Account Based COPA - Simplification With Simple Finance

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Account Based COPA Simplification with

Simple Finance
August 7, 2015 | 7,250 Views |
Sanil Bhandari
more by this author
SAP S/4HANA Finance
FIN (Finance) | FIN Controlling | SAP ERP | SAP S/4HANA | account | account based copa | analytics finance | central
finance | cfo | enterprise resource planning | erp
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https://blogs.sap.com/2015/08/07/account-based-copa-simplification-with-simple-finance/ 1/18
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.
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35 Comments
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Rishab Bucha
August 7, 2015 at 11:25 am
Great blog Sanil, thanks for it.

Just wanted to clarify that the number of characteristics restriction is still 50 in Simple
Finance
Sanil Bhandari Post author
August 7, 2015 at 12:08 pm
Thanks Rishab
Yes agreed the no of characteristics is still the same.
regards
Sanil
RAHEEM BAKSH
August 10, 2015 at 11:14 am
Good one Mr. Sunil,

Regards
Raheem
August 10, 2015 at 5:06 pm
Thanks a lot
Regards
Sanil Bhandari
John Price
August 10, 2015 at 12:33 pm
Very good explanation Sanil, thanks.
August 10, 2015 at 5:06 pm
Thanks a lot John

Regards
Sanil
Hany Abdall
August 10, 2015 at 5:53 pm
very good clarification Sanil.
August 11, 2015 at 5:17 am
Thanks a lot Hany

Regards
Sanil
Big Choi
August 11, 2015 at 4:48 am
I dont 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 dont make GL account for SD price condition with statistical information.
August 11, 2015 at 5:23 am
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
Big Choi
August 11, 2015 at 6:04 am
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?
Big Choi
August 19, 2015 at 4:22 am
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.
Pep Diola
March 9, 2016 at 8:37 pm
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,
Jos Luis
Vikash Kumar Tulsyan
August 11, 2015 at 11:18 am
This is indeed a very good explanation.
Shanid MP
August 12, 2015 at 7:16 am
Nice explanation, thanks for sharing.
mauro b.
August 17, 2015 at 12:05 pm
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=
?
Ravi Kumar Grandhi
August 28, 2015 at 9:39 am
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 .
Someswara Rao Perla
March 16, 2016 at 2:06 am
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
March 17, 2016 at 3:56 am
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
Someswara Rao Perla
April 11, 2016 at 12:18 am
Thanks Sanil. We are planning to do this
Srinatha Polati
April 8, 2016 at 3:15 am
Very informative, Sanil. Thanks for sharing this document.

Regards,
Srinath
Puneet Sharma
October 3, 2016 at 1:01 pm
Thanks for sharing !

very informative blog
Fidel Herrera
October 17, 2016 at 11:46 am
Hey Sanil!
Thank for sharing and detailed explanation, it is so helpful.
Kind Regards.
FHR
October 17, 2016 at 3:09 pm
Thanks a lot
Nandini K
November 16, 2016 at 2:42 am
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
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
Hi
The COGS Split functionality will work only at time of PGI and not billing. It is a standard
system design.
Regards
Sanil Bhandari
Nandini K
November 16, 2016 at 3:34 pm
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?
Dont 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.
November 17, 2016 at 4:16 pm
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
Ali Akbar Mirnia
January 16, 2017 at 2:35 pm
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?
January 18, 2017 at 4:49 am
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
Abhinay Gautam
January 16, 2017 at 4:01 pm
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
January 18, 2017 at 4:51 am
Hi Abhinay
I have answered your query in my immediate post earlier today
regards
Sanil Bhandari
Abhinay Gautam
May 24, 2017 at 1:06 pm
Thanks Sunil. Cost Split is not supported by RAR so far.
Marcos Ramos
May 15, 2017 at 8:08 pm
Hello Sanil,
Please help me with link bellow:
https://answers.sap.com/questions/200028/co-pa-based-on-accounts-s4hana.html
Thanks For your help.
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7/7/2017 Account Based COPA Simplification with Simple Finance | SAP Blogs

Account Based COPA Simplification with

SAP S/4HANA Finance

The traditional way of storing the characteristics in COPA irrespective of using

IMG> Financial Accounting (New)>General Ledger Accounting

IMG> Financial Accounting (New)>General Ledger Accounting

Controlling>General Controlling>Additional Quantities> Define additional

August 7, 2015 at 11:25 am

Great blog Sanil, thanks for it.

Sanil Bhandari Post author

August 7, 2015 at 12:08 pm

August 10, 2015 at 11:14 am

Good one Mr. Sunil,

Sanil Bhandari Post author

August 10, 2015 at 5:06 pm

August 10, 2015 at 12:33 pm

Very good explanation Sanil, thanks.

Sanil Bhandari Post author

August 10, 2015 at 5:06 pm

Thanks a lot John

August 10, 2015 at 5:53 pm

very good clarification Sanil.

Sanil Bhandari Post author

August 11, 2015 at 5:17 am

Thanks a lot Hany

August 11, 2015 at 4:48 am

Sanil Bhandari Post author

August 11, 2015 at 5:23 am

August 11, 2015 at 6:04 am

Thank you for your reply.

August 19, 2015 at 4:22 am

In case of actual costing using material ledger

March 9, 2016 at 8:37 pm

I will be attentive to your comments.

Vikash Kumar Tulsyan

August 11, 2015 at 11:18 am

This is indeed a very good explanation.

August 12, 2015 at 7:16 am

Nice explanation, thanks for sharing.

August 17, 2015 at 12:05 pm

Ravi Kumar Grandhi

August 28, 2015 at 9:39 am

Someswara Rao Perla

March 16, 2016 at 2:06 am

Sanil Bhandari Post author

March 17, 2016 at 3:56 am

Someswara Rao Perla

April 11, 2016 at 12:18 am

Thanks Sanil. We are planning to do this

April 8, 2016 at 3:15 am

Very informative, Sanil. Thanks for sharing this document.

October 3, 2016 at 1:01 pm

Thanks for sharing !

October 17, 2016 at 11:46 am

Sanil Bhandari Post author

October 17, 2016 at 3:09 pm

November 16, 2016 at 2:42 am

November 16, 2016 at 2:44 am

Sanil Bhandari Post author

November 16, 2016 at 7:02 am

November 16, 2016 at 3:34 pm

Sanil Bhandari Post author

November 17, 2016 at 4:16 pm