CO FI Reconciliation in SAP new GL

Overview

CO to FI reconciliation is one of the significant process improvements in SAP new GL. Cross company code postings in Controlling ledger is the main cause of difference between FI ledger and CO ledger. If users post cross company code in CO ledger, the corresponding “legal” effect (i.e. cross company billing and accounting) of this transaction does not reflect in FI. Previously, users had to process a job at month end to allow the system to reconcile the differences and post corresponding entries in FI ledger. With new GL, this reconciliation and posting of entry in FI ledger occurs real time. We will use a cross company allocation example to examine how new GL reconciles CO Ledger with FI Ledger.

 

CO FI Ledger ReconciliationWhen allocations are made within Controlling, they might post to two cost objects or two cost centres that belong to different company codes. In legal terms, one company code has charged cost to another company code. Since this allocation occurs in Controlling, the legal impact of cross company allocation is required to be reflected in Financial Accounting.

Cross company code allocation in Controlling

 

With previous versions of SAP, business users are required to execute a period end job to reflect this posting in Financial Accounting.

With new GL, SAP posts documents in Financial Accounting simultaneously with the cross company allocation posting in Controlling. The obvious advantage of this is faster period end close because users do not have to execute the period end job to reconcile the ledgers. New GL ensures integrity of data between the two ledgers is maintained throughout.

CO FI Reconciliation postings in FI Ledgers

What am I demonstrating?I will demonstrate how new GL handles COFI reconciliation. As an example, I will process a cross company code cost centre allocation in Controlling. This posting should generate a real-time cross-company posting in Financial Accounting.

Assumptions for this blogOne of the pre-requisites is that SAP new GL is active. It is not essential to have document splitting active; for the purpose of this blog document splitting is active. All configuration steps documented in blog “SAP delivered pre-configuration for document splitting in SAP new GL” are configured for the demonstration in this blog.

Profit Centre 1300 is assigned only to Company Code V001 and Profit Centre 5001 is assigned only to Company Code V005.

I will demonstrate COFI Real-Time Integration for a cross-company code posting. The similar logic and configuration step applies to cross profit centre, cross functional area, or any of the other new GL scenario.

For the purposes of demonstration, I will perform a cross-profit centre assessment. However, the logic and the process described in this blog will work for all processes that post cross-company code eg. distribution, activity allocation, manual repostings etc

SAP new GL design driving COFI ReconciliationThe below configuration has to be done to enable COFI reconciliation.

Define Variants for Real-Time Integration Assign Variants for Real-Time Integration to Company Codes

Define Account Determination for Real-Time Integration

Define rules for selecting CO Line items

Transfer CO Documents retrospectively

 

Define Variants for Real-Time Integration

Here we define parameters for Real-Time Integration.

Select the indicator to activate Real-Time Integration Key Date: is the date from when the Integration is active. If you decide to put a date in the past,

you can execute “Transfer CO documents retrospectively” if no transfer was made previously. It is recommended that you put the key date as the first date of the next fiscal period.

Account determination: This will use the account determination rules, which you will configure in the next step, to post the accounting entry in Financial Accounting. It is recommended that you always select this indicator. If you do not select this indicator, and

o Post an allocation using a primary cost element, SAP will use that GL account to post back into FI.

o Post an allocation using a secondary cost element, SAP will not post an entry back into FI.

Assign Document Type for COFI Reconciliation postings.

Leave Ledger field blank. FI document will post to all ledgers.

You could either select scenarios for which you want FI reconciliation documents to be posted; or use BAdI to select scenarios; or define Rules to select scenarios. You can, for example, select all cross-profit centre documents (within the same company code) to be posted back to FI as well.

Avoid selecting transfer of all CO allocation Line Items or Trace – this will impact performance of the processes.

Variant for Real-Time Integration can be defined in IMG menu path

Financial Accounting (New) > Financial Accounting Global Settings (New) >Real-Time Integration of Controlling with Financial Accounting > Define Variants for Real-Time Integration

Variants for real time integration CO FI

 

Assign Variants for Real-Time Integration to Company Codes

Variants for Real-Time Integration can be assigned by Company Code. Assign your variant to all Company codes within the Controlling Area.

Assignment of Variant for Real-Time Integration can be defined in IMG menu path

Financial Accounting (New) > Financial Accounting Global Settings (New) >Real-Time Integration of Controlling with Financial Accounting > Assign Variants for Real-Time Integration to Company Codes

Assign variants to company code

 

Account Determination for Real-Time Integration

There are two tables to be configured:

Define Intercompany Clearing Define Account Determination for Real-Time Integration

Define Intercompany Clearing

This is generally configured as a part of general Finance configuration. There is no additional configuration required here. When COFI Reconciliation posting is made in Financial Accounting, this table is used to populate the Inter Company customer and Inter Company Vendor account.

You can check this configuration in IMG menu Path

Financial Accounting (New) > Financial Accounting Global Settings (New) >Real-Time Integration of Controlling with Financial Accounting > Account Determination for Real-Time Integration > Define Intercompany Clearing

Define cross company code posting parameters

 

Define Account Determination for Real-Time Integration

When COFI Reconciliation posting is made in Financial Accounting, this table is used to populate the COFI Reconciliation clearing account.

You can define the COFI reconciliation GL account in IMG menu Path

Financial Accounting (New) > Financial Accounting Global Settings (New) >Real-Time Integration of Controlling with Financial Accounting > Account Determination for Real-Time Integration > Define Intercompany Clearing

Define account for automatic posting of CO FI reconciliation

 

Define rules for selecting CO Line items

You can define your own rules to determine which CO line items should be selected for transfer to Financial Accounting. You assign this rule in the variant for COFI Reconciliation. Selection of checkboxes in the variant is the standard way to activate the transfer; define rules only if you business process has special requirements (eg. certain cross company code postings should not transfer back to Financial Accounting).

 

Transfer CO Documents retrospectively

You would only need to perform this if you activate COFI Reconciliation retrospectively in the variant definition for Real-Time Integration.

 

Cross Company code Allocation in ControllingI created a simple cross company allocation cycle to allocate IT costs from Cost Centre 1322 in Company Code V001 to Cost Centre 5001 in Company Code V005.

Maintain CO assessment allocation cycle

 

Once the allocation is performed, the system posts an entry into Controlling as shown below.

CO document from assessment

 

Costs are allocated from Company Code V001 to Company Code V005. This is a charge of costs across legal entities. Hence, the posting should reflect in the legal books as well.

With COFI Reconciliation active and the tables configuration as shown above, the system has posted a cross company document in Financial Accounting as shown below.

FI document from CO assessment

 

The General Ledger view of the two documents in Company code V001 and V005 is shown below.

 

ConclusionWith new GL COFI Real-Time Integration functionality, users can now expect FI documents posted in real time for all cross company code (or any of the new GL scenarios) allocations in CO. This eliminates the need to perform period end job to transfer CO postings to FI and has greatly help reduce the period end processing time.