In R12, a new Legal Entity Configurator was introduced in financials and Legal Entities defined here are are assigned to Ledgers and/or Balancing Segments (Company Codes). However it is not possible to assign a Financials Legal Entity to an Operating Unit, you can only define a Default Legal Context (DLC) to an Operating Unit. This assignment can cause confusion as it is only possible to assign one DLC, but I can use more than one LE in that Operating Unit. The key word in DLC is default.When I am in Payables or Receivables the LE is stamped on the transactions and used to identify the Legal Owner for Legal reporting as well as Tax calculation. The invoice exists within an OU and that OU has a ledger which will account the transactions, if that has more than one LE associated with it then a hierarchy of LE derivation is used to default an LE, the last resort being the DLC.
For example in AR the Legal Entity derivation hierarchy for transactions is
- Transaction Type
- Batch Source
Assigning a LE to a transaction type or batch source is optional and only the LE's mapped to the Ledger associated with the OU are available to assign.
So in R12 we have much better support for many LE accounted in a single OU as we clearly mark the LE on the transactions.
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32 comments:
I inadvertently assigned the incorrect balancing segment value to legal entity and proceeded to define the MO structure. All Application setups are not completed.
I can change the description of the balancing segment value, but I cannot update the legal entity to reflect the correct balancing segment value.
One USD ledger is defined
Two Legal Entitles are defined
Two Operating Units are defined
Multiple Inventory Orgs defined
LE A segment value is 112
LE B segment value is 111
I need LE A segment value to be 111
And LE B segment value to be 112
I have logged a SR with Oracle Support. Why can BSV not be changed once the record is saved?
Mary
I think the idea is to prevent update one transactions have been created - switching the BSV assignment with transactions in progress would be a big problem for processing and also reporting on completed transactions would be problematic.
In the UI it is difficult for us to know if a BSV has been used or not in either a transaction or another Set Up, so this is why changing assignment is not allowed.
If you have not entered any transactions at all, or done any other dependent set up - it might be worth considering changing this via the back end (be careful with this of course, it's never recommended by Oracle)
HI David,
I created a new ledger and assign LE & 2 operating units to it, after that i run replicate seed data request and created security profile & run security list maintenance in HR.
I assigned security profile to payable responsibility by mo: sec. profile option.
When i switched responsibility and click on invoice batches/expense reports then it gives error message: You do not have access privileges to any operating unit or check if mo: security profil or mo: oper unit include any operating unit.
Can you plz explain the reason ?
Thanks.
Thanks good document
I have a question regarding this: is it possible and/or advisable to have multiple balancing segments in one OU?
I'm in release 11.5.10 and I have to add several small companies with very low volumes of sub-ledger transactions. It seems to me that multiple balancing segments in an OU would suffice.
Thanks
Bernardo,
Yes it is very common to have multiple balancing segments in a single OU and you should certainly consider it but there are a couple of caveats:-
Do you need to secure access to these balancing segments individually in the subledger? If so they may need an OU each.
Do you have any requirements for gapless sequencing for any of these balancing segments (common if they are in some European countries, e.g. Italy)? If so you may need to give them an OU of their own.
Hope this helps
David
Thanks for your reply.
Our biggest reservations are around accounting: will AP and AR create sub-ledger balanced entries (without intercompany accounts)? I think it will but the documentation Ive seen is not clear enough to dissipate all doubts. Have you seen docs on this subject?
Around the sequencing issue, we are willing to allow the user to select the document sequences (with defaults) and this is in the Netherlands which is not as strict as Italy.
Regards,
Bernardo
Bernardo,
AP and AR can create balanced entries, as long as your set up is correct.
However you do the have the option of defining intercompany accounts, they you will get the balancing when you account for each transaction.
Hi ,
Can we transfer item created in Inventory org of one operating Unit to Inventory org of another Operating Unit, in case of Multi -Org Setup...?
Neeti
Inventory has Intercompany functionality that is based on Operating Units. This generates Intercompany Invoices for the transfer of goods across Operating Units, I think that's the feature you would be interested in.
Thanks a lot David for your reply..
I guess I had
I would like to know whether we can assign an item created in Master Organization of an Operating Unit (OU1) to an inventory organization of a different Operating Unit(OU2) in multi-org setup...?
Thanks a million for a most informative blog. I have a query on a certain situation. We have 5 branches, each operating totally independently, which are all part of the same legal entity. Each branch would like to independently control the close of their AR and AP periods. This, as I understand it, can only be accomplished by assigning each operating unit to its own ledger. However, as there is only a single legal entity, is there any way in which to accomodate this requirement in Oracle R12? Can a single legal entity reference multiple ledgers and, if so, are there any implications I should be aware of?
Mark,
If each branch is in it's own ledger you'll have to do consolidation to get results for the Legal entity, you will have to set up each OU and do stuff like create 5 supplier sites (1 per OU) for each of your suppliers. you will not be able to use automatic balancing to deal with Intacompany. These are the first extra pieces of work that come to mind and I'm sure there is a lot more trouble in store. We don't usually see people trying to create more ledgers and OU than they totally have to, so I'd say avoid this.
Hi Mark,
I am laying out the migration of 2 - 11.5.10.2 and 1 - 11.0.3 environments into one r12. The company has legal entities all over the world and account for them in these enviornments. They have established around 40 OU's in their 3 environments which are mostly by country.
My question is: When diagraming out the Ledgers, LE's and OU's for system design for the world-wide r12 footprint i am not always sure if i should group countries into LE's (a.k.a "Europe" which runs multiple LE's through the OU) or not?
They have to be able to Auto-Balance I/C within the OU and from what i have tested and learned you have to have all of the BSV's assigned either within a single LE or all to the ledger to be able to take advantage of the I/C Auto Balance features.
Their are no situatuations in which they would want to restrict auto-balancing of I/C.....Its a rare need and i would accomplish with a secutiry rule if i needed to restrict it anyway!
I'm just trying to make sure i haven't missed anything in my research and thought you would have a good viewpoint i would value to hear.
Thanks in advance,
Dan
Dan
Automatic i/c balancing will work across LE so you should avoid creating dummy LE such as 'europe'. It does not work across Ledgers, so all the LE/BSV you want to balance automatically need to be in the same ledger and the same OU.
You may have an issue in some European countries with your sequencing if you need gapless sequencing for each LE as this is only available by Ledger/OU - that is a big gotcha for many European LE in a single ledger
Great Blog:
Can I assign an Operating Unit to Multiple Legal Entities? This is a really good question.
One which is not well documented.
We are in a design phase, in which the business have given us a requirement to have a single BG a number LE's in a Global roll out under a single primary ledger and each LE BSV attached to a single operating unit.
How would you secure AP and AR transactions/suppliers/customers between LE's?
Or is the Only answer use another Operating Unit
Your thoughts are much appreciated
Apologies Dave
I think I mis-typed my email address please can you revert back to me on my query about a single OU and security in R12
If you want to secure transactions in AP and AR you need to use OU to partition them.
If you are in a shared service center type environment then using 1 OU for all the LEs will work fine as you can still run all your reports at the LE level etc.
Javier,
A further thought. If you want to secure by LE, but don't want to maintain all the Set Up across multiple OU. Maybe is it better to consider having one OU per LE to drive security and work on a custom way to synch the setup data across the OU maybe - this is a different approach but gets the same end result of security be LE but minimizing the set up overhead?
Hi David
This is a nice thought, Oracle have a product called iSetup perhaps this might cover synch/multiple OU set up...this is an alternative idea however if there is no automated way....other than config monkeys...replicating the same config then might rule this option out.
Under a single OU adding a new LE/country becomes a BSV in a single corporate primary ledger and if necessary a new secondary ledger for stat purposes.
Javi
Hi David
I am going to go down the Custom.PLL route -The custom .pll will be dependant on a profile option ‘Legal Entity', which should be updateable at the responsibility. All Financial responsibilities should have a value of ‘Yes’ and any Superuser responsibility lthat needs access to all the transactions will have a ‘No’ or blank against this custom profile, which will then not enforce this custom .pll on ‘Transactions’ and ‘Transaction Summary’ windows. Payment Windows, Receipt Windows, AP invoice windows etc....
Javier
Javier,
That seems like a neat solution, It would be great if you keep me and other readers updated with how it works out. It would make a great blog post - you or I should write it up.
Thanks,
David
Hi David
I am in the process of writing the functional specs as soon as I have a clear approach be sure I will update this post!
Best Regards
Javier
Hi David,
Can we assign a Single Operating Unit TO multiple address
Deepak,
What is the requirement here - what will you use the address - Operating Unit association for?
Hi David,
Is the any way to identify/differentiate the tables storing legal entity id , operating unit id and inventory id. As column name for all the tables will be organization_id or org_id. How can we make it out what value is getting stored. Is it legal entity id or is it Operating Unit id or inventory org id ? (If same organization is set as BG,LE,OU and Inv org)
Thanks
Srirang
Hi Aman,
How did you resolve this issue?
Cheers,
Saheed
Hi David,
In R12 if we setup 2 ledgers and 2 legal entities and 2 operating units and 2 inventory orgs
ie. LE1->LEDGER1->OU1->INV1
LE2->LEDGER2->OU2.->INV2
My questions are: If OU1 is the shared service purchasing unit, can it purchase for INV2 and OU2 even though they are in a different Ledger. How would the intercompany balance ?
Can INV1 representing a shared service warehouse, issue product to OU2 and INV2.
Does Oracle's idea of shared services only work for multiple operating units within the same Ledger ?
Thank you very much.
Our Financial Director is concerned that the intercompany functionality selling/shipping org will not allow us to analyze our true intercompany sales and true intercompany COGS from customer sales and COGS. How can we determine customer profitability at the legal entity (Co. 01) P&L, if the intercompany transactions from the shipping org debits – COGS and the revenue transaction credits intercompany revenue account. He states that there is a mismatch between the intercompany revenue recorded at the shipping org will not have the corresponding intercompany COGS account recorded; The same holds true for the selling org where a debit is recorded to the intercompany COGS and the credit is record to Trade Revenue. How do you truly segregate intercompany revenue and intercompany COGS in one legal entity (shipping org)? I realize at the consolidate level the combination of all transactions from 01- LE -shipping org and 02 LE-selling org will determine allows us to determine intercompany revenue and intercompany COGS. We are using an intercompany segment in our COA in our R12.1 environment
R12 can i change one operating unit from one ledger to other ledger and when i create invoice adn transaction it will be mapped and where will it reflect in the ledger 2 or one
Hi There
I have this same question around Srirang's question about one OU purchasing or paying for another OU, if those two OUs are assigned to different ledgers. On first glance, it seems you would have to use AGIS.... to get it into both ledgers?
Thx.
Angela
Hello,
Please send your AIGS / Intercompany setup. And also the the steps you are following to do intercompany transactions. Please mention the GL code description with GL code.
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