What is the purpose of KALC and why we use this during month end? 

This is used when a controlling area is assigned to more than one company codes and when there are intercompany posting in controlling. KALC will then create the intercompany postings in FI.

In short, KALC is for reconciliation between FI and CO.

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.

Path: 

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 1. 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.

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