During allocations in Controlling, postings are created that do not affect Financial Accounting. These postings do not update any G/L account transaction figures, rather they are ordinary postings within Controlling.

If, however, an allocation in Controlling leads to a change in the functional area, a shift occurs in the affected items in the profit and loss statement. The change of functional area has therefore to be communicated back to Financial Accounting. This reconciliation between Controlling and Financial Accounting is effected with so-called reconciliation postings.

All allocations within Controlling are logged in the reconciliation ledger. If these allocations contain relevant account assignment for Financial Accounting (company code, business area, functional area, and so on), the difference between the functional area balance in Financial Accounting and Controlling is entered here, along with other data.

At period-end closing, you can carry out adjustment postings or reconciliation postings for Financial Accounting. These postings are based on reconciliation ledger documents and result in either debit or credit postings to the relevant functional areas via automatic account determination.