It goes without saying that master data forms the backbone of a well-designed ERP system. Virtually every process in ERP requires interacting with and analyzing this type of data. Within the accounting realm of SAP ERP, the profit center is one of the most prominent master data objects. It is also referenced by several other master data records ranging throughout the SAP ERP system, including assets in FI, cost centers and orders in CO, projects and networks in project system (PS), sales orders and production orders in sales and distribution (SD) and production planning (PP), and materials in materials management (MM). Most transactions generate financial postings due to SAP’s integration throughout the logistics, HR, and accounting modules, so it’s difficult to think of a significant activity in SAP ERP that isn’t relevant to profit center accounting (PCA).

As highlighted in Janet Salmon’s article “Profit Center Reorganization Is a Snap with New Functions in Enhancement Package 5,” SAP has introduced a significant toolset in enhancement package 5 that allows companies to retroactively adjust the master data in their system that is relevant to PCA. This functionality is relevant to any company, but is even more important now that SAP has released the SAP General Ledger (formerly called the new G/L). The reason for that is that the SAP General Ledger supports segment reporting and the segment is primarily derived from the profit center of the posting.

There is a lot of discussion in the SAP community regarding segments when the SAP General Ledger is implemented, but it’s really the profit center and its relationships to the other objects in FI, CO, and MM that people should focus on. In my opinion, the segment just makes the design and administration of profit centers that much more critical. Coupled with SAP’s new tool in enhancement package 5, companies have greater flexibility to manage their PCA hierarchies.

The three main improvements in enhancement package 5 for FI-AA are the incorporation of capital elements such as an asset into the reorganization of the PCA hierarchy, segment reporting, and changes to the asset’s time segments. I’ll start by talking about reorganization, and then move on to these three improvements.

Reorganization in Capital Management

As Janet highlighted in her article, organizations are constantly undergoing some degree of change. Within the bounds of a financial system it has historically been very difficult to properly reflect these changes at the effective date of change. The reorganization capabilities alleviate some of the system restrictions that make this so difficult.

In the area of capital management it is important to properly reorganize projects and fixed assets based on the changes in the profit center hierarchy. For most companies, one of the biggest items on the balance sheet is fixed assets. Since most companies perform their capitalizations via PS, it is equally important to ensure that their projects and Assets under Construction (AuC) have the correct profit center and segment.

The process to reorganize the records is not materially different from what Janet wrote in her article. You can easily adapt the steps in the article to create reorganization plans using the object types for work breakdown structure (WBS) elements and fixed assets. This makes it possible to make the changes to these important objects in a disciplined and controlled manner.

While I’m focusing primarily on the capitalization of project expenses as AuC, the same logic applies to the creation of work in process (WIP) and reserves for billable customer projects using results analysis. A structural change in this area can involve a significant transfer of WIP within the balance sheet.

Reporting by Profit Center and Segment

One of the changes that directly affects asset accounting (FI-AA) is the introduction of the profit center and segment within the subledger. It is now possible to directly assign the profit center and segment on the fixed asset master record. Follow menu path Accounting > Financial Accounting > Fixed Assets > Asset > Create, or use transaction AS01 and they both appear on the Time-dependent tab (Figure 1). This allows you to track an asset’s assignment on a periodic basis that supports both more accurate reporting and an easier reconciliation to the asset section of the balance sheets tracked in PCA.

Figure 1

Profit Center and Segment both appear in the Time-dependent tab

Prior to this change, it was possible to derive the profit center from the asset’s assignment to a cost center or internal order. SAP delivered structure ANLAV, which included mostly asset-specific attributes, but also a few fields (e.g., profit center) that were not directly in the asset tables. You could use this structure to create sort versions that would show the asset subtotaled by its profit center relationship.

The problem with this solution was that it was not possible to enforce strict controls regarding the asset’s profit center assignment without writing validations. Validations are great for customer-specific field control, but can be cumbersome to administrate. While it is still possible to enforce logic from a separate module on the asset master (such as the state assigned to the asset’s cost center) they require ABAP development and a user exit to do so.

It was also not possible to run any asset report by its profit center assignment without resorting to custom solutions. This limitation has also been fixed with enhancement package 5 because profit center and segment are now selection criteria on all of the asset reports that read from the logical database ADA. It is now possible to execute the majority of the asset reports based on the asset’s profit center or segment. As SAP has introduced the notion of segment into the standard SAP ERP Financials organizational structure and its relationship to the already established profit center, it has become more important to report on all objects and activities by these two elements. This is now possible in enhancement package 5.

Use transaction AR01 or follow menu path Accounting > Financial Accounting > Fixed Assets > Information System > Reports on Asset Accounting > Asset Balance > Balance Lists > Asset Balances (Figure 2). This shows the selection screen from the Asset Balances report. Click the dynamic selections icon (the third icon from the left under Asset Balances) to view the two attributes, which you can then specify so that the report returns data only for the appropriate set of segments or profit centers.

Figure 2

The profit center and segment are found in the Dynamic selections pane of virtually all asset reports

It is also possible to include the fields as displayed characteristics in asset reporting as shown in Figure 3. For more, see my article “How to Add Fields to Any Fixed Asset Report.” This solution can be applied to the new PRCTR and SEGMENT fields.

Between these two changes, SAP has delivered solutions to allow for easier reporting by profit center and segment, which means companies shouldn’t have to resort to custom solutions. The profit center also shows up in the Asset Explorer in the Objects Related to Asset section (not shown) and can be directly accessed from there. You can access the Asset Explorer using transaction code AW01 or from the menu path Accounting > Financial Accounting > Asset Accounting > Asset > Asset Explorer. This is the most comprehensive tool in FI-AA to view the asset’s key attributes, depreciation parameters, asset values, and transactions across all depreciation areas.

Figure 3

Asset Balance report displaying Profit Ctr and Segment columns

Changes have been made to the standard content in SAP NetWeaver Business Warehouse as well. 0PROFIT_CTR and 0SEGMENT have been added as time-dependent navigational attributes to the 0ASSET InfoObject, which allows for similar analysis of asset values (Figure 4). 

Figure 4

InfoObject 0ASSET has 0PROFIT_CTR and 0SEGMENT as navigational attributes

The InfoObjects 0PROFIT_CTR and 0SEGMENT have also been added to the standard data sources 0FI_AA_12 and 0FI_AA_20 (Figure 5). This makes it easier for companies to perform line item-based analysis on their asset records for these two important attributes.

Figure 5

Extractor checker in SAP ERP for the 0FI_AA_12 data source

Time Segments

Enhancement package 5 introduces more strict controls around the time segments within certain SAP ERP Financials master data objects such as assets and cost centers. Both of these objects have had the ability in the past to maintain time-dependent relationships to key attributes. This allows a single cost center to change ownership or organizational responsibility (e.g., hierarchy area) at various times in its life cycle. It has always been possible to create new time intervals (also called analysis periods) in past SAP ERP releases, but the new reorganization tool adds more control to this process.

As an example, if you wanted to change the profit center assignment on a cost center prior to enhancement package 5 you could do so by defining a new analysis period. There were restrictions on this based on the timing of the change and postings to the affected cost center. With enhancement package 5, the change in the profit center is handled by the reorganization tool itself. If you try and change the profit center directly at transaction KS02, the error message indicates this shift in control by its message class (FAGL_REORGANIZATION) (Figure 6).

Figure 6

Error message

When implementing these solutions, you need to reference two programs.  

The first program is FAGL_ASSET_MASTERDATA_UPD, which assists in the initial population of the profit center and segment on the asset (Figure 7). This is required because the fields are initially blank for an existing implementation of fixed assets. The program is simple to execute as it reads the profit center and segment on the asset’s existing cost center assignment and makes the assignment based on its selection criteria.

Figure 7

Error message

The second program, FAGL_R_ASSETS_CONSISTENZ_CHECK, performs a consistency check on the fixed assets (Figure 8). It performs several checks related to the asset’s current cost center and any newly assigned cost centers as a result of the reorganization plan. It also looks for any financial postings made after the reorganization.

Figure 8

FAGL_R_ASSETS_CONSISTENZ_CHECK performs a consistency check

You should run this program after the reorganization plan. After the program is executed for the appropriate reorganization plan, you’ll want to review the output shown in Figure 9 and inspect the profit center to ensure that it is correct based on the output of the reorganization plan. The purpose of the program is to show the account assignment on the asset as well as the old and new profit centers assigned to the asset. 

Figure 9

Output of the FAGL_R_ASSETS_CONSISTENZ_CHECK program

Nathan Genez

Nathan Genez is an SAP FI/CO- and SAP BW-certified consultant who has worked with SAP ERP since 1996, with an emphasis on the capital accounting modules: PS, IM, and FI-AA. A former platinum consultant with SAP America, Inc., he has worked with SAP BW since release 1.2B. He is currently a managing partner at Serio Consulting in Houston, Texas.

You may contact the author at nathan.genez@serioconsulting.com.

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