A typical pain point for most projects has been the underlying differences in Costing Based COPA and

the P&L in
Financial Accounting. Most of the customers used costing based COPA with one of the reasons being getting a
break up of Cost of Goods Sold.

Typically in Costing based COPA, the values for key figures like Revenue, cost of goods sold, variances,
overheads etc get stored in value field in CE1* tables. This essentially used to map the accounts such as
revenue and sales deductions to value fields in costing based COPA. Additionally there were restrictions on the
no of value fields in costing based copa with around 200 fields (SAP OSS Note 1029391).

The account based COPA on the other hand uses cost elements to store the same values for various attributes
like revenue, cost of goods sold, and so on. However, the posting logic in traditional account based COPA was
such that cost of goods sold and variances could only be mapped to a single GL Account/Cost element. This was
one of the basic reasons why most SAP customers preferred using Costing based COPA over Account based
COPA. Another major challenge with using Costing based COPA was the frequent reconciliation issues between
COPA and GL. For eg, typically, the COGS was booked in the GL at the time of Outbound delivery and the same
value flowed into Costing Based COPA at the time of billing. So if the PGI and Billing were far apart in two
different posting periods, you typically had challenges in reconciliation of differences.

With SAP Simple Finance, life has been simplified for the Finance folks. SAP mandates the use of Account
based COPA with Simple Finance and does away with the limitations of traditional account based COPA
providing the same detailed information for Cost of Goods Sold, Production Variances & invoice quantities which
till now existed only with costing based COPA. Of course, the costing based COPA can continue to co exist with
the new Account based COPA

The traditional way of storing the characteristics in COPA irrespective of using Costing based COPA or Account
based COPA was to store the data in a row in a data base structure. Every time the typical COPA reports were
run, the system would query each data record and than aggregate to arrive at values which had been queried.
With HANA, the data is stored in columns and so only the relevant column is queried, This brings in tremendous
performance improvement. One of the ways in which SAP Customers used to tide over the performance related
issues with COPA Reports was to create secondary indexes on the way in which reports were done. So this is
some thing which is not required with the capabilities of HANA.

With Simple Finance, comes a new posting capability that allow SAP Customers to report the Cost of Goods Sold
at the same level of details as available in Costing based COPA. Typically, the postings on the GL used to
happen at the standard price at which the material was valuated and the break up of the standard cost was
available through Costing based COPA. With Simple Finance comes the capability to link the cost components
in the standard cost estimate to individual GL Accounts for each cost component. There is no restriction now on
the no of accounts and the level of detail can be the same as the one available in cost component structure. The
configuration path for the same in Simple Finance environment is:

IMG> Financial Accounting (New)>General Ledger Accounting (New)>Periodic Processing>

Integration>Materials Management>Define Accounts for Splitting the cost of goods so
Case Study Dual CO-PA Implementation
Customer Major High-tech Company
Industry Semi-conductor
About Customer
A major semi-conductor company based in the Silicon Valley, California and the worlds leading
supplier of process control and yield management solutions for the semiconductor and related
microelectronics industries. The companys products and services enable integrated circuit
manufacturers to manage yield throughout the wafer fabrication process from research and
development to final mass production yield analysis. In addition, it provides manufacturing with
older technologies and refurbished certified tools. The company also provides other services,
such as on-site repair, system installation, and educational services. It sells its products and
services through direct sales force and distributors primarily in the United States and Japan, as
well as in Europe and the Asia-Pacific region.
Business Challenge
The company has been already using Costing-based COPA for many years. Though the Costingbased
CO-PA met their margin reporting requirements, it was heavily under-utilized. The
primary cause of the problem was that there was significant mismatch between CO-PA and the
G/L. Majority of the reports used by the business community were out of sync and caused major
heart burn. The business community had lost the confidence in CO-PA numbers and thus the
costing-based CO-PA module was hardly used.
QS&S Solution
One of the most common causes of differences is shipped but not invoiced transactions. In
addition, there were many other causes caused by the business processes. A detailed analysis was
conducted by the QS&S team to understand the causes of the issues.
After detailed review and understanding, QS&S team recommended implementing Accountbased
CO-PA. This was in addition to the Costing-based CO-PA solution already in place. One of
the biggest challenges was to turn on Account-based CO-PA in the live productive system. In
addition to the extensive configuration required to activate Account-based CO-PA, the significant
challenge involved changing the account-assignment settings for the open transactions.
Benefits
The use of Account-based CO-PA offers advantages in terms of reconciliation between CO-PA
and G/L.
Utilizing the feature of Dual CO-PA was a huge benefit to the customer. Costing-based CO-PA
provided the valuable gross-margin analysis reporting typically required for management
analytics. Account-based CO-PA provided the day-to-day operational reporting tools, which
matched the General Ledger, provided consistent and granular reporting.
Cost Center Budgeting:

Key Concept

Budget availability control in the managerial accounting (CO) and Project System (PS) modules is a standard
SAP functionality that automates budget control through warnings and error messages. It also can send
notification emails automatically to respective budget holders based on defined conditions. This functionality in
the standard SAP system is available only for orders and projects.
The standard SAP functionality for budget availability control is available for internal orders and work
breakdown structure (WBS) elements, but not for the cost centers. Cost centers are commonly used to represent
the organizational structure of the company. Naturally, most businesses are interested in having system-enabled
budget control for departments or business units represented by cost centers.
Quite often, budget overspending is discovered too late with a traditional system setup. Organizations
traditionally rely on a regular reporting procedure, but sooner or later, it can fail for a number of possible
reasons. On the other hand, with active budget availability control, the system can not only provide early and
real-time warnings, but also send automatic emails to the person responsible. This is exactly the difference
between reactive and proactive approaches toward cost controlling.
When you use budget availability control, my recommendation is to route most of your external costs through
commitments. From a business perspective, commitment is a future cost that is internally agreed upon in
advance, so the company is anticipating it with very high degree of certainty. Ideally all vendor invoices should
have corresponding purchase requisitions (PRs) and purchase orders (POs) because the system automatically
creates commitments for them. Any exceptions to this rule should be minimized. Commitments allow a budget
control to be one step ahead of an actual cost because they block or reserve funds from the budget.

Note
You can always consider the implementation of Funds Management functionality (PSM-FM component), but I
would classify it as a heavy alternative that requires a lot of effort and its complexity is often underestimated by
project implementation teams.

In this article, I test the solution proposed in the SAP Note 101030. However, I go beyond the SAP Note content
and provide practical steps for configuring a working prototype, as well as sharing some ideas around further
possible solution improvements.

In SAP Note 101030, SAP suggests that you mirror cost centers with statistical internal orders that should be
used as an additional account assignment in financial postings via substitution. Once budget availability control
is activated for statistical internal orders, it serves as budget availability control for cost centers that are paired
with them.

One of the important advantages of this solution is that it can be implemented after the system go-live date and
with minimum impact to the end-user interface. On the other hand, it naturally increases complexity around
master data management in the managerial accounting (CO) module.