How To Fix KZ023 - System error: Cost object hierarchy contains a loop

SAP Error Message - Details

• Message type: E = Error

• Message class: KZ - Cost Object Repetitive Mfg / Process Mfg

• Message number: 023

• Message text: System error: Cost object hierarchy contains a loop

What causes this issue?

You have formed a cost object hierarchy for cost object ID numbers by
specifying higher-level cost objects for them.
If you change the higher-level cost object, a loop would occur. This is
becasue a cost object which is assigned lower down in the hierarchy
would become the higher-level cost object for a cost object higher up in
the hierarchy.

System Response

The system cannot process a hierarchy with a loop.

How to fix this error?

Check the cost object ID and change the incorrect entry.
Bear in mind that the highest node in the hierarchy is indicated with
'*' in the "Higher-level cost object" field.

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message KZ023 - System error: Cost object hierarchy contains a loop ?

  The SAP error message KZ023, which states "System error: Cost object hierarchy contains a loop," typically occurs in the context of controlling (CO) when there is a circular reference in the cost object hierarchy. This can happen when cost objects (like cost centers, internal orders, or projects) are linked in such a way that they create a loop, making it impossible for the system to determine the correct flow of costs.
  Cause:
  
  Circular References: The most common cause of this error is that the cost objects are defined in a way that they reference each other in a circular manner. For example, if Cost Object A is assigned to Cost Object B, and Cost Object B is assigned back to Cost Object A, this creates a loop.
  Incorrect Hierarchy Setup: The hierarchy of cost objects may not be set up correctly, leading to unintended loops.
  Data Entry Errors: Manual errors during the creation or assignment of cost objects can lead to loops.
  
  Solution:
  
  Review Cost Object Hierarchy: Check the hierarchy of the cost objects involved. You can do this by navigating to the relevant transaction codes (like KSH1 for cost centers or KO01 for internal orders) and reviewing the assignments.
  Identify Circular References: Use tools or reports available in SAP to identify any circular references in the cost object hierarchy. This may involve checking the assignment of cost objects and ensuring that no object points back to itself indirectly.
  Correct the Assignments: Once you identify the loop, correct the assignments to eliminate the circular reference. This may involve reassigning cost objects or restructuring the hierarchy.
  Testing: After making changes, test the configuration to ensure that the error no longer occurs and that the cost flow is as expected.
  
  Related Information:
  
  Transaction Codes: Familiarize yourself with relevant transaction codes such as KSH1 (Create Cost Center), KSH2 (Change Cost Center), and KSH3 (Display Cost Center) to manage cost objects.
  SAP Notes: Check SAP Notes for any specific patches or updates related to this error. Sometimes, SAP releases notes that provide additional guidance or fixes for known issues.
  Documentation: Review SAP documentation on cost object hierarchies and controlling to understand best practices for setting up and managing these objects.
  Consulting with SAP Support: If the issue persists after troubleshooting, consider reaching out to SAP support for further assistance.
  
  By following these steps, you should be able to resolve the KZ023 error and ensure that your cost object hierarchy is correctly configured.