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Introduction

 

SECTION 1 Construction of the P&L

 

TO BE UPDATED WITH AFTER SPS PROJECT

Business Financial Consolidation (BFC)


P&L statements and BFC interfaces are produced through

  • CO-PA for sales data (by country, partner, etc.)
  • CO-PCA for other P/L reporting items
  • Material ledger for COGS (split VC / NVC / DEP)

 

A specific transaction in PF1 (ZZF_BFC_COLLECTIVE) is used to extract the data to send to BFC, from the different sources.
The assignment of financial accounts and cost elements to BFC reporting items is done via sets of accounts (centrally managed) (GS03 - Display Set)

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Logistics Organizational Unit representing the place where either materials are produced or goods and services provided.

Identification of production and non production plants.

Use in CO:

  • Organizational Cost Centers standard hierarchy 
  • Profit Centers standard hierarchy 
  • Cost Object Hierarchy (first 2 levels in the structure) 
  • Materials: To identify the ones relevant for costing and to be updated during the Project (Accounting / Costing views). 
  • Material Ledger activation (customizing).

1 digit code identifying the country inside Solvay ERP.

Use in CO:

  • Reporting Profit Centers codification at PIF level (position before last)

It is used in the codification of the Cost Centers (=first two digits) in PF1.

The establishment code is a combination of a legal company on a site

  • SM = cy 0001 SCH
  • XR = cy 0270 Solvay Quimica, Italian in Rosignano
  • SV = cy 0306 Solvay Portugal, Prod Quim.

The codes are part of the enterprise structure and managed by Core Tables 

The establishment code can be displayed with PF1 - ZPRI Display table ETAB

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SAP t-code

KA03 - Display Cost Element

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SAP t-code

KAH3 - Display cost element group

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The Result (Reporting) Profit Centers are the basis for Group reporting

All elements for BFC statement are extracted from the Profit centers (except NETV, QTV and TPT which are extracted from CO-Profitability Analysis -> CO-PA). To make this extraction work (through interfaces), all objects in CO must be assigned to a profit center;
  • Material (plant level, Costing view)
  • Cost centers
  • CO orders
  • PM orders
  • PP orders
  • Cost collectors
  • WBS
The Result Profit centers are depending on the Profit center group “CHEFCHEOPS”. These profit centers are generally assigned to all the ERP companies;
The non reporting Profit Center are in group “CHEF_CNTRL

 

 

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The person responsible of a cost center is accountable for the elements allocated in the cost center

The companies using SRM7 for purchasing should have a SRM7 user ID (=BIP user ID) entered in this field, starting with 5, such as 50000000

To display the list of person responsible use the report PF1 - SRM Validators in cost centers

Usually the name & description of a cost center is free but in some cases there can be special needs.

An assessment cycle is used in SAP to assign all primary cost elements and secondary cost elements from a sending cost center to the receiver cost center.When you want to transfer costs from one cost center to another through an assessment cycle, sap use a secondary cost element and accumulates all the primary cost and secondary cost and send it to the receiving cost center.

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A distribution cycle is used in SAP to transfer primary costs from a sender cost center to receiving controlling objects. The original cost element remains the same. 

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COPA Assessment cycle assesses costs from a Cost Center to COPA Value Fields. 

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[ Cost center - Creation Rules ] [ Cost allocation - Rule ] [ Pricing - Rule ] [ Payroll expenses allocation ] [ Reporting assessment - rule ] [ Intercos - cycles ] [ Technical cost center usage ] [ Statistical key figures usage ] [ Working File 3 ]

 

 

Cost center - Creation Rules

 

Rule 1

It is not allowed to create a cost center for less than two employees

Rule 2

An employee is assigned to one cost center only

Rule 3

Threshold of minimum amount per year of primary expense.

 

 

 

Cost allocation - Rule

 

Recommendation: minimize the number of CC allocation

  • For Production costs: allocation between organizational CC and another organizational CC
  • For non Production costs: allocation from organizational CC to reporting CC

Exception

  • Utilities
  • Insurance (IAS 19)
  • R&I: allocation from CC to WBS
  • Intercos: from organizational CC to organizational CC other company

General rule:

  • All type of expenses - different than Manufacturing  Costs (Indirect/Direct) and R&I - go directly to BFC (at different reporting cost center) and to only 1 BFC heading.

 

 

Pricing - Rule

 

General rule:

  • “No pricing” rule: allocations between organizational cost center, within the same legal entity (same GBU normally, but could be also between 2 GBUs) should be done at cost.

 

 

Payroll expenses allocation

 

General rule:

  • Payroll expenses shouldn’t be posted to technical cost center if HR/Payroll system is integrated.
  • An employee is assigned to only one cost center

 

 

Reporting assessment - rule

 

General rule: A minimum level of detail is required for assessment to reporting cost center:

  • For gross margin => Cost center reporting at “PIF” Level (see codification below)
  • Below gross margin => Cost center  reporting at “Division” level (see codification below)
  • Below EBIT => Cost center reporting at “Company” level (see codification below)

 

 

Intercos - cycles

 

General rules:


1. For GBU cross charge

  • Change the cycle usage: evolution from actual amounts to planned amount
    • Objective: anticipate the launch of cycles (from D2 to D-1) and reduce problems in D4
  • Create and standard cost center for Cross charge (in order to align to method of CBS)

2. For CBS

  • Create a specific Cost Section (160) for SBS invoicing

 

 

Technical cost center usage

 

Technical Cost Center can be used for the following cases:

  • Use case 1: to centralize primary costs for corporate needs (e.g.: Insurance, IAS 19…)
  • Use case 2: to post costs not directly linked to the organizational structure (e.g.: other non recurring expenses)
  • Use case 3: to collect the result of income miscellaneous (e.g.: sales of scrap…)
  • Use case 4: if the organization cost is not defined in the Cost Section narrative

Reminder: in all cases, the request has to be approved by the Central Costing Expert after approved the request by GBU. 

 

 

Statistical key figures usage

Definition: “Statistical key figures” provide information on non-monetary data such as the number of employees, number of machines, capacity usage, market information…and can be used for internal cost allocations.

Recommendation: minimize the usage of SKF or avoid it (if possible) 

2 conditions are identified to use the “Statistical key figures”

  • Volumes of target CC
  • High frequency (e.g.: every month) of update 

 

Working File 3

Overview of Working file 3

Working File 3

All the companies harmonized in Sympa Model after a period of 2-3 months where some adjustment are done; 

Controllers should have access to their WF3. If you do not have; please request it

  • Each year by the end of October you will be requested to review your allocation keys by RCOM. And this will be part of an Internal Control.
  • Review of the roles and transactions access by the users has been done in January-16.

Cycles PF1 - Example

Cycles - codification PF1

Expand to see the last version of the cycle model in Gdrive:

Definition

Cost object in Product Cost by Period that collects the periodic actual costs incurred in the production of a material. When a cost collector is used, the product is the main cost object. 

Use

Product cost collectors are independent of the production type. This means that costs can be collected on product cost collectors in the following production environments:

  • In order-related production (using production orders) to analyze the costs by period rather than by lot;
  • In process manufacturing (using process orders) to analyze the costs by period rather than by lot;
  • Repetitive manufacturing: product cost collectors are used as cost objects. 

Cost collectors are independent of the production type. This means that costs can be collected

 

CO-Product Costing Object - Structure

KKPHIE - Insert a new Cost Object

KKF8 - Display Product Cost Collector

CS03 - Display Material BOM

CA23 - Display Rate Routing

 

 

 

CO-Product Costing Object - Basic Schema

 

 

 

CO-Product Costing Object – Example – 1/3

KKP4 - Display Cost Object Hierarchy

 

 

CO-Product Costing Object – Example – 2/3

 

 

 

CO-Product Costing Object – Example – 3/3

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Splitting structure is used in cost center planning to define which cost elements are considered for calculating which prices of activity types, when a cost center has more than one activity associated to it, and the price is not manually determined (most of the cases in production CC). Also for actual price calculation of the activity types. It links Cost elements (and its amounts) with activities types of a given production CC.
  • It is done at CC level. 
  • The level of complexity is determined by the different types of activity types used in production CC.
  • The right design of the splitting Structure/Activity Types  is a preliminary step to have the Cost Component structure as detailed or as simple as we want.

Cost Component structure are used to classify within the cost collector which cost elements are fixed, variable or Depreciation. But not only this. The level of granularity depends on the GBU election (election of Cost Component), but it has to be coherent with activity types. It links them to material ledger classification

  • It is customized at Company level. 
  • The level of detail provided and its complexity is determined by the different types of activity types used in production CC.
  • The right design of the Splitting structure / Activity Types  is a preliminary step to have the Cost Component structure as detailed or simple as we want.

 

 

SECTION 2 Usage of different reports to explain PL

 

 

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