In SAP, a Chart of Account (COA) is defined at the client level.
After creating a chart of accounts in SAP, it has to be assigned to a company code. To have better control, all the general ledger accounts are grouped under a chart of accounts. This will help to develop different financial statements for legal reporting.
Chart of Account in SAP, 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 Chart Of Account contains the Account Number, Name, control fields that manages the function of master data.
Every organization must have an operating chart of accounts to record its financial transactions for a periodical evaluation at the month, quarter or year end.
In SAP, COA is defined 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 account etc while creating this variant.
After creating the 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 the number range of General Ledger Accounts from its respective account group that has been created under a Chart Of Account variant in SAP.
In SAP FICO, we have three different type of chart of account;
- Operating Chart of Accounts,
- Country Specific Chart of Accounts, and
- Group Chart of Accounts
What is Operating Chart Of Account in SAP
Operating Chart Of Account for an organization contains all the General ledgers that it uses in a 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 account otherwise you can not assign company codes to the controlling area.
If you are using different operating COA in SAP for company codes then for each company code, you need to create a separate controlling area in SAP.
What is Country Specific Chart Of Account in SAP
Country Specific Chart Of Account contains only those General Ledger A/cs that are required to meet Country’s legal requirements.
This allows 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.
Why to create Group Chart Of Account in SAP
Group COA 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 Accounts filed status and numbering systems it’s 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, the user selects operational Chart Of Accounts General Ledger A/c to get posted the transaction into SAP then it flows to other Accounts maintained in SAP.
Only the creation of an operating Chart Of Account 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 Account in SAP FI module
Here are transaction codes used to create, edit, assign Chart of Account in SAP;
- OB13 – To edit or define or create COA list
- OB62 – Assign company code to A COA
- OBD4- Define Account Group
- OB53- Define retained earning account
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