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Oracle Financials Concepts Guide
Release 12.1
Part Number E13424-03
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Worldwide Operations with Oracle Financials Applications

This chapter covers the following topics:


We've discussed your organization and how you might represent it in the system, and we've discussed how you can account for it. Let's look at those concepts that help you provide common services to the different entities, maintain consistency in practice, and minimize costs in your operation.

Our applications include many features that enable local operations of worldwide companies. We offer localized features in 120 countries, ranging from statutory reporting through transaction tax calculation and filing to local business reporting - all in the core products. Additional support for newer regulations may be available from our consulting organization.

We assume that you are going to rationalize your operations, that is, to centralize certain activities and distribute others. We recommend deployment on a single instance, or at least, on as few instances as possible.

There are several concepts that are important to understand as you design your internal service network.

Multiple Organizations Support

Operating units store subledger document data for entities that are separated from one another for transaction tax or other reasons.

Subledger users are assigned responsibilities. A responsibility can be attached to one or many operating units as required, using a feature called "Multiple Organizations Access Control". In a shared service center, users who are employees of the shared center's own legal entity, are given access to operating unites that are owned by the legal entities that the center serves. Users at an Ireland Shared Service Center will be employed by an Ireland Legal Entity and have access to operating unites that represent the United Kingdom, France, Germany, and the United States.

More importantly, Multiple Organizations Access Control also enables automated processes to access the relevant operating units permitted for the process.

Advanced Global Intercompany System

Intercompany transactions record transfers of goods and services between related legal entities. Transactions between related legal entities must be tracked and documented for financial consolidation, local compliance, and tax reporting purposes.

The Advanced Global Intercompany System is an extensive and complete system integrating several Oracle products and features including Receivables, Payables, Subledger Accounting, and General Ledger. The system generates both Payables and Receivables transactions.

Advanced Global Intercompany System, together with the Supply Chain Event Management module, Enhanced Drop Ship, provides a complete system in support of "Internal Supply Chain". When a customer of one of your subsidiaries places an order, you can then place orders with your warehouses and plants - each of which will be recognized in Procurement and in Order Management appropriately - and transfer the goods from the originating plant to the subsidiary using comprehensive documentation, both commercial and in-house invoices.

The intercompany feature integrates with other Oracle products that impact the intercompany solution:

The Intercompany engine also supports the following features:

The Advanced Global Intercompany System serves as a hub for streamlining intercompany transactions - from creation all the way through their ultimate reconciliation and closing. The application allows companies to comply not only with local regulations, but also with established corporate-wide standards for processing intercompany transactions between subsidiary legal entities.

Tip for Existing Oracle Financials User

Facilitating Intercompany Accounting in Oracle Ledgers

In addition to Advanced Global Intercompany System, the Oracle E-Business Suite provides intercompany support with standard intercompany balancing in General Ledger journal vouchers and Subledger Accounting. These particular intercompany features are within Oracle General Ledger and Oracle Subledger Accounting; they do not make calls to other modules such as Payables, Receivables, or Procurement:

Intercompany accounts can be represented in multiple ways:

In all cases, a fully automated intercompany system is critical to ensure that all intercompany account totals across the columns are equal to zero. When consolidating financial results, you create eliminating entries to exclude the impact of intercompany transactions.

The E-Business Tax Engine

Nations, states, and federations around the world derive substantial parts of their income by taxing business transactions. A major part of your operating cost is compliance with various rules and regulations. We help you to meet this obligation by creating a transaction tax engine that facilitates focus of the control issues where your experts are and allows the software to support the tax calculations even at locations far remote from the taxing jurisdiction.

There are many kinds of transaction taxes, including Sales Tax, Value Added Tax (VAT), Goods and Services Taxes (GST), and Customs Duties. Your tax experts will rapidly familiarize themselves with the details of the tax engine. The engine includes the following features:

A subledger product that requires a tax calculation on a business document invokes the engine and supplies it with appropriate data as to customer and vendor, ship-to and ship-from addresses, nature of goods or service providers, and so on. The engine determines the jurisdiction and the taxes involved, and returns the detail to the product to be included on documents.

The engine supports worldwide taxes. In addition to basic sales tax, VAT, and GST, the engine supports:

Tip for Existing Oracle Financials User

The Bank Account Model

While a company may choose to store invoices in different OUs, it should be able to use its money in the bank to service any invoice it owns.

We've modeled our bank account support around this concept. A bank account is owned by a legal entity, accounting for the balance in its ledgers. At the same time, the funds in that account are available to different operating units for assignment to invoices or payable items.

Subledger accounting ensures that all OU transfers are accounted for both legally and accurately. The model supports zero-based balances, notional-zero based balances, and other international bank product offerings.

A shared service user with Multiple Organizations Access Control can select invoices stored in different operating units, combine them into one bank instruction, and send them to the bank for issuance.

Tip for Existing Oracle Financials User

Ledgers and Reporting

Ledger sets are used to manage ledgers, including opening and closing of periods and running reports. Ledger sets support adjustments and allocations and specifically support adjusting ledgers. This separation of ledger data and ledger management is designed to support the creation of ledger shared service centers and of moving ledgers into sets that are centrally managed.

XML Publisher facilitates the production of reports using templates applied to extracts. The resulting reports are published in many formats and can be securely distributed electronically in several different ways.

Together, this facilitates the creation of reporting shared service centers. Not only is this a low cost solution to reporting, but it can help to assure that management everywhere is reading from the same page.


Together, these approaches and modules, supported by transactions and process initiatives in individual products, constitute an excellent architecture that you can apply to focus your activity to tightly support the financial functions, while covering the whole organization, and distributing solid decision oriented information.