In SAP, the Finance and Controlling (FI-CO) module encompasses two very large worlds of information. This blog post is an overview of FICO, hopefully providing a basis for understanding the distinction between FI and CO and their purposes and uses.
The Distinction Between Finance (FI) and Controlling (CO)
A good place to start in drawing the difference between FI and CO is the SAP Easy Access menu (if you’re using your User Menu, toggle to the SAP menu by the key combination “Ctrl-F11” – the User Menu is broken down by roles, not necessarily by modules, so not helpful for this exercise). Clicking the image to the right will show you the full size menu if you’re not connected to SAP.
Looking at the SAP menu, the Accounting folder contains most of the FICO transactions (T-codes). Inside Accounting, you will find Financial Accounting. This represents the FI part of FICO. Inside Financial Accounting, you will see:
- General Ledger
- Accounts Receivable
- Accounts Payable
- Fixed Assets, etc.
Compare these to the items in the Controlling (CO) folder:
- Cost Element Accounting
- Cost Center Accounting
- Internal Orders
- Activity-Based Costing
- Product Cost Controlling
- Profitiability Analysis
- Profit Center Accounting, etc.
The difference may be painfully obvious by now. FI transactions and data are relevant to external stake holders, while the CO transactions and data are of keen interest to your internal management.
GL allows you to produce financial statements for external reporting to the SEC, shareholders, IRS, banks, lenders, etc.
AR and AP allow you to track you customer and vendor accounts.
Fixed Assets are of interest to taxing authorities.
Your shareholders, customers, vendors, lenders, the SEC and IRS are usually not concerned with how much money was spent on office supplies at your Little Rock profit center – data usually captured in CO. While, they are very interested in your company’s income and cash flow, or how much you owe them.
There is one external group that might be keenly interested in your CO data to be able to tell how you run your business, where you spend your money, and what your strategy is, most external business partners are not concerned with the expenses or revenue of a particular profit center.
Organizational Units Relevant to FI & CO
The distinction between FI and CO is also reflected in the organizational units that are relevant to each of them.
Primary Org Units for FI
- Company Code: the primary org unit that is used in FI is the company code. For an overview of company codes, read here…and here.
- Business Area: an organizational unit used within FI to assist in External Segment Reporting. Can go across company codes. The SEC and International Accounting Standards (IAS) require that significant areas of operation within a company be reported separately. (Read more on segment reporting in IAS 14.) Note that a complete Balance Sheet is usually not available within a business area.
- Business Organization: can be made up of one or more company codes
Primary Org Units for CO
- Controlling Area: can be made up of one or more company codes. When company codes and controlling areas are in a one to one relationship, the internal and external reporting views at this level are the same.
- Profit Center: captures revenue, cost, and certain balance sheet information. Transactions that are posted to a cost element require a cost object (cost center, internal order, profitability segment, etc) to be included on the transaction. These usually roll into a profit center by the profit center that is assigned in the master data of the cost object.
- Cost Center: used to capture cost information, particularly expense. Not necessarily used to capture Cost-of-Goods-Sold which frequently uses a profitability segment as the cost object. Each Cost Center must be assigned to a single Profit Center. Posting made to a cost center roll into its assigned profit center.