Deriving Functional Areas 

Use

During cost of sales accounting corporate expenditure is broken down according to functional area.

Integration

From a business perspective, allocations between Controlling (CO) objects can involve a change of functional area. This then causes the affected items to be moved in the profit and loss statement (P&L). Therefore, this business transaction needs to be posted back to FI as a reconciliation posting.

All allocations in CO are logged by the reconciliation ledger. The reconciliation ledger also displays the differences between functional area balances in FI and CO, which were created due to CO internal postings where an FI-relevant account assignment was changed (company code, business area, or functional area).

At the end of the period you can generate adjustment postings for FI using the data in the reconciliation ledger. The postings lead to credits and debits for the relevant functional areas. Once these postings have been made, you can then draw up a reconciled profit and loss statement.

Features

The system derives the functional area for both primary postings (FI postings) and secondary postings (allocations within the controlling area) using a three stage method.

For postings internal to CO, the functional area is derived for both the objects involved in the allocation.
  1. The system checks whether a functional area is entered in the master data of the CO object to which the posting is made, and uses this functional area if entered.
  2. The system checks whether a functional area is entered in the master data of the G/L account or cost element, and uses this functional area if entered.

    3. The functional area belonging to the G/L account or cost element takes precedence over any functional area derived from the master data of the CO object.

  3. The system derived the functional area using substitution from the account assignment elements that already exist in the document.

Activities

You define functional areas in Customizing under the settings for cost of sales accounting.

In Customizing, choose Financial Accounting ® Financial Accounting Global Settings ® Company Code ® Cost of Sales Accounting.