SAP Note 69384 - Information: Account-based Profitability Analysis

Note Language: English Version: 7 Validity:

Valid Since 02.09.2005

Summary
Symptom
As of Release 3.0, two different types of Profitability Analysis (CO-PA) can be used: costing-based or account-based Profitability Analysis. The differences in function between the two Profitability Analysis types are pointed out in the documentation in the context of the appropriate function. However, there is no summary of the differences in function or the different Customizing settings which are possible or required during an implementation. This note is intended to provide such a summary. The note is intended for all users (users, consultants and so on) who require information on the differences between the costing-based and the account-based Profitability Analysis types. Note: At present this note does not cover all eventualities exhaustively, but it will be updated occasionally with additional information.

Other terms
Customizing, transfer of actual data, sales and profit planning, profitability report, KE093, account-based Profitability Analysis,

Reason and Prerequisites Solution

A. Comparison (overview)

COSTING-BASED PROFITABILITY ANALYSIS -------------------------------OBJECTIVE

ACCOUNT-BASED PROFITABILITY ANALYSIS --------------------------------

o profitability and sales accounting o evaluation of market segments (for example, customers, product groups, sales areas) and corporate units (for example, division, sales organization) with regard to their profit or contribution margins o calculation of profits procedures - cost-of-sales accounting - interim and reconciled sales report - periodic and transaction-based allocation - Profitability Analysis on the basis of full and direct costs o posted and costing-based values o account-based values

o can be reconciled with FI for account groups (revenues, sales deductions, costs of goods
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o always reconciled with FI on account level

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SAP Note 69384 - Information: Account-based Profitability Analysis

manufactured, and so on)

DATA STRUCTURES o definition of operating concerns with fixed characteristics and user-defined characteristics and value fields o cumulative storage by posting periods and weeks o storage in operating concern currency (as of Release 4.0 also optional in company code currency if req.) o user-definable summarization levels FUNCTIONS o transfer of profit relevant o business transactions from SD, FI CO, MM (revenues, sales deductions and costs organized by value fields) transfer of profit-relevant activities from SD, FI, CO, MM (revenues, sales deductions and costs organized by accounts) o definition of operating concerns with fixed and userdefined characteristics

o cumulative storage by posting periods o controlling area currency, company code currency and transaction currency

o Derivation of characteristics from master data or using derivation rules o Realignments also for data that is already posted o Valuation (Costs of goods manufactured, imputed costs and sales deductions) o sales and profit planning - flexible layout - periodic distribution - valuation, revaluation - forecast procedure - top-down distribution - simulation o profit planning - flexible layout - periodic distribution - forecast procedure - top-down distribution - simulation

o profit analysis by means of 'interactive drill-down reporting' - Report Painter - object list/ranking lists, database schema - drill-down - key figure systems - flexible hierarchies - navigation between reports - exception reporting - ABC analyses - Exporting (Excel, Winword, Mail)
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SAP Note 69384 - Information: Account-based Profitability Analysis

B. Explanation of the differences between the costing-based and the account-based Profitability Analysis

1. Objective The Costing-based Profitability Analysis is primarily intended to provide a short-term profit and loss statement for sales management. One of the main functions of the costing-based Profitability Analysis is the valuation of the planned sales volumes or the sales volume transferred from billing or from incoming orders using costing-based values (for example, with costing-based sales deductions and standard cost of goods manufactured). The advantage of this procedure is that the data is always up to date. Therefore the primary function of the Costing-based Profitability Analysis is to offer all the information required to make decisions in in the area of sales and profitability accounting. Using the account-based Profitability Analysis, an invoice that is always reconciled with Financial Accounting at account level is available to the user. All costs and revenues are transferred to the accounts-based values in the CO-PA system; in particular the cost of sales at goods issue is updated in the Profitability Analysis - and therefore at the same time as the posting in Financial Accounting. In the account-based Profitability Analysis, the profitability report is organized according to cost and revenue elements or cost and revenue element groups - in the same way as Overhead Cost Controlling and Financial Accounting. Both account-based Profitability Analysis and the costing-based Profitability Analysis display results differentiated according to market segments that are defined by combinations of characteristics. Values are organizef according to accounts in both the account-based Profitability Analysis and Financial Accounting. This means that the account-based Profitability Analysis can be used, in parallel with the costing-based Profitability Analysis, as a 'reconciliation bridge' between the Financial Accounting and costing-based Profitability Analysis.

2. Functional differences in detail 2.1 Basic data 2.1.1 Definition of the operating concern 2.1.1.1 Relationship between operating concern and controlling area

As in the costing-based Profitability Analysis, the controlling area in account-based Profitability Analysis is also subordinated to the operating concern in hierarchical form. Consequently, one or more controlling areas can be assigned to an operating concern. The operating concern determines the characteristics and therefore the structuring of the market segments for the costing-based and the account-based Profitability Analysis. If you are using both types of Profitability Analysis you have the option of deactivating individual
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SAP Note 69384 - Information: Account-based Profitability Analysis

characteristics for the account-based Profitability Analysis (see the "Usage of characteristics" function in the Customizing). The data volume for the account-based Profitability Analysis can be reduced considerably in this way. The controlling areas can have different currencies and different charts of accounts. However, as in the costing-based Profitability Analysis, the fiscal year variant of the operating concern and the fiscal year variants of all assigned controlling areas must correspond. Unlike in the costing-based Profitability Analysis, you cannot create cross-controlling area evaluations in the account-based Profitability Analysis, since the charts of accounts may differ. In the same way, cross-controlling area planning is not supported either. 2.1.1.2 Settings for the operating concern 2.1.1.2.1 Currencies For the costing-based Profitability Analysis, an 'operating concern currency' must be determined when you maintain the operating concern. Data is stored in this currency in teh costing-based Profitability Analysis. For the account-based Profitability Analysis, the operating concern currency is unimportant. Here, data is updated simultaneously in the transaction currency, company code currency and controlling area currency. 2.1.1.2.2 Data retention in calendar weeks In the costing-based Profitability Analysis, you have the option of activating the update of data in calendar weeks at totals records level (segment level). You have the option of entering different settings for actual data and planning data. When you activate this function, the data in CO-PA is managed both in the period type of the posting periods and according to calendar weeks. In particular, you can use it to support a weekly schedule in sales planning. This function is not available in the account-based Profitability Analysis. This means that in the account-based Profitability Analysis, you can only evaluate data according to calendar weeks in the line item reporting (selection "Date created"). 2.1.1.3 Determining according to the data structure There are no differences in functions between costing-based and account-based Profitability Analysis as regards the definition of the characteristics which are to be used in Profitability Analysis when planning, in reporting or the direct account assignment. Value fields, however, are only required in the costing-based Profitability Analysis. If you are only using the account-based Profitability Analysis, you cannot define any value fields when you define the operating concern; if you are using both types of Profitability Analysis, the value fields defined are only relevant for the costing-based Profitability Analysis. 2.1.2 Derivation of characteristics For the derivation of characteristics, the same functions are available in the costing-based and the account-based Profitability Analysis.
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SAP Note 69384 - Information: Account-based Profitability Analysis

2.1.3 Valuation In the account-based Profitability Analysis, the posted values are always transferred from the primary document (goods issue posting, billing, direct posting from FI/MM, allocations within the CO system, settlements of orders). A valuation does not take place.

2.2 Actual data flow The costing-based and the account-based Profitability Analysis is generally updated in the case of all actual postings relevant to the profit, providing the respective Profitability Analysis type is active. providing the corresponding Profitability Analysis type is active. 2.2.1 Sales order receipts In the costing-based Profitability Analysis, you can transfer the sales order receipts to Profitability Analysis so that an early profit forecast can be carried out. This function is not available in the account-based Profitability Analysis. 2.2.2 Goods issues for the sales order When you transfer billing data in the costing-based Profitability Analysis, the costs of sales are determined by a valuation with a material price and/or a product costing, and they are updated in Profitability Analysis. The value of stock change, updated in the Financial Accounting (FI) when the goods are issued, can also be transferred to the costing-based Profitability Analysis during billing (by using condition type VPRS). If the goods issue and the corresponding billing document are in another posting period, differences emerge between the FI and CO-PA. In account-based Profitability Analysis, on the other hand, the value that is posted as stock change in FI when the goods are issued for the sales order is transferred simultaneously to Profitability Analysis. For this, you must create the stock change account as a cost element in CO. (Problems occur in Release 3.* for an inter-company business and for goods issue posting for delivery note items for which there are no corresponding sales document items. In these cases, determine a profitability segment number via a substitution exit. See Note 70159). 2.2.3 Transfer of billing data When billing in thecosting-based Profitability Analysis (or to be more specific: when the billing document is released to the Financial Accounting), revenues, sales deductions and imputed costs are transferred, including ('real') values relevant to Financial Accounting as well as values not relevant to it ('statistical' values). Cost of goods manufactured and other possible imputed costs are now assigned by the valuation in the Profitability Analysis. When billing, all data relevent to Financial Accounting is transferred into account-based Profitability Analysis (revenues, sales deductions relevant to Financial Accounting and imputed costs). A valuation does not occur in CO-PA. The cost of goods manufactured is transferred to the account-based Profitability Analysis when the goods issue value is transferred when the
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SAP Note 69384 - Information: Account-based Profitability Analysis

goods are issued. 2.2.4 Assessment of the cost center costs In the costing-based Profitability Analysis, the cost center costs are updated in a value field, which you must specify during the cycle maintenance. In the account-based Profitability Analysis, the update is carried out under the assessment cost element, under which the sending cost center is also credited. If you are using both types of Profitability Analysis, in the cycle maintenance you can select whether the distribution base is to be determined from the data of the costing-based Profitability Analysis or from the data of the account-based Profitability Analysis. 2.2.5 Order and project settlement When you settle orders or projects, the value fields for updating the costing-based Profitability Analysis are determined by the PA transfer structure which is assigned to the order (see Settlement rule --> Parameter --> PA transfer structure). In the account-based Profitability Analysis, the update of the settlement data is carried out under the settlement cost elements which are defined by the corresponding settlement structure. A PA transfer structure is not required for the settlement in the account-based Profitability Analysis. 2.2.6 Internal activity allocation When you allocate internal activities of cost centers to profitability segments, the value field for updating costing-based Profitability Analysis is defined by the "CO" PA transfer structure. The update of the values from activity allocation in the account-based Profitability Analysis is carried out under the allocation cost element which is assigned to the corresponding activity type. The "CO" PA transfer structure is not used for the account-based Profitability Analysis.

2.3 Sales and profit planning 2.3.1 General functions A main function of the Profitability Analysis the sales volume, with (SD) and imputed costs sales and profit planning for the costing-based is the valuation of entered planning values, such as price lists of the Sales and Distribution system and sales deductions.

In the account-based Profitability Analysis, amounts and quantities can be entered by cost element for any market segments and user-selectable planning levels. However, no kind of valuation functions are available. 2.3.2 Dialog planning (in preparation) 2.3.3 Complete planning (in preparation)

2.4 Reporting 2.4.1 Profitability report

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SAP Note 69384 - Information: Account-based Profitability Analysis

In the reporting, you must be aware of the following special features when you use account-based Profitability Analysis: o Forms, reports and line item layout each apply to one type of Profitability Analysis, in other words, either to the costing-based Profitability Analysis or to the account-based Profitability Analysis. In the In account-based Profitability Analysis, you can define a hierarchy for the "cost element" characteristic by entering a cost element group (see the "Assign hierarchy" function in the Customizing of CO-PA). there is no "Cost element" characteristic in the Costing-based Profitability Analysis. The amounts can be displayed in different currencies in a report for the account-based Profitability Analysis: - controlling area currency - company code currency - transaction currency. When you define a form or a basic report, a characteristic specifying the currency must be entered as a required entry field for each currency for which you would like a report. If you want a report to be made in the company code currency, for example, the "Company code" characteristic is compulsory; for a report in the transaction currency, the transaction currency (foreign currency) characteristic is required. However, in the form definition or report definition, you can use variables that are only supplied with a characteristic when they are executed. By the time you run the report at the latest, you must have specified a unique characteristic value for every cell of a report (intervals are not permitted). 2.4.2 Line-item report You can use the line item list both for the account-based Profitability Analysis and for the costing-based Profitability Analysis. You can define separate line item layouts for the account-based Profitability Analysis. If you do not specify a layout, the system uses the standard layout. The following restriction applies to the the account-based Profitability Analysis: In the account-based Profitability Analysis, you can only report on active characteristics (see 'Usage of characteristics' in the Customizing) (in the costing-based Profitability Analysis, however, you can also display non-active characteristics in the line-item report). The detail display in the account-based Profitability Analysis now differs from the detail display in the costing-based Profitability Analysis. In the costing-based Profitability Analysis, the detail screens of the costing-based line item are displayed, whereas in the account-based Profitability Analysis the system goes to the general CO document display.

2.5 Tools

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SAP Note 69384 - Information: Account-based Profitability Analysis

2.5.1 Authorization check The authorization objects, which are used to assign authorizations for combinations of characteristics, must be created separately for the account-based and for the costing-based Profitability Analysis. All other Profitability Analysis authorization objects are effective for both types of Profitability Analysis. 2.5.2 Archiving (in preparation) 2.5.3 Allocation changes (in preparation) 2.5.4 External data transfer The only way you can transfer actual external/legacy data into the account-based Profitability Analysis is to post the corresponding data to the Financial Accounting. The long text of error message KE093 explains why this restriction applies (=> reconciliation). All FI document line items which have been assigned to a profitability segment, automatically generate a line item in the account-based Profitability Analysis as well.

Header Data
Release Status: Released on: Master Language: Priority: Category: Primary Component: Released for Customer 02.09.2005 13:27:08 German Recommendations/additional info Consulting CO-PA Profitability Analysis

The Note is release-independent

Related Notes
Number 672255 398631 120937 74486 Short Text Shortened fiscal year/changing fiscal periods INFO: CO-PC-OBJ (settlement) EDI:No profitability segmt number for invoice recpt INFO: Overview of consulting notes for CO-PA

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