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In accounting point of view, Financial Accounting (FI) and Management Accounting/Controlling (CO) are two branches of accounting. Each branch has different purpose, serves different type of information users and uses different types of data and information. The following clearly distinguish the two branches of accounting:


Financial Accounting output such as the financial statements generally used by external users (other than management). These users could be the stockholders, government, employees and banks. Whereas, Management Accounting (Controlling) purposely serves the management of the Company. Example of controlling reports are cost center report (cost per dep’t), profit center report and profitability analysis report.

Financial Accounting uses general data and information. To relate to SAP FICO, the basis of the preparation of financial statements is the general ledger. And postings to GL are general in nature e.g. accounts receivable - trade account is not segregated into source. Whereas, Management Accounting uses specific type of data and information. In SAP, example of these reports are cost center report, profit center report and profitability analysis. The above reports contain specific information e.g. salaries expense is segregated per project and/or per department.

Both two branches of accounting are properly addressed and automated in SAP. Standard reports are available and readily available to use.