Assigning Controlling Areas and Company Codes

Use
The company code assignment to the controlling area must be made according to the processes
your company has in logistics and accounting. The organizational environment is also very
important. It is difficult or at best, time-consuming to change the 1:1 or 1:n relationsip between the
controlling area and company code after the decision and the assignment have already been
made.

The company code and controlling area organizational units can be combined in a number of
ways. Using these combinations you can represent organizations with different structures.

• One Controlling Area is Assigned to One Company Code

In this example, the financial accounting and cost accounting views of the
organization are identical.

• Multiple Company Codes Assigned to One Controlling Area

This example is Cross-Company Code Cost Accounting. Cost accounting is

carried out in multiple company codes in one controlling area. All cost-accounting
relevant data is collected in one controlling area and can be used for allocations
and evaluations. In this case, the external and internal accounting perspectives
differ from each other.

For example, this method can be used if the organization contains a number of
independent subsidiaries using global managerial accounting. Cross-company
code cost accounting gives you the advantage of using internal allocations
across company code boundaries.
 If you assign more than one company code to one controlling area, then
you need to note the following:

• You need to use a consistent chart of accounts

You need to treat each cost element (in all company codes) in
the same way (for example, as a primary cost element, or as an
accrual cost element).

In Financial Accounting, you can also use country-specific charts

of accounts.

• The operative fiscal year variants in the company codes must match the fiscal year
variants in the controlling area.

• You should execute period-end closing in Controlling for all company codes at the same
time. Separate period-end closing for each company code would be too time-consuming.

You can only execute period-end closing for a shared controlling

area once closing is complete in Financial Accounting.
 • If you wish to calculate plan prices automatically, you need to wait until planning is
complete.

• The system only posts reconciliation postings across company codes without tax, which
means that it cannot automatically create invoices.

For tax reasons, cost flows (that are cross-company code) in

Controlling can only be passed onto Financial Accounting if the
company codes form an integrated company with sales tax.

• If you wish to prevent cross-company code postings in Controlling, then you need to
create a detailed authorization concept.

• Retrospectively excluding a company code in another SAP system or client, requires

more time and effort than in cost accounting by company code.

• If you only use one controlling area, you can only use one operating concern.

• You can only display profit center allocations in a controlling area.

• You can only use transfer prices within a controlling area.

You need to take the following into consideration when deciding on the controlling area –
company code assignment:

• It is currently not possible to make CO allocations across controlling areas.

However, if you then create a controlling area with more than one assigned company
code so that you can use all the functions in Controlling, you may be causing a significant
amount of extra work. Therefore, check to see if you really need a 1:n relationship and
whether the extra work it would create is acceptable.

SAP recommends a 1:n relationship between controlling area and

company code for the following situations:

• Cross-company code transactions that MUST be processed in a controlling area, for

example, production in an associate plant, special cases of intercompany processing.
• Cross-company code CO postings that can be displayed in the reconciliation ledger, such
as assessments, capitalization of internal activity in Asset Accounting, activity allocation.
• Representation of group costing
• Use of Profit Center Accounting and transfer prices
• Multilevel Product Cost Management across company codes
 SAP recommends a 1:1 relationship between controlling area and
company code for the following situations:

• Consolidated analysis of settled transactions across company codes in Profitability

Analysis (CO-PA) In this situation, you assign more than one controlling area to an
operating concern
• Representation of intercompany processes, whereby producing and delivering plant are
the same.

Activities

1. To assign one or more company codes to a controlling area, go to the Implementation

Guide (IMG) and choose Controlling → Organization → Maintain Controlling Area.
2. To assign company codes to an existing controlling area, select a controlling area.
3. Choose Assign company code(s).
4. Choose New entries.
5. Enter the company code(s) that you want to assign to the selected controlling area.

The company code(s) must be fully maintained before you can assign
them to a controlling area.

See also:

Example: Assignment of Controlling Area and Company Code