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  1. Big Choi

    I don’t know why simple finance strongly recommend accounting-based CO-PA still.

    It is impossible for me get the value from SD price condition with statistical information in case of accounting-based CO-PA.

    Because I don’t make GL account for SD price condition with statistical information.

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    1. Sanil Bhandari Post author

      Hi

      I think the representation of Statistical Condition in GL is a step in right direction. Ideally as per Accounting best practices, below are the cases in which revenue should be represented as gross:

      1. You are the primary obligor in a sales transaction. If you are providing a service, shipping the product, such revenue should be recorded at gross. This means that any thing which is represented as discounts on your invoice but not booked on GL, should ideally be recorded in GL.

      2. This is also the true in case, you hold the title to inventory before you ship the same to the customer. This means that there is no other party who is primarily responsible for delivering the product. So in line with the same, you should book the revnue at gross and deduct your discounts on the GL

      Hope that answers your questions to an extent.

      Regards

      Sanil Bhandari

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      1. Big Choi

        Thank you for your reply.

        I have one question.

        If I use accounting-based CO-PA, is it possible for me to get individual GL Accounts for each cost component of the actual after material ledger closing?

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        1. Big Choi

          In case of actual costing using material ledger closing for materials with price determination ‘3’ and price control ‘S’, You should use costing-based CO-PA for you to transfer actual cost component into co-pa after material ledger closing.

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          1. Pep Diola

            Hi Big Choi,

            What you comment is an important problem, because you should always activate accounting-based CO-PA and costing-based CO-PA in Simple Finance, and create a Z report to combine information.


            I will be attentive to your comments.


            Regards,

            José Luis

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  2. mauro b.

    Hi,

    very informative blog. We are planning migration to SFIN; by the way I have a doubt. Currently, we are using Costing based COPA and t-code KEPM to plan customers net sales. How to cope with it using costing based COPA=

    ?

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  3. Ravi Kumar Grandhi

    Very informative blog and the information provided by you has clear the confusion about why costing based COPA is replaced with account based COPA in simple finance.

    Thanks for sharing .

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  4. Someswara Rao Perla

    Hi Sanil,

    Thanks for providing detailed explanation with screenshots.

    While we were able to achieve the account split for COGS in case of normal sales (Mvmt 601), this account split is not happening for delivery against Interco STO (Mvmt 643) although its hitting the same COGS account.

    Is there any technical limitation? We are on S/4 HANA with SFin 2.0

    Regards,

    Som Perla

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    1. Sanil Bhandari Post author

      Hi

      I am not aware of any such technical restriction on specific movement type. I do not have a 643 scenario so not sure. You may want to open an OSS message with SAP on the same.

      Thanks & regards

      Sanil Bhandari

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  5. Nandini K

    Sanil

    We use during delivery
    Dr. unbilled shipment -Delivery
    Cr. Inventory

    During Billing

    Use VPRS and copy to ZPRS (Non Stat, Accrual ) map to a cogs account with CE
    use another Condition type for clearing….

    Now with the new change how to bring this COGS in Billing because

    SFIN

    Dr. COGS
    Cr. Inventory

    Dr. Raw Mat
    Dr. Lab
    Cr. COGS

    No COGS entry in Billing

    This results in Timing issue.

    how to resolve?
    Can you help

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  6. Nandini K

    Sanil

    I forgot to add ECC 6 method no timing issue of COGS and Rev, whereas in SFIN there is a timing based on what described above…

    Pl help

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  7. Nandini K

    Sanil
    Thanks for your response. but you agree the concept what I explained being followed by many clients right for years right?  How will they then achieve this?
    Don’t you agree still there is still a timing issue with this SFIN hana method.

    Do they have to change to PGI instead of Billing which may have lots of training issues.

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  8. Sanil Bhandari Post author

    Hi

    PGI is still a transaction in OTC Cycle. There is no change in that in S/4HANA from ECC. The requirement is the way accounting is done for COGS recognition. The standard functionality of COGS Break up will work only on PGI and that is a system design. The reason for COGS Recognition at the time of billing could be one of the reasons:

    1. Ensure that the cost is recognized at the same time in GL and COPA if you are using costing based COPA today. However, with S/4HANA Finance, a better approach is Enhanced Account based COPA, in which the AB COPA ensures that values flow into COPA when the GL is posted so there are no differences. So that way the COGS functionality is correct

    2. Additionally, many companies also have a account practice to recognize revenue at the same time as Delivery. So if that is the case, the standard functionality of COGS Split at the time of PGI will not work as it is a system design. There is nothing wrong in the design and your accounting flow is working as expected. If you need a change, you may look at the option of a suitable enhancement, which might be possible

    Regards

    Sanil Bhandari

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  9. Ali Akbar Mirnia

    Thanks, Sanil,
    One question in cost based when release billing revenue and cogs create in COPA Doc,
    In the S4/Hana when delivery save , COGS in PA create but billing not release.
    In the S4/Hana  always delay between revenue and cogs is it correct?

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    1. Sanil Bhandari Post author

      Hi Ali

      In Costing based COPA, the COGS is recognized at the time of Billing through VPRS Condition type and cost is recognized in GL at time of PGI. To tide over the same, you can create VPRS as a statistical accrual condition type and assign COGS Account and Stock in Transit Account in VKOA. So your accounting entry would look like:

      PGI

      Stock in Transit Dr
      To Stock – FG

      Billing

      Customer A/c Dr
      COGS Dr
      To Revenue
      To Stock in Transit

      This way in Costing based COPA and GL, the values should always match.

      However, in S/4HANA Finance, there is a functionality to get a COGS Split by assigning the GL Account to various levels of Cost Component Structure. There is a built in restriction that this will work only if COGS is recognized at time of PGI. But if you are using AB COPA, than there should not be an issue of reconciliation since both COPA and GL values will always be reconciled.

      Specifically, if you have IFRS 15 requirement for revenue recognition where the revenue should be recognized only based on Performance Obligation, which in MTS scenario will be delivery, you should look at RAR Component available in S/4. This should also enable you to recognize cost and revenue at the same time and in line with the accounting principle should you choose to use AB COPA in S/4HANA Finance. The below link should give you an insight into RAR

      https://blogs.sap.com/2016/09/13/revenue-accounting-and-recognition-rar-part-1/

      Thanks & regards

      Sanil Bhandari

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  10. Abhinay Gautam

    Hi Sanil, Very Nice Document!!

    I have a question from revenue/cost recognition perspective, we move COGS to revenue  recognition module through SD line item statistical cost condition(e.gVPRS). Then we would like to defer the cost with correction postings and then recognize it later along with revenue. So, is it possible that COGS deferred with correction postings and recognition postings can follow the same split functionality as per cost split configuration profile.

    Thanks/Abhinay

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  11. Abdullah Galal

    Dear Mr. Sanil,

     

    Thank you so much for sharing.

    I’ve one question… is there anyway to get a Balance Sheet Account in COPA, they want to post a GL at billing and report on it with all the sales dimensions

     

    Thank you.

    Best regards,

    Abdullah Galal

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    1. Sanil Bhandari Post author

      Hi

      Couple of things:

      1. You can use COPA Characteristics on specific Balance sheet GL Accounts like WIP etc. This is pretty much possible in Account Based COPA in S/4HANA Finance
      2. Can you please list down the GL Accounts, which are balance sheet in nature and you need them to flow into COPA. How come they will be part of your P&L reporting in COPA

      Regards

      Sanil Bhandari

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