report from library 0F1 and define
the rows and columns you want to appear
in the report
Create a report group and assign the report
to this report group
GR23
GS11
GR11
GR51

46. 46
Problem with Report Painter Reports
• Report Painter reports do not support a financial statement
version with functional areas
• This means that in order to group functional areas into
reporting nodes, you need to create sets and replicate the
functional area financial statement version
• This makes the reports more time-consuming to create
• It also means that you need to update two structures when business
circumstances change – the Financial Statement version and the Set
that was created

47. 47
Other Reporting Options
• ABAP Reports
• Custom reports can be created from tables GLFUNCT and
GLFUNCA in classical G/L and FAGLFLEXT & FAGLFLEXA in
SAP G/L
• BI Reports
• Activation of InfoCubes 0FIGL_C02 (Cost of Sales Ledger:
Transaction Figures) and 0FIGL_VC2 (Cost of Sales Ledger:
Financial Statements)
• Query 0FIGL_V10_Q0001 (Financial Statements (New):
Actual/Actual Comparison ) is a New G/L financial statement
report which can be viewed by functional areas

48. Topics
48
• Overview of cost-of-sales accounting
• Using functional areas for cost-of-sales accounting
• Using cost-of-sales accounting with SAP General Ledger
• Activating cost-of-sales scenario and deriving functional areas
• Creating cost-of-sales financial statements
• Summary
Start of first section:
List the main points in your presentation and insert this slide at
the start of each new topic. Move the highlighted box down for
each new section. This divides your presentation into easy to
follow sections.

49. Resources
• Paul Ovigele, 100 Things You Should Know About Financial
Accounting with SAP (July 2011)
• Provides little-known tips to optimize the Financial
Accounting module, including with cost-of-sales accounting
• http://help.sap.com/saphelp_erp60_sp/helpdata/en/e1/8e51341a
06084de10000009b38f83b/frameset.htm
• Go to: ERP Central Component  Financials  Financial
Accounting  General Ledger Accounting  General
Ledger Accounting  Cost of Sales Accounting
• SAP Note 677630 – Correcting functional areas in FI documents
• This note can also be used to re-derive the functional areas
of accounting documents already posted
49

50. Five Key Ideas
• The functional area field is updated by assigning the “cost-of-
sales” scenario to the relevant ledgers
• Cost –of-sales can be activated as follows:
• “In Preparation”– means it is available for entry in master
data
• “Active” – means that it is available for posting
• It is best not to allow direct entry of functional areas during
posting in order to avoid manual errors
• Standard financial statement reports such as 0SAPBSPL-01 can
be viewed by functional area
• Functional areas are derived by manual entry, substitution, G/L
account, cost element or cost object assignment
50

51. Questions
• Now:
• Ask questions now for immediate answers
• Later:
• Contact me at paul@ovigele.com
51
Q&A

52. Disclaimer
SAP®, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver®, Duet®, PartnerEdge, and other SAP® products and
services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in
Germany and in several other countries all over the world. All other product and service names mentioned are the
trademarks of their respective companies. ERP Corp is neither owned nor controlled by SAP.