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Tips on How to Plan Your Migration from

Costing-Based CO-PA to Account-Based CO-
PA in SAP S/4HANA Finance
by Ajay Maheshwari, SAP FI/CO and SAP S4/HANA Solution Architect
December 28, 2016

See what you gain and lose by switching from costing-based Profitability Analysis (CO-PA) to
account-based CO-PA in the SAP S/4HANA Finance environment. Review a proposed
approach to pull the plug on costing-based CO-PA.

Key Concept

SAP S/4HANA Finance offers several enhancements in account-based Profitability

Analysis (CO-PA), making it on a par with costing-based CO-PA. The following features that
were earlier unique to costing-based CO-PA are now made available in account-based CO-
PA: splitting the cost of goods sold (COGS) based on a cost component split; splitting the
manufacturing variances based on variance categories; and populating the sales quantities in
multiple units of measure (UoM).

SAP offers two choices for Profitability Analysis, or CO-PA as it is widely known. One is based on
account codes (account-based CO-PA), and the other (costing-based CO-PA) is based on value
fields, also known as key figures.
Although the end is the same for both, the means are different, setting the stage for discussions
leading to which one is better. 
Account-based CO-PA offers the immediate advantage of easy reconciliation with General Ledger
Accounting (FI-GL), but you could also design costing-based CO-PA to reconcile with FI-GL. So, that’s
where account-based CO-PA starts losing its key advantage. The argument that costing-based CO-
PA offers only key figures (value fields) does not favor account-based CO-PA, as the CXOs are
usually interested in key figures. Moreover, with time, SAP has increased the number of key figures
available from 120 to 200, which are usually sufficient. Apart from making it on par with costing-
based CO-PA, there are several other improvements delivered in account-based CO-PA.
However, before you can step over from costing-based CO-PA to account-based CO-PA, you need to
consider their unique capabilities, a redesign of SAP processes if required, the required change
management exercises, and a systematic transition. I address these areas in this article.
Table 1 shows the advantages with which the costing-based CO-PA used to race past the account-
based CO-PA until SAP ERP Central Component (ECC) and how these differences stand now in SAP
S/4HANA Finance.

Advantages of costing-based CO-PA as of Advantages of account-based CO-PA with

ECC 6.0 SAP S/4HANA Finance

Splits the cost of goods sold (COGS) into

Splits the COGS into multiple general ledger
multiple value fields as per a cost component
accounts as per a cost component split
split

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Splits the production variances into multiple

Splits the production variances into multiple
general ledger accounts as per variance
value fields as per variance categories
categories

Sales quantities in multiple unit of measure Sales quantities in multiple UoM are also
(UoM) are possible possible with account-based CO-PA

Reports run faster as CO-PA data is managed

SAP HANA is the underlying platform, so there
in a separate set of tables (CE1, CE2, and
are no issues with report performance
CE3)

Table 1 A comparison of the advantages of costing-based CO-PA with the

innovations in SAP S/4HANA Finance
Account-based CO-PA not only is on a par with costing-based CO-PA in SAP S/4HANA Finance but
also has other inherent advantages, owing to the new data model in SAP S/4HANA Finance:
• When account-based CO-PA is active, all the CO-PA characteristics (whether standard or
user defined) from the operating concern are added to table ACDOCA.
• The CO-PA information is now managed in the same table ACDOCA as FI-GL. Using Fiori,
you can now drill down from an income statement to see the sales revenue by customer,
product, and region.
• With the merger of the general ledger account and cost element in SAP S/4HANA Finance,
secondary costs are now also updated in FI-GL, putting aside the reconciliation woes.
So, can you just cross over the fence to account-based CO-PA and pull the plug on costing-based
CO-PA? Definitely not. It requires much deeper thought and consideration. However, remember that
costing-based CO-PA can still be used as earlier, but there will be no further innovations in it.

Possible Impact to the Business Process of a

Switchover to Account-Based CO-PA
In this section I describe the various considerations that can affect the business on account of
migration from costing-based CO-PA to account-based CO-PA.
1.  Statistical condition types: Costing-based CO-PA allows you to update statistical condition types
to CO-PA and then use these condition types for analysis in costing-based CO-PA. Costing-based
CO-PA allows you to post values in costing-based CO-PA without affecting FI-GL. This comes in
handy when you want to analyze profitability, including certain additional parameters, without
affecting the income statement in FI-GL.
Impact: If you are using statistical condition types (e.g., ZX01) and updating them in CO-PA, too, you
must consider the impact on profitability reporting after the switchover to account-based CO-PA.
Since the statistical condition types don’t post to FI-GL, they don’t also update account-based CO-
PA. 
Possible remedy:
• The business process must change (i.e., the profitability analysis must exclude the statistical
values and the analysis must be done based on actual values only).
• If the statistical values are needed for profitability analysis, you must address that issue
through a workaround. You should perhaps use such condition types as real condition types
in the sales and distribution (SD) pricing procedure and start posting them in FI-GL. Offset
such postings with a new condition type (having condition record of -100 percent based on
condition type ZX01) in the SD pricing procedure.

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2. Valuation using costing sheets: Costing-based CO-PA allows you to calculate (accrual) values for
additional valuations in CO-PA, such as freight costs, packaging costs, and sales commission with
the help of costing sheets. These values are posted only in costing-based CO-PA without affecting
the FI-GL.
Impact: During the switchover to account-based CO-PA, you must consider that this feature is not
native to account-based CO-PA.
Possible remedy:
• The business process must change (i.e., the profitability analysis must exclude the accrual
values and analysis must be done based on actual values only).
• If these accrual values are needed for profitability analysis, a workaround is necessary.
Assign a new condition type in SD pricing procedure (e.g., ZX02). The calculations performed
in CO-PA costing sheets must be performed in the SD pricing procedure using an SD routine
(user exit) assigned to the condition type. You must then post such values to FI-GL. Offset
such postings using a new condition type (having a condition record of -100 percent based on
condition type ZX02) in the SD pricing procedure.
3. Valuation using user exit COPA0002: Additional valuations in costing-based CO-PA can also be
performed using the user exit COPA0002 to post additional values in costing-based CO-PA
independent of FI-GL
Impact: During switchover to account-based CO-PA, you must consider that this feature is not
available in account-based CO-PA.
Possible remedy:
• The business process must change (i.e., the profitability analysis must exclude the
additionally calculated values through a user exit and the analysis needs to be done based on
actual values only)
• If these additional values are needed for profitability analysis, a workaround is necessary.
Assign a new condition type in the SD pricing procedure (e.g., ZX03). The calculations
performed in the exit COPA0002 must be performed in the SD pricing procedure using an SD
routine (user exit) assigned to the condition type. You must then post such values to FI-GL.
Offset such postings using a new condition type (having condition record of -100 percent
based on condition type ZX03) in the SD pricing procedure.
4. Possible impact on settlements: During settlements to costing-based CO-PA (e.g., settlement of
an internal order to CO-PA), you can credit the internal order using a single settlement cost element
(from the allocation structure) and use the PA transfer structure to populate the amounts in the
desired value fields in costing-based CO-PA, such as rents or advertisement costs.

Note
PA transfer structure is the object in the SAP system for mapping cost elements to value
fields.

Impact: If you continue to use the same allocation structure after the switchover to account-based
CO-PA, you won’t be able to get the same split in account-based CO-PA. You would rather see the
amount populated in the settlement cost element (without the desired split).
Possible remedy (showing these adjustments in the configuration is not the subject of this article):
• After the switchover to account-based CO-PA, you would have to make modifications in the
allocation structure to incorporate new settlement cost elements in order to have the same
split in account-based CO-PA
To keep it simple, you need the same number of assignment lines, with the same cost elements in
the allocation structure, as existed in the PA transfer structure (make allocation structure 1:1 with
the PA transfer structure).

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5. Possible impact on assessment cycles: During allocating the Sales, General and Administration
Overhead (SG&A) to costing-based CO-PA, you can credit the cost centers using a single
assessment cost element assigned in the assessment cycle. You make use of the PA transfer
structure to populate the amounts in the desired value fields in costing-based CO-PA, such as
salaries and interest costs.
Impact: If you continue to credit the cost centers using one assessment cost element after the
switchover to account-based CO-PA, you won’t be able to get the same split in account-based CO-
PA. You would rather see the amount populated in the assessment cost element (without the
desired split).
Possible remedy (showing these adjustments in the configuration is not the subject of this article):
• After the switchover to account-based CO-PA, you would have to use an allocation structure
in order to have the same split in account-based CO-PA
• You will need the same number of assignment lines, with the same cost elements in the
allocation structure as existed in the PA transfer structure (make allocation structure 1:1 with
the PA transfer structure)
6. Stand-alone adjustments to CO-PA data: Costing-based CO-PA allows you to make stand-alone
postings to CO-PA independent of FI-GL, using transaction code KE21N. These postings can be to
make corrections in the posted data or to feed the sales information from a third-party system for
the purpose of profitability analysis.
Similarly, you can reverse and repost only the costing-based CO-PA document (transaction codes
KE4S and KE4S00) without reversing the FI documents. This can be the case, for example, if the
financial document is correct, but the characteristic derivations were not performed correctly.
Impact: During the switchover to account-based CO-PA, you must remember that these features are
not native to account-based CO-PA. You can’t make any manual adjustment or correction posting
into account-based CO-PA unless it is also posted in accounting. 
Possible remedy: 
• After the switchover to account-based CO-PA, you would have to reverse and repost the
finance document or the document from the feeder interfaces such as SD (customer invoice),
even though a correction has to be made only in the profitability analysis data
• This can be a concern in some countries including Brazil and India, where the reversal of a
tax invoice must be intimated to the revenue authorities
7. Sign handling in CO-PA: This is a very tricky area. The way signs (+/-) are updated in costing-
based CO-PA is very different from the way the (+/-) signs are updated in FI-GL.
For example, both the sales revenue and discounts are usually posted into CO-PA as an absolute
amount (as positive), whereas in FI-GL, sales revenue is posted as negative and discounts are
posted as positive. Hence, account-based CO-PA is also updated accordingly, as FI-GL.
Impact: No impact on the business process, as such
Possible remedy:
• After the switchover to account-based CO-PA, you must carefully create the CO-PA reports,
keeping the new sign logic in mind.
• Also, wherever necessary, train the end users accordingly.
8. Top-down distribution (TDD): Companies using TDD in costing-based CO-PA must re-create the
TDD variants for account-based CO-PA
Impact: No impact on the business process, as such.
Possible remedy:
• Re-create the TDD variants in account-based CO-PA

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Additional Activities to Be Performed for Switching Over

to Account-Based CO-PA
In this section, I briefly explain what additional tasks need to be performed after switching over to
account-based CO-PA in SAP S/4HANA.  
1. New customizing tasks in SAP S/4HANA: As explained above, account-based CO-PA in SAP
S/4HANA offers new features to split the COGS into multiple general ledger accounts, to split the
production variances into multiple general ledger accounts, and to populate the sales quantities into
multiple UoMs.
Should you need to use these features, you must perform the relevant additional customization. You
would also need to write a small piece of ABAP code in order to populate the sales quantities in
multiple UoMs. (Showing these tasks is not the subject of this article.) You can refer to Janet
Salmon’s article, “SAP Simple Finance: New Options in Profitability Analysis, for more details.
2. Update MM-FI integration: For posting COGS into FI-GL, the general ledger account assigned in
transaction OBYC – Transaction Event Key GBB – Account Modifier VAX is used when account-
based CO-PA is not active. However, when account-based CO-PA is active, the Account Modifier VAY
is used, instead of VAX.
The general ledger account assigned in Account Modifier VAY must be a cost element. You must
complete this customizing activity accordingly.
One obvious question that would arise is, what would happen to the sales orders where the post
goods issue (PGI) has been posted while costing-based CO-PA is active, but the account-based CO-
PA is activated before the invoice is posted? A possible solution, after activating the account-based
CO-PA, is:
• To create the general ledger account in GBB-VAX as a cost element (transaction code FS00),
define the automatic account assignment to a profitability segment (transaction code OKB9)
• Subsequently, transfer the posting to Controlling (transaction codes OKBA or OKBB)
• Adjust the profitability segment to include relevant details, using line item reposting
(transaction code KB61)
3. Updating the profitability segment in sales orders: When account-based CO-PA is active or if the
transfer of sale orders to costing-based CO-PA is active, the profitability segment is determined at
the time of sales order.
In your existing system, if the transfer of a sales order to costing-based CO-PA is not active, it is a
good idea to run transaction code KE4F, so that the sales orders are updated with the profitability
segment.
4. Re-create reports: Since account-based CO-PA uses cost elements, instead of value fields, you
must re-create your profitability reports after switching over to the account-based CO-PA.
The format of the reports in account-based CO-PA would, ideally, remain the same as in costing-
based CO-PA. So, the existing reports in costing-based CO-PA should act as a good reference point.
5. Adjust assessment cycles: After the switchover to account-based CO-PA, you must adjust your
assessment cycles to account-based CO-PA in the cycle header.
Assessment cycles in CO-PA require you to specify the Tracing Factor (TF) Basis in the cycle header
in transaction code KEU1. If you are using account-based CO-PA, the TF Basis must be set to 2.

Managing the Historical Information in Costing-Based

CO-PA

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The migration process to SAP S/4HANA as well as to SAP in general does not offer any tools to
migrate the historical information in costing-based CO-PA to account-based CO-PA. You must
consider if the historical data from costing-based CO-PA is needed for future analyses. If yes, then
how much of that is needed (for example, historical data of three previous years)? Accordingly, this
must be undertaken as a separate project to migrate the historical information into account-based
CO-PA.
While it would be an ideal situation to migrate the historical data to account-based CO-PA in the
same timelines as SAP S/4HANA migration, it is quite unlikely to happen. Considering the criticality
of the SAP S/4HANA migration and the complexity of the historical data migration from costing-
based CO-PA to account-based CO-PA, it is advisable to keep both the projects separate. 
Hence, there might be a transition period post migration to SAP S/4HANA, in which both account-
based CO-PA and costing-based CO-PA are active simultaneously. Once the historical data is
migrated, the plug on costing-based CO-PA can be pulled (by deactivating the costing-based CO-PA
in the operating concern using transaction code KEA0).
There could be another option to handle the historical data in costing-based CO-PA, which is to
make use of data warehousing tools to store the historical information. This can then be used for
future analyses. However, this also needs to be taken up as a separate project.

Ajay Maheshwari
Ajay Maheshwari is an SAP Finance and Controlling (FI/CO) and SAP S4/HANA
solution architect with more than 13 years of experience. He is well known for
his contributions to the SAP Community Network (SCN) Forum.
He is among the all-time top 20 contributors to the SCN Forum, across all SAP
modules and one of the top contributors in his own space, SAP FI/CO.
He is one of the official SAP mentors and has been recognized as the topic leader in the SCN
Forum each year since 2011. 
He has experience with SAP implementations and rollouts in several industries and thoroughly
enjoys designing complex business processes and delivering SAP training in the areas of FI/CO
and SAP S/4HANA.
Currently, he works as associate director at itelligence, an SAP Platinum Partner.
See more by this author (/Financials/search?q=Ajay+Maheshwari&exact=Checked)
You may contact the author at ajaycwa1981@gmail.com (mailto:ajaycwa1981@gmail.com?
cc=editor@financialsexpertonline.com).
If you have comments about this article or publication, or would like to submit an article idea,
please contact the editor (mailto:editor@financialsexpertonline.com).

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