Account assignment is a critical aspect of financial accounting and management in any organization. It refers to the process of allocating financial transactions to specific cost or profit centers, projects, or business processes. By properly assigning financial transactions to the appropriate account, organizations can accurately track their expenses, revenues, and profitability. This information can then be used to make informed decisions about resource allocation, cost control, and overall financial management.
In SAP FICO, account assignment is a core module that offers various types of account assignment options, including cost center accounting, profit-center accounting, internal order accounting, and WBS element accounting. These options provide organizations with greater visibility into their financial performance, enabling them to optimize their operations and drive greater value for their stakeholders.
Types of Account Assignment
There are several types of account assignments in SAP FICO, including:
- Cost center accounting
- Profit center accounting
- Internal order accounting
- WBS element accounting
i) Cost center accounting
Cost center accounting is the process of tracking and analyzing costs associated with each department, function, or unit of an organization. SAP FICO provides a module that allows organizations to create and manage cost centers, allocate expenses, and generate reports to track performance.
By tracking expenses at a granular level, organizations can make informed decisions about resource allocation, identify areas of inefficiency, and make changes to improve overall performance, reducing costs and increasing efficiency.
ii) Profit center accounting
Profit center accounting is a process that allows organizations to track revenues and expenses at a granular level, providing insights into the profitability of individual business units, product lines, or geographic regions. By allocating revenues and expenses to specific profit centers, organizations can generate reports that help identify areas of high profitability or inefficiency.
SAP FICO provides a comprehensive profit center accounting module that enables organizations to create and manage profit centers, allocate revenues and expenses, and generate reports to analyze profitability. This information can be used to make informed decisions about product lines, investments, and resource allocation, enabling organizations to optimize their profitability and drive growth.
iii) Internal order accounting
Internal order accounting is a process that allows organizations to track and control expenses associated with a specific project, event, or business process. By assigning costs to a specific internal order, organizations can monitor actual expenses versus budgeted expenses, and ensure that resources are allocated efficiently.
iv) WBS element accounting
WBS (Work Breakdown Structure) element accounting is a process that allows organizations to track and control expenses associated with a specific project or work breakdown structure. It involves breaking down large projects into smaller, manageable tasks or work packages, each of which is assigned a WBS element.
Expenses are then allocated to each WBS element to track actual versus planned expenses and ensure that resources are allocated efficiently.
Advantages of Account Assignment
The advantages of account assignment in SAP FICO include:
Better visibility: Account assignment allows organizations to track expenses and revenues at a granular level, providing better visibility into financial performance.
Resource allocation: By tracking expenses and revenues, organizations can make informed decisions about resource allocation, ensuring that resources are allocated efficiently.
Cost control: By identifying areas of inefficiency or waste, organizations can make changes to control costs and improve profitability.
Accurate reporting: Account assignment provides accurate reporting and analytics, enabling organizations to make informed decisions about their financial performance.
Compliance: Account assignment helps organizations comply with regulatory requirements and accounting standards.
How to Define Account Assignment?
Please follow the steps below to define the account assignment:
Execute t-code OKB9 in the SAP command field as shown in the image below.
On Change View "Default account assignment": Overview you will see the list of default account assignments.
Next, click the New Entries button to create a new account assignment.
In the next window, enter the following fields:
- Cost Elem
- Cost Ctr
Now click on the Save button to save the new account assignment.
Now in order to post a test document to check that the account assignment works, execute t-code FB50 in the SAP command field.
On the next popup enter Company Code as shown below.
Now on the next window, click Tree On button.
Next, select the Screen Variant in the next window and click Tree Off button.
In the next window, enter the following fields according to your requirements:
To make the document assignment, click the Post button.
The account assignment is now defined and can be used for tracking expenses and revenues at a granular level in SAP FICO.