SAP Internal Order Overview
Internal Orders are one of the CO Object provided by SAP for various purposes. They are normally used to plan, collect, budget and settle the costs of internal jobs and tasks.
The SAP system enables to monitor internal orders throughout their entire life-cycle; from initial creation, through the planning and posting of all the actual costs, to the final settlement and archiving.
Tools for Analysis in CO
Before going ahead with the I/O, lets first try to see what are the various tools of analysis provided by SAP in Controlling module, few of them are listed below for our understanding:
A Cost Centre is the physical location in the organisation that spends organisation’s resources. This tool keeps track of where the cost is incurred.
There are two different types of Cost Elements (a) Primary (b) Secondary. Purpose of Cost Elements is to record the nature of expenses incurred.
As explained above, Internal Order is used to trace the various costs incurred, plan, control etc.
Combination of these 3 axes provides the financial data with the needed level of details.
Use of Internal Order
Internal orders can be used for following purposes:
Monitor the costs of short-term measures
Monitor the costs and revenues related to a specific service/activity
Monitor ongoing costs
Restrict costs from going beyond a certain limit by assigning budgets
Verifying the actual costs against planned
Understanding of Internal Orders can be divided into (a) Master Data (b) Actual Posting and (c) Period End Activities, we will try to look into all the above in brief:
The Master Data for Internal Order is created by Transaction Code: KO01. Using this T Code we can maintain various information in the I/O. But before we can maintain the same it would be important to first understand the two types of Internal Order available in the system as explained below:
Internal Order Types
Order types provide the principle functionalities and codification rules for the individual orders. Given below is the further information on the two types of internal orders available in SAP:
Statistical internal orders are used to collect cost for reporting purpose only. Cost collected in a statistical internal cannot be allocated to other cost objects.
This type of I/O is used to monitor costs and, in some instances, revenues for an organization. You use the statistical order to evaluate costs which cannot be itemized in detail in cost element or cost center accounting.
Every posting on a cost element is posted into only one “real” CO analytical object. This means that the charge could be re-allocated / transferred to another CO object afterwards.
After our understanding of the types of internal order, we would try to see the various data that is to be maintained in the I/O master as listed below
Settlement cost elem
Investment reason etc.
We will try to look into details of all this information in other post.
The actual posting in case of an I/O is no different than posting in case of cost centre etc.
The actual line items posted in an Internal Order can be views with Transaction Code: KOB1.
Period End Activities
An internal order is usually used as an interim collector of costs and an aid to the planning, monitoring, and controlling processes needed. When the job completes, you allocate the costs to one or more receivers (cost center, fixed asset, profitability segment, and so on). This process of cost allocation is known as Settlement.
To be able to settle an order, you must have saved a settlement rule in each of the senders. This settlement rule determines where the costs are to be settled to. You can achieve this in two ways:
Settlement to One Receiver
You use this basic form of order settlement to completely settle the costs collected on the internal order. This is either to a cost center, or a G/L account under a settlement cost element. The system generates the appropriate settlement rule from the information contained in the internal order master data.
Definition of a comprehensive settlement rule gives you more settlement possibilities, for example, you can settle costs to a wide range of receivers (project, SO, profitability segment, and so on).
To sum up the above, the settlement rule is specification of how the costs are to be distributed between receivers.
It is important to know that only Real Internal Order can be settled and there is no need to settle Statistical Internal Order
Note: Internal Order Type can be created for Investment Measure (Asset), this requires special configuration but works same as a normal Internal Order with additional feature available for creation of Asset under construction (AuC) and Final asset.
Internal Order Master Data : AUFK