What is Controlling Area:
In SAP, a Controlling Area is a fundamental organizational unit in the Controlling (CO) module. It’s the highest level of organization for managerial accounting, and it’s used to manage and track costs and revenues for internal reporting purposes
It plays a central role in Controlling (CO) module, which deals with internal reporting, unlike the FI (Financial Accounting) module, which handles external reporting
Simple Words: A Controlling Area is a part of your company in SAP where you group together company codes to track costs and performance for internal business purposes.
Key Points:
- one Controlling area can can include one or multiple company code.
- It helps with cost accounting, cost centers, profit centers, internal orders, and budgets
- All the company codes under a controlling area must use the same chart of accounts and fiscal year variant
Key Dependencies:
For Company Codes to be assigned to the same Controlling Area, they must share the same:
- Operative Chart of Accounts: This ensures that all cost and revenue accounts are defined consistently across all the legal entities
- Fiscal Year Variant: This ensures that all the companies are on the same fiscal calendar, which is essential for consistent reporting
Core Functionality:
The Controlling Area is the central hub where you activate and configure all the sub-modules of Controlling, such as:
- Cost Center Accounting (CCA): For tracking costs by department or responsibility.
- Internal Orders: For tracking costs for specific projects or tasks
- Product Costing: For determining the cost of a finished good
- Profitability Analysis (CO-PA): For analyzing the profitability of market segments
Important: Without a controlling area, SAP can’t track how your business is spending money internally — like what department is over budget or which product is more profitable.
Step to create Controlling Area in SAP
to create controlling area in sap you can go directly on the screen via Transaction code or you can use the Navigation path.
Transaction Code (Tcode): OX06
Navigation Path: SPRO → SAP Reference IMG → Controlling → General Controlling → Organization → Maintain Controlling Area
I will use the Transaction Code OX06 to open the controlling Area screen
Step 1: enter tcode OX06
Step 2: Click on New Entries to define Controlling Area
Step 3: Enter the details in below fields, as per your requirement
When you’re setting up a Controlling Area in SAP, you’ll need to enter some basic information. Here’s a step-by-step explanation in simple language:
a. Controlling Area
This is a unique ID for the controlling area. You can create it using four letters or numbers (or a mix of both), like TC01.
b. Name
Just give your controlling area a name or description so people know what it’s for — e.g., “Tata Group”
c. Person Responsible
If someone specific is in charge of this controlling area, enter their name or ID here. If not, you can leave it blank.
d. COArea = CCode (Company Code Relationship)
This field decides how your company code(s) connect to the controlling area.
You have two options:
- Option 1: CO Area = Company Code
Choose this if you want a one-to-one setup — one controlling area for one company code. - Option 2: Cross-Company Cost Accounting
Pick this if you want a one-to-many setup — one controlling area shared by multiple company codes.
e. Currency Type & Currency
This section decides which currency your controlling area will use. You have several choices:
| Code | Meaning | Explanation |
|---|---|---|
10 | Company Code Currency | Use the same currency as your company code |
20 | Controlling Area Currency | Use a different currency — enter it in the next field |
30 | Group Currency | Use a global currency shared across multiple companies |
40 | Hard Currency | Typically used for countries with a stable second currency |
50 | Index-Based Currency | Used in countries with high inflation |
60 | Global Company Currency | Used if you have operations in many countries globally |
f. Chart of Accounts
All company codes under the same controlling area must use the same chart of accounts. If your company codes are using different charts, you can’t group them under the same controlling area — you’ll need to create separate ones.
g. Fiscal Year Variant
Choose the fiscal year variant (e.g., Jan–Dec or Apr–Mar).
But remember: All company codes under this controlling area must follow the same fiscal year pattern.
Once you’ve filled in everything, click Save — and your Controlling Area is now created!
