What is Reconciliation Ledger?

The purpose of Recon Ledger is to display the summarized balances of cost ledger. It
is a ledger used for summarized display of values that appear in more detailed form in
the transaction form. It has the following functions:

1) Reconciles controlling with Financial accounting.

a) The recon ledger provide the reports for monitoring the reco of CO with FI by
accounts.
b) It can identify & display value flows in Controlling across Company codes,
functional area or business area boundaries.
c) Value flows can be used in FI as a basis for summarized reco. postings.

2) Provides an overview of all costs incurred.

Updation of Recon ledger can be done online or periodically. To update online, you
need to activate the recon ledger. For periodical updation, proceed as follows :
a) During month end, activate the recon ledger. (T Code-KALA)
b) Do follow up postings.
c) Deactivate the Recon ledger. (T Code-KALB).

RECONCILIATION LEDGER EXAMPLE 1

When you need to drill back from the FI G/L to find which cost center was Posted to
on an expense account, the reconciliation ledger is accessed.

The need to have a CO to FI reconciliation process is a result of cross company Code,

cross-business area, or cross functional area activity that may occur in the CO module.
Order settlement or confirmation, cost center assessment, or other internal CO
movement may initiate these postings. When costs moved internally within CO, the FI
G/L is not updated because of CO use of secondary Cost elements to facilitate the
postings.

The first two steps in reconciliation ledger configuration are to activate the Ledger
within the controlling area and assign a document type. If you have an Existing
controlling area that does not have the reconciliation ledger activated.

Activate the reconciliation ledger:

Controlling -> Overhead Cost Controlling -> Cost and Revenue Element ->
Accounting -> Reconciliation Ledger -> Activate Reconciliation Ledger (KALA)

RECONCILIATION LEDGER EXAMPLE 2

A good receipt posting of Rs.100 has occurred on internal order 1, which is assigned
to company code

One hundred percent of the value of internal order No.1 is settled to internal order 2.
Which is assigned to company code 2.

A Settlement cost element is used for the settlement posting. When an order
Settlement is run, internal order 1 is credited with Rs.100 and internal order 2 is
debited with Rs.100. The balances of internal order 1 and internal order 2 are 0 and
Rs.100, respectively. However, the balances of company code 1 and 2 remain as they
were prior to settlement. The reason: settlement activity was internal to CO. No FI
update occurred.

To place the FI company codes back in balance, the CO-FI reconciliation posting
transaction should be run. The resulting FI postings would credit company code 1 for
Rs.100 and debit company code 2 for Rs.100. The internal CO activity will now have
been accounted for in FI and company codes are now in balance.