In SAP, a Chart of Account or COA is defined at the client level. After creating, it has to be assigned to a company code. To have a better control in SAP, general ledger Accounts are grouped under a chart of account.
This will help to develop different financial statements for legal reporting.
Generally, COA is a list of all the general ledger Account’s master data under different account groups of a company code that is used to record day to day financial transactions of a company.
Each general ledger Account created within a COA contains the Account Number, Name, control fields that manages the function of master data.
Every organization must have a operating chart of account to record it’s financial transactions for a periodical evaluation at the month, quarter or year end.
In SAP, we define COA as a variant within the financial module which contains the structure and basic information about all general ledger Accounts used within the organization.
We require information like Maintenance Language, Length of GL Accounts (in number), Manual or automatic creation of cost elements, Group chart of accounts etc while creating this variant.
After creating COA variant, we create different Account groups within it so that it will be easy to identify the nature of the expenses by looking at the naming convention.
It will also be easy to manage Account group’s field status from these A/c groups. These fields are used in general ledger master data creation.
We can also manage number range of General Ledger Accounts from its respective account group that has been created under a Chart Of Accounts variant in SAP.
In SAP FICO, we have three different type of chart of accounts;
- Operating COA
- Country Specific COA
- Group COA
Operating Chart Of Accounts in SAP
Operating Chart Of Accounts for an organization contains all the General ledgers that it uses in day to day posting.
Every company code has to be assigned to an operating COA.
Company code under one controlling area should have the same operating chart of accounts other wise you can not assign company codes to controlling area.
If you are using different operating Chart Of Accounts in SAP for company codes then for each company code, you need to create separate controlling area in SAP.
Country Specific Chart Of Accounts in SAP
Country Specific Chart Of Account contains only those General Ledger A/cs that are required to meet Country’s legal requirements.
This allow you to provide financial statements for the country’s legal requirements.
It’s an optional requirement and can be created in addition to operating COA.
Group Chart Of Accounts in SAP
Group Chart Of Accounts is used at the group level for entire corporate group’s reporting purpose. General Ledger Accounts that are used by the entire corporate group are defined in group COA.
This allows the company to provide reports for the entire corporate group.
In order to organize and manage a large number of Account’s filed status and numbering system its always better that they are arranged under different Account groups.
These Account groups are created on the basis of their business requirements.
While posting business transactions, user selects operational Chart Of Account’s General Ledger A/c to get posted the transaction into SAP then it flows to other Accounts maintained in SAP.
Only creation of operating Chart Of Accounts will not serve the purpose. After its creation, you need to assign it to your company code for which you have created.
Also Read: Use of Chart Of Accounts in SAP FI module
Here are transaction codes used to create, edit, assign Chart Of Accounts in SAP
- OB13 – To edit or define or create COA list in SAP
- OB62 – Assign company code to A COA in SAP
- OBD4- Define Account Group in SAP
- OB53- Define retained earning account in SAP