Creating Company Codes

Looking into the documentation for the most central financial organizational units, Paloma notes the following:

• Company Code:

  The company code is a fundamental organizational unit in SAP Financial Accounting (FI). It represents an independent accounting entity within a company, where financial transactions are recorded and managed. Financial statements required by law (for external accounting), such as the balance sheet and profit and loss (P&L) statement, are created at the company code level.

  In multinational corporations, operations are spread across different countries. The governments and tax authorities of each country require that these activities be represented by separate legal entities. For this reason, a company code is created for each country. In addition, even within a country, a corporation might operate multiple entities that each warrant their own company code. In short: every organization that needs to report a financial statement and a P&L statement, a separate company code is created in SAP S/4HANA.

• Controlling Area:

  The controlling area is an organizational unit in accounting used to represent a closed system for cost accounting purposes. Cross-company-code cost accounting is recommended, allowing all data relevant to cost accounting to be recorded in a single common controlling area making it available for allocations and evaluations.

  Paloma notes that the new company code will be assigned to the existing common controlling area A000.

To define a company code you need the following data:

• Basic Data
  • Four-digit alphanumeric company code key. This key identifies the company code and must be entered whenever you post business transactions or create master data that is specific to the company code.
  • Company name. This is the official name, as communicated to the local authorities.
• Address data.
  • Currency. A currency is required for each company code. Accounts are managed in the company code currency. All other currencies are interpreted as foreign. The system converts the amounts posted in a foreign currency into the company code currency. The currency defined in the company code is known in SAP S/4HANA (FI) as the local currency.
  • Language. A language key enables the system to display texts automatically in the correct language; for example, when issuing checks.
  • Country. A country key specifies the country to be regarded as the home country. The system interprets all other countries as foreign. This is important for business or payment transactions because different forms are required for foreign transactions. The system also supports different address formats for foreign correspondence.
  • City and Address. The address data is required for correspondence and is recorded on evaluation reports.

The global parameters you need to assign include the following data:

• Chart of accounts
• Fiscal year
• Company code defaults