Functional areas in SAP

Functional areas are used in cost of sales accounting. Typically in United States of America. The functional area is available in FI for reporting, e.g. Production, R&D, Sales, Marketing rather than GL Accounts as is usually done.

Controlling Area is the highest orginisation object in Controlling. It enables management accounting in reporting across legal entities (Company Codes). You can create numerous Controlling areas, however, it is not possible to perform allocations across Controlling Areas. Functional Areas are created in order to classify financial transactions. Functional Areas are used to identify financial transactions by 'function'. Some examples of 'functions' are: R&D, Marketing, Sales, Finance Human Resources, etc.