Controlling area

Controlling area
Controlling area is an organizational unit from the Accounting component in the R/3 System, used to represent a closed system for cost accounting purposes.
In the standard R/3 System, the controlling area constitutes the framework for planning, allocation and monitoring of costs.
One controlling area

When we have one controlling area:

v  The same operative chart of accounts is used.

v  Each enterprise entity in the controlling area only uses the specific accounts it requires. We can use a country chart of accounts to record country-specific requirements.

v  Posting periods are always the same. Special periods are, however, an exception.

v  We must agree on controlling master data, for example for cost elements, activity types, cost centers. Uniform procedures should exist for maintaining master data.

v  Work on period-end closing must be coordinated (planned and actual work). We must agree on a time schedule for work on period-end closing. We must define how costs are allocated and prices are calculated for services per cost center / cost center group

v  We have a choice of three currencies. Controlling area currency, object currency and transaction currency. For cost accounting for several company codes and several countries, the object currency corresponds to the transaction currency.

v  We have unlimited use of the project management function. We can work with one project definition, one project structure plan and one network. We have unlimited use of project management and reporting functions.

v  We have unlimited use of the cost distribution functions (cost center assessment and internal activity allocation.

Several controlling areas
We can define several controlling areas if we do not want to merge enterprise units in cost accounting. Ensure that the organizational structure provides for harmonized procedures and structures for cost accounting
When we have more than on controlling area:

v  We can define a separate operative chart of accounts for each controlling area. We can use the group chart of accounts for consolidation.

v  We can work with different posting periods. Controlling areas that are assigned to the same operating concern use the same posting periods.

v  Work on period-end closing do not need to be coordinated (planned and actual work).

v  We define controlling master data such as cost elements, activity types, cost centers for each specific controlling area.

v  We must ensure that the organizational structure caters for comprehensive project management. We can work with one project definition, one project structure plan and one network for each controlling area. We have unlimited use of project management and reporting functions within each controlling area. We may use the Executive Information System (EIS) if we would like project reporting to cover all controlling areas (cost elements, cost centers, orders).

v  We can use the Special Purpose Ledger (FI-SL) or Consolidation (EC-CS) components to draw up reports for all controlling areas. Ensure that we consolidate the appropriate elements from different controlling areas.