One of the most common asked question in SAP FI is What are the organizational elements?
When a project is started, its structure must first be defined and categorised in order to be in alignment with the organization’s current enterprise structure.
Project System lacks internal organisational structures, so we must give organisational components to various ERP R/3 modules in order to integrate the system’s structure with the enterprise structure. These organisational components enable the Project system to obtain and preserve accurate data.
When constructing a project, there are many different components that must be constructed, including an organisational structure. The components of organisation are as follows:
- Company Code – The smallest organisational entity for which independent financial statements can be prepared is a company code. As needed by law, balance sheets and profit & loss statements can be generated at the level of the company code. Each company code level processes business transactions.
- Business Area – An organisational unit’s separate area of activities or responsibility that is used for both internal and external reporting is known as a “business area.” For the purpose of reporting on each operational area, various divisions of each business inside a legal organisation are created as business areas.
- Chart of Account – The organization’s list of GL accounts master records is contained in the chart of accounts (COA). Each company code must be given a chart of accounts.
- Functional Area – A functional area is a type of organisational unit used in accounting to categorise an organization’s expenses according to its many purposes. Using cost of sales accounting, the functional area generates P&L A/C for Financial Accounting. for instance, functional areas are:
- Administration
- Sales & Distribution
- Manufacturing
- Production
- Research & Development