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Oracle R12 Legal Entity

Presentation that outlines all the concepts of Legal Entity in Oracle R12

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Oracle R12 Legal Entity

  1. 1. R12 Legal Entity configurator
  2. 2. Architectural Changes in R12 Financials • Legal Entity • Ledger Sets • Accounting Engine(SLA) • Transaction Based Taxes(EBTAX) • Intercompany Accounting (AGIS) • Multi-Organization Access Control(MOAC)
  3. 3. Relevance of LEGAL ENTITY
  4. 4. Organization Modeling
  5. 5. … Organization Modeling Business GRE/LE Group Legal Entity Operating Ledger BSV Unit Inventory Org
  6. 6. … Organization Modeling Legal Entity in 11i Reporting SOB BSV Entity GDFs Belgium VAT GRE/LE Reporters System Options Profile Operating Brazilian Options Unit Companies
  7. 7. … Organization Modeling Legal Entity in 11i • LE , GRE/LE, OU and SOB were tightly coupled. Reporting SOB BSV Entity • Global Financial Structure was 1:1:1. • Problem in accounting, transaction flows GDFs and compliance when the legal rules and business operations were not monolithic GRE/LE Belgium VAT Reporters or top-down. System Options Profile Operating Brazilian Options Unit Companies
  8. 8. New design in R12
  9. 9. Legal Entity – The Reality Public Company Legal Authorities (ultimate parent) Countries, States, Local, Agencies, Taxation, Registrars, Regulators... Subsidiary Subsidiary Regulates Public Company Company Complies Company (regional parent) (business parent) Legal Entities Registered Companies, Subsidiary Subsidiary Subsidiary Company Company Company Funds, Partnerships… Inc. LLC. Ltd. SA. GmBH. Etc. “exist in the outside world” Subsidiary Subsidiary Company Company Managed & analyzed by • Parent companies (LEs) “own or control” subsidiaries Management Orgs (LEs) Divisions, LOBS, Plants, Cost Centers, Whatever = • LEs create commercial transactions “Decision Making Tags”
  10. 10. Legal Entity – The Reality What LE Means ? What R12 tried to address ? • LEs pay TAX – Need Tax Registrations • Addresses, Officers, etc. • Trade between LEs need • Enabled First Party stamp Intercompany. • Added Establishments: map • LEs own money and bank accounts. Registrations to Authorities • LEs file the accounts and take care of • GRE/LE not touched accounting. • Authorities as TCA parties • LEs comply with whatever need • LE Configurator compliance : “Legal” in LE.
  11. 11. New structure in R12
  12. 12. … Organization Modeling Legal Entity Architecture (LEA) in R12 11i Link Bank Account Legal Entity Operating Unit Not in R12 Inventory Org Business Group Ledger
  13. 13. … Organization Modeling LEA in R12 11i Link Bank Legal Operating Account Entity Unit Not in R12 • Releases OU as a surrogate for the real world Legal Entity • OU retains is primary role in managing user access Inventory • LE now manages local jurisdiction Org requirements Business Group Ledger
  14. 14. LE Relationship with Accounting Structure and OU • Accounting Structure – In GL, LE is mapped to Ledger and BSV • Operating Unit – No Direct Relationship between LE and OU – Relationship is derived from OU assigned to Ledger and LE mapped to Ledger
  15. 15. LE Relationship with Accounting Structure and OU • Accounting Structure Legal – In GL, LE is mapped to Ledger Establishment Legal and BSV Entity • Operating Unit – No Direct Relationship Accounting between LE and OU – Relationship is derived from Transactions Ledger (SOB) BSV OU assigned to Ledger and LE mapped to Ledger Business Operating Unit
  16. 16. LE Design - Models • 1:Many – LE are mapped to the Balancing Segment Value (BSV, aka Company code) within a Ledger, so multiple LE are accounted for in a ledger. – An OU will have one Ledger assigned so transactions for many LE are processed and accounted in a single OU • 1: 1: 1 – A single LE is mapped to a Ledger – An OU will have one Ledger assigned – Therefore an OU only has one LE (that means it is easy to derive the LE given the OU)
  17. 17. What Model Should I use ?
  18. 18. • That Depends on where the LE is registered • The 1:M model is recommended and preferred in the US, the 1:1:1 model is recommended for most non US regions.
  19. 19. How to Set Up Legal Entity ?
  20. 20. Legal Entity Configurator  Legal Entity Configurator – is the central place to – Setup and Maintain: • Legal Entities • Establishments • Registrations • Jurisdictions • Legal Authorities • Legal Addresses • Legal Contacts – Setup and Maintain Legal Associations • Map Establishments to BSVs in a Ledger. • Map Establishments to OUs, Inv Orgs, and Business Locations to enable tax calculation. – Setup and Maintain History • Maintain history of Registrations for comparative reporting and analysis.
  21. 21. Key Concepts  First Party Legal Entity (LE) – Legal Entity of the Deploying Company. – Initiates and Owns Transactions. – It can own property, trade, repay debt, pay taxes and account for themselves.  Establishment – “Building block” of a Legal Entity. – 100% owned and controlled by the Legal Entity. – Required for registrations within local level Jurisdictions.  Legal Authority – Legal body in charge of enforcing legislation, collecting fees/taxes and making financial appropriations.
  22. 22. … Key Concepts  Jurisdiction – Is a formulation of a legislative category and territory to which legal rules are grounded.  Legal Associations – Centralized repository and a common mechanism for maintaining associations between business entities (BSVs, OUs, etc) and legal constructs (legal entities, establishments).  Default Legal Context – One of the Legal Entities sharing the Ledger will be stored on the Operating Unit (OU) when the OU is created. This LE will provide any downstream process with a DLC, which will act as a proxy for the owning LE.  Legal Entity Stamping – Stamping is the identification and recording of the first party legal entity for the given transaction. The first party legal entity is the legal entity that owns the transaction.
  23. 23. Set Key Profile Options • Default Country – This profile option determines the default value for the Territory in the Create Legal Entity page Profile Value Description This will be the default Territory in the Create Legal Entity page. For Country Name example, United States.
  24. 24. Set Key Profile Options • LE: Generate Legal Entity Identifier – This profile option determines whether the Legal Entity Identifier is generated automatically or entered manually. Profile Value Description If this option is set to “Yes”, the Legal Entity Identifier is generated automatically based on the International Organization for Standardization (ISO) code of the Country Yes of Registration, plus the Registration Number (of the Identifying Jurisdiction) which qualifies an entity to be a Legal Entity in that particular territory. If this option is set to “No”, the user must enter the Legal No Entity Identifier manually.
  25. 25. Set Key Profile Options • HZ: Generate Party Number – This profile option determines whether the Organization Number is generated automatically or entered manually. Profile Value Description If this option is set to “Yes”, the Organization Number is Yes generated automatically. If this option is set to “No”, the user must enter the Organization Number manually. The Main Establishment’s No Organization Number will be the Legal Entity Organization Number appended with ETB.
  26. 26. Set Key Profile Options • LE: Change Affectivity – This profile option determines whether the Change Affectivity Region is enabled and displayed in the Update Registrations page . Profile Value Description If this option is set to “Yes”, the Change Effectivity region is displayed in the Update Registrations page and the user can Yes enter an effective from date as well as comments for the change. If this option is set to “No”, the Change Effectivity region is No not displayed in the Update Registrations page.
  27. 27. Legal Entity Setup Process Step 1: Enter Legal Information The Territory chosen sets the context of the information required Activity Classification
  28. 28. Legal Entity Setup Process Step 1: Enter Legal Information These are required attributes for a French Territory
  29. 29. Legal Entity Setup Process Step 2: Enter Detail Main Information Automatically generated LE Identifier and Org Number Registration Number is the SIREN and EIN/TIN Numbers
  30. 30. Legal Entity Setup Process Step 2: Enter Detail Main Information
  31. 31. Legal Entity Setup Process Step 2: Enter Detail Main Information Ends a Legal Entity eTax Attributes
  32. 32. Legal Entity Setup Process Step 3: Enter Legal Entity Registrations Jurisdiction and Legal Authority Functions such as income tax declaration
  33. 33. Legal Entity Setup Process Step 3: Enter Legal Entity Registrations Identifying Flag
  34. 34. Legal Entity Setup Process Step 4: Enter Contact Information
  35. 35. Legal Entity Setup Process Step 5: Add/Review Intercompany Exceptions When adding an Intercompany Exception, a legal association is created between the legal entity that is being created/updated and the selected legal entity.
  36. 36. Legal Entity Setup Process Step 6: Review The History subtab displays any changes that have been made to the Legal Entity’s Registration.
  37. 37. Legal Entity Setup Process Step 6: Review Main Establishment Flag
  38. 38. Affects of LE in R12  Cash Management (Bank)  Receivable (Transaction and Receipt)  Payables (Invoice and Payment)  LE and TCA
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