Creating Profit Center Master Data

Profit Center Accounting (PCA) supports a division of an enterprise into areas of responsibility for profits.

You can divide your enterprise based on the following aspects:

• Geographical structure of profit centers (for example, locations and regions).
• Product-related structure of profit centers (for example, divisions and product lines).
• Functional structure of profit centers (for example, production, sales, and research).

Mixed forms of these structures are also possible. For example, you can opt for a regional structure based on business locations and then subdivide each location by the products made there.

You create the profit center master data to define the organizational structure. For evaluations at a higher level of aggregation, you can combine profit center groups.

The dummy profit center was the primary default value for postings to an account assignment object in an accounting area, if no other profit center was assigned.

In SAP General Ledger, in contrast to classic Profit Center Accounting (EC-PCA), you do not need to define and use a dummy profit center. Postings to account assignment objects that do not have assigned profit centers are simply made without profit centers (if it is not set as mandatory in document splitting), that is, the profit center field remains blank in the corresponding document items. Postings without profit centers can be assessed or distributed to the desired profit centers (similar to postings to a dummy profit center).

A special customizing transaction is available to create the dummy profit center. You create the dummy profit center in Customizing for Financial Accounting under General Ledger Accounting→Master Data→Profit Center→Create Dummy Profit Center.

This procedure is almost the same as that for creating normal profit centers.

The differences between a dummy profit center and a normal profit center are as follows:

• You do not specify a validity period for the dummy profit center. The dummy profit center is automatically valid for the maximum validity period.
• You cannot copy the dummy profit center from an existing profit center.
• A flag identifying the profit center as the dummy profit center is set automatically (in the indicator folder).

You change and display the dummy profit center using the normal maintenance transactions for profit centers.

Collective processing is particularly useful when you adapt existing data to a change in circumstances, for example, if certain master data fields (such as the department and person responsible) or company code assignments have to be changed.

You can call collective processing in the following areas:

• On the SAP Easy Access screen, choose Accounting→Financial Accounting→General Ledger→Master Records→Profit Center→Collective Processing→Master Records.
• On the SAP Easy Access screen, choose Accounting→Financial Accounting→General Ledger→Master Records→Profit Center→Collective Processing→Company Code Assignment.

• With the SAP Fiori apps Edit Profit Centers — Collective and Edit Company Code Assignments.

Profit center accounting in SAP S/4HANA is based on the accounts of the operational chart of accounts that is assigned to the company code in Financial Accounting (FI). Each General Ledger (G/L) account is assigned to an account type. The G/L account type determines how the G/L account can be used in Financial Accounting (FI) and Controlling (CO).

The following account types are available:

• Account that is posted from business transactions. The balance of a balance sheet account is carried forward at the fiscal year-end.

• Income statement account that records expenses or gains from activities that are not part of the main purpose of the company, such as gains realized from financial investments by a manufacturing company.

• Income statement account that functions as a cost element for primary costs or revenue. Primary costs reflect operating expenses such as payroll, selling expenses, or administration costs.

• Income statement account that functions as a cost element for secondary costs. Secondary costs result from value flows within the organization, such as internal activity cost allocations, overhead allocations, and settlement transactions.

Alternative Profit center groups are alternative hierarchies to the standard hierarchy. You can use them in reporting, distribution, and assessment, or planning functions. In contrast to the standard hierarchy, these profit center groups do not have to contain all the profit centers in the CO area. Profit center groups allow you to select only certain profit centers and structure them hierarchically for more flexibility.

Create profit center groups under the following menu paths:

• On the SAP Easy Access screen, choose Accounting→Financial Accounting→General Ledger→Master Records→Profit Center→Profit Center Group→Create.

• You can also define profit center groups using the SAP Fiori tile Manage Profit Center Groups or Manage Global Accounting Hierarchies.

• You define profit center groups in Customizing for Financial Accounting under General Ledger Accounting→Master Data→Profit Center→Define Profit Center Groups.

Changes in the Profit Center Structure are complex and however frequent. It takes effort for companies to set up and build new hierarchies as all organizational units need to be included in new hierarchy.

Flexible hierarchies enable you to generate hierarchies for reporting, based on Profit Center master data attributes. With the SAP Fiori tile Manage Flexible Hierarchies, you set up a new flexible hierarchy based on a sequence definition of the selected attributes. This also provides a fast and efficient way to set up different hierarchies in parallel just by using a different sequence of attributes.

The app Manage Flexible Hierarchies supports a master data attribute mass change, too.

Statistical key figures are values or quantities (for example, number of phone calls, sq. m. area, and number of employees) that give further details on the setup, the consumption or performance output of cost centers, internal orders, processes or profit centers. You can post statistical key figures both in the plan and in the actual. You can use statistical key figures both as an allocation base for periodic distributions or assessments and to create key figures (ratios such as personnel costs per employee). You define a statistical key figure as a fixed value or a totals value as follows:

• The fixed value is carried over from the period in which it is posted to all subsequent periods of the same fiscal year. You need to enter a new posting only when the value changes. Fixed values are defined when key figures remain constant over a significant period of time (for example, number of employees in a cost center).

• The totals value is not transferred to the following period but must be entered for each individual period and is preferable for statistical key figures whose values fluctuate in individual periods (for example, kilowatt hours of electricity consumption).

Statistical key figures can be transferred from the Logistics Information System (LIS) by linking a key figure from LIS (for example, order receipts) to a statistical key figure (for example, in cost center accounting).

You can define segments in the SAP system in Customizing for Enterprise Structure under Definition→Financial Accounting→Define Segment. You can enter a segment in the master record of a profit center. If no segment is entered manually during posting (only possible in FI transactions), the segment is determined from the master record of the profit center. If you want to use different rules to derive the segment during posting, you can define your own.

You can find the relevant settings in Customizing for Financial Accounting under Financial Accounting Global Settings→Tools→Customer Enhancements→Business Add-Ins (BAdIs)→Segment Derivation.

Document splitting is needed for creating financial and Profit and Loss (P&L) statements for the segment dimension at any time. US-GAAP requires near complete financial statements at segment level for reporting (everything but equity capital). In this approach, the segment is defined as an area of a company whose activities result in expenses and revenues. Its operating result is reviewed regularly by the company and group management to assess its success and allocate resources. The IFRS segmentation requirements are nearly identical.

When you make a posting to the profit center, the posting is also made to the segment.

For more information, see SAP Note 1035140. SAP only authorizes the use of segments if profit centers are used at the same time.

The automatic derivation of segments is possible only with profit centers. Many business transactions, particularly in logistics, do not have an option for entering the segment manually.

Furthermore, several standard interfaces do not support segments. For these reasons, the use of segments is approved only if you also use profit centers. If it is not possible to derive the segment characteristic from a profit center master record, you have to find a different way to assign the segment accounts.

Options include manual entry, BAdI implementation (BAdI: FAGL_DERIVE_SEGMENT), defining substitution rules, and a standard account assignment (which involves document splitting).

In addition to BAdI FAGL_DERIVE_SEGMENT, BAdI FAGL_DERIVE_PSEGMENT is also available for deriving the partner segment.