Role of Profit Center Accounting in the SAP System 

Role in Enterprise Controlling (EC)

The Enterprise Controlling component (EC) is a powerful, integrated system which provides efficient, up‑to‑date information for controlling your group or company.

EC consists of the applications Executive Information System (EC‑EIS), Consolidation (EC‑CS) and Profit Center Accounting (EC‑PCA).

 

 

Executive Information System (EC‑EIS)

The Executive Information System presents up‑to‑date aggregated data and provides user‑friendly tools for analyzing the critical success factors for your company or entire group. The data basis can be supplied either internally (SAP system or other applications) or from external sources. EC‑EIS is integrated with other information systems in SAP through the architecture of the SAP Open Information Warehouse.

Consolidation (EC‑CS)

Consolidation (currently in development) gives you a reconciled view of your group’s financial data and lets you create the reports required by corporate law (by group, company or business area) as well as reports which reflect your company’s internal management structure (by profit center or region). This is possible due to powerful consolidation functions built on top of flexible structures. You can use corresponding interfaces to transfer data from General Ledger Accounting (FI-GL), Asset Accounting (FI-AA), Material Management (MM), Sales and Distribution (SD) and Profit Center Accounting. You can also analyze the results of the consolidation immediately in EC‑EIS.

Profit Center Accounting (EC-PCA)

Profit Center Accounting forms an interface between the operative controlling (CO) applications and the Enterprise Controlling (EC) module. It reflects the actual and plan postings from operative controlling and settlement components, with which it is integrated in real‑time. It then summarizes this data according to profit centers, which reflect the internal structure of areas of responsibility within your company.

Profit Center Accounting primarily serves to calculate internal (plan and actual) results according to the period accounting approach. If the function area is specified for the data in the controlling components, you can also analyze results using the cost‑of‑sales approach.

In addition, EC‑PCA lets you analyze certain balance sheet items by profit center. This also makes it possible to control the necessary key figures for an area of responsibility.

If you store values flows in multiple fields using different valuation methods, you have the option of valuating goods movements with transfer prices in Profit Center Accounting.

Profit Center Accounting is account‑based. That means, the values are updated in EC‑PCA according to account. Consequently, you can reconcile the data here with that in Financial Accounting.

You can modify or supplement both actual and plan data taken from the operative components to meet your company’s requirements for Profit Center Accounting (assessment/distribution). You can then use this data as a basis for a more strategic analysis using EC‑EIS.

Multiple profit center hierarchies (profit‑oriented, functional, regional, and so on) make it possible to analyze data in different ways in multidimensional organizations. Through the elimination of internal business you can also represent data at higher hierarchical levels.

EC‑PCA provides you with a comprehensive and flexible information system for analyzing your data by period. You can access the original postings from FI, CO, SD, MM, and so on directly to identify potential weaknesses. Using the report/report interface, you can drill down to the information systems of other components.

The Distinction Between Profit Center Accounting and Profitability Analysis (CO‑PA)

Profitability Analysis (CO‑PA), like Profit Center Accounting, is another form of profitability accounting. However, it is incorporated in operative cost accounting. That means that the profitability segments in CO‑PA are accounting assignment objects and are thus directly integrated in the flow of data in cost accounting.

In contrast to EC-PCA, where profits are found for areas of responsibility within the company, CO-PA lets you analyze the profitability of different segments of your operative business -- defined according to products, customers, orders, or any combinations or groups of these -- or organizational units, such as company codes or business areas. The aim of CO-PA is to provide the accounting department and decision-makers in sales, marketing, product management and corporate planning with information about the market.

You can define the master data and basic structures in CO‑PA flexibly to meet your company’s specific requirements. By choosing just the objects for evaluation (characteristics) and key figures you require, you can create a company‑specific multidimensional structure for analysis.

Unlike EC‑PCA, CO‑PA lets you use an account‑based or a costing‑based approach. In the costing‑based approach, you can define your own value fields for analysis. In account‑based CO‑PA, the values are represented in accounts.

EC‑PCA and CO‑PA should not be regarded as alternative components. On the contrary, they complement one another and jointly provide you with a flexible and comprehensive profitability accounting tool, allowing you both a market‑oriented viewpoint as well as a responsibility‑ and person‑oriented one.

For more details about CO‑PA and how it differs from EC‑PCA, see the R/3 Library, under CO-PA Profitability Analysis.

The Distinction Between Profit Center Accounting and Special Purpose Ledgers (FI‑SL)

The component Special Purpose Ledgers (FI‑SL) is primarily used to perform company‑specific accounting‑tasks which cannot be performed using the SAP standard functionality. This component contains no predefined business functionality. Rather, it makes available a number of abstract tools, which are already used in various standard applications.

For example, Profit Center Accounting is based largely on the technology in FI-SL. You may wish to use the special purpose ledgers to supplement Profit Center Accounting if your requirements cannot be entirely met there. However, this would require a significant amount of programming and additional maintenance.