Account Based COPA – Simplification with Simple Finance
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 sold
Another major reason with SAP Customers preferring Costing based COPA over Account based COPA was the ability of costing based COPA to provide the break up of Production Variances, which posted to a single GL Account. However, with Simple Finance comes the ability to assign a GL Account for each variance category and you can have the same break up in Account based COPA on Simple Finance. The required configuration path for the same is:
IMG> Financial Accounting (New)>General Ledger Accounting (New)>Periodic Processing> Integration>Materials Management>Define Accounts for Splitting Price Difference
Here in similar to COSG split you have to define a Schema and assign a GL Account for each Variance category.
Most of SAP customers using costing base COPA choose not to report the quantity in logistics, but convert them into their own reporting units. This was typically done through an enhancement to record this kind of conversion. COPA0005 was the enhancement which has been used in most customers. However, with Simple Finance, the COEP table has additional quantity columns which can be used for these kind of reporting requirements. The IMG path for the same is:
Controlling>General Controlling>Additional Quantities> Define additional quantities
The usage of Account based COPA in Simple Finance ensures that there are no more time consuming painful reconciliation required to be done anymore. Additionally, the customers get the same kind of reporting capabilities hitherto seen with costing based COPA making life simpler for Finance users.