SAP FICO Introduction

What is SAP FICO?

SAP FICO is the short form of SAP Financial (FI) Controlling (CO). This SAP FICO is one of the important modules of ERP. The financial transaction data is stored by both FI and CO modules. SAP FI (Financial Accounting) is used for external reporting that provides Balance sheet, Profit & Loss statements. Different SAP modules like MM (Materials Management), PS (Project Systems), SD (Sales & Distribution), PP (Production Planning) and PM (Plant Management) etc are integrated with these SAP FICO modules.

What is a Functional Area?

The Functional area field appears on FI, CO, profit center accounting (PCA), and special purpose ledger (SL) documents. When combined with the G/L account, the functional area determines where on the profit and loss statement a value will be displayed. Functional areas allow you to deliver a profit and loss statement that meets the requirements of US GAAP.

When you post a document, you can enter the functional area manually in addition to your cost object. However, the IDES system has been configured so that the functional area is posted to in the background via substitutions. These substitutions are described in Defining a Substitution Rule.

In the R/3 System, General Ledger (G/L) records do not include the cost center or other cost objects in the G/L totals records. Totals records are kept by account, for example, Salaries. Salaries could appear in cost of sales as a labor cost or they could be, for example, a selling and marketing expense. As an additional identifier on the item level, the functional area determines to which line on the P&L the salary expense is actually posted.

If you are curious and want to see which functional areas will be used in reporting the P&L in our IDES example, follow these steps:

• Select in the SAP R/3 System screen Tools  Business Engineer  Customizing. A dialog box appears. Select Enter.
• On the Customizing screen, select Implement. projects  SAP Reference IMG.
• From the outline, select Enterprise Structure  Structure maintenance  Definition Financial Accounting  Maintain functional area.
• Return to the main SAP R/3 System screen.