Enterprise Structure in SAP FICO

Through this SAP tutorial, we will learn, the enterprise structure in SAP FICO and how it works. You couldn’t integrate and customize your program without SAP FI enterprise structures. These structures are the foundation of the financial solution.

Table of Contents

What is enterprise structure in SAP FICO?

The SAP enterprise structure is an organizational diagram that displays how the entire group is structured within SAP. It is made up of a few organizational units made up of several modules that were gathered together for specific business-related purposes. Legal corporate entities, sales offices, profit centers, etc. are examples of organizational units. It performs particular business operations.

Enterprise structures are the foundation of the SAP FI solution; without them, you couldn’t integrate and modify your application.

Check out, What is SAP FICO [Uses of FICO]

Enterprise structure in SAP FICO modules

Operating Concern:

Often known as COPA, is the profitability analysis module’s primary organizational unit. When analyzing particular markets and business segments, COPA serves as a management tool.

Client independence exists in the operating concern setup. It will automatically have an effect on all clients once it is created in one client. Within SAP’s organizational structure, COPA is ranked highest.

Controlling Area:

The main organizational unit, located in the CO Module and allocated to the operating concern, is part of SAP’s corporate structure. In this setting, control of costs and revenues serves as the primary means of internal reporting to the management.

Using a closed system for cost accounting, this organizational unit represents it in SAP’s corporate structure. One or more company codes that, if necessary, can function in various currencies may be present in a controlling region.

A controlling region requires that all business codes adhere to the same operational chart of accounts and fiscal year variants.

What is Company?

In the FI Module, the company is at the highest level of organization. A company is a type of organizational entity that can be used to combine the financial statements of various company codes. Any number of company codes can make up a company.

The fiscal year breakdown and transaction chart of accounts must be identical across all company codes within a corporation. Nonetheless, there may be variations in company code currencies. The transaction numbers for a company code are reported in a single local currency.

The term “Company” refers to all the company codes that have been issued to it in the legal consolidation. Companies are given a company code and company codes are given a controlling area in the organization structure so that everything can be connected together.

Company Code:

The Financial Accounting module’s Company Code is the lowest organizational unit for which an entire self-contained set of accounts can be prepared for external reporting. The majority of the other modules have been tasked with integrating it, making it the most crucial component of the corporate structure.

The process of external reporting includes documenting all pertinent transactions and producing all supplementary financial statement records (balance sheets, profit, and loss statements, etc.).

Charts of Accounts:

A chart of accounts is a variation developed at the client level in FI that includes the structure and the essential details of general ledger accounts. Following its creation, we assign a chart of accounts to company codes in the SAP enterprise structure.

You may find out how many charts of accounts are produced and what company codes they are assigned by looking at the enterprise structure in SAP.

Chart of Accounts information required: Maintenance Language, Length of GL Account Number, Manual or automatic development of cost elements, Group chart of accounts, etc.

Cost Center:

An organizational unit known as a cost center, located in a controlling region, represents a clearly defined location where expenses are generated. Cost centers must be designated and organized for reporting reasons in one specific hierarchy that must be constructed for cost center accounting.

In an enterprise structure, cost centers are assigned to company codes and are particular to certain company codes.

Profit Center:

The organization typically establishes profit centers based on responsibilities. You can use their period accounting or the cost-of-sales method to calculate profits and losses by profit center.

Using the Balance Sheet and Profit Center, a management-oriented organizational unit This profit center accounting can be used to create profit and loss statements.

Chart of Depreciation:

The top-level organizational structure for SAP Asset Accounting is called a Chart of Depreciation, and it contains all of the parameters that are pertinent to asset accounting, including country-specific depreciation techniques and depreciation areas.

Charts of Depreciation are often country-specific and might have many Company Codes allocated to them because different corporations in the same nation are subject to the same legal regulations regarding the depreciation of fixed assets.

The tax book is included in every depreciation chart. A 3-character code that allows alpha-numeric format is called a chart of depreciation. The Chart of Depreciation will typically have the country codes included in the coding because it is typically country-specific.

Depreciation Area:

A depreciation area is an isolated depreciation book where each fixed asset’s value can be estimated in parallel for various purposes. The terms and estimated life values used to determine the fixed asset book value and depreciation are all managed at the depreciation area level.

Functional Areas:

Can allocate expenditures to particular parts of the firm, such as management, sales, and production, using functional areas. From there, it is simple to build profit and loss statements for every part of the firm, enabling us to delve down and identify areas where costs are going up and profits are falling.

Financial Management Areas:

Areas under financial management (FM) take a cash budget and money management viewpoint while analyzing the business. FM areas are given company codes, and FM areas in turn provide the reports.

Conclusion

These SAP FI enterprise modules all have a significant impact on the financial landscape. One can assign these SAP FI enterprise structures to enterprise structures in those other SAP ERP components in order to integrate with them.