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Oracle® Fusion Applications Sales Implementation Guide
11g Release 1 (11.1.3)
Part Number E20373-03
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5 Common Applications Configuration: Define Enterprise Structures for Sales

This chapter contains the following:

Enterprise Structures: Overview

Enterprise Structures Business Process Model: Explained

Global Enterprise Configuration: Points to Consider

Modeling Your Enterprise Management Structure in Oracle Fusion: Example

Define Initial Configuration with the Enterprise Structures Configurator

Define Reference Data Sharing

Define Enterprise: Manage Enterprise HCM Information

Define Enterprise: Manage Locations

Define Geographies

Define Legal Jurisdictions and Authorities

Define Legal Entities: Manage Legal Entity

Define Legal Entities: Manage Legal Entity HCM Information

Define Legal Entities: Manage Legal Entity Tax Profile

Define Legal Entities: Define Legal Reporting Units

Define Chart of Accounts for Enterprise Structures: Manage Chart of Accounts

Define Chart of Accounts for Enterprise Structures: Manage Chart of Accounts Value Sets

Define Chart of Accounts for Enterprise Structures: Manage Accounting Calendars

Define Accounting Configurations of Enterprise Structures: Manage Primary or Secondary Ledgers

Define Accounting Configurations of Enterprise Structures: Specify Ledger Options

Define Accounting Configurations of Enterprise Structures: Manage Reporting Currencies

Define Business Units: Manage Service Provider Relationships

Define Business Units: Specify Customer Contract Management Business Function Properties

Define Business Units: Specify Supplier Contract Management Business Function Properties

Define Business Units: Assign Business Unit Business Function

Define Business Units: Manage Business Units

Define Workforce Structures: Manage Enterprise HCM Information

Define Workforce Structures: Manage Locations

Define Workforce Structures: Manage Divisions

Define Workforce Structures: Manage Departments

Define Workforce Structures: FAQs for Manage Job Families

Define Workforce Structures: Manage Job

Define Workforce Structures: Manage Person Search Relevance Profile Option Values

Define Facilities: Manage Facility Shifts, Workday Patterns, and Schedules

Define Facilities: Manage Inventory Organizations

Define Facilities: Manage Item Organizations

Enterprise Structures: Overview

Oracle Fusion Applications have been designed to ensure your enterprise can be modeled to meet legal and management objectives. The decisions about your implementation of Oracle Fusion Applications are affected by your:

Every enterprise has three fundamental structures, legal, managerial, and functional, that are used to describe its operations and provide a basis for reporting. In Oracle Fusion, these structures are implemented using the chart of accounts and organizations. Although many alternative hierarchies can be implemented and used for reporting, you are likely to have one primary structure that organizes your business into divisions, business units, and departments aligned by your strategic objectives.

This figure is a grid in the shape
of a cube with the Business Axis representing the enterprise division,
Legal Axis representing the companies, and the Functional Axis representing
the business functions.

Legal Structure

The figure above shows a typical group of legal entities, operating various business and functional organizations. Your ability to buy and sell, own, and employ comes from your charter in the legal system. A corporation is a distinct legal entity from its owners and managers. The corporation is owned by its shareholders, who may be individuals or other corporations. There are many other kinds of legal entities, such as sole proprietorships, partnerships, and government agencies.

A legally recognized entity can own and trade assets and employ people in the jurisdiction in which it is registered. When granted these privileges, legal entities are also assigned responsibilities to:

Many large enterprises isolate risk and optimize taxes by incorporating subsidiaries. They create legal entities to facilitate legal compliance, segregate operations, optimize taxes, complete contractual relationships, and isolate risk. Enterprises use legal entities to establish their enterprise's identity under the laws of each country in which their enterprise operates.

In the figure above, a separate card represents a series of registered companies. Each company, including the public holding company, InFusion America, must be registered in the countries where they do business. Each company consists of various divisions created for purposes of management reporting. These are shown as vertical columns on each card. For example, a group might have a separate company for each business in the United States (US), but have their United Kingdom (UK) legal entity represent all businesses in that country. The divisions are linked across the cards so that a business can appear on some or all of the cards. For example, the air quality monitoring systems business might be operated by the US, UK, and France companies. The list of business divisions is on the Business Axis. Each company's card is also horizontally striped by functional groups, such as the sales team and the finance team. This functional list is called the Functional Axis. The overall image suggests that information might, at a minimum, be tracked by company, business, division, and function in a group environment. In Oracle Fusion Applications, the legal structure is implemented using legal entities.

Management Structure

Successfully managing multiple businesses requires that you segregate them by their strategic objectives, and measure their results. Although related to your legal structure, the business organizational hierarchies do not need to be reflected directly in the legal structure of the enterprise. The management structure can include divisions, subdivisions, lines of business, strategic business units, and cost centers. In the figure above, the management structure is shown on the Business Axis. In Oracle Fusion Applications, the management structure is implemented using divisions and business units.

Functional Structure

Straddling the legal and business organizations is a functional organization structured around people and their competencies. For example, sales, manufacturing, and service teams are functional organizations. This functional structure is represented by the Functional Axis in the figure above. You reflect the efforts and expenses of your functional organizations directly on the income statement. Organizations must manage and report revenues, cost of sales, and functional expenses such as research and development (R&D) and selling, general, and administrative (SG&A) expenses. In Oracle Fusion Applications, the functional structure is implemented using departments and organizations, including sales, marketing, project, cost, and inventory organizations.

Enterprise Structures Business Process Model: Explained

In Oracle Fusion Applications, the Enterprise Performance and Planning Business Process Model illustrates the major implementation tasks that you perform to create your enterprise structures. This process model includes the Set Up Enterprise Structures business process, which consist of implementation activities that span many product families. Information Technology is a second Business Process Model which contains the Set Up Information Technology Management business process. Define Reference Data Sharing is one of the activities in this business process and is important in the implementation of the enterprise structures. This activity creates the mechanism to share reference data sets across multiple ledgers, business units, and warehouses, reducing the administrative burden and decreasing the time needed to implement.

The following figure and chart describes the Business Process Model structures and activities.

This diagram lists the
BPM activities: Define Enterprise, Define Enterprise Structures, Define
Legal Jurisdictions and Authorities, Define Legal Entity, Define Business
Units, Define Financial Reporting Structures, Define Chart of Accounts,
Define Ledgers, Define Accounting Configurations, Define Facilitates,
and Define Reference Data Sharing.


BPM Activities

Description

Define Enterprise

Define the enterprise to capture the name of the deploying enterprise and the location of the headquarters. There is normally a single enterprise organization in a production environment. Multiple enterprises are defined when the system is used to administer multiple customer companies, or when you choose to set up additional enterprises for testing or development.

Define Enterprise Structures

Define enterprise structures to represent an organization with one or more legal entities under common control. Define internal and external organizations to represent each area of business within the enterprise.

Define Legal Jurisdictions and Authorities

Define information for governing bodies that operate within a jurisdiction.

Define Legal Entities

Define legal entities and legal reporting units for business activities handled by the Oracle Fusion Applications.

Define Business Units

Define business units of an enterprise to allow for flexible implementation, to provide a consistent entity for controlling and reporting on transactions, and to be an anchor for the sharing of sets of reference data across applications.

Define Financial Reporting Structures

Define financial reporting structures, including organization structures, charts of accounts, organizational hierarchies, calendars, currencies and rates, ledgers, and document sequences which are used in organizing the financial data of a company.

Define Chart of Accounts

Define chart of accounts including hierarchies and values to enable tracking of financial transactions and reporting at legal entity, cost center, account, and other segment levels.

Define Ledgers

Define the primary accounting ledger and any secondary ledgers that provide an alternative accounting representation of the financial data.

Define Accounting Configurations

Define the accounting configuration that serves as a framework for how financial records are maintained for an organization.

Define Facilities

Define inventory, item, and cost organizations. Inventory organizations represent facilities that manufacture or store items. The item master organization holds a single definition of items that can be shared across many inventory organizations. Cost organizations group inventory organizations within a legal entity to establish the cost accounting policies.

Define Reference Data Sharing

Define how reference data in the applications is partitioned and shared.

Note

There are product specific implementation activities that are not listed here and depend on the applications you are implementing. For example, you can implement Define Enterprise Structures for Human Capital Management, Project Management, and Sales Management.

Global Enterprise Configuration: Points to Consider

Start your global enterprise structure configuration by discussing what your organization's reporting needs are and how to represent those needs in the Oracle Fusion Applications. Consider deployment on a single instance, or at least, on as few instances as possible, to simplify reporting and consolidations for your global enterprises. The following are some questions and points to consider as you design your global enterprise structure in Oracle Fusion.

Enterprise Configuration

What is the level of configuration needed to achieve the reporting and accounting requirements? What components of your enterprise do you need to report on separately? Which components can be represented by building a hierarchy of values to provide reporting at both detail and summary levels? Where are you on the spectrum of centralization versus decentralization?

Business Unit Management

What reporting do I need by business unit? How can you set up your departments or business unit accounts to achieve departmental hierarchies that report accurately on your lines of business? What reporting do you need to support the managers of your business units, and the executives who measure them? How often are business unit results aggregated? What level of reporting detail is required across business units?

Security Structure

What level of security and access is allowed? Are business unit managers and the people that report to them secured to transactions within their own business unit? Are the transactions for their business unit largely performed by a corporate department or shared service center?

Compliance Requirements

How do you comply with your corporate external reporting requirements and local statutory reporting requirements? Do you tend to prefer a corporate first or an autonomous local approach? Where are you on a spectrum of centralization, very centralized or decentralized?

Modeling Your Enterprise Management Structure in Oracle Fusion: Example

This example uses a fictitious global company to demonstrate the analysis that can occur during the enterprise structure configuration planning process.

Scenario

Your company, InFusion Corporation, is a multinational conglomerate that operates in the United States (US) and the United Kingdom (UK). InFusion has purchased an Oracle Fusion enterprise resource planning (ERP) solution including Oracle Fusion General Ledger and all of the Oracle Fusion subledgers. You are chairing a committee to discuss creation of a model for your global enterprise structure including both your US and UK operations.

InFusion Corporation

InFusion Corporation has 400 plus employees and revenue of $120 million. Your product line includes all the components to build and maintain air quality monitoring (AQM) systems for homes and businesses. You have two distribution centers and three warehouses that share a common item master in the US and UK. Your financial services organization provides funding to your customers for the start up costs of these systems.

Analysis

The following are elements you need to consider in creating your model for your global enterprise structure.

Global Enterprise Structure Model

The following figure and table summarize the model that your committee has designed and uses numerical values to provide a sample representation of your structure. The model includes the following recommendations:

InFusion Corporation is the enterprise
and has two divisions, InFusion United States (US) and InFusion United
Kingdom (UK). InFusion US has two legal entities, InFusion America,
Inc. and InFusion Financial Services, Inc. each with its own ledger.
InFusion UK has one legal entity, Infusion UK Systems, Ltd. which
has on primary ledger in Great Britain Pounds (GBP) and a Reporting
Currency representation in United States Dollar (USD). Each legal
entity has its own business unit (BU). InFusion America also has a
BU that processes general and administrative transactions across all
legal entities. InFusion Corporation has a US and a UK distribution
centers with three associated warehouses. InFusion Corporation shares
one common item master.

The table indicates if the enterprise
structure entities are mandatory or optional.

In this chart, the green globe stands for mandatory and gold globe stands for optional setup. The following statements expand on the data in the chart.

Note

Some Oracle Fusion Human Capital Management and Customer Relationship Management implementations do not require recording of accounting transactions and therefore, do not require implementation of a ledger.

Note

The InFusion Corporation is a legal entity but is not discussed in this example.

Define Initial Configuration with the Enterprise Structures Configurator

Establishing Enterprise Structures Using the Enterprise Structures Configurator: Explained

The Enterprise Structures Configurator is an interview-based tool that guides you through the process of setting up a basic enterprise structure. By answering questions about your enterprise, the tool creates a structure of divisions, legal entities, business units, and reference data sets that reflects your enterprise structure. After you create your enterprise structure, you also follow a guided process to determine whether or not to use positions, and whether to set up additional attributes for jobs and positions. After you define your enterprise structure and your job and position structures, you can review them, make any necessary changes, and then load the final configuration.

This figure illustrates the process to configure your enterprise using the Enterprise Structures Configurator.

A figure that shows the process to
create an enterprise configuration using the ESC

To be able to use the Enterprise Structures Configurator, you must select the Enterprise Structures Guided Flow feature for your offerings on the Configure Offerings page in the Setup and Maintenance work area. If you do not select this feature, then you must set up your enterprise structure using individual tasks provided elsewhere in the offerings, and you cannot create multiple configurations to compare different scenarios.

Establish Enterprise Structures

To define your enterprise structures, you use the guided flow within the Establish Enterprise Structures task to enter basic information about your enterprise, such as the primary industry and the location of your headquarters. You then create divisions, legal entities, business units, and reference data sets. The Establish Enterprise Structures task enables you to create multiple enterprise configurations so that you can compare different scenarios. Until you load a configuration, you can continue to create and edit multiple configurations until you arrive at one that best suits your enterprise.

Establish Job and Position Structures

You also use a guided process to determine whether you want to use jobs only, or jobs and positions. The primary industry that you select in the Establish Enterprise Structures task provides the application with the information needed to make an initial recommendation. You can either accept the recommendation, or you can answer additional questions about how you manage people in your enterprise, and then make a selection. After you select whether to use jobs or positions, the guided process prompts you to set up a descriptive flexfield structure for jobs, and for positions if you have chosen to use them. Descriptive flexfields enable you to capture additional information when you create jobs and positions.

Review Configuration

Finally, you can review a summary of the results of the two interview processes. For each configuration, the online summary lists the divisions, legal entities, business units, reference data sets, and job and position structures that the application will create when you load the configuration.

For a more detailed analysis of a configuration, you can access the Technical Summary Report. This report lists the same information as the online summary, but also lists the following information that will be created by the application when you load the configuration, based on your configuration:

The Technical Summary report also lists the default settings that will be loaded for these fields, which you access from the Manage Enterprise HCM Information task: Worker Number Generation, Employment Model and Allow Employment Terms Override. You can print the Technical Summary Report for each of your configurations and compare each scenario.

Note

If your PDF viewer preferences are set to open PDFs in a browser window, the Technical Summary report replaces the Oracle Fusion application. Use your browser's Back button to return to the application.

Load Configuration

You can load only one configuration. When you load a configuration, the application creates the divisions, legal entities, business units, and so on. After you load the configuration, you then use individual tasks to edit, add, and delete enterprise structures.

Designing an Enterprise Configuration: Example

This example illustrates how to set up an enterprise based on a global company operating mainly in the US and the UK with a single primary industry.

Scenario

InFusion Corporation is a multinational enterprise in the high technology industry with product lines that include all the components that are required to build and maintain air quality monitoring (AQM) systems for homes and businesses. Its primary locations are in the US and the UK, but it has smaller outlets in France, Saudi Arabia, and the United Arab Emirates (UAE).

Enterprise Details

In the US, InFusion employs 400 people and has a company revenue of $120 million. Outside the US, InFusion employs 200 people and has revenue of $60 million.

Analysis

InFusion requires three divisions. The US division will cover the US locations. The Europe division will cover the UK and France. Saudi Arabia and the UAE will be covered by the Middle East division.

InFusion requires legal entities with legal employers, payroll statutory units, tax reporting units, and legislative data groups for the US, UK, France, Saudi Arabia, and UAE, in order to employ and pay its workers in those countries.

InFusion requires a number of departments across the enterprise for each area of business, such as sales and marketing, and a number of cost centers to track and report on the costs of those departments.

InFusion requires business units for human capital management (HCM) purposes. Infusion has general managers responsible for business units within each country. Those business units may share reference data. Some reference data can be defined within a reference data set that multiple business units may subscribe to. Business units are also required for financial purposes. Financial transactions are always processed within a business unit.

Resulting Enterprise Configuration

Based on this analysis, InFusion requires an enterprise with multiple divisions, ledgers, legal employers, payroll statutory units, tax reporting units, legislative data groups, departments, cost centers, and business units.

This figure illustrates the enterprise configuration that results from the analysis of InFusion Corporation.

A figure of an enterprise configuration

Division: Explained

Managing multiple businesses requires that you segregate them by their strategic objectives and measure their results. Responsibility to reach objectives can be delegated along the management structure. Although related to your legal structure, the business organizational hierarchies do not need to reflect directly the legal structure of the enterprise. The management entities and structure can include divisions and subdivisions, lines of business, and other strategic business units, and include their own revenue and cost centers. These organizations can be included in many alternative hierarchies and used for reporting, as long as they have representation in the chart of accounts.

Divisions

A division refers to a business oriented subdivision within an enterprise, in which each division organizes itself differently to deliver products and services or address different markets. A division can operate in one or more countries, and can be comprised of many companies or parts of different companies that are represented by business units.

A division is a profit center or grouping of profit and cost centers, where the division manager is responsible for attaining business goals including profit goals. A division can be responsible for a share of the company's existing product lines or for a separate business. Managers of divisions may also have return on investment goals requiring tracking of the assets and liabilities of the division. The division manager reports to a top corporate executive.

By definition a division can be represented in the chart of accounts. Companies may choose to represent product lines, brands, or geographies as their divisions: their choice represents the primary organizing principle of the enterprise. This may coincide with the management segment used in segment reporting.

Oracle Fusion Applications supports a qualified management segment and recommends that you use this segment to represent your hierarchy of business units and divisions. If managers of divisions have return on investment goals, make the management segment a balancing segment. Oracle Fusion applications allows up to three balancing segments. The values of the management segment can be comprised of business units that roll up in a hierarchy to report by division.

Historically, divisions were implemented as a node in a hierarchy of segment values. For example, Oracle E-Business Suite has only one balancing segment, and often the division and legal entity are combined into a single segment where each value stands for both division and legal entity.

Use of Divisions in Oracle Fusion Human Capital Management (HCM)

Divisions are used in HCM to define the management organization hierarchy, using the generic organization hierarchy. This hierarchy can be used to create organization based security profiles.

Legal Entities: Explained

A legal entity is a recognized party with rights and responsibilities given by legislation.

Legal entities have the right to own property, the right to trade, the responsibility to repay debt, and the responsibility to account for themselves to regulators, taxation authorities, and owners according to rules specified in the relevant legislation. Their rights and responsibilities may be enforced through the judicial system. Define a legal entity for each registered company or other entity recognized in law for which you want to record assets, liabilities, and income, pay transaction taxes, or perform intercompany trading.

A legal entity has responsibility for elements of your enterprise for the following reasons:

The Role of Your Legal Entities

In configuring your enterprise structure in Oracle Fusion Applications, you need to understand that the contracting party on any transaction is always the legal entity. Individual legal entities own the assets of the enterprise, record sales and pay taxes on those sales, make purchases and incur expenses, and perform other transactions.

Legal entities must comply with the regulations of jurisdictions, in which they register. Europe now allows for companies to register in one member country and do business in all member countries, and the US allows for companies to register in one state and do business in all states. To support local reporting requirements, legal reporting units are created and registered.

You are required to publish specific and periodic disclosures of your legal entities' operations based on different jurisdictions' requirements. Certain annual or more frequent accounting reports are referred to as statutory or external reporting. These reports must be filed with specified national and regulatory authorities. For example, in the United States (US), your publicly owned entities (corporations) are required to file quarterly and annual reports, as well as other periodic reports, with the Securities and Exchange Commission (SEC), who enforces statutory reporting requirements for public corporations.

Individual entities privately held or held by public companies do not have to file separately. In other countries, your individual entities do have to file in their own name, as well as at the public group level. Disclosure requirements are diverse. For example, your local entities may have to file locally to comply with local regulations in a local currency, as well as being included in your enterprise's reporting requirements in different currency.

A legal entity can represent all or part of your enterprise's management framework. For example, if you operate in a large country such as the United Kingdom or Germany, you might incorporate each division in the country as a separate legal entity. In a smaller country, for example Austria, you might use a single legal entity to host all of your business operations across divisions.

Creating Legal Entities in the Enterprise Structures Configurator: Points to Consider

Using the Enterprise Structures Configurator (ESC), you can create legal entities for your enterprise automatically, based on the countries in which divisions of your business operate, or you can upload a list of legal entities from a spreadsheet.

Automatically Creating Legal Entities

If you are not certain of the number of legal entities that you need, you can create them automatically. To use this option, you first identify all of the countries in which your enterprise operates. The application opens the Map Divisions by Country page, which contains a matrix of the countries that you identified, your enterprise, and the divisions that you created. You select the check boxes where your enterprise and divisions intersect with the countries to identify the legal entities that you want the application to create. The enterprise is included for situations where your enterprise operates in a country and acts on behalf of several divisions within the enterprise and is a legal employer in a country. If you select the enterprise for a country, the application creates a country holding company.

The application automatically creates the legal entities that you select, and identifies them as payroll statutory units and legal employers. For each country that you indicated that your enterprise operates in, and for each country that you created a location for, the application also automatically creates a legislative data group.

Any legal entities that you create automatically cannot be deleted from the Create Legal Entities page within the Enterprise Structures Configurator. You must return to the Map Divisions by Country page and deselect the legal entities that you no longer want.

Example: Creating Legal Entities Automatically

InFusion Corporation is using the ESC to set up their enterprise structure. They have identified two divisions, one for Lighting, and one for Security. The Lighting division operates in Japan and the US, and the Security division operates in the UK and India.

This figure illustrates InFusion Corporation's enterprise structure.

A figure that shows an enterprise with
divisions and countries in which the divisions operate

This table represents the selections that InFusion Corporation makes when specifying which legal entities to create on the Map Divisions by Country page.


Country

Enterprise

InFusion Lighting

InFusion Security

Japan

No

Yes

No

US

No

Yes

No

UK

No

No

Yes

India

No

No

Yes

Based on the selections made in the preceding table, the ESC creates the following four legal entities:

Creating Legal Entities Using a Spreadsheet

If you have a list of legal entities already defined for your enterprise, you can upload them from a spreadsheet. To use this option, you first download a spreadsheet template, then add your legal entity information to the spreadsheet, and then upload directly to your enterprise configuration. You can export and import the spreadsheet multiple times to accommodate revisions.

Legal Entity in Oracle Fusion: Points to Consider

Oracle Fusion Applications support the modeling of your legal entities. If you make purchases from or sell to other legal entities, define these other legal entities in your customer and supplier registers, which are part of the Oracle Fusion Trading Community Architecture. When your legal entities are trading with each other, you represent both of them as legal entities and also as customers and suppliers in your customer and supplier registers. Use legal entity relationships to determine which transactions are intercompany and require intercompany accounting. Your legal entities can be identified as legal employers and therefore, are available for use in Human Capital Management (HCM) applications.

There are several decisions that need to be considered in creating your legal entities.

The Importance of Legal Entity in Transactions

All of the assets of the enterprise are owned by individual legal entities. Oracle Fusion Financials allow your users to enter legal entities on transactions that represent a movement in value or obligation.

For example, the creation of a sales order creates an obligation for the legal entity that books the order to deliver the goods on the acknowledged date, and an obligation of the purchaser to receive and pay for those goods. Under contract law in most countries, damages can be sought for both actual losses, putting the injured party in the same state as if they had not entered into the contract, and what is called loss of bargain, or the profit that would have made on a transaction.

In another example, if you revalued your inventory in a warehouse to account for raw material price increases, the revaluation and revaluation reserves must be reflected in your legal entity's accounts. In Oracle Fusion Applications, your inventory within an inventory organization is managed by a single business unit and belongs to one legal entity.

Legal Entity and Its Relationship to Business Units

A business unit can process transactions on behalf of many legal entities. Frequently, a business unit is part of a single legal entity. In most cases the legal entity is explicit on your transactions. For example, a payables invoice has an explicit legal entity field. Your accounts payables department can process supplier invoices on behalf of one or many business units.

In some cases, your legal entity is inferred from your business unit that is processing the transaction. For example, your business unit A agrees on terms for the transfer of inventory to your business unit B. This transaction is binding on your default legal entities assigned to each business unit. Oracle Fusion Procurement, Oracle Fusion Projects, and Oracle Fusion Supply Chain applications rely on deriving the legal entity information from the business unit.

Legal Entity and Its Relationship to Divisions

The division is an area of management responsibility that can correspond to a collection of legal entities. If desired, you can aggregate the results for your divisions by legal entity or by combining parts of other legal entities. Define date-effective hierarchies for your cost center or legal entity segment in your chart of accounts to facilitate the aggregation and reporting by division. Divisions and legal entities are independent concepts.

Legal Entity and Its Relationship to Ledgers

One of your major responsibilities is to file financial statements for your legal entities. Map legal entities to specific ledgers using the Oracle Fusion General Ledger Accounting Configuration Manager. Within a ledger, you can optionally map a legal entity to one or more balancing segment values.

Legal Entity and Its Relationship to Balancing Segments

Oracle Fusion General Ledger supports up to three balancing segments, Best practices recommend that one of these segments represents your legal entity to ease your requirement to account for your operations to regulatory agencies, tax authorities, and investors. Accounting for your operations means you must produce a balanced trial balance sheet by legal entity. If you account for many legal entities in a single ledger, you must:

  1. Identify the legal entities within the ledger

  2. Balance transactions that cross legal entity boundaries through intercompany transactions

  3. Decide which balancing segments correspond to each legal entity and assign them in Oracle Fusion General Ledger Accounting Configuration Manager. Once you assign one balancing segment value in a ledger, then all your balancing segment values must be assigned. This recommended best practice facilitates reporting on assets, liabilities, and income by legal entity.

Represent your legal entities by at least one balancing segment value. You may represent it by two or three balancing segment values if more granular reporting is required. For example, if your legal entity operates in multiple jurisdictions in Europe, you might define balancing segment values and map them to legal reporting units. You can represent a legal entity by more than one balancing segment value, do not use a single balancing segment value to represent more than one legal entity.

In Oracle Fusion General Ledger, there are three balancing segments. You can use separate balancing segments to represent your divisions or strategic business units to enable management reporting at the balance sheet level for each division or business unit. For example, use this solution to empower your business unit and divisional managers to track and assume responsibility for their asset utilization or return on investment. Using multiple balancing segments is also useful when you know at the time of implementation that you are disposing of a part of a legal entity and need to isolate the assets and liabilities for that entity.

Note

Implementing multiple balancing segments requires every journal entry that is not balanced by division or business unit, to generate balancing lines. Also, you cannot change to multiple balancing segments easily after you have begun to use the ledger because your historical data is not balanced by the new multiple balancing segments. Restating historical data must be done at that point.

To use this feature for disposal of a part of a legal entity, implement multiple balancing segments at the beginning of the legal entity's corporate life or on conversion to Oracle Fusion.

If you decided to account for each legal entity in a separate ledger, there is no requirement to identify the legal entity with a balancing segment value within the ledger.

Note

While transactions that cross balancing segments don't necessarily cross legal entity boundaries, all transactions that cross legal entity boundaries must cross balancing segments. If you make an acquisition or are preparing to dispose of a portion of your enterprise, you may want to account for that part of the enterprise in its own balancing segment even if it is not a separate legal entity. If you do not map legal entities sharing the same ledger to balancing segments, you will not be able to distinguish them using the intercompany functionality or track their individual equity.

Legal Entity and Its Relationship to Consolidation Rules

In Oracle Fusion Applications you can map legal entities to balancing segments and then define consolidation rules using your balancing segments. You are creating a relationship between the definition of your legal entities and their role in your consolidation.

Legal Entity and its Relationship to Intercompany Transactions

Use Oracle Fusion Intercompany functionality for automatic creation of intercompany entries across your balancing segments. Intercompany processing updates legal ownership within the enterprise's groups of legal entities. Invoices or journals are created as needed. To limit the number of trading pairs for your enterprise, set up intercompany organizations and assign then to your authorized legal entities. Define processing options and intercompany accounts to use when creating intercompany transactions and to assist in consolidation elimination entries. These accounts are derived and automatically entered on your intercompany transactions based on legal entities assigned to your intercompany organizations.

Intracompany trading, in which legal ownership isn't changed but other organizational responsibilities are, is also supported. For example, you can track assets and liabilities that move between your departments within your legal entities by creating departmental level intercompany organizations.

Note

In the Oracle Fusion Supply Chain applications, model intercompany relationships using business units, from which legal entities are inferred.

Legal Entity and Its Relationship to Worker Assignments and Legal Employer

Legal entities that employ people are called legal employers in the Oracle Fusion Legal Entity Configurator. You must enter legal employers on worker assignments in Oracle Fusion HCM.

Legal Entity and Payroll Reporting

Your legal entities are required to pay payroll tax and social insurance such as social security on your payroll. In Oracle Fusion Applications, you can register payroll statutory units to pay and report on payroll tax and social insurance on behalf of many of your legal entities. As the legal employer, you might be required to pay payroll tax, not only at the national level, but also at the local level. You meet this obligation by establishing your legal entity as a place of work within the jurisdiction of a local authority. Set up legal reporting units to represent the part of your enterprise with a specific legal reporting obligation. You can also mark these legal reporting units as tax reporting units if the legal entity must pay taxes as a result of establishing a place of business within the jurisdiction.

Business Units: Explained

A business unit is a unit of an enterprise that performs one or many business functions that can be rolled up in a management hierarchy. A business unit can process transactions on behalf of many legal entities. Normally, it will have a manager, strategic objectives, a level of autonomy, and responsibility for its profit and loss. Roll business units up into divisions if you structure your chart of accounts with this type of hierarchy. In Oracle Fusion Applications, you assign your business units to one primary ledger. For example, if a business unit is processing payables invoices they will need to post to a particular ledger. This assignment is mandatory for your business units with business functions that produce financial transactions.

In Oracle Fusion Applications, use business unit as a securing mechanism for transactions. For example, if you run your export business separately from your domestic sales business, secure the export business data to prevent access by the domestic sales employees. To accomplish this security, set up the export business and domestic sales business as two separate business units.

The Oracle Fusion Applications business unit model:

Business units process transactions using reference data sets that reflect your business rules and policies and can differ from country to country. With Oracle Fusion Application functionality, you can choose to share reference data, such as payment terms and transaction types, across business units, or you can choose to have each business unit manage its own set depending on the level at which you wish to enforce common policies.

In countries where gapless and chronological sequencing of documents is required for subledger transactions, define your business units in alignment with your ledger definition, because the uniqueness of sequencing is only ensured within a ledger. In these cases, define a single ledger and assign one legal entity and business unit.

In summary, use business units in the following ways:

Brief Overview of Business Unit Security

Business units are used by a number of Oracle Fusion Applications to implement data security. You assign data roles to your users to give them access to data in business units and permit them to perform specific functions on this data. When a business function is enabled for a business unit, the application can trigger the creation of data roles for this business unit base on the business function's related job roles.

For example, if a payables invoicing business function is enabled, then it is clear that there are employees in this business unit that perform the function of payables invoicing, and need access to the payables invoicing functionality. Therefore, based on the correspondence between the business function and the job roles, appropriate data roles are generated automatically. Use Human Capital Management (HCM) security profiles to administer security for employees in business units.

Creating Business Units in the Enterprise Structures Configurator: Points to Consider

Business units are used within Oracle Fusion applications for management reporting, processing of transactions, and security of transactional data. Using the Enterprise Structures Configurator (ESC), you create business units for your enterprise either automatically or manually.

Automatically Creating Business Units

To create business units automatically, you must specify the level at which to create business units. Business units within your enterprise may be represented at the business function level, such as Sales, Consulting, Product Development, and so on, or they may be represented at a more detailed level, where a business unit exists for each combination of countries in which you operate and the functions in those countries.

You can automatically create business units at the following levels:

Select the option that best meets your business requirements, but consider the following:

After you select a business unit level, the application generates a list of business units, and you select the ones you want the application to create. If you select a level that has two components, such as country and division, then the system displays a table listing both components, and you select the check boxes at the intersections of the components.

The business units listed by the application are suggestions only, and are meant to simplify the process to create business units. You are not required to select all of the business units suggested. When you navigate to the next page in the ESC guided flow, which is the Manage Business Units page, you cannot delete any of the business units that were created automatically. You must return to the Create Business Units page and deselect any business units that you no longer want.

Example: Selecting Business Unit Levels

InFusion Corporation is using the Enterprise Structures Configurator to set up their enterprise structure. They have identified two divisions, one for Lighting, and one for Security. They operate in four countries: US, UK, Japan, and India, and they have created a legal entity for each of the countries. The sales and marketing functions are based in both India and Japan, while the US and the UK have only the sales function.

This figure illustrates InFusion Corporation's enterprise structure.

A figure of an enterprise with divisions,
legal entities, and functions

The following table lists the options for business unit levels and the resulting business units that the application suggests for InFusion Corporation.


Business Unit Level

Suggested Business Units

Country

  • US

  • UK

  • Japan

  • India

Country and Division

  • InFusion Lighting: Japan

  • InFusion Lighting: US

  • Infusion Security: UK

  • Infusion Security: India

Country and business function

  • Sales: Japan

  • Marketing: Japan

  • Sales: US

  • Sales: UK

  • Marketing: India

  • Sales: India

Division

  • InFusion Lighting

  • InFusion Security

Division and Legal Entity

  • InFusion Lighting: Japan

  • InFusion Lighting: US

  • Infusion Security: UK

  • Infusion Security: India

Division and Business Function

  • InFusion Lighting, Sales

  • InFusion Lighting, Marketing

  • InFusion Security, Sales

  • InFusion Security, Marketing

Business Function

  • Sales

  • Marketing

Legal Entity

  • Legal Entity: Japan

  • Legal Entity: US

  • Legal Entity: UK

  • Legal Entity India

Legal Entity and Business Function

  • Legal Entity: Japan, Sales

  • Legal Entity: Japan, Marketing

  • Legal Entity: US, Sales

  • Legal Entity: UK, Sales

  • Legal Entity India, Marketing

  • Legal Entity India, Sales

Manually Creating Business Units

If none of the levels for creating business units meets your business needs, you can create business units manually, and you create them on the Manage Business Units page. If you create business units manually, then no reference data sets are created automatically. You must create them manually as well.

Reference Data Sets and Sharing Methods: Explained

Oracle Fusion Applications reference data sharing feature is also known as SetID. The reference data sharing functionality supports operations in multiple ledgers, business units, and warehouses, thereby reducing the administrative burden and decreasing the time needed to implement new business units. For example, you can share sales methods, transaction types, or payment terms across business units or selected other data across asset books, cost organizations, or project units.

The reference data sharing features use reference data sets to which reference data is assigned. The reference data sets group assigned reference data. The sets can be understood as buckets of reference data assigned to multiple business units or other application components.

Reference Data Sets

You begin this part of your implementation by creating and assigning reference data to sets. Make changes carefully as changes to a particular set will affect all business units or application components using that set. You can assign a separate set to each business unit for the type of object that is being shared. For example, assign separate sets for payment terms, transaction types, and sales methods to your business units.

Your enterprise can decide that some aspects of corporate policy should affect all business units and leave other aspects to the discretion of the business unit manager. This allows your enterprise to balance autonomy and control for each business unit. For example, if your enterprise holds business unit managers accountable for their profit and loss, but manages working capital requirements at a corporate level, you can let managers define their own sales methods, but define payment terms centrally. In this case, each business unit would have its own reference data set for sales methods, and there would be one central reference data set for payment terms assigned to all business units.

The reference data sharing is especially valuable for lowering the cost of setting up new business units. For example, your enterprise operates in the hospitality industry. You are adding a new business unit to track your new spa services. The hospitality divisional reference data set can be assigned to the new business unit to quickly setup data for this entity component. You can establish other business unit reference data in a business unit specific reference data set as needed

Reference Data Sharing Methods

There are variations in the methods used to share data in reference data sets across different types of objects. The following list identifies the methods:

Note: Oracle Fusion Applications contains a reference data set called Enterprise. Define any reference data that affects your entire enterprise in this set.

Business Units and Reference Data Sets: How They Work Together

Reference data sharing is a feature within Oracle Fusion that enables you to group set-enabled reference data such as jobs or grades so that the data can be shared across different parts of the organization. Sets also enable you to filter reference data at the transaction level so that only data that has been assigned to certain sets is available to select. To filter reference data, Oracle Fusion Human Capital Management (HCM), applications use the business unit on the transaction. To set up reference data sharing in Oracle Fusion HCM, you create business units and sets, and then assign the sets to the business units.

Common Set Versus Specific Sets

Some reference data in your organization may be considered global, and should therefore be made available for use within the entire enterprise. You can assign this type of data to the Common Set, which is a predefined set. Regardless of the business unit on a transaction, reference data that has been assigned to the Common Set will always be available, in addition to the reference data that has been assigned to the set that corresponds to the business unit on the transaction.

Other types of reference data may be specific to certain business units, so you want to restrict the use of the data to those business units. In this case, you can create sets specifically for this type of data, and assign the sets to the business units.

Business Unit Set Assignment

When you assign reference data sets to business units, you assign a default reference data set that will be used for all reference data types for that business unit. You can override the set assignment for one or more data types.

Example: Assigning Sets to Business Units

InFusion Corporation has two divisions: Lighting and Security, and the divisions each have two locations. Each location has one or more business functions.

The following figure illustrates the structure of InFusion Corporation.

A table that illustrates an enterprise
structure

When deciding how to create business units, InFusion decides to create them using the country and business function level. Therefore, they created the following business units:

Because locations, departments, and grades are specific to each business unit, InFusion does not want to share these types of reference data across business units. They will create a reference data set for each business unit so that data of those types can be set up separately. Because the jobs in the Sales business function are the same across many locations, InFusion decides to create one additional set called Jobs and they will override the set assignment for the Jobs reference data group and assign it to the Jobs set. Based on these requirements, they create the following sets:

InFusion assigns business units to sets as follows:


Business Unit

Default Set Assignment

Set Assignment Overrides

Sales_Japan

Sales_Japan_Set for grades, departments, and locations

Jobs set for jobs

Marketing_Japan

Mktg_Japan_Set for grades, departments, and locations

None

Sales_US

Sales_US_Set for grades, departments, and locations

Jobs set for jobs

Sales_UK

Sales_UK_Set for grades, departments, and locations

Jobs set for jobs

Marketing_India

Mktg_India_Set for grades, departments, and locations

None

Sales_India

Sales_India_Set for grades, departments, and locations

Jobs set for jobs

When setting up grades, departments, and locations for the business units, InFusion will assign the data to the default set for each business unit. When setting up jobs, they will assign the Jobs set and will assign the Common Set to any jobs that may be used throughout the entire organization.

When using grades, departments, and locations at the transaction level, users will be able to select data from the set that corresponds to the business unit that they enter on the transaction, and any data that was assigned to the Common Set. For example, for transactions for the Marketing_Japan business unit, grades, locations, and departments from the Mktg_Japan_Set will be available to select, as well as from the Common Set.

When using jobs at the transaction level, users will be able to select jobs from the Jobs set and from the Common Set when they enter one of the Sales business units on the transaction. For example, when a manager hires an employee for the Sales_India business unit, the list of jobs will be filtered to show jobs from the Jobs set and from the Common Set.

The following figure illustrates what sets of jobs can be accessed when a manager creates an assignment for a worker.

A figure that shows the jobs that can
be accessed

Creating Reference Data Sets in the Enterprise Structures Configurator: Explained

If you created business units automatically, then the Enterprise Structures Configurator automatically creates reference data sets for you. The Enterprise Structures Configurator creates one reference data set for each business unit. You can add additional sets, but you cannot delete any of the sets that were created automatically.

A standard set called the Enterprise set is predefined.

Common Set

The common set is a predefined set that enables you to share reference data across business units. When you select set-enabled data at the transaction level, the list of values includes data in both the common set and the set associated with the data type for the business unit on the transaction. For example, when you create an assignment, the list of values for grades will include both grades in the common set and in the set that is assigned to grades for the business unit in which you creating the assignment.

Jobs and Positions: Critical Choices

Jobs and positions represent roles that enable you to distinguish between tasks and the individuals who perform those tasks. The key to whether to use jobs or positions is how each is used. Positions offer a well-defined space independent of the person performing the job. Jobs are a space defined by the person. A job can be defined globally in the Common Set, whereas a position is defined within one business unit.

You can update the job and department of a position at any time. This is useful if you hire someone into a new role and want to transfer the position to another department.

During implementation, one of the earliest decisions you will make is whether to use jobs or a combination of jobs and positions. The determinants for this decision are:

Primary Industry of Your Enterprise

Primary industries and how they usually set up their workforce are listed in the table below.


Primary Industry

Workforce Setup

Mining

Positions

Utilities

Positions

Manufacturing

Positions

Retail Trade

Positions

Transportation and Warehousing

Positions

Educational Services

Positions

Public Transportation

Positions

Agriculture, Forestry, Fishing, and Hunting

Jobs

Construction

Jobs

Wholesale Trade

Jobs

Information

Jobs

Finance and Insurance

Jobs

Professional, Scientific, and Technical Services

Jobs

Management of Companies and Enterprises

Jobs

Administrative and Support and Waste Management and Remediation Services

Jobs

Arts, Entertainment, and Recreation

Jobs

Accommodation and Food Services

Jobs

Other Services (Except Public Administration)

Jobs

Management of People

The following table displays suggestions of whether to use jobs or a combination of jobs and positions based on your industry and how you manage your employees when there is turnover.


Industry

We always replace employees by rehiring to same role

We replace the head count, but the manager can use the head count in a different job

We rehire to the same position, but the manager can request a reallocation of budget to a different post

Project (An industry that supports project-based forms of organization in which teams of specialists from both inside and outside the company report to project managers.)

Positions

Jobs

Jobs

Controlled (An industry that is highly structured in which all aspects of work and remuneration are well organized and regulated.)

Positions

Positions

Positions

Manufacturing

Positions

Jobs

Positions

Retail

Positions

Jobs

Positions

Education

Positions

Jobs

Positions

Other

Positions

Jobs

Jobs

Positions: Examples

Positions are typically used by industries that use detailed approval rules, which perform detailed budgeting and maintain head counts, or have high turnover rates.

Retail Industry

ABC Corporation has high turnover. It loses approximately 5% of their cashiers monthly. The job of cashier includes three positions: front line cashier, service desk cashier, and layaway cashier. Each job is cross trained to take over another cashier position. When one cashier leaves from any of the positions, another existing cashier from the front line, service desk or layaway can assist where needed. . But to ensure short lines and customer satisfaction, ABC must replace each cashier lost to turnover.

Since turnover is high in retail it is better for this industry to use positions. There is an automatic vacancy when an employee terminates employment. The position exists even when there are no holders. This is important if the person who leaves the company is a manager or supervisor with direct reports. All direct reports continue reporting to the position even if it is empty. You do not need to reassign these employees to another manager or supervisor; the replacement manager is assigned to the existing position.

Also, an advantage to using positions is that when you hire somebody new many of the attributes are defaulted in from the position. This speeds up the hiring process.

This figure illustrates the retail position setup.

Position example set up for retail
industry

Health Care Industry

The hospital has a structured head count and detailed budgeting. For example, a specific number of surgeons, nurses, and interns of various types are needed. These positions need to be filled in order for the hospital to run smoothly. Use jobs and positions if you need to apply detailed head count rules.

Health care is an industry that needs to regulate employment, roles, and compensation according to strict policies and procedures. Fixed roles tend to endure over time, surviving multiple incumbents. Industries that manage roles rather than individuals, where roles continue to exist after individuals leave, typically model the workforce using positions.

This figure illustrates the hospital position setup.

Position example set up for a health
care industry

Jobs: Example

Jobs are typically used without positions by service industries where flexibility and organizational change are key features.

Software Industry

For example, XYZ Corporation has a director over the departments for developers, quality assurance, and technical writers. Recently, three developers have left the company. The director decides to redirect the head count to other areas. Instead of hiring all three back into development, one person is hired to each department, quality assurance, and technical writing.

In software industries, the organization is fluid. Using jobs gives an enterprise the flexibility to determine where to use head count, because the job only exists through the person performing it. In this example, when the three developers leave XYZ Corporation, their jobs no longer exist, therefore the corporation has the flexibility to move the headcount to other areas.

This figure illustrates the software industry job setup.

Jobs setup example

Job and Position Structures: Explained

Job and position structures identify the descriptive flexfield structure that enables you to specify additional attributes that you want to capture when you define jobs and positions. Job and position attributes provide further detail to make jobs and positions more specific. You also use attributes to define the structure of your jobs and positions. You can specify attributes at the enterprise level for jobs and positions, at the business unit level for positions, and at the reference data set level for jobs. Job and position structures are optional.

Enterprise-Level Job Attributes

When you define a job, you enter a value for the name of the job. To make job names more specific, set up attributes that enable you to identify additional details about the job, such as the nature of the work that is performed or the relative skill level required for the job. If these attributes apply to all jobs within your enterprise, set up enterprise-level job attributes. Standard capabilities mean that you can use the different segments of the name to identify common jobs or job holders for analysis or compensation, or for grouping records in reports, for example, to find all jobs of a specific job type. You should not use attributes with values that change regularly, for example, salary ranges or expense approval levels that change every year.

This figure illustrates how job type and job level provide further details for the HR Application Specialist job.

A figure that illustrates additional
attributes for a job

Enterprise-Level Position Attributes

Position attributes at the enterprise level are similar to those for jobs. Each position that you define identifies a specific role in the enterprise, which you can manage independently of the person in the position, and it will belong to one specific department or organization. The name of each position must be unique. To simplify the process of managing unique names for positions, set up enterprise-level attributes to identify separate components of the position name. For example, you can set up an attribute for position title and one for position number. When defining the attributes that make up the structure of a position name you should also consider if any of your attributes are part of the definition of a common job type. Using job types for a position can help you manage common information that applies to many different positions. For example you can define a job type of Manager.Level 1 and use this for comparison of positions across departments or lines or business, or for setting common job requirements. You can then define multiple manager type positions in your HR department, each of which has responsibility for a different management function or group.

This figure illustrates how title and position number provide further details for the manager position.

A figure that illustrates additional
attributes for a position

Business Unit-Level Attributes for Positions

If you have information that you want to capture for positions that is specific to each business unit, then you can define attributes at the business unit level for positions. When you create positions, these attributes appear in addition to any enterprise-level attributes. For example, you may want to identify the sales region for all positions in the sales business unit. You can set up a text attribute called Sales Region and use it to enter the necessary information when creating positions for the sales business unit.

Reference Data Set-Level Attributes for Jobs

If you have information for jobs that applies to specific reference data sets, set up attributes for jobs at the reference data set level. When you create jobs, these attributes appear in addition to any enterprise-level attributes. For example, you may want to identify all information technology (IT) jobs within a specific set. You can set up a text attribute called Function and use it to enter IT in jobs that you create that perform an IT function within a specific set.

FAQs for Define Initial Configuration

What happens if I don't use the Enterprise Structures Configurator to set up my enterprise structures?

The Enterprise Structures Configurator is an interview-based tool that guides you through setting up divisions, legal entities, business units, and reference data sets. The tool also enables you to assign reference data sets to business units and locations. You can set up multiple configurations to perform what-if scenarios, and then print each configuration to compare the resulting enterprise structure. If you do not use the Enterprise Structures Configurator, then you must set up your enterprise structure using the individual tasks that correspond to each enterprise component. In addition, you will not be able to set up multiple configurations and compare different scenarios. It is recommended that you use the Enterprise Structures Configurator.

What's an ultimate holding company?

The legal entity that represents the top level in your organization hierarchy, as defined by the legal name entered for the enterprise. This designation is used only to create an organization tree, with the ultimate holding company as the top level, divisions and country holding companies as the second level, and legal employers as the third level.

What's the default reference data set?

The reference data set that is assigned to a business unit for all reference data groups, such as grades, locations, departments, and jobs. You can override the default reference data set for any reference data group.

What happens if I override the set assignment?

For the selected business unit, you can override the default reference data set for one or more reference data groups. For example, assume you have three reference data groups: Vision 1 SET, Vision 2 SET, and Vision 3 SET, where Vision SET 1 is the default set for business unit United Kingdom Vision 1 BU. You can override the default so that grades are assigned to Vision 2 SET, departments are assigned to Vision 3 SET, and jobs are assigned to the default set, Vision 3 SET.

Define Reference Data Sharing

Reference Data Sharing: Explained

Reference data sharing facilitates sharing of configuration data such as jobs and payment terms, across organizational divisions or business units. You define reference data sets and determine how the data is shared or partitioned. Use reference data sets to reduce duplication and maintenance by sharing common data across business entities where appropriate. Depending on the requirement (specific or common), each business unit can maintain its data at a central location, using a set of values either specific to it or shared by other business units.

You can share reference data after it is filtered on the basis of sets. A common reference data set is available as the default set, which can be assigned to several business units sharing the same reference data. For commonly used data such as currencies, you can use the common reference data set and assign it to multiple business units in various countries that use the same currency. In cases where the default set cannot be assigned to an entity, you can create specific sets. The data set visible on the transactional page depends on the sharing method used to share reference data.

For example, XYZ Corporation uses the same grades throughout the entire organization. Instead of managers in different business units setting up the same grades, XYZ Corporation decides to create a set called Grades and assign the grades reference data group for all business units in the organization to the Grades set, so that the grades can be shared.

Note

For specific information on configuring reference data sharing for a particular object or product, refer to its product documentation.

Reference Data Sets: Explained

Reference data sets are logical groups of reference data that can be accessed by various transactional entities depending on the business context. Oracle Fusion Applications contains a common reference data set as well as an enterprise set that may be used as a default set. Depending on your business requirement you can create and maintain additional reference data sets, while continuing to use the common reference data set.

Consider the following scenario.

Your enterprise can decide that some aspects of corporate policy should affect all business units and leave other aspects to the discretion of the business unit manager. This allows your enterprise to balance autonomy and control for each business unit. For example, if your enterprise holds business unit managers accountable for their profit and loss, but manages working capital requirements at a corporate level, you can let managers define their own sales methods, but define payment terms centrally. In this case, each business unit would have its own reference data set for sales methods, and there would be one central reference data set for payment terms assigned to all business units.

Partitioning

The partitioning of reference data and creation of data sets enable you to create reference entities across tables or lookup types, and share modular information and data processing options among business units. With the help of partitioning, you can choose to create separate sets and subsets for each business unit depending upon its business requirement, or create common sets or subsets to enable sharing reference data between several business units, without the need for duplicating the reference data. Partitioning provides you the flexibility to handle the reference data in a way appropriate to your business needs.

The following figure illustrates the reference data sharing method (assignment to one set only, with common values) where the user can access the data assigned to a specific set in a particular business unit, as well as access the data assigned to the common set.

Difference between a common set and
a specific set

Reference Data Sets and Sharing Methods: Explained

Oracle Fusion Applications reference data sharing feature is also known as SetID. The reference data sharing functionality supports operations in multiple ledgers, business units, and warehouses, thereby reducing the administrative burden and decreasing the time needed to implement new business units. For example, you can share sales methods, transaction types, or payment terms across business units or selected other data across asset books, cost organizations, or project units.

The reference data sharing features use reference data sets to which reference data is assigned. The reference data sets group assigned reference data. The sets can be understood as buckets of reference data assigned to multiple business units or other application components.

Reference Data Sets

You begin this part of your implementation by creating and assigning reference data to sets. Make changes carefully as changes to a particular set will affect all business units or application components using that set. You can assign a separate set to each business unit for the type of object that is being shared. For example, assign separate sets for payment terms, transaction types, and sales methods to your business units.

Your enterprise can decide that some aspects of corporate policy should affect all business units and leave other aspects to the discretion of the business unit manager. This allows your enterprise to balance autonomy and control for each business unit. For example, if your enterprise holds business unit managers accountable for their profit and loss, but manages working capital requirements at a corporate level, you can let managers define their own sales methods, but define payment terms centrally. In this case, each business unit would have its own reference data set for sales methods, and there would be one central reference data set for payment terms assigned to all business units.

The reference data sharing is especially valuable for lowering the cost of setting up new business units. For example, your enterprise operates in the hospitality industry. You are adding a new business unit to track your new spa services. The hospitality divisional reference data set can be assigned to the new business unit to quickly setup data for this entity component. You can establish other business unit reference data in a business unit specific reference data set as needed

Reference Data Sharing Methods

There are variations in the methods used to share data in reference data sets across different types of objects. The following list identifies the methods:

Note: Oracle Fusion Applications contains a reference data set called Enterprise. Define any reference data that affects your entire enterprise in this set.

Assigning Reference Data Sets to Reference Objects: Points to Consider

You can assign the reference data sets to reference objects on the Manage Reference Data Set Assignments page. For multiple assignments, you can classify different types of reference data sets into groups and assign them to reference entity objects. The assignment takes into consideration the determinant type, determinant, and reference group, if any.

Determinant Types

The partitioned reference data is shared based on a business context setting called the determinant type. It is the point of reference used in the data assignment process. The following table lists the determinant types used in the reference data assignment.


Type

Description

Asset Book

Information about the acquisition, depreciation, and retirement of an asset that belongs to a ledger or a business unit.

Business Unit

The departments or organizations within an enterprise.

Cost Organization

The organization used for cost accounting and reporting on various inventory and cost centers within an enterprise.

Project Unit

A logical organization within an enterprise that is responsible for enforcing consistent project management practices.

Reference Data Set

References to other shared reference data sets.

Determinant

The determinant or determinant value is the value that corresponds to the selected determinant type. The determinant is one of the criteria for selecting the appropriate reference data set. For example, when managing set assignments for the set determinant type, Reference Data Set is the determinant type, and you would enter the corresponding set code value as the corresponding determinant value.

Reference Groups

A transactional entity may have multiple reference entities (generally considered to be setup data) that are treated in the same manner because of commonness in implementing business policies and legal rules. Such reference entities in your application are grouped into logical units called reference groups, based on the functional area and the partitioning requirements that they have in common. For example, all tables and views that define Sales Order Type details might be part of the same reference group.

Note

The reference groups are predefined in the reference groups table and are available for selection and assignment.

Items and Supplier Site Reference Data Sharing: Explained

Some products required special logic for reference data sharing and have implemented their own domain specific ways for sharing data.

Items and supplier sites are two such product specific reference data objects that use product specific mechanisms to share data.

Items

If you share your items across warehouses or manufacturing facilities, you can access them through a common item master. Configure one or multiple item masters for your enterprise, based your enterprise structure. A single item master is recommended because it provides simpler and more efficient maintenance. However, in rare cases, it may be beneficial to keep multiple item masters. For example, if you acquire another enterprise and need to continue to operate your lines of business separately, maintaining a second item master might be the best decision.

Suppliers Sites

You can approve particular suppliers to supply specified commodities and authorize your business units to buy from those suppliers when the need arises. For example, you might be a household cleaning products manufacturer and need dyes, plastics, and perfumes to make your products. You purchase from a central supplier 70% of your perfume supplies with an additional supplier, in reserve, from whom you purchase the remaining 30%. At the same time, each of your business units purchases plastics and dyes from the same supplier, but from different local supplier sites to save transportation costs.

To implement business unit specific supplier sites, Oracle Fusion Procurement supports a method for defining suppliers sites as owned and managed by the business unit responsible for negotiating the supplier terms. Your other business units that have a service provider relationship defined with your procurement business unit, subscribe to the supplier sites using the supplier site assignments feature. In addition, Procurement allows sharing of the following procurement data objects across business units:

FAQs for Define Reference Data Sharing

What reference data objects can be shared across business units?

The following list contains the reference data objects for the Oracle Fusion Applications that can be shared across business units and the method in which the reference data for each is shared.


Application Name

Reference Data Object

Method of Sharing

Trading Community Model

Customer Account Relationship

Assignment to one set only, with common values

Trading Community Model

Customer Account Site

Assignment to one set only, with common values

Trading Community Model

Sales Person

Assignment to one set only, with common values

Opportunity Management

Sales Method Group

Assignment to one set only, with common values

Work Management

Assessment Templates

Assignment to one set only, with common values

Enterprise Contracts

Contract Types

Assignment to one set only, with common values

Sales

Sales Method

Assignment to one set only, with common values

Common Components

Activity Templates

Assignment to one set only, with common values

Payables

Payment Terms

Assignment to multiple sets, no common values allowed

Receivables

Accounting Rules

Assignment to one set only, with common values

Receivables

Aging Buckets

Assignment to one set only, with common values

Receivables

Auto Cash Rules

Assignment to one set only, with common values

Receivables

Collectors

Assignment to one set only, with common values

Receivables

Lockbox

Assignment to one set only, with common values

Receivables

Memo Lines

Assignment to one set only, with common values

Receivables

Payment Term

Assignment to one set only, with common values

Receivables

Remit To Address

Assignment to one set only, with common values

Receivables

Revenue Contingencies

Assignment to one set only, with common values

Receivables

Transaction Source

Assignment to one set only, with common values

Receivables

Transaction Type

Assignment to one set only, with common values

Advanced Collections

Collections Setups

Assignment to one set only, with common values

Advanced Collections

Dunning Plans

Assignment to one set only, with common values

Tax

Tax Classification Codes

Assignment to one set only, with common values

Performance Management

Performance Templates

Assignment to one set only, with common values

Human Resources

Departments

Assignment to one set only, with common values

Human Resources

Jobs

Assignment to one set only, with common values

Human Resources

Locations

Assignment to one set only, with common values

Human Resources

Grades

Assignment to one set only, with common values

Project Billing

Project and Contract Billing

Assignment to multiple sets, common values not allowed

Project Foundation

Project Accounting Definition

Assignment to one set only, no common values allowed

Project Foundation

Project Rates

Assignment to one set only, with common values

Distributed Order Orchestration

Hold Codes

Assignment to one set only, with common values

Distributed Order Orchestration

Orchestration Process

Assignment to one set only, with common values

What reference data objects can be shared across asset books?

The following list contains the reference data objects for Oracle Fusion Assets that can be shared across asset books and the method in which the reference data for each is shared.


Application Name

Reference Data Object

Method of Sharing

Assets

Bonus Rules

Assignment to one set only, no common values allowed

Assets

Depreciation Ceilings

Assignment to one set only, no common values allowed

Assets

Depreciation Methods

Assignment to one set only, with common values

Assets

Asset Descriptions

Assignment to one set only, no common values allowed

Assets

Property Types

Assignment to one set only, with common values

Assets

Prorate Conventions

Assignment to one set only, no common values allowed

Assets

Asset Queue Names

Assignment to one set only, with common values

Assets

Retirement Types

Assignment to one set only, with common values

Assets

Unplanned Types

Assignment to one set only, with common values

What reference data objects can be shared across cost organizations?

The following list contains the reference data objects for Oracle Fusion Cost Management that can be shared across cost organizations and the method in which the reference data for each is shared.


Application Name

Reference Data Object

Method of Sharing

Cost Management

Cost Structure

Assignment to one set only, no common values allowed

What reference data objects can be shared across project units?

The following list contains the reference data objects for Oracle Fusion Project Foundation that can be shared across project units and the method in which the reference data for each is shared.


Application Name

Reference Data Object

Method of Sharing

Project Foundation

Project Definition

Assignment to multiple sets, no common values allowed

Project Foundation

Project Transaction Types

Assignment to multiple sets, no common values allowed

Define Enterprise: Manage Enterprise HCM Information

Enterprise: Explained

An enterprise consists of legal entities under common control and management.

Enterprise Defined

When implementing Oracle Fusion Applications you operate within the context of an enterprise that has already been created in the application for you. This is either a predefined enterprise or an enterprise that has been created in the application by a system administrator.

An enterprise organization captures the name of the deploying enterprise and the location of the headquarters. There is normally a single enterprise organization in a production environment. Multiple enterprises are defined when the system is used to administer multiple customer companies, for example, multiple tenants, or when a customer chooses to set up additional enterprises for testing or development.

Oracle Fusion Applications offers capabilities for multiple tenants to share the same applications instance for some human resources processes. If you offer business process outsourcing services to a set of clients, each of those clients may be represented as an enterprise within an Oracle Fusion Application instance. To support this functionality, system owned reference data such as sequences, sets, and flexfields are also defined within an enterprise.

In Oracle Fusion Applications, an organization classified as an enterprise is defined before defining any other organizations in the HCM Common Organization Model. All other organizations are defined as belonging to an enterprise.

Managing Enterprise Information for Non-Oracle Fusion HCM Users: Explained

The Manage Enterprise HCM Information task includes default settings for your enterprise such as the employment model, worker number generation, and so on. If you are not implementing Oracle Fusion Human Capital Management (HCM), then the only action you may need to perform using this task is to change the enterprise name, if necessary. The other settings are HCM-specific and are not relevant outside of Oracle Fusion HCM.

Define Enterprise: Manage Locations

Locations: Explained

A location identifies physical addresses of a workforce structure, such as a department or a job. You can also create locations to enter the addresses of external organizations that you want to maintain, such as employment agencies, tax authorities, and insurance or benefits carriers.

The locations that you create exist as separate structures that you can use for reporting purposes, and also in rules that determine employee eligibility for various types of compensation and benefits. You enter information about a location only once. Subsequently, when you set up other workforce structures you select the location from a list.

Location Sets

When you create a location, you must associate it with a set. Only those users who have access to the set's business unit can access the location set and other associated workforce structure sets, such as those that contain departments and jobs.

You can also associate the location to the common set so that users across your enterprise can access the location irrespective of their business unit. When users search for locations, they can see the locations that they have access to along with the locations in the common set.

The following figure shows how locations sets restrict access to users.

Controlling access to locations using
sets

FAQs for Manage Locations

Why can't I see my location in the search results?

You can search for approved locations only. Also, if you created a location in Oracle Fusion Trading Community Model, then you can't access that location from Oracle Fusion Global Human Resources. For use in Oracle Fusion HCM, you must recreate the location from the Manage Locations page.

What happens if I select a geographic hierarchy node when I'm creating or editing a location?

The calendar events that were created for the geographical node start to apply for the location and may impact the availability of worker assignments at that location. The geographical hierarchy nodes available for selection on the Locations page display from a predefined geographic hierarchy.

What happens if I select an inventory organization when I'm creating or editing a location?

The location is available for selection in purchase documents of that inventory organization in Oracle Fusion Inventory Management. If you don't select an inventory organization, then the location is available in purchase documents across all inventory organizations.

What happens if I inactivate a location?

Starting from the effective date that you entered, you can no longer associate the location with other workforce structures, assignments, or applications. If the location is already in use, it will continue to be available to the components that currently use it.

How can I associate a location with an inventory organization?

From the Manage Locations page in Oracle Fusion Global Human Resources.

To appear on the Create or Edit Location pages, your inventory organization must be effective on today's date and must exist in the location set that you selected.

Define Geographies

Defining Address Cleansing: Explained

Address cleansing provides a way to validate, correct, and standardize addresses that are entered in a user interface. Geography validation only validates the geography attributes of an address, for example, State, City, and Postal codes; address cleansing validates both the geography attributes and the address line attributes.

Address cleansing can only be used through the Oracle Fusion Trading Community Data Quality product, because the feature is delivered using Data Quality integration. You need to ensure that you have a license for the countries that will use Trading Community Data Quality data cleansing.

You can specify the real time address cleansing level for each country by choosing either None, meaning that there is no real time address cleansing, or by choosing Optional, meaning that you will have the choice to cleanse addresses. Once you have enabled address cleansing for a country a Verify Address icon appears at address entry points in the application. You can then click the icon to perform address cleansing and receive a corrected, standardized address. If Trading Community Data Quality does not find a matching address the application will alert you.

Geography Structure, Hierarchy, and Validation: How They Fit Together

There are three components that are dependent on each other when defining a country: geography structure, geography hierarchy, and geography validation. Every country has to have the geography structure defined first before the hierarchy can be defined, and the geography hierarchy has to be defined before the validation can be defined.

Geography Structure

Firstly, you need to create a geography structure for each country to define which geography types are part of the country structure, and how the geography types are hierarchically related within the country structure. For example, you can create geography types called State, City, and Postal Code. Then you can rank the State geography type as the highest level within the country, the City as the second level, and the Postal Code as the lowest level within the country structure. Geography structure can be defined using the Manage Geographies task, or can be imported using tasks in the Define Geographies activity.

Geography Hierarchy

Once the geography structure is defined, the geographies for each geography type can be added to the hierarchy. For example, below the United States you can create a geography called California using a State geography type.

As part of managing the geography hierarchy you can view, create, edit, and delete the geographies for each geography type in the country structure. You can also add a primary and alternate name and code for each geography. A geography hierarchy can be created using the Manage Geographies task, or can be imported using tasks in the Define Geographies activity.

Geography Validation

After defining the geography hierarchy, you need to specify the geography validations for the country. You can choose which address style formats you would like to use for the country, and for each selected address style format you can map geography types to address attributes. You can also select which geography types should be included in geography or tax validation, and which geography types will display in a list of values during address entry in other user interfaces. The geography validation level for the country, such as error or warning, can also be selected.

Geography Structures: Explained

A geography structure is a hierarchical grouping of geography types for a country. For example, the geography structure for the United States is the geography type of State at the top, then followed by the County, then the City, and finally the Postal Code.

You can use the geography structure to establish:

How Geographies Can Be Related

You can determine how a country's geographies are hierarchically related by creating the hierarchy of the geography types in the geography structure. When you define a country's structure the country geography type is implicitly at the top of the geography structure, and the numbering of the subsequent levels start with 1 as the next geography level after country.

You must add a geography type as a level in the country structure before you can define a geography for that geography type in a country. For example, before defining the state of California, the State geography type must be added to the United States country structure. Only one geography type can be used for each level, you cannot define more than one geography type at the same level.

Note

After you first define a country structure you can only add geography types below the current lowest level, and delete geography types without defined geographies.

To simplify the creation of a country structure you can copy a structure from another country, and then amend the geography type hierarchy for the country.

The Types of Geographies You Can Define for the Country

The application provides you with a set of available master reference geography types. If required, you can create a geography type before adding it to the country structure. Each geography type is added below the current lowest level.

Note

If you want to delete a geography type that is not at the lowest level in the country structure, then you have to delete the geography type level and all the levels below it.

A geography type that you create within the country structure can be used for other country structures as well.

Geography Hierarchy: Explained

Geography hierarchy is a data model that lets you establish conceptual parent-child relationships between geographies. A geography, such as Tokyo or Peru, describes a boundary on the surface of the earth. The application can extrapolate information based on this network of hierarchical geographical relationships.

For example, in the geography hierarchy the state of California is defined as the parent of San Mateo county, which is the parent of Redwood City, which is the parent of the postal code 94065. If you enter just 94065, the application can determine that the postal code is in California, or that the corresponding city is Redwood City.

The application leverages geography hierarchy information to facilitate business processes that rely on geography information, for example, tax calculation, order sourcing rules, sales territory definition. The geography hierarchy information is centrally located in the Trading Community Model and shared among other application offerings.

The top level of the geography hierarchy is Country, so the hierarchy essentially contains countries and their child geographies. Other aspects of the geography hierarchy include:

Geography

A geography is a boundary such as a country, state, province or city. It is a physical space with boundaries that is a defined instance of a geography type. For example, San Jose is a geography of the City geography type.

Geography Type

Geography types are a divisional grouping of geographies, which can be either geopolitical (for example, City, Province, and District) or user defined (for example, Continent, Country Regions, Tax Regions).

Geography Usage

Geography usage indicates how a geography type or geography is used in the application. A master reference geography always has the usage of Master Reference. User defined zones can have the usages of Tax, Shipping, or Territory, based on what is relevant for their purpose.

Master Reference Geography Hierarchy

The geography hierarchy data is considered to be the single source of truth for geographies. It is all the data, including geography types and geographies, that you define and maintain in the Trading Community Model tables.

The geography usage for the entire hierarchy is the master reference, and defined geography types and geographies are considered as master reference geography types and geographies. For example, Country is a universally recognized geography type, and United States is considered a master geography.

User Defined Zones

User defined zones are a collection of geographical data, created from master reference data for a specific purpose. For example, territory zones are collections of master reference geographies ordered in a hierarchy. Tax and shipping zones are collections of master reference geographies without a hierarchical grouping.

Geography Validation: Explained

Geography validation determines the geography mapping and validation for a country's address styles, as well as the overall geography validation control for a country.

The No Styles Format address style format is the default address style format for a country. By defining the mapping and validation for this format you will ensure that validations can be performed for any address in the country. After the No Styles Format is defined you can set up additional mapping for specific address styles.

For each address style format, you can define the following:

Map to Attribute

For every address style format, you can map each geography type to an address attribute. For example, you can map the State geography type to the State address attribute for the United States, or map the State geography type to the County address attribute for the United Kingdom. The geography types that appear are based on how the country structure is defined. The list of address attributes that appear are based on address formats delivered with the application, or your customer defined address formats.

Note

You only need to map geography types that you want to use for geography or tax validation purposes.

Enable List of Values

Once a geography type is mapped to an attribute, then you can specify whether the geography type will appear in a list of values during address entry in user interfaces. It is very important to review carefully if you want to enable a list of values. You should only enable a list of values if you have sufficient geography data imported or created for that geography. Once you have enabled a list of values for an address attribute, you can only select the geography data available for the geography type. This means that if a specific geography value is not available in the geography hierarchy, you cannot create an address with a different geography value.

Tax Validation

You can also specify whether a geography type will be included in tax validation. For example, for the United States North America address style format you specify that County, State, and City are used for tax validation. This will mean that when a transaction involves an address with the North America address style, the address must have the correct county, state, and city combination based on the geography hierarchy data, to be considered valid for tax calculation.

Geography Validation

You can specify whether a geography type will be included in geography validation. This will mean that, for example, when the user enters a United States address using the North America address style format, the address must have the correct country, state, and postal code combination based on geography hierarchy data to be considered geographically valid.

If an address element is mapped to a geography type, but not selected for geography validation usage, then suggested values can be provided for that address element during address entry, but that element is not validated.

Note

For either the tax or geography validation, do not skip more than one consecutive level unless you are certain that the selected geography types can uniquely identify geographies. For example, the United States country structure is: State, County, City, and Postal Code, and you want to select just State and Postal Code for geography or tax validation. However, for the combination of California and 94065, the city can be either Redwood Shores or Redwood City. In this case, you should also select at least the City geography type for geography or tax validation.

Geography Validation Control

You can select the geography validation level for a country. Validation will check if the entered address maps to the geography hierarchy data available for the country, and the geography validation control determines whether you can save an address that did not pass validation during address entry. For example, if the validation level is Warning, then an address can still be saved if the values do not match the geography hierarchy data.

These are the geography validation levels you can choose:

Regardless of the result of validation, the validation process will try to map any address attribute to a geography of the country, and store any mapping it could establish based on the available data. This is called Geography Name Referencing and it is executed as part of validation. The result of this referencing is used in several business processes in the application to map an address to a specific geography or zone.

Managing Geography Structures, Hierarchies, and Validation: Worked Example

This example shows how to start the configuration of the geography structure, hierarchy, and validation for the country geography of the United Kingdom.

The following table summarizes the key decisions for this scenario.


Decisions to Consider

In This Example

Copy an existing country structure?

No, create a new country structure.

What is the structure of the geography types?

Create geography types with the following ranking structure:

  1. County

  2. Post Town

What is the geography hierarchy?

Create the following hierarchy:

  1. Country of United Kingdom

  2. County of Berkshire

  3. Post Town of Reading

Which address style format will you use when mapping geography validations?

The default address style format, called the No Styles Format.

Are you using Oracle Fusion Tax for tax purposes?

No, do not select Tax Validation for the geography types.

Add the County and Post Town geography types to the geography structure. Then add the geographies for the County and Post Town geography types to define the geography hierarchy. Finally, specify the geography validations for the geography types you have added to the geography structure.

Defining the geography structure

You add the County and Post Town geography types to the United Kingdom geography structure.

  1. On the Manage Geographies page, enter GB in the Code field. Click Search.
  2. On the Manage Geographies page, click Structure Defined.
  3. On the Manage Geography Structure page, click the Create button next to the Copy Country Structure From field.
  4. In the Geography Structure section, select the County list item in the Add Geography Type field.
  5. Click Add.
  6. Select the Post Town list item in the Add Geography Type field.
  7. Click Add.

Defining the geography hierarchy

You want to begin to create the geography hierarchy for the United Kingdom, so you add the geographies for the County and Post Town geography types using the geography hierarchy User Interfaces. You can also use the Manage File Import Activities task to import geography hierarchies using a csv or xml file.

  1. On the Manage Geographies page, enter GB in the Code field. Click Search.
  2. On the Manage Geographies page, click Hierarchy Defined.
  3. On the Manage Geography Hierarchy page, Geography Hierarchy section, click the United Kingdom to highlight the table row.
  4. Click the Create button.
  5. In the Create County page, Primary and Alternate Names section, enter Berkshire in the Name field.
  6. Click Save and Close.
  7. On the Manage Geography Hierarchy page, Geography Hierarchy section, click Berkshire to highlight the table row.
  8. Click the Create button.
  9. In the Create Post Town page, Primary and Alternate Names section, enter Reading in the Name field.
  10. Click Save and Close.

Defining the geography validations

Now you want to specify the geography validations for the geography types you have added to the United Kingdom. You define the geography mapping and validation for the United Kingdom default address style format. You map the geography types to attributes, enable the geography types for Lists of Values and Geography validation, and set the geography validation level.

  1. On the Manage Geographies page, click Validation Defined.
  2. On the Manage Geography Validation page, Address Style section, click No Styles Format to highlight the table row.
  3. For the County geography type, click the County list item in the Map to Attribute field.
  4. Click the Enable List of Values option for the County geography type.
  5. Click the Geography Validation option for the County geography type.
  6. For the Post Town geography type, click the City list item in the Map to Attribute field.
  7. Click the Geography Validation option for the Post Town geography type.
  8. In the Geography Validation Control section, click the Error list item in the Geography Validation Level for Country field.
  9. Click Save and Close.

FAQs for Define Geographies

When do I define address cleansing?

When address data entered into the application needs to conform to a particular format, in order to achieve consistency in the representation of addresses. For example, making sure that the incoming data is stored following the correct postal address format.

Why can't I update a geography structure by copying an existing country structure?

You can only update a geography structure by adding existing geography types, or by creating new geography types and then adding them to the geography structure. You can only copy an existing country structure when you are defining a new country structure.

Why can't I delete a level of the country geography structure?

If a geography exists for a country geography structure level then you cannot delete the level. For example, if a state geography has been created for the United States country geography structure, then the State level cannot be deleted in the country geography structure.

Can I add any geography to the geography hierarchy?

Yes. However, the geography type for the geography that you want to add must be already added to the country geography structure.

Can I edit a specific geography in the geography hierarchy?

Yes. In the Manage Geography Hierarchy page you can edit details such as the geography's date range, primary and alternate names and codes, and parent geographies.

How can I add a geography that is the level below another geography in a geography hierarchy?

Select the geography that you want your geography to be created below, and then click the Create icon. This will allow you to create a geography for a geography type that is the level below the geography type you selected. The structure of the country's geography types are defined in the Manage Geography Structure page.

Define Legal Jurisdictions and Authorities

Jurisdictions and Legal Authorities: Explained

You are required to register your legal entities with legal authorities in the jurisdictions where you conduct business. Register your legal entities as required by local business requirements or other relevant laws. For example, register your legal entities for tax reporting to report sales taxes or value added taxes.

Legal Jurisdictions and Authorities

Define jurisdictions and related legal authorities to support multiple legal entity registrations, which are used by Oracle Fusion Tax and Oracle Fusion Payroll. When you first create a legal entity, the Oracle Fusion Legal Entity Configurator automatically creates one legal reporting unit for that legal entity with a registration.

Jurisdictions: Explained

Jurisdiction is a physical territory such as a group of countries, country, state, county, or parish where a particular piece of legislation applies. French Labor Law, Singapore Transactions Tax Law, and US Income Tax Laws are examples of particular legislation that apply to legal entities operating in different countries' jurisdictions. Judicial authority may be exercised within a jurisdiction.

Types of jurisdictions are:

Identifying Jurisdiction

For each legal entity, select an identifying jurisdiction. An identifying jurisdiction is your first jurisdiction you must register with to be allowed to do business in a country. If there is more than one jurisdiction that a legal entity needs to register with to commence business, select one as the identifying jurisdiction. Typically the identifying jurisdiction is the one you use to uniquely identify your legal entity.

Income tax jurisdictions and transaction tax jurisdictions do not represent the same jurisdiction. Although in some countries, the two jurisdictions are defined at the same geopolitical level, such as a country, and share the same legal authority, they are two distinct jurisdictions.

Income Tax Jurisdiction

Create income tax jurisdictions to properly report and remit income taxes to the legal authority. Income tax jurisdictions by law impose taxes on your financial income generated by all your entities within their jurisdiction. Income tax is a key source of funding that the government uses to fund its activities and serve the public.

Transaction Tax Jurisdiction

Create transaction tax jurisdictions through Oracle Fusion Tax in a separate business flow, because of the specific needs and complexities of various taxes. Tax jurisdictions and their respective rates are provided by suppliers and require periodic maintenance. Use transaction tax jurisdiction for legal reporting of sales and value added taxes.

Legal Authorities: Explained

A legal authority is a government or legal body that is charged with powers to make laws, levy and collect fees and taxes, and remit financial appropriations for a given jurisdiction.

Legal Authorities

For example, the Internal Revenue Service is the authority for enforcing income tax laws in United States. In some countries, such as India and Brazil, you are required to print legal authority information on your tax reports. Legal authorities are defined in the Oracle Fusion Legal Entity Configurator. Tax authorities are a subset of legal authorities and are defined using the same setup flow.

Legal authorities are not mandatory in Oracle Fusion Human Capital Management (HCM), but are recommended and are generally referenced on statutory reports.

Define Legal Entities: Manage Legal Entity

Legal Entities: Explained

A legal entity is a recognized party with rights and responsibilities given by legislation.

Legal entities have the right to own property, the right to trade, the responsibility to repay debt, and the responsibility to account for themselves to regulators, taxation authorities, and owners according to rules specified in the relevant legislation. Their rights and responsibilities may be enforced through the judicial system. Define a legal entity for each registered company or other entity recognized in law for which you want to record assets, liabilities, and income, pay transaction taxes, or perform intercompany trading.

A legal entity has responsibility for elements of your enterprise for the following reasons:

The Role of Your Legal Entities

In configuring your enterprise structure in Oracle Fusion Applications, you need to understand that the contracting party on any transaction is always the legal entity. Individual legal entities own the assets of the enterprise, record sales and pay taxes on those sales, make purchases and incur expenses, and perform other transactions.

Legal entities must comply with the regulations of jurisdictions, in which they register. Europe now allows for companies to register in one member country and do business in all member countries, and the US allows for companies to register in one state and do business in all states. To support local reporting requirements, legal reporting units are created and registered.

You are required to publish specific and periodic disclosures of your legal entities' operations based on different jurisdictions' requirements. Certain annual or more frequent accounting reports are referred to as statutory or external reporting. These reports must be filed with specified national and regulatory authorities. For example, in the United States (US), your publicly owned entities (corporations) are required to file quarterly and annual reports, as well as other periodic reports, with the Securities and Exchange Commission (SEC), who enforces statutory reporting requirements for public corporations.

Individual entities privately held or held by public companies do not have to file separately. In other countries, your individual entities do have to file in their own name, as well as at the public group level. Disclosure requirements are diverse. For example, your local entities may have to file locally to comply with local regulations in a local currency, as well as being included in your enterprise's reporting requirements in different currency.

A legal entity can represent all or part of your enterprise's management framework. For example, if you operate in a large country such as the United Kingdom or Germany, you might incorporate each division in the country as a separate legal entity. In a smaller country, for example Austria, you might use a single legal entity to host all of your business operations across divisions.

Legal Entity in Oracle Fusion: Points to Consider

Oracle Fusion Applications support the modeling of your legal entities. If you make purchases from or sell to other legal entities, define these other legal entities in your customer and supplier registers, which are part of the Oracle Fusion Trading Community Architecture. When your legal entities are trading with each other, you represent both of them as legal entities and also as customers and suppliers in your customer and supplier registers. Use legal entity relationships to determine which transactions are intercompany and require intercompany accounting. Your legal entities can be identified as legal employers and therefore, are available for use in Human Capital Management (HCM) applications.

There are several decisions that need to be considered in creating your legal entities.

The Importance of Legal Entity in Transactions

All of the assets of the enterprise are owned by individual legal entities. Oracle Fusion Financials allow your users to enter legal entities on transactions that represent a movement in value or obligation.

For example, the creation of a sales order creates an obligation for the legal entity that books the order to deliver the goods on the acknowledged date, and an obligation of the purchaser to receive and pay for those goods. Under contract law in most countries, damages can be sought for both actual losses, putting the injured party in the same state as if they had not entered into the contract, and what is called loss of bargain, or the profit that would have made on a transaction.

In another example, if you revalued your inventory in a warehouse to account for raw material price increases, the revaluation and revaluation reserves must be reflected in your legal entity's accounts. In Oracle Fusion Applications, your inventory within an inventory organization is managed by a single business unit and belongs to one legal entity.

Legal Entity and Its Relationship to Business Units

A business unit can process transactions on behalf of many legal entities. Frequently, a business unit is part of a single legal entity. In most cases the legal entity is explicit on your transactions. For example, a payables invoice has an explicit legal entity field. Your accounts payables department can process supplier invoices on behalf of one or many business units.

In some cases, your legal entity is inferred from your business unit that is processing the transaction. For example, your business unit A agrees on terms for the transfer of inventory to your business unit B. This transaction is binding on your default legal entities assigned to each business unit. Oracle Fusion Procurement, Oracle Fusion Projects, and Oracle Fusion Supply Chain applications rely on deriving the legal entity information from the business unit.

Legal Entity and Its Relationship to Divisions

The division is an area of management responsibility that can correspond to a collection of legal entities. If desired, you can aggregate the results for your divisions by legal entity or by combining parts of other legal entities. Define date-effective hierarchies for your cost center or legal entity segment in your chart of accounts to facilitate the aggregation and reporting by division. Divisions and legal entities are independent concepts.

Legal Entity and Its Relationship to Ledgers

One of your major responsibilities is to file financial statements for your legal entities. Map legal entities to specific ledgers using the Oracle Fusion General Ledger Accounting Configuration Manager. Within a ledger, you can optionally map a legal entity to one or more balancing segment values.

Legal Entity and Its Relationship to Balancing Segments

Oracle Fusion General Ledger supports up to three balancing segments, Best practices recommend that one of these segments represents your legal entity to ease your requirement to account for your operations to regulatory agencies, tax authorities, and investors. Accounting for your operations means you must produce a balanced trial balance sheet by legal entity. If you account for many legal entities in a single ledger, you must:

  1. Identify the legal entities within the ledger

  2. Balance transactions that cross legal entity boundaries through intercompany transactions

  3. Decide which balancing segments correspond to each legal entity and assign them in Oracle Fusion General Ledger Accounting Configuration Manager. Once you assign one balancing segment value in a ledger, then all your balancing segment values must be assigned. This recommended best practice facilitates reporting on assets, liabilities, and income by legal entity.

Represent your legal entities by at least one balancing segment value. You may represent it by two or three balancing segment values if more granular reporting is required. For example, if your legal entity operates in multiple jurisdictions in Europe, you might define balancing segment values and map them to legal reporting units. You can represent a legal entity by more than one balancing segment value, do not use a single balancing segment value to represent more than one legal entity.

In Oracle Fusion General Ledger, there are three balancing segments. You can use separate balancing segments to represent your divisions or strategic business units to enable management reporting at the balance sheet level for each division or business unit. For example, use this solution to empower your business unit and divisional managers to track and assume responsibility for their asset utilization or return on investment. Using multiple balancing segments is also useful when you know at the time of implementation that you are disposing of a part of a legal entity and need to isolate the assets and liabilities for that entity.

Note

Implementing multiple balancing segments requires every journal entry that is not balanced by division or business unit, to generate balancing lines. Also, you cannot change to multiple balancing segments easily after you have begun to use the ledger because your historical data is not balanced by the new multiple balancing segments. Restating historical data must be done at that point.

To use this feature for disposal of a part of a legal entity, implement multiple balancing segments at the beginning of the legal entity's corporate life or on conversion to Oracle Fusion.

If you decided to account for each legal entity in a separate ledger, there is no requirement to identify the legal entity with a balancing segment value within the ledger.

Note

While transactions that cross balancing segments don't necessarily cross legal entity boundaries, all transactions that cross legal entity boundaries must cross balancing segments. If you make an acquisition or are preparing to dispose of a portion of your enterprise, you may want to account for that part of the enterprise in its own balancing segment even if it is not a separate legal entity. If you do not map legal entities sharing the same ledger to balancing segments, you will not be able to distinguish them using the intercompany functionality or track their individual equity.

Legal Entity and Its Relationship to Consolidation Rules

In Oracle Fusion Applications you can map legal entities to balancing segments and then define consolidation rules using your balancing segments. You are creating a relationship between the definition of your legal entities and their role in your consolidation.

Legal Entity and its Relationship to Intercompany Transactions

Use Oracle Fusion Intercompany functionality for automatic creation of intercompany entries across your balancing segments. Intercompany processing updates legal ownership within the enterprise's groups of legal entities. Invoices or journals are created as needed. To limit the number of trading pairs for your enterprise, set up intercompany organizations and assign then to your authorized legal entities. Define processing options and intercompany accounts to use when creating intercompany transactions and to assist in consolidation elimination entries. These accounts are derived and automatically entered on your intercompany transactions based on legal entities assigned to your intercompany organizations.

Intracompany trading, in which legal ownership isn't changed but other organizational responsibilities are, is also supported. For example, you can track assets and liabilities that move between your departments within your legal entities by creating departmental level intercompany organizations.

Note

In the Oracle Fusion Supply Chain applications, model intercompany relationships using business units, from which legal entities are inferred.

Legal Entity and Its Relationship to Worker Assignments and Legal Employer

Legal entities that employ people are called legal employers in the Oracle Fusion Legal Entity Configurator. You must enter legal employers on worker assignments in Oracle Fusion HCM.

Legal Entity and Payroll Reporting

Your legal entities are required to pay payroll tax and social insurance such as social security on your payroll. In Oracle Fusion Applications, you can register payroll statutory units to pay and report on payroll tax and social insurance on behalf of many of your legal entities. As the legal employer, you might be required to pay payroll tax, not only at the national level, but also at the local level. You meet this obligation by establishing your legal entity as a place of work within the jurisdiction of a local authority. Set up legal reporting units to represent the part of your enterprise with a specific legal reporting obligation. You can also mark these legal reporting units as tax reporting units if the legal entity must pay taxes as a result of establishing a place of business within the jurisdiction.

Define Legal Entities: Manage Legal Entity HCM Information

HCM Organization Models: Examples

These examples illustrate different models for human capital management (HCM) organizations. Each example includes a legislative data group (LDG). LDGs are not an organization classification, but they are included in the example to show how you associate them with a payroll statutory unit to partition payroll data.

Simple Configuration

This example illustrates a simple configuration that does not include any tax reporting units. The legal employer and payroll statutory units are the same, sharing the same boundaries. Reporting can only be done at a single level. Countries such as Saudi Arabia and the United Arab Emirates (UAE) might use this type of model, as reporting in these countries is done at the legal entity level.

This figure illustrates a simple configuration where the enterprise has only one legal entity that is both a payroll statutory unit and a legal employer.

An enterprise with one legal entity
that is also a payroll statutory unit and a legal employer. The legal
entity is associated with one legislative data group.

Multiple Legal Employers and Tax Reporting Units Under One Payroll Statutory Unit

This example illustrates a more complex configuration. In this enterprise, one legal entity, InFusion US, is defined as a payroll statutory unit and has two separate legal entities, which are also legal employers. This model shows multiple legal employers that are associated with a single payroll statutory unit, and how tax reporting units are always associated with a specific legal employer (or employers) through the payroll statutory unit. The implication is that payroll statutory reporting boundaries vary from human resources (HR) management, and the balances can be categorized separately by either payroll statutory unit, legal employer, or tax reporting unit. This configuration is based on tax filing requirements, as some tax-related payments and reports are associated with a higher level than employers. An example of a country that might use this model is the US.

This figure illustrates an enterprise that has one payroll statutory unit and multiple legal employers and tax reporting units.

An enterprise with one payroll statutory
unit, two legal entities that are also legal employers, and two tax
reporting units

One Payroll Statutory Unit and Two Tax Reporting Units That Are Subsidiaries of the Legal Entity

This model makes no distinction between a legal employer and a payroll statutory unit. Tax reporting units are defined as subsidiaries to the legal entity. In this enterprise, legal entity is the highest level of aggregation for payroll calculations and reporting, and statutory reporting boundaries are assumed to be the same for both payroll and HR management. An example of a country that might use this model is France.

This figure illustrates an example of an organization with one legal entity that is both a legal employer and a payroll statutory unit and that has two tax reporting units.

An organization that has one legal
entity that is both a payroll statutory unit and legal employer and
has two tax reporting units.

One Payroll Statutory Unit with Several Tax Reporting Units That Are Independent from the Legal Employer

In this model, the enterprise has one legal entity, and legal employers and tax reporting units are independent from each other within a payroll statutory unit, because there is no relationship from a legal perspective. Therefore, you can run reporting on both entities independently. Using this model, you would not typically need to report on tax reporting unit balances within a legal employer, and balances can be categorized by either or both organizations, as required. An example of a country that might use this model is India.

This figure illustrates an enterprise with one legal entity that is a payroll statutory unit and a legal employer, and the tax reporting units are independent from the legal employer.

A figure that shows an enterprise with
one legal entity that is both a legal employer and a payroll statutory
unit and that has multiple tax reporting units that are independent
from the legal employer

Multiple Payroll Statutory Units with Several Tax Reporting Units that are Independent from the Legal Employer

In this model, the enterprise has two legal entities, and legal employers and tax reporting units are independent from each other within a payroll statutory unit, because there is no relationship from a legal perspective. Therefore, you can run reporting on both entities independently. Using this model, you would not typically need to report on tax reporting unit balances within a legal employer, and balances can be categorized by either or both organizations, as required. An example of a country that might use this model is the United Kingdom (UK).

This figure illustrates an enterprise with two legal entities, and legal employers and tax reporting units are independent from each other.

A graphic that illustrates an enterprise
with two legal entities

Payroll Statutory Units, Legal Employers, and Tax Reporting Units: How They Work Together

When you set up legal entities, you can identify them as legal employers and payroll statutory units, which makes them available for use in Oracle Fusion Human Capital Management (HCM). A tax reporting unit is created automatically when you add a legal entity and identify it as a payroll statutory unit. Depending on how your organization is structured, you may have only one legal entity that is also a payroll statutory unit and a legal employer, or you may have multiple legal entities, payroll statutory units, and legal employers.

Legal Employers and Payroll Statutory Unit

Payroll statutory units enable you to group legal employers so that you can perform statutory calculations at a higher level, such as for court orders or for United Kingdom (UK) statutory sick pay. In some cases, a legal employer is also a payroll statutory unit. However, your organization may have several legal employers under one payroll statutory unit. A legal employer can belong to only one payroll statutory unit.

Payroll Statutory Units and Tax Reporting Units

Payroll statutory units and tax reporting units have a parent-child relationship, with the payroll statutory unit being the parent.

Tax Reporting Units and Legal Employers

Tax reporting units are indirectly associated with a legal employer through the payroll statutory unit. One or more tax reporting units can be used by a single legal employer, and a tax reporting unit can be used by one or more legal employers. For example, assume that a single tax reporting unit is linked to a payroll statutory unit. Assume also that two legal employers are associated with this payroll statutory unit. In this example, both legal employers are associated with the single tax reporting unit.

FAQs for Manage Legal Entity HCM Information

What's a legal employer?

A legal employer is a legal entity that employs workers. You define a legal entity as a legal employer in the Oracle Fusion Legal Entity Configurator.

The legal employer is captured at the work relationship level, and all employment terms and assignments within that relationship are automatically with that legal employer. Legal employer information for worker assignments is also used for reporting purposes.

What's a payroll statutory unit?

Payroll statutory units are legal entities that are responsible for paying workers, including the payment of payroll tax and social insurance. A payroll statutory unit can pay and report on payroll tax and social insurance on behalf of one or many legal entities, depending on the structure of your enterprise. For example, if you are a multinational, multicompany enterprise, then you register a payroll statutory unit in each country where you employ and pay people. You can optionally register a consolidated payroll statutory unit to pay and report on workers across multiple legal employers within the same country. You associate a legislative data group with a payroll statutory unit to provide the correct payroll information for workers.

Define Legal Entities: Manage Legal Entity Tax Profile

Party Tax Profiles: Explained

A tax profile is the body of information that relates to a party's transaction tax activities. A tax profile can include main and default information, tax registration, tax exemptions, party fiscal classifications, tax reporting codes, configuration options, and service subscriptions.

Set up tax profiles for the following parties involved in your transactions:

First Parties

Set up tax profiles for your first party legal entities, legal reporting units, and business units.

First party legal entities identify your organization to the relevant legal authorities, for example, a national or international headquarters. Legal entities let you more accurately model your external relationships to legal authorities. The relationships between first party legal entities and the relevant tax authorities normally control the setup of the transaction taxes required by your business. Under most circumstances the tax setup is used and maintained based on the configuration of the legal entity. Enter the default information, party fiscal classifications, tax reporting codes, and configuration options for your legal entities. You can also specify if you are using the tax services of an external service provider for tax calculation.

First party legal reporting units identify each office, service center, warehouse and any other location within the organization that has a tax requirement. A legal reporting unit tax profile is automatically created for the headquarter legal entity. Set up additional legal reporting unit tax profiles for those needed for tax purposes. For legal reporting units, enter the default information, tax registrations, party fiscal classifications, and tax reporting codes. Also, define tax reporting details for your VAT and global tax reporting needs for tax registrations of tax regimes that allow this setup.

Business units organize your company data according to your internal accounting, financial monitoring, and reporting requirements. To help you manage the tax needs of your business units, you can use the business unit tax profile in either of two ways:

For business units that maintain their own setup, enter the default information, tax reporting codes, configuration options, and service providers as required.

Third Parties

Set up third party tax profiles for parties with the usage of customer, supplier, and their sites. Enter the default information, tax registrations, party fiscal classifications, and reporting codes required for your third parties or third party sites. You can set up tax exemptions for your customers and customer sites.

Banks are also considered third parties. When a bank is created, the tax registration number specified on the bank record is added to the party tax profile record in Oracle Fusion Tax. You can not modify the party tax profile for a bank as it is view only. You can only modify the bank record itself.

Note

Setting up party tax profiles for third parties is not required. Taxes are still calculated on transactions for third parties that do not have tax profiles

Tax Authorities

Set up a tax authority party tax profile using the Legal Authorities set up task. The tax authority party tax profile identifies a tax authority party as a collecting authority or a reporting authority or both. A collecting tax authority manages the administration of tax remittances. A reporting tax authority receives and processes all company transaction tax reports.

The collecting and reporting tax authorities appear in the corresponding list of values on all applicable Oracle Fusion Tax pages. All tax authorities are available in the list of values as an issuing tax authority.

Specifying First Party Tax Profile Options: Points to Consider

Set up first party tax profiles for all legal entities, legal reporting units, and business units in your organization that have a transaction tax requirements. How you set up your first parties can impact the tax calculation on your transactions.

The first party tax profile consists of:

Defaults and Controls

The following table describes the defaults and controls available at the first party tax profile level:


Option

Description

Set as self-assessment (reverse charge)

Automatically self-assess taxes on purchases.

Rounding Level

Perform rounding operations on the:

  • Header: Applies rounding to calculated tax amounts once for each tax rate per invoice.

  • Line: Applies rounding to the calculated tax amount on each invoice line.

Rounding Rule

The rule that defines how the rounding should be performed on a value involved in a taxable transaction. For example, up to the next highest value, down to the next lowest value, or nearest.

Note

If you defined a rounding precedence hierarchy in the configuration owner tax option settings for the combination of configuration owner and event class, Oracle Fusion Tax considers the rounding details in the applicable tax profile.

Set Invoice Values as Tax Inclusive

This first party intends to send or receive invoices with invoice line amount inclusive of the tax amount.

Note

This option overrides the tax inclusive handling setting at the tax level, but not at the tax rate level.

Tax Registrations

You must set up a separate tax registration to represent each distinct registration requirement for a first party legal reporting unit. Oracle Fusion Tax uses tax registrations in tax determination and tax reporting. If your first party has more than one tax registration under the same tax regime, then the application considers the tax registration in the order: tax jurisdiction; tax; tax regime.

You must enable the Use tax reporting configuration option on the first party tax regime to allow entry of global tax reporting configuration details during tax registration setup for legal reporting units for these tax regimes.

Party Fiscal Classifications

If applicable, associate first party fiscal classification codes with this party. The party fiscal classification codes you enter become part of tax determination for invoices associated with this party. Specify start and end dates to control when these fiscal classifications are applicable for this party and transaction.

For legal entities, you can view the associated legal classifications that were assigned to the tax regime defined for this first party. The legal classifications are used in the tax determination process, similarly to the party fiscal classifications.

Tax Reporting Codes

Set up tax reporting types to capture additional tax information on transactions for your tax reports for your first parties. Depending on the tax reporting type code, you either enter or select a tax reporting code for this party. Specify start and end dates to control when these tax reporting codes are applicable.

Configuration Options

The legal entities and business units in your organization are each subject to specific sets of tax regulations as designated by the tax authorities where you do business. Use configuration options to associate legal entities and business units with their applicable tax regimes. You can set up tax configuration options when you create a tax regime or when you create a party tax profile. Both setup flows display and maintain the same party and tax regime definitions.

Service Subscriptions

Oracle Fusion Tax lets you use the tax services of external service providers for tax calculation of US Sales and Use Tax on Receivables transactions. The setup for provider services is called a service subscription. A service subscription applies to the transactions of one configuration option setup for a combination of tax regime and legal entity or business unit. Set up service subscriptions when you create a tax regime or when you create a party tax profile for a first party legal entity or business unit.

FAQs for Manage Legal Entity Tax Profile

When does a party tax profile get created for a legal entity?

The legal entity party tax profile is automatically created when a legal entity record is created. If a legal entity party tax profile record is not created, for example, when a legal entity is created through a back-end process, a legal entity party tax profile is created upon saving the tax regime when a legal entity is subscribed to or upon saving the configuration owner tax options when they are defined for the legal entity. Otherwise, create a party tax profile using the Create Legal Entity Tax Profile page. You can edit the tax profile that was automatically generated with the relevant tax information, but it is not required.

Define Legal Entities: Define Legal Reporting Units

Planning Legal Reporting Units: Points to Consider

Each of your legal entities has at least one legal reporting unit. Legal reporting units can also be referred to as establishments. You can define either domestic or foreign establishments. Define legal reporting units by physical location, such as a sales office, or by logical unit, such as groups of employees subject to different reporting requirements. For example, define logical legal reporting units for both salaried and hourly paid employees.

Another example of logical reporting units is in the Human Capital Management (HCM) system where you use your legal reporting units to model your tax reporting units. A tax reporting unit is used to group workers for the purpose of tax reporting.

Planning Legal Reporting Units

Plan and define your legal reporting units at both the local and national levels if you operate within the administrative boundaries of a jurisdiction that is more granular than country. For example, your legal entity establishes operation in a country that requires reporting of employment and sales taxes locally as well as nationally. Therefore, you need more than one legally registered location to meet this legal entity's reporting requirements in each local area. Additionally, legal entities in Europe operate across national boundaries, and require you to set up legal reporting units for the purposes of local registration in each country. There can be multiple registrations associated with a legal reporting unit. However, there can be only one identifying registration, defined by the legal authority used for the legal entity or legal reporting unit, associated with the legal reporting unit.

Define Chart of Accounts for Enterprise Structures: Manage Chart of Accounts

Chart of Accounts: Explained

The chart of accounts is the underlying structure for organizing financial information and reporting. An entity records transactions with a set of codes representing balances by type, expenses by function, and other divisional or organizational codes that are important to its business.

A well-designed chart of accounts provides the following benefits:

The chart of accounts facilitates aggregating data from different operations, from within an operation, and from different business flows, thus enabling the organization to report using consistent definitions to their stakeholders in compliance with legislative and corporate reporting standards and aiding in management decisions.

Best practices include starting the design from external and management reporting requirements and making decisions about data storage in the general ledger, including thick versus thin general ledger concepts.

Thick Versus Thin General Ledger: Critical Choices

Thick versus thin general ledger is standard terminology used to describe the amount of data populated and analysis performed in your general ledger. Thick and thin are the poles; most implementations are somewhere in between. Here are some variations to consider:

Thin General Ledger

With a thin general ledger, you use the general ledger for internal control, statutory reporting, and tracking of asset ownership. You minimize the data stored in your general ledger. A thin general ledger has many of the following characteristics:

A thin general ledger has natural accounts at a statutory reporting level, for example, payroll expense, rent, property taxes, and utilities. It has cost centers at the functional expense level, such as Research and Development (R&D) or Selling, General, and Administrative (SG&A) expense lines, rather than at department or analytic levels. It omits business unit, division, and product detail.

One example of an industry that frequently uses a thin general ledger is retail. In a retail organization, the general ledger tracks overall sales numbers by region. A retail point of sales product tracks sales and inventory by store, product, supplier, markup, and other retail sales measures.

Thick General Ledger

With a thick general ledger, you use the general ledger as a detailed, analytic tool, performing analytic functions directly in the general ledger. Data is broken down by many reporting labels, and populated frequently from the subledgers.

You maximize the data stored in the general ledger. A thick general ledger has many of the following characteristics:

In a thick general ledger, you obtain detail for cost of goods sold and inventory balances and track property plant and equipment at a granular level. Cost centers represent functional expenses, but also roll up to departmental or other expense analysis levels. Using product and location codes in optional segments can provide reporting by line of business. Posting daily, at the individual transaction level, can maximize the data stored in the general ledger.

One example of an industry that frequently uses a thick general ledger is electronic manufacturers. Detail on the revenue line is tagged by sales channel. Product is structured differently to provide detail on the cost of goods sold line, including your bill of materials costs. The general ledger is used to compare and contrast both revenue and cost of goods sold for margin analysis.

Other Considerations

Consider implementing a thick ledger if there are business requirements to do any of the following:

Consider implementing a thin ledger in addition to a thick ledger, if there are additional requirements for:

The important consideration in determining if a thick ledger is the primary or secondary ledger is your reporting needs. Other considerations include how the values for an operational dimension or segment are derived and the amount of resources used in reconciling your different ledgers. If values for the operational dimension are always entered by the user like other segments of the accounting flexfield, then a thick primary ledger is the better choice.

However, if values for the operational dimension or segment are automatically derived from other attributes on the transactions in your subledger accounting rules, rather than entered in the user interface, then use a thick secondary ledger. This decision affects the amount of:

Summary

The factors you need to consider in your decision to use a thick or thin general ledger for your organization, are your:

Chart of Accounts: How Its Components Fit Together

There are several important elements to the basic chart of accounts in Oracle Fusion Applications: a structure that defines the account values, segments, and their labels, and rules (security and validation). Account combinations link the values in the segments together and provide the accounting mechanism to capture financial transactions.

This figure shows the main components
in the chart of account structure and the way they fit together. The
chart of accounts consists of segments which have value sets attached
to them to determine the values from each used in creating account
combinations. Segments also have segment labels attached to them to
point to the correct segment to use in general ledger processing,
such as intercompany balancing or retained earning summarization.
Segments are secured by security rules and accounts are secured by
cross validation rules.

Chart of Accounts

The chart of accounts defines the number and attributes of various segments, including the order of segments, the width of segments, prompts, and segment labels, such as balancing, natural account, and cost center.

The chart of accounts further defines the combination of value sets associated with each segment of the chart of accounts, as well as the type, default value, additional conditions designating the source of the values using database tables, and the required and displayed properties for the segments.

Segments

A chart of accounts segment is a component of the account combination. Each segment has a value set attached to it to provide formatting and validation of the set of values used with that segment. The combination of segments creates the account combination used for recording and reporting financial transactions. Examples of segments that may be found in a chart of accounts are company, cost center, department, division, region, account, product, program, and location.

Value Sets and Values

The value sets define the attributes and values associated with a segment of the chart of accounts. You can think of a value set as a container for your values. You can set up your flexfield so that it automatically validates the segment values that you enter against a table of valid values. If you enter an invalid segment value, a list of valid values appears automatically so that you can select a valid value. You can assign a single value set to more than one segment, and you can share value sets across different flexfields.

Segment Labels

Segment labels identify certain segments in your chart of accounts and assign special functionality to those segments. Segment labels were referred to as flexfield qualifiers in Oracle E-Business Suite. Here are the segment labels that are available to use with the chart of accounts.

Note

All segments have a segment qualifier that enables posting for each value. The predefined setting is Yes to post.

Account Combinations

An account combination is a completed code of segment values that uniquely identifies an account in the chart of accounts, for example 01-2900-500-123, might represent InFusion America (company)-Monitor Sales (division)-Revenue (account)-Air Filters (product).

Rules

The chart of accounts uses two different types of rules to control functionality.

Creating One Chart of Accounts Structure with Many Instances: Example

In Oracle Fusion General Ledger, the chart of accounts model is framed around the concept of a chart of accounts structure, under which one or more chart of accounts structure instances can be created.

Scenario

Your company, InFusion Corporation, is a multinational conglomerate that operates in the United States (US) and the United Kingdom (UK). InFusion has purchased an Oracle Fusion enterprise resource planning (ERP) solution including Oracle Fusion General Ledger and all of the Oracle Fusion subledgers. You are chairing a committee to discuss creation of a model for your global financial reporting structure including your charts of accounts for both your US and UK operations.

InFusion Corporation

InFusion Corporation has 400 plus employees and revenue of $120 million. Your product line includes all the components to build and maintain air quality monitoring (AQM) systems for homes and businesses.

Analysis

In Oracle Fusion General Ledger, the chart of accounts model is framed around the concept of a chart of accounts structure, under which one or more chart of accounts structure instances can be created.

Chart of Accounts Model

The chart of accounts structure provides the general outline of the chart of accounts and determines the number of segments, the type, the length, and the label (qualifier) of each segment. This forms the foundation of the chart of accounts definition object.

For each chart of accounts structure, it is possible to associate one or more chart of accounts structure instances. Chart of accounts structure instances under the same structure share a common configuration with the same segments, in the same order, and the same characteristics. Using one chart of accounts structure with multiple instances simplifies your accounting and reporting.

At the chart of accounts structure instance level, each segment is associated with a value set that conforms to the characteristic of that segment. For example, you assign a value set with the same segment type and length to each segment. You are using hierarchies with your chart of accounts segments. Each structure instance segment is assigned a tree code to indicate the source of the hierarchy information for the associated value set. The same value set can be used multiple times within the same or across different chart of accounts instances within the same structure or in different structures. This functionality reduces your segment value creation and maintenance across your charts of accounts.

The collective assignment of value sets to each of the segments forms one chart of accounts instance. At the chart of accounts structure instance level, you can select to enable dynamic insertion. Dynamic insertion allows the creation of account code combinations automatically the first time your users enter that new account combination. The alternative is to create them manually. By deciding to enable dynamic insertion, you save data entry time and prevent delays caused by the manual creation of new code combinations. Well defined cross validation rules help prevent the creation of inappropriate account code combinations.

Perform deployment after a new chart of accounts structure and structure instances are defined or any of their modifiable attributes are updated. Deployment validates and regenerates the necessary objects to enable your charts of accounts and chart of accounts structure instances. By unifying and standardizing you organization's chart of accounts, you are positioned to take full advantage of future functionality in Oracle Fusion General Ledger.

In summary, you are recommending to your company to unify the organization's chart of accounts in a single chart of accounts structure based on chart of accounts commonalities across ledgers. You have also decided to use the chart of accounts structure instance construct to serve different accounting and reporting requirements by using value sets specific to each of your entities.

Balancing Segments: Explained

Balancing segments ensure that all journals balance for each balancing segment value or combination of multiple balancing segment values. You can secure access to your primary balancing segment values only with data access sets. The general ledger application automatically calculates and creates balancing lines as required in journal entries. For example, recognizing an entity's receivable and the other entity's payable. There are three balancing segment labels: primary, second, and third balancing. The primary balancing segment label is required.

By enabling multiple balancing segments for your chart of accounts, it is possible to produce financial statements for each unique combination of segment values across not only one, but two or even three qualified balancing segments. This ability provides you greater insights into your operations as it affords you visibility along the critical fiscal dimensions you use to plan, monitor, and measure your financial performance.

The following explains processes that use balancing segments.

Multiple Balancing Segments: Points to Consider

Oracle Fusion General Ledger supports tracking financial results at a finer level of granularity than a single balancing segment. In addition to the required primary balancing segment for the chart of accounts, which is typically associated with the company dimension of a business organization, two additional segments of the chart of accounts can be optionally qualified as the second and third balancing segments respectively. Possible chart of accounts segments that can be tagged as these additional balancing segments include cost center or department, additional aspects of a business commonly used in measuring financial results.

There are several points to consider in using multiple balancing segments:

Journal Entry Processing

Multiple balancing segments ensure that account balances come from journal entries where the debits equal the credits, and thus, the financial reports are properly generated for each unique instance of account value combinations across the balancing segments. Consider this option carefully as it provides more granular reporting but requires more processing resources.

Implementation Timing

When considering implementing the optional second and third balancing segments, keep in mind that these chart of accounts segment labels are set from the beginning of time and are actively used by your ledgers. This is important to ensure that balances are immediately maintained in accordance with the necessary balancing actions to produce consistent financial reporting for the desired business dimensions. Multiple balancing segment ledgers that are not maintained from the beginning of time require extensive manual balance adjustments to catch up and realign the balances in accordance with the multiple balancing segments.

Note

Do not set a segment already qualified as a natural account or intercompany segment as any of the three balancing segments. Validations are not performed when segment labels are assigned, so verify that all are assigned correctly before using your chart of accounts.

Change Options

Once a segment has been enabled and designated as a balancing segment, you must not change the segment. Do not disable the segment or remove the segment labels. These settings must be consistently maintained throughout the life of the chart of accounts to control the accuracy and integrity of the financial data.

Migration Adjustments

For charts of accounts migrated from Oracle E-Business Suite to Oracle Fusion General Ledger that use a segment with the secondary balance tracking segment qualifier, steps must be taken to ensure the proper transition to the second and third balancing segments. The required adjustments are extensive.

For ledgers associated with a migrated chart of accounts, its balances must be adjusted manually to be consistent with the second and third balancing segments as though these segment labels have been in place since the beginning of entries for these ledgers. This requires recomputing and updating of the following processes to reflect the correct balancing for each unique combination of segment values across the additional second and third balancing segments.

Note

All previously translated balances must also be purged, and new translations run to properly account for translated retained earnings and cumulative translation adjustments with the correct level of balancing.

Using Multiple Balancing Segments: Example

This simple example illustrate balancing along two balancing segments for a simple chart of accounts with three segments.

Scenario

Your company has a chart of accounts with two balancing segments and three segments, qualified as follows:

The following multiple company and cost center journal has been entered to transfer advertising and phone expense from Company 1, Cost Center A to Company 2, Cost Center B.


Account

Debit

Credit

Company 1-Cost Center A-Advertising Expense Account

600

 

Company 2-Cost Center B-Advertising Expense Account

 

600

Company 1-Cost Center A-Phone Expense Account

800

 

Company 2-Cost Center B-Phone Expense Account

 

800

During the posting process, the last four lines are created to balance the entry across the primary and second balancing segments, company and cost center.


Account

Debit

Credit

Company 1-Cost Center A-Advertising Expense Account

600

 

Company 2-Cost Center B-Advertising Expense Account

 

600

Company 1-Cost Center A-Phone Expense Account

800

 

Company 2-Cost Center B-Phone Expense Account

 

800

Company 1-Cost Center A-Balancing Account

 

600

Company 2-Cost Center B-Balancing Account

600

 

Company 1-Cost Center A-Balancing Account

 

800

Company 2-Cost Center B-Balancing Account

800

 

FAQs for Manage Charts of Accounts

How can I use future accounting segments?

To plan for future growth in the business organization that requires additional segments in the chart of accounts, extra segments can be added to the chart of accounts structure during your original implementation. Since all segments of the chart are required and have to be enabled, these unused segments can be assigned value sets that have a single value in the chart of accounts structure instance. This value is set as a default for that segment so that the extra segments are automatically populated when an account code combination is used.

Define Chart of Accounts for Enterprise Structures: Manage Chart of Accounts Value Sets

Chart of Accounts Values Sets: Critical Choices

A value set is the collection of account values that are associated with a segment of a chart of accounts structure instance. When creating values sets, consider the following critical choices:

Module Designation

The module designation is used to tag value sets in Oracle Fusion Applications and sets the value sets apart during upgrades and other processes. Chart of accounts value sets upgraded from Oracle E-Business Suite Release 12 generically bear the module value of Oracle Fusion Middleware. When creating new value sets for a chart of accounts, the module can be specified as Oracle Fusion General Ledger to distinctly identify its intended use in an accounting flexfield, basically a chart of accounts.

Validation Type

Assign one of the following validation types to chart of accounts value sets:

Format Assignments

Value sets for chart of accounts must use the Value Data Type of Character. The Value Subtype is set to Text. These two setting support values that are both numbers and characters, which are typical in natural account segment values. Set the maximum length of the value set to correspond to the length of the chart of accounts segment to which it is assigned. Best practices recommend restricting values to Upper Case Only or Numeric values that are zero filled by default.

Security Rules

If flexfield data security rules are to be applied to the chart of accounts segment associated with the value set, the Enable Security check box must be checked for the assigned value set. In addition, assign a data security resource name to enable creation of a data security object automatically for the value set. The data security object is used in the definition of flexfield data security rules.

Value Definition

Once these basic characteristic are defined for the value set, values can be added to the set in the Manage Values page.

Note

If the value set is used with a natural account segment, the value also requires you set the Natural Account Type, with one of the following values: Asset, Liability, Equity, Revenue or Expense. Other attributes used are Third Party Control Account, Reconciliation indicator, and Financial Category used with Oracle Transaction Business Intelligence reporting.

Oracle Fusion General Ledger best practice is to define the values for the value set after the value set is assigned to a chart of accounts structure instance. Otherwise you are not able to define the mandatory value attributes, such as summary flag, posting allowed, and account type for natural account segment. The attributes must be added after the value set is assigned to a chart of accounts structure instance.

Define Chart of Accounts for Enterprise Structures: Manage Accounting Calendars

Defining Accounting Calendars: Critical Choices

Define an accounting calendar to create your accounting year and the periods it contains. Specify common calendar options that the application uses to automatically generate a calendar with its periods. Specifying all the options makes defining a correct calendar easier and more intuitive with fewer errors. The choices you make when specifying the following options are critical, because it is difficult to change your accounting calendar after a period status is set to open or future enterable.

Note

In Oracle Fusion, the common calendar types, monthly, weekly, 4-4-5, 4-5-4, 5-4-4, 4-week, quarterly, and yearly, are automatically generated. This functionality makes it easier to create and maintain accounting calendars. By using the period frequency option, you no longer have to go through the tedious task of defining each period manually.

Start Date

If you plan to run translation, specify a calendar start date that is a full year before the start date of the year of the first translation period for your ledger. Translation cannot be run in the first period of a calendar. Consider how many years of history you are going to load from your previous system and back up the start date for those years plus one more. You cannot add previous years once the first calendar period has been opened.

Period Frequency

Use period frequency to set the interval for each subsequent period to occur, for example, monthly, quarterly, or yearly. If you select the period frequency of Other, by default, the application generates the period names, year, and quarter number. You specify the start and end dates. You must manually enter the period information. For example, select the period frequency of Other and enter 52 as the number of periods when you want to define a weekly calendar. For manually entered calendars, when you click the Add Year button, the application creates a blank year. Then, you must manually enter the periods for the new year. The online validation helps prevent erroneous entries.

Note

In Oracle Fusion applications a calendar can only have one period frequency and period type. Therefore, if you have an existing calendar with more than one period type associated with it, during the upgrade from Oracle E-Business Suite, separate calendars are created based on each calendar name and period type combination.

Adjusting Period Frequency

Use the adjusting period frequency to control when the application creates adjusting periods. For example, some of the frequencies you select add one adjusting period at year end, two at year end, or one at the end of each quarter. The default is None which adds no adjusting periods. If you select the frequency of Other, the Number of Adjusting Periods field is displayed. Enter the number of desired adjusting periods and then, manually define them.

Period Name Format Region

The User-Defined Prefix field in the Period Name Format region is an optional feature that allows you to enter your own prefix. For example, define a weekly calendar and then enter a prefix of Week, - as the separator, and the period name format of Period numberYY fiscal year. The application creates the names of Week1-11, Week2-11, through Week52-11. The options for the Format field are predefined values. The list of values is filtered based on the selected separator and only displays the options that match the selected separator.

The year displayed in the period names is based on the selected period name format and the dates the period covers or if the period crosses years, on the year of the start date of the period. For example, April 10, 2010 to May 9, 2010 has the period name of Apr-10 and December 10, 2010 to January 9, 2011 has the name of Dec-10. If period frequency is Other, then the period format region is hidden. The application generates a temporary period name for calendars with period frequency of Other, using a fixed format of Period numberYY. You can override this format with your own customized period names.

Note

For an accounting calendar that is associated with a ledger, changing period names or adding a year updates the accounting period dimension in the balances cubes.

Calendar Validation: How It Works with the Accounting Calendar

Calendar validation is automatic and prevents serious problems when you begin using the calendar. Once you set a calendar period status to open or future enterable, you cannot edit the period.

Settings That Affect Calendar Validation

The calendar validation runs automatically when you save the calendar.

How the Calendar Is Validated

The following table lists the validation checks performed when the accounting calendar is saved.


Validation Performed

Example of Data

Unique period number

2 assigned for two periods

Unique period name

Jan-11 entered twice

Period number beyond the maximum number of periods per year

13 for a 12 period calendar with no adjusting periods

Entered period name contains spaces

Jan 11

Single or double quotes in the period name

Jan '11

Nonadjusting periods with overlapping dates

01-Jan-2011 to 31-Jan-2011 and 30-Jan-2011 to 28-Feb-2011

Period date gaps

01-Jan-2011 to 28-Jan-2011 and 31-Jan-2011 to 28-Feb-2011

Missing period numbers

Periods 1 through 6 defined for a twelve month calendar

Period number gaps

1, 3, 5

Period numbers not in sequential order by date

Period 1 covers 01-Jan-2011 to 31-Jan-2011 and period 2 covers 01-Mar-2011 to 31-Mar-2011, and period 3 covers 01-Feb-2011 to 28-Feb-2011.

Quarter number gaps

1, 3, 4

Quarters not in sequential order by period

1, 3, 2, 4

Period start or end dates more than one year before or after the fiscal year

July 1, 2010 in a 2012 calendar

FAQs for Manage Accounting Calendars

How can I identify errors in my accounting calendar?

Oracle Fusion General Ledger identifies erroneous entries online as you enter a new calendar or change data on an existing calendar. The application also automatically validates the data when you save the calendar.

What's the difference between calendar and fiscal period naming?

The period naming format determines the year that is appended to the prefix for each period in the calendar. For the example, your accounting year has a set of twelve accounting period with a start date of September 1, 2011 and the end date is August 31, 2012, with each period's date range following the natural calendar month date range.

Calendar period naming format: Select the calendar period format to append the period's start date's year to the prefix. For the period covering September 1, 2011 to December 31, 2011, then 2011 or just 11, depending on the period format selected, is appended to each period's name. For the remaining periods covering January 1, 2012 to August 31, 2012, then 2012 or 12, is appended to each period's name.

Fiscal period naming format: Select the fiscal period format to always append the period's year assignment to the prefix. If the accounting periods in the set of twelve are all assigned the year of 2012, then 2012 or just 12, depending on the period format selected, is appended to the period name of all 12 periods.

When do I update an existing calendar?

Update an existing calendar before the new periods are needed as future periods, based on the future period setting in your accounting configuration. If a complete year has been defined and validated, use the Add Year button to add the next year quickly. Accept or change the new rows as required. For example, with the Other frequency type calendar, dates may differ from what the application generates.

What happens if I upgrade my calendar from Oracle E-Business Suite Release 12?

The migration script assigns a period frequency that most closely matches your Oracle E-Business Suite Release 12 calendar. When you use the Oracle Fusion applications Add Year functionality for the first time, you have an opportunity to review and change the period frequency. The Calendar Options page opens only for calendars upgraded from Release 12 to allow one time modification.

Make your changes to the period frequency, adjusting period frequency, and period name format, including the prefix and separator, as needed. Changes can not conflict with the existing upgraded calendar definition. Update the calendar name and description in the calendar header, as needed, for all calendars. Period details for a new year will be generated automatically based on the latest calendar options. You can also manually update the calendar. The modified calendar options affect future years only.

Define Accounting Configurations of Enterprise Structures: Manage Primary or Secondary Ledgers

Accounting Configuration: Overview

The Setup and Maintenance work area in the Oracle Fusion Applications is used to manage the configuration of legal entities, ledgers, and reporting currencies that comprise your accounting configuration. To create a new legal entity or ledger, your implementation consultant or system administrator must create an implementation project. This implementation project can be populated by either adding a financials related offering or one or more task lists.

Note

Setup tasks that are not related to the ledger or legal entity specific setup tasks can be invoked from either an implementation project or launched directly from the Setup and Maintenance work area.

There are two offerings predefined for financial implementations.

When adding an offering to an implementation project, implementation consultants can customize the tasks displayed by adding additional tasks to the implementation project.

Ledgers and Subledgers: Explained

Oracle Fusion Applications reflect the traditional segregation between the general ledger and associated subledgers. Detailed transactional information is captured in the subledgers and periodically imported and posted in summary or detail to the ledger.

A ledger determines the currency, chart of accounts, accounting calendar, ledger processing options, and accounting method for its associated subledgers. Each accounting setup requires a primary ledger and optionally, one or more secondary ledgers and reporting currencies. Reporting currencies are associated with either a primary of secondary ledger.

The number of ledgers and subledgers is unlimited and determined by your business structure and reporting requirements.

Single Ledger

If your subsidiaries all share the same ledger with the parent company or they share the same chart of accounts and calendar, and all reside on the same applications instance, you can consolidate financial results in Oracle Fusion General Ledger in a single ledger. Use Oracle Fusion Financial Reporting functionality to produce individual entity reports by balancing segments. General Ledger has three balancing segments that can be combined to provide detailed reporting for each legal entity and then rolled up to provide consolidated financial statements.

Multiple Ledgers

Accounting operations using multiple ledgers can include single or multiple applications instances. You need multiple ledgers if one of the following is true:

Subledgers

Oracle Fusion Subledgers capture detailed transactional information, such as supplier invoices, customer payments, and asset acquisitions. Oracle Fusion Subledger Accounting is an open and flexible application that defines the accounting rules, generates detailed journal entries for these subledger transactions, and posts these entries to the general ledger with flexible summarization options to provide a clear audit trail.

Ledgers: Points to Consider

Companies account for themselves in primary ledgers, and, if necessary, secondary ledgers and reporting currencies. Your transactions from your subledgers are posted to your primary ledgers and possibly, secondary ledgers or reporting currencies. Local and corporate compliance can be achieved through an optional secondary ledger, providing an alternate accounting method, or in some cases, a different chart of accounts. Your subsidiary's primary and secondary ledgers can both be maintained in your local currency, and you can convert your local currency to your parent's ledger currency to report your consolidated financial results using reporting currencies or translation.

Primary Ledgers

A primary ledger is the main record-keeping ledger. Like any other ledger, a primary ledger records transactional balances by using a chart of accounts with a consistent calendar and currency, and accounting rules implemented in an accounting method. The primary ledger is closely associated with the subledger transactions and provides context and accounting for them.

To determine the number of primary ledgers, your enterprise structure analysis must begin with your financial, legal, and management reporting requirements. For example, if your company has separate subsidiaries in several countries worldwide, enable reporting for each country's legal authorities by creating multiple primary ledgers that represent each country with the local currency, chart of accounts, calendar, and accounting method. Use reporting currencies linked to your country specific primary ledgers to report to your parent company from your foreign subsidiaries. Other considerations, such as corporate year end, ownership percentages, and local government regulations and taxation, also affect the number of primary ledgers required.

Secondary Ledgers

A secondary ledger is an optional ledger linked to a primary ledger for the purpose of tracking alternative accounting. A secondary ledger can differ from its primary ledger by using a different accounting method, chart of accounts, accounting calendar, currency, or processing options. All or some of the journal entries processed in the primary ledger are transferred to the secondary ledger, based on your configuration options. The transfers are completed based on the conversion level selected. There are four conversion levels:

Note

A full accounting representation of your primary ledger is maintained in any subledger level secondary ledger.

Secondary ledgers provide functional benefits, but produce large volumes of additional journal entry and balance data, resulting in additional performance and memory costs. When adding a secondary ledger, consider your needs for secondary ledgers or reporting currencies, and select the least costly data conversion level that meets your requirements. For secondary ledgers, the least costly level is the adjustment data conversion level because it produces the smallest amount of additional data. The balance data conversion level is also relatively inexpensive, depending upon how often the balances are transferred from the primary to the secondary ledger. The journal and subledger data conversion levels are much more expensive, requiring duplication of most general ledger and subledger journal entries, as well as general ledger balances.

For example, you maintain a secondary ledger for your International Financial Reporting Standards (IFRS) accounting requirements, while your primary ledger uses US Generally Accepted Accounting Principles (GAAP). You decided to select the subledger level for your IFRS secondary ledger. However, since most of the accounting is identical between US GAAP and IFRS, a better solution is to use the adjustment only level for your secondary ledger. The subledger level secondary ledger requires duplication of most subledger journal entries, general ledger journal entries, and general ledger balances. With the adjustment only level, your secondary ledger contains only the adjustment journal entries and balances necessary to convert your US GAAP accounting to the IFRS accounting, which uses a fraction of the resources that are required by full subledger level secondary ledger.

Following are scenarios that may require different combinations of primary and secondary ledgers:

Note

Use the same currency for primary and secondary ledgers to avoid difficult reconciliations, if you have the resources to support the extra posting time and data storage. Use reporting currencies or translations to generate the different currency views needed to comply with internal reporting needs and consolidations.

Reporting Currencies

Reporting currencies maintain and report accounting transactions in additional currencies. Each primary and secondary ledger is defined with a ledger currency that is used to record your business transactions and accounting data for that ledger. It is advisable to maintain the ledger in the currency in which the majority of its transactions are denominated. For example, create, record, and close a transaction in the same currency to save processing and reconciliation time. Compliance, such as paying local transaction taxes, is also easier using a local currency. Many countries require that your accounting records be kept in their national currency.

If you need to maintain and report accounting records in different currencies, you do this by defining one or more reporting currencies for the ledger. There are three conversion levels for reporting currencies:

Note

A full accounting representation of your primary ledger is maintained in any subledger level reporting currency. Secondary ledgers cannot use subledger level reporting currencies.

Of the three data conversion levels available, the balance data conversion level is typically the least expensive, requiring duplication of only the balance level information. The journal and subledger data conversion levels are more expensive, requiring duplication of most general ledger and subledger journal entries, as well as general ledger balances.

Do not use journal or subledger level reporting currencies if your organization has only an infrequent need to translate your financial statements to your parent company's currency for consolidation purposes. Standard translation functionality meets this need. Consider using journal or subledger level reporting currencies when any of the following conditions exist.

Note

The second option is rare since most companies have moved beyond the initial conversion to the EMU currency. However, future decisions could add other countries to the EMU, and then, this option would again be used during the conversion stage.

Financial Ledgers: How They Fit Together

Oracle Fusion Applications is an integrated suite of business applications that connects and automates the entire flow of the business process across both front and back office operations and addresses the needs of a global enterprise. The process of designing the enterprise structure, including the accounting configuration, is the starting point for an implementation. This process often includes determining financial, legal, and management reporting requirements, setting up primary and secondary ledgers, making currency choices, and examining consolidation considerations.

This figure shows the enterprise structure components and their relationships to each other. Primary ledgers are connected to reporting currencies and secondary ledgers to provide complete reporting options. Legal entities are assigned to ledgers, both primary and secondary, and balancing segments are assigned to legal entities. Business units must be connected to both a primary ledger and a default legal entity. Business units can record transactions across legal entities.

Enterprise Structure Components Diagram.

Primary Ledgers

A primary ledger is the main record-keeping ledger. Create a primary ledger by combining a chart of accounts, accounting calendar, ledger currency, and accounting method. To determine the number of primary ledgers, your enterprise structure analysis must begin with determining financial, legal, and management reporting requirements. For example, if your company has separate subsidiaries in several countries worldwide, create multiple primary ledgers representing each country with the local currency, chart of accounts, calendar, and accounting method to enable reporting to each country's legal authorities.

If your company just has sales in different countries, with all results being managed by the corporate headquarters, create one primary ledger with multiple balancing segment values to represent each legal entity. Use secondary ledgers or reporting currencies to meet your local reporting requirements, as needed. Limiting the number of primary ledgers simplifies reporting because consolidation is not required. Other consideration such as corporate year end, ownership considerations, and local government regulations, also affect the number of primary ledgers required.

Secondary Ledgers

A secondary ledger is an optional ledger linked to a primary ledger. A secondary ledger can differ from its related primary ledger in chart of accounts, accounting calendar, currency, accounting method, or ledger processing options. Reporting requirements, for example, that require a different accounting representation to comply with international or country-specific regulations, create the need for a secondary ledger.

Below are scenarios and required action for different components in primary and secondary ledgers:

Note: Journal conversion rules, based on the journal source and category, are required to provide instructions on how to propagate journals and types of journals from the source ledger to the secondary ledger.

Reporting Currencies

Reporting currencies are the currency you use for financial, legal, and management reporting. If your reporting currency is not the same as your ledger currency, you can use the foreign currency translation process or reporting currencies functionality to convert your ledger account balances in your reporting currency. Currency conversion rules are required to instruct the system on how to convert the transactions, journals, or balances from the source representation to the reporting currency.

Legal Entities

Legal entities are discrete business units characterized by the legal environment in which they operate. The legal environment dictates how the legal entity should perform its financial, legal, and management reporting. Legal entities generally have the right to own property and the obligation to comply with labor laws for their country. They also have the responsibility to account for themselves and present financial statements and reports to company regulators, taxation authorities, and other stakeholders according to rules specified in the relevant legislation and applicable accounting standards. During setup, legal entities are assigned to the accounting configuration, which includes all ledgers, primary and secondary.

Balancing Segments

You assign primary balancing segment values to all legal entities before assigning values to the ledger. Then, assign specific primary balancing segment values to the primary and secondary ledgers to represent nonlegal entity related transactions such as adjustments. You can assign any primary balancing segment value that has not already been assigned to a legal entity. You are allowed to assign the same primary balancing segment values to more than one ledger. The assignment of primary balancing segment values to legal entities and ledgers is performed within the context of a single accounting setup. The Balancing Segment Value Assignments report is available to show all primary balancing segment values assigned to legal entities and ledgers across accounting setups to ensure the completeness and accuracy of their assignments. This report allows you to quickly identify these errors and view any unassigned values.

Business Units

A business unit is a unit of an enterprise that performs one or many business functions that can be rolled up in a management hierarchy. When a business function produces financial transactions, a business unit must be assigned a primary ledger, and a default legal entity. Each business unit can post transactions to a single primary ledger, but it can process transactions for many legal entities. Normally, it will have a manager, strategic objectives, a level of autonomy, and responsibility for its profit and loss. You define business units as separate task generally done after the accounting setups steps.

The business unit model:

For example, if your company requires business unit managers to be responsible for managing all aspects of their part of the business, then consider using two balancing segments, company and business unit to enable the production of business unit level balance sheets and income statements.

Transactions are exclusive to business units. In other words, you can use business unit as a securing mechanism for transactions. For example, if you have an export business that you run differently from your domestic business, use business units to secure members of the export business from seeing the transactions of the domestic business.

Define Accounting Configurations of Enterprise Structures: Specify Ledger Options

Specifying Ledger Options: Worked Example

This example demonstrates specifying the ledger options for your primary ledger. Your company, InFusion Corporation, is a multinational conglomerate that operates in the United States (US) and the United Kingdom (UK). InFusion has purchased an Oracle Fusion enterprise resource planning (ERP) solution including Oracle Fusion General Ledger and all of the Oracle Fusion subledgers.

After completing your InFusion America Primary Ledger, select Specify Ledger Options under the Define Accounting Configuration task list on the Functional Setup Manager page.

Note

Both primary and secondary ledgers are created in the same way and use the same user interface to enable their specific ledger options.

Reviewing General Region Options

  1. Accept the Name and Description defaults for the ledger selected.
  2. Review the Currency and Chart of Accounts for the specified ledger, which are automatically populated.

Setting Accounting Calendar Region Options

  1. Review the Accounting Calendar that defaults from your ledger.
  2. Select Jan-2011 as the First Open Period for your ledger.

    Important: Select a period after the first defined period in the ledger calendar to enable running translation. You cannot run translation in the first defined period of a ledger calendar. In this example, your calendar began with Jan-2010.

  3. Enter 3 for the Number of Future Enterable Periods.

    Any value between 0 and 999 periods can be specified to permit entering journals but not posting them in future periods. Minimize the number of open and future periods to prevent entry in the wrong period.

Selecting the Subledger Accounting Region Options

  1. Accept the default Accounting Method from your ledger.
  2. Select US American English as your Journal Language.

Completing the Period Close Region Options

  1. Enter your Retained Earnings Account: 101-00-31330000-0000-000-0000-0000.

    This account is required for the General Ledger to perform the movement of revenue and expense account balances to this account at the end of the accounting year.

  2. Enter your Cumulative Translation Adjustment Account: 101-00-31350000-0000-000-0000-0000.

    Note: The Cumulative Translation Adjustment (CTA) account is required for ledgers running translation.

  3. Do not enter a Default Period End Rate Type or Default Period Average Rate Type.

    The values entered here are used as the default for balance level reporting currency processing. InFusion America Primary Ledger is using the subledger level reporting currency processing.

Specifying the Journal Processing Region Options

  1. Specify the Balance options as outlined in the following table.

    Option

    Setting

    Enable Suspense

    General Ledger

    Default Expense Account

    101-00-98199999-0000-000-0000-0000

    Rounding Account

    101-10-98189999-0000-000-0000-0000

    Entered Currency Balancing Account

    101-10-98179999-0000-000-0000-0000

    Balancing Threshold Percent

    10


  2. Click all the following Entry options listed in the table.

    Option

    Description

    Enable journal approval

    Click to enable journal approval functionality. Approval rules must be created in the Oracle Fusion Approvals Management (AMX).

    Notify when prior period journal

    Notify the user when a prior period date is selected on a journal entry.

    Allow mixed and statistical journals

    Enter both monetary and statistical amounts on the same line in a journal entry.

    Validate reference date

    Requires a reference date in an open or future enterable period.


  3. Click the Separate journals by accounting date during journal import for the Import option to create individual journal entries for each accounting date.
  4. For the Reversal options, select InFusion America Accrual Set from the list of values in the Journal Reversal Criteria Set field and click the Launch AutoReverse after open period to reverse accrual journal entries automatically when a new period is opened.
  5. Click the Enable intercompany accounting for the Intercompany option to enable automatic balancing by the application for primary, second, and third balancing segments (if implemented) on intercompany journal entries and transactions.

    Note: To complete the intercompany accounting functionality, you must define intercompany rules.

FAQs for Specify Ledger Options

What happens if I change the cumulative adjustment account?

To avoid data corruption, your cumulative adjustment account (CTA) can only be changed if you first perform the following set of steps:

What happens if I change the retained earnings account?

To avoid data corruption, your retained earnings account can only be changed if you first perform the following set of steps:

Define Accounting Configurations of Enterprise Structures: Manage Reporting Currencies

Reporting Currency Balances: How They Are Calculated

Reporting currency balances, set at the journal or subledger level, are updated when journal entries that originate in Oracle Fusion General Ledger are posted and converted to your reporting currencies. This process includes General Ledger manual journals, periodic journals, and allocations, and at the subledger level, journals from Oracle Fusion Subledger Accounting and imported from sources other than your Oracle Fusion subledgers. When you post a journal in a ledger that has one or more reporting currencies defined, the posting process creates new journals converted to each of your reporting currencies and includes them in the same batch as the original journal with a status of Posted.

Settings That Affect

Reporting currencies share a majority of the ledger options with their source ledger. For example, the reporting currency uses the same suspense account and retained earnings accounts as its source ledger. However, there are certain options that need to be set specifically for the reporting currencies. For example, reporting currencies are maintained at one of these three currency conversion levels:

Note

Secondary Ledgers cannot use subledger level reporting currencies.

There are multiple dependencies between a reporting currency and its source ledger. Therefore, it is important that you complete your period opening tasks, daily journal or subledger level reporting currencies accounting tasks, and period closing tasks in the correct order. Some guidelines are presented in the table below.


Type

Task

Period Opening Tasks

Open the accounting period in both your ledger and reporting currencies before you create or import journals for the period. Converted journals are only generated in your reporting currency if the period is open or future enterable.

Daily Tasks

Enter the daily conversion rates to convert your journals to each of your reporting currencies.

Period Closing Tasks

  • Finish entering all regular and adjusting journals for the period in your ledger.

  • Post all unposted journals in your ledger if not already done in the previous step.

  • Post all unposted journals in your reporting currencies if not already done in the previous step.

  • Run Revaluation in both your ledger and reporting currencies. Post the resulting revaluation batches in each ledger.

  • As needed, translate balances in your ledger.

  • Generate needed reports from both your ledger and reporting currencies.

  • Close your accounting period in both your ledger and reporting currencies.

How Reporting Currencies Are Calculated

If you use reporting currencies at the journal or subledger level, when you create accounting, post journal entries, or translate balances, journals are posted in your reporting currency. General Ledger and Subledger Accounting automatically generate journals in your reporting currencies where the entered currency amounts are converted to the reporting currency amounts. Other factors used in the calculation of reporting currency balances are listed:

Note

Be careful when changing amounts in a reporting currency, since the changes are not reflected in your source ledger. Making journal entry changes to a reporting currency makes it more difficult to reconcile your reporting currency to your source ledger. In general, enter or change your journals in your source ledger, and then allow posting to update the reporting currency.

Note

If you use reporting currencies at the journal or subledger level, statistical journals are generated for your reporting currencies, but the journals are not affected by the currency conversion process.

Define Business Units: Manage Service Provider Relationships

Shared Service Centers: Explained

Oracle Fusion Applications allows defining relationships between business units to outline which business unit provides services to the other business units.

Service Provider Model

In Oracle Fusion Applications V1.0, the service provider model centralizes only the procurement business function. Your business units that have the requisitioning business function enabled can define relationships with business units that have the procurement business function enabled. These service provider business units will process requisitions and negotiate supplier terms for their client business units.

This functionality is used to frame service level agreements and drive security. The definition of service provider relationships provides you with a clear record of how the operations of your business are centralized. For other centralized processing, business unit security is used (known in Oracle EBS as Multi-Org Access Control). This means that users who work in a shared service center have the ability to get access and process transactions on behalf of many business units.

Shared Service Center: Points to Consider

Oracle Fusion applications supports shared service centers in two ways. First, with business unit security, which allows your shared service centers personnel to process transactions for other business units called clients. This was the foundation of Multi Org Access Control in the Oracle E-Business Suite.

Second, the service provider model expands on this capability to allow a business unit and its personnel in a shared service center to work on transactions of the client business units. It is possible to view the clients of a service provider business unit, and to view service providers of a client business unit.

Your shared service centers provide services to your client business units that can be part of other legal entities. In such cases, your cross charges and recoveries are in the form of receivables invoices, and not merely allocations within your general ledger, thereby providing internal controls and preventing inappropriate processing.

For example, in traditional local operations, an invoice of one business unit cannot be paid by a payment from another business unit. In contrast, in your shared service center environment, processes allowing one business unit to perform services for others, such as paying an invoice, are allowed and completed with the appropriate intercompany accounting. Shared service centers provide your users with access to the data of different business units and can comply with different local requirements.

Security

The setup of business units provides you with a powerful security construct by creating relationships between the functions your users can perform and the data they can process. This security model is appropriate in a business environment where local business units are solely responsible for managing all aspects of the finance and administration functions.

In Oracle Fusion applications, the business functions your business unit performs are evident in the user interface for setting up business units. To accommodate shared services, use business unit security to expand the relationship between functions and data. A user can have access to many business units. This is the core of your shared service architecture.

For example, you take orders in many business units each representing different registered legal entities. Your orders are segregated by business unit. However, all of these orders are managed from a shared service order desk in an outsourcing environment by your users who have access to multiple business units.

Benefits

In summary, large, medium, and small enterprises benefit from implementing share service centers. Examples of functional areas where shared service centers are generally implemented include procurement, disbursement, collections, order management, and human resources. The advantages of deploying these shared service centers are the following:

Service Provider Model: Explained

In Oracle Fusion applications, the service provider model defines relationships between business units for a specific business function, identifying one business in the relationship as a service provider of the business function, and the other business unit as its client.

Procurement Example

The Oracle Fusion Procurement product family has taken advantage of the service provide model by defining outsourcing of the procurement business function. Define your business units with requisitioning and payables invoicing business functions as clients of your business unit with the procurement business function. Your business unit responsible for the procurement business function will take care of supplier negotiations, supplier site maintenance, and purchase order processing on behalf of your client business units. Subscribe your client business units to the supplier sites maintained by the service providers, using a new procurement feature for supplier site assignment.

In the InFusion example below, business unit four (BU4) serves as a service provider to the other three business units (BU1, BU2, and BU3.) BU4 provides the corporate administration, procurement, and human resources (HR) business functions, thus providing cost savings and other benefits to the entire InFusion enterprise.

A figure that shows an example of a
procurement service provider model.

Define Business Units: Specify Customer Contract Management Business Function Properties

Customer Contracts Business Unit Setup: Explained

Using the Specify Customer Contract Management Business Function Properties task, available by navigating to Setup and Maintenance work area and searching on the task name, you can specify a wide variety of business function settings for customer contracts in a specific business unit. The selections you make for these business functions impact how Oracle Fusion Enterprise Contracts behaves during contract authoring.

Using the Specify Customer Contract Management Business Function Properties task, manage these business function properties:

Enabling Related Customer Accounts

Contract authors can specify bill-to, ship-to, and other accounts for the parties in a contract. Enable the related customer accounts option if you want accounts previously specified as related to the contract party to be available for selection.

Managing Currency Conversion Options

If your organization plans to transact project-related business in multiple currencies, then select the multicurrency option. This allows a contract author to override a contract's currency, which defaults from the ledger currency of the business unit. It also enables the contract author to specify currency conversion attributes to use when converting from the bill transaction currency to the contract currency and from the invoice currency to the ledger currency.

In the Bill Transaction Currency to Contract Currency region, enter currency conversion details that will normally be used, by all contracts owned by this business unit, to convert transaction amounts in the bill transaction currency to the contract currency. Newly created contracts contain the default currency conversion values, but you can override the values on any contract, if needed.

In the Invoice Currency to Ledger Currency region:

Managing Project Billing Options

The options available for selection in the Project Billing region control the behavior of project invoicing and revenue recognition for contracts with project-based work.

Project billing can behave differently for external contracts (customer billing) or intercompany and interproject contracts (internal billing).

Set these options, which apply to all contracts:

There are two sets of the following options, one for customer billing and a second for internal billing:

Set this option only for customer billing:

Contract Terms Library Business Unit Setup: Explained

You can specify a wide variety of Contract Terms Library settings for either customer or supplier contracts within each business unit, by using either the Specify Customer Contract Management Business Function Properties or the Specify Supplier Contract Management Business Function Properties tasks. These tasks are available by navigating to the Setup and Maintenance work area and searching on the task name.

For the Contract Terms Library in each business unit, you can:

Enabling Clause Adoption

If you plan to use clause adoption in your implementation, then set up the following:

Setting Clause Numbering Options

You can set up automatic clause numbering for the clauses in the business unit by selecting Automatic in the Clause Numbering field and entering a Document Sequence Category you previously set up in the Clause Sequence Category field. If clause numbering is manual, contract terms library administrators must enter unique clause numbers each time they create a clause.

You can choose to display the clause number in front of the clause title in contracts by selecting the Display Clause Number in Clause Title option.

Enabling Contract Expert

You must select the Enable Contract Expert option to be able to use the Contract Expert feature in a business unit. This setting takes precedence over enabling Contract Expert for individual contract terms templates.

Specifying the Printed Clause and Deviations Report Layouts

For each business unit, you can specify the Oracle BI Publisher RTF file that serves as the layout for:

Define Business Units: Specify Supplier Contract Management Business Function Properties

Supplier Contracts Business Unit Setup: Explained

Using the Specify Supplier Contract Management Business Function Properties task, available by selecting Setup and Maintenance from the Tools menu and searching on the task name, you can specify a variety of business function settings for supplier contracts in a specific business unit.

The selections you make for these business functions impact how the Contract Terms Library behaves during supplier contract authoring.

Managing Contract Terms Library Setup Options

The setup options available for the Contract Terms Library are applicable to both customer and supplier contracts, and are described in the business unit setup topic for the Contract Terms Library. That topic is available as a related link to this topic.

Contract Terms Library Business Unit Setup: Explained

You can specify a wide variety of Contract Terms Library settings for either customer or supplier contracts within each business unit, by using either the Specify Customer Contract Management Business Function Properties or the Specify Supplier Contract Management Business Function Properties tasks. These tasks are available by navigating to the Setup and Maintenance work area and searching on the task name.

For the Contract Terms Library in each business unit, you can:

Enabling Clause Adoption

If you plan to use clause adoption in your implementation, then set up the following:

Setting Clause Numbering Options

You can set up automatic clause numbering for the clauses in the business unit by selecting Automatic in the Clause Numbering field and entering a Document Sequence Category you previously set up in the Clause Sequence Category field. If clause numbering is manual, contract terms library administrators must enter unique clause numbers each time they create a clause.

You can choose to display the clause number in front of the clause title in contracts by selecting the Display Clause Number in Clause Title option.

Enabling Contract Expert

You must select the Enable Contract Expert option to be able to use the Contract Expert feature in a business unit. This setting takes precedence over enabling Contract Expert for individual contract terms templates.

Specifying the Printed Clause and Deviations Report Layouts

For each business unit, you can specify the Oracle BI Publisher RTF file that serves as the layout for:

Define Business Units: Assign Business Unit Business Function

Business Functions: Explained

A business unit can perform many business functions in Oracle Fusion Applications. Prior to Oracle Fusion Applications, operating units in Oracle E-Business Suite were assumed to perform all business functions, while in Oracle PeopleSoft , each business unit had one specific business function. Oracle Fusion Applications blends these two models and allows defining business units with one or many business functions.

Business Functions

A business function represents a business process, or an activity that can be performed by people working within a business unit and describes how a business unit is used. The following business functions exist in Oracle Fusion applications:

Although there is no relationship implemented in Oracle Fusion Applications, a business function logically indicates a presence of a department in the business unit with people performing tasks associated with these business functions. A business unit can have many departments performing various business functions. Optionally, you can define a hierarchy of divisions, business units, and departments as a tree over HCM organization units to represent your enterprise structure.

Note

This hierarchy definition is not required in the setup of your applications, but is a recommended best practice.

Your enterprise procedures can require a manager of a business unit to have responsibility for their profit and loss statement. However, there will be cases where a business unit is performing only general and administrative functions, in which case your manager's financial goals are limited to cost containment or recovering of service costs. For example, if a shared service center at the corporate office provides services for more commercially-oriented business units, it does not show a profit and therefore, only tracks its costs.

In other cases, where your managers have a responsibility for the assets of the business unit, a balance sheet can be produced. The recommended best practice to produce a balance sheet, is to setup the business unit as a balancing segment in the chart of accounts. The business unit balancing segment can roll up to divisions or other entities to represent your enterprise structure.

When a business function produces financial transactions, a business unit must be assigned to a primary ledger, and a default legal entity. Each business unit can post transactions to a single primary ledger, but it can process transactions for many legal entities.

The following business functions generate financial transactions and will require a primary ledger and a default legal entity:

Business Unit Hierarchy: Example

For example, your InFusion America Company provides:

The InFusion Air Systems division further segments your business into the System Components and Installation Services subdivisions. Your subdivisions are divided by business units:

A figure that shows an example of a
business unit hierarchy.

Oracle Fusion applications facilitates independent balance sheet rollups for legal and management reporting by offering up to three balancing segments. Hierarchies created using the management segment can provide the divisional results. For example, it is possible to define management segment values to correspond to business units, and arrange them in a hierarchy where the higher nodes correspond to divisions and subdivisions, as in the Infusion US Division example above.

Define Business Units: Manage Business Units

Business Units: Explained

A business unit is a unit of an enterprise that performs one or many business functions that can be rolled up in a management hierarchy. A business unit can process transactions on behalf of many legal entities. Normally, it will have a manager, strategic objectives, a level of autonomy, and responsibility for its profit and loss. Roll business units up into divisions if you structure your chart of accounts with this type of hierarchy. In Oracle Fusion Applications, you assign your business units to one primary ledger. For example, if a business unit is processing payables invoices they will need to post to a particular ledger. This assignment is mandatory for your business units with business functions that produce financial transactions.

In Oracle Fusion Applications, use business unit as a securing mechanism for transactions. For example, if you run your export business separately from your domestic sales business, secure the export business data to prevent access by the domestic sales employees. To accomplish this security, set up the export business and domestic sales business as two separate business units.

The Oracle Fusion Applications business unit model:

Business units process transactions using reference data sets that reflect your business rules and policies and can differ from country to country. With Oracle Fusion Application functionality, you can choose to share reference data, such as payment terms and transaction types, across business units, or you can choose to have each business unit manage its own set depending on the level at which you wish to enforce common policies.

In countries where gapless and chronological sequencing of documents is required for subledger transactions, define your business units in alignment with your ledger definition, because the uniqueness of sequencing is only ensured within a ledger. In these cases, define a single ledger and assign one legal entity and business unit.

In summary, use business units in the following ways:

Brief Overview of Business Unit Security

Business units are used by a number of Oracle Fusion Applications to implement data security. You assign data roles to your users to give them access to data in business units and permit them to perform specific functions on this data. When a business function is enabled for a business unit, the application can trigger the creation of data roles for this business unit base on the business function's related job roles.

For example, if a payables invoicing business function is enabled, then it is clear that there are employees in this business unit that perform the function of payables invoicing, and need access to the payables invoicing functionality. Therefore, based on the correspondence between the business function and the job roles, appropriate data roles are generated automatically. Use Human Capital Management (HCM) security profiles to administer security for employees in business units.

Define Workforce Structures: Manage Enterprise HCM Information

Managing Enterprise Information for Non-Oracle Fusion HCM Users: Explained

The Manage Enterprise HCM Information task includes default settings for your enterprise such as the employment model, worker number generation, and so on. If you are not implementing Oracle Fusion Human Capital Management (HCM), then the only action you may need to perform using this task is to change the enterprise name, if necessary. The other settings are HCM-specific and are not relevant outside of Oracle Fusion HCM.

Define Workforce Structures: Manage Locations

Locations: Explained

A location identifies physical addresses of a workforce structure, such as a department or a job. You can also create locations to enter the addresses of external organizations that you want to maintain, such as employment agencies, tax authorities, and insurance or benefits carriers.

The locations that you create exist as separate structures that you can use for reporting purposes, and also in rules that determine employee eligibility for various types of compensation and benefits. You enter information about a location only once. Subsequently, when you set up other workforce structures you select the location from a list.

Location Sets

When you create a location, you must associate it with a set. Only those users who have access to the set's business unit can access the location set and other associated workforce structure sets, such as those that contain departments and jobs.

You can also associate the location to the common set so that users across your enterprise can access the location irrespective of their business unit. When users search for locations, they can see the locations that they have access to along with the locations in the common set.

The following figure shows how locations sets restrict access to users.

Controlling access to locations using
sets

Define Workforce Structures: FAQs for Manage Locations

Why can't I see my location in the search results?

You can search for approved locations only. Also, if you created a location in Oracle Fusion Trading Community Model, then you can't access that location from Oracle Fusion Global Human Resources. For use in Oracle Fusion HCM, you must recreate the location from the Manage Locations page.

How can I associate a location with an inventory organization?

From the Manage Locations page in Oracle Fusion Global Human Resources.

To appear on the Create or Edit Location pages, your inventory organization must be effective on today's date and must exist in the location set that you selected.

What happens if I select an inventory organization when I'm creating or editing a location?

The location is available for selection in purchase documents of that inventory organization in Oracle Fusion Inventory Management. If you don't select an inventory organization, then the location is available in purchase documents across all inventory organizations.

What happens if I select a geographic hierarchy node when I'm creating or editing a location?

The calendar events that were created for the geographical node start to apply for the location and may impact the availability of worker assignments at that location. The geographical hierarchy nodes available for selection on the Locations page display from a predefined geographic hierarchy.

What happens if I inactivate a location?

Starting from the effective date that you entered, you can no longer associate the location with other workforce structures, assignments, or applications. If the location is already in use, it will continue to be available to the components that currently use it.

Define Workforce Structures: Manage Divisions

Division: Explained

Managing multiple businesses requires that you segregate them by their strategic objectives and measure their results. Responsibility to reach objectives can be delegated along the management structure. Although related to your legal structure, the business organizational hierarchies do not need to reflect directly the legal structure of the enterprise. The management entities and structure can include divisions and subdivisions, lines of business, and other strategic business units, and include their own revenue and cost centers. These organizations can be included in many alternative hierarchies and used for reporting, as long as they have representation in the chart of accounts.

Divisions

A division refers to a business oriented subdivision within an enterprise, in which each division organizes itself differently to deliver products and services or address different markets. A division can operate in one or more countries, and can be comprised of many companies or parts of different companies that are represented by business units.

A division is a profit center or grouping of profit and cost centers, where the division manager is responsible for attaining business goals including profit goals. A division can be responsible for a share of the company's existing product lines or for a separate business. Managers of divisions may also have return on investment goals requiring tracking of the assets and liabilities of the division. The division manager reports to a top corporate executive.

By definition a division can be represented in the chart of accounts. Companies may choose to represent product lines, brands, or geographies as their divisions: their choice represents the primary organizing principle of the enterprise. This may coincide with the management segment used in segment reporting.

Oracle Fusion Applications supports a qualified management segment and recommends that you use this segment to represent your hierarchy of business units and divisions. If managers of divisions have return on investment goals, make the management segment a balancing segment. Oracle Fusion applications allows up to three balancing segments. The values of the management segment can be comprised of business units that roll up in a hierarchy to report by division.

Historically, divisions were implemented as a node in a hierarchy of segment values. For example, Oracle E-Business Suite has only one balancing segment, and often the division and legal entity are combined into a single segment where each value stands for both division and legal entity.

Use of Divisions in Oracle Fusion Human Capital Management (HCM)

Divisions are used in HCM to define the management organization hierarchy, using the generic organization hierarchy. This hierarchy can be used to create organization based security profiles.

Adding a New Division After Acquiring a Company: Example

This example shows how to restructure your enterprise after acquiring a new division.

Scenario

You are part of a senior management team at InFusion Corporation. InFusion is a global company with organizations in the United States (US), the United Kingdom (UK), France, China, Saudi Arabia, and the United Arab Emirates (UAE). Its main area of business is in the high tech industry, and it has just acquired a new company. You must analyze their current enterprise structure and determine what new organizations you need to create to accommodate the new company.

Details of the Acquired Company

The acquired company is a financial services business based in Germany. Because the financial services business differs significantly from the high tech business, you want to keep the financial services company as a separate business with all the costs and reporting rolling up to the financial services division.

Analysis

The following table summarizes the key decisions that you must consider when determining what new organizations to set up and how to structure the enterprise.


Decision to Consider

In This Example

Create location?

The financial services company is based in Frankfurt as are the departments, so you need to create only one location.

Create separate division?

Yes. Although the new division will exist within the current enterprise structure, you want to keep the financial services company as a separate line of business. Creating a separate division means you can manage the costs and reporting separately from the InFusion Corporation. It also means you do not have to modify any existing organizations in the enterprise setup.

Create business unit?

Yes. The financial services business requires you to create several jobs that do not exist in your high tech business. You can segregate the jobs that are specific to financial services in a new business unit.

How many departments?

The financial services company currently has three departments for sales, accounting, and marketing. As you have no plans to downsize or change the company, you can create three departments to reflect this structure.

How many cost centers?

Although you can have more than one cost center tracking the costs of a department, you decide to create one cost center for each department to track costs.

How many legal entities?

Define a legal entity for each registered company or other entity recognized in law for which you want to record assets, liabilities, and income, pay transaction taxes, or perform intercompany trading. In this case, you need only one legal entity.

You must define the legal entity as a legal employer and payroll statutory unit. As the new division operates in Germany only, you can configure the legal entity to suit Germany legal and statutory requirements.

Note

When you identify the legal entity as a payroll statutory unit, the application transfers the legal reporting unit that is associated with that legal entity to Oracle Fusion HCM as a tax reporting unit.

Create legislative data group?

Yes. Because you currently do not employ or pay people in Germany, you must create one legislative data group to run payroll for the workers in Germany.

Resulting InFusion Enterprise Structure

Based on the analysis, you must create the following:

The following figure illustrates the structure of InFusion Corporation after adding the new division and the other organizations.

A graphic that illustrates InFusion
corporation after adding a new division

Define Workforce Structures: Manage Departments

Cost Centers and Departments: Explained

A cost center represents the smallest segment of an organization for which costs are collected and reported. A department is an organization with one or more operational objectives or responsibilities that exist independently of its manager and has one or more workers assigned to it.

The following two components need to be considered in designing your enterprise structure:

Cost Centers

A cost center also represents the destination or function of an expense as opposed to the nature of the expense which is represented by the natural account. For example, a sales cost center indicates that the expense goes to the sales department.

A cost center is generally attached to a single legal entity. To identify the cost centers within a chart of accounts structure use one of these two methods:

Departments

A department is an organization with one or more operational objectives or responsibilities that exist independently of its manager. For example, although the manager may change, the objectives do not change. Departments have one or more workers assigned to them.

A manager of a department is typically responsible for:

Note

The manager of a sales department may also be responsible for meeting the revenue targets.

The financial performance of departments is generally tracked through one or more cost centers. In Oracle Fusion Applications, departments are defined and classified as Department organizations. Oracle Fusion Human Capital Management (HCM) assigns workers to departments, and tracks the headcount at the departmental level.

The granularity of cost centers and their relationship to departments varies across implementations. Cost center and department configuration may be unrelated, identical, or consist of many cost centers tracking the costs of one department.

Department Classifications: Points to Consider

A department can be classified as a project organization, sales and marketing organization, or cost organization.

Oracle Fusion Human Capital Management (HCM) uses trees to model organization hierarchies. It provides seeded tree structures for department and other organizational hierarchies that can include organizations with any classification.

Project Organization

Classify departments as a project owning organization to enable associating them with projects or tasks. The project association is one of the key drivers for project access security.

In addition, you must classify departments as project expenditure organizations to enable associating them to project expenditure items. Both project owning organizations and project expenditure organizations can be used by Oracle Fusion Subledger Accounting to derive accounts for posting Oracle Fusion Projects accounting entries to Oracle Fusion General Ledger.

Sales and Marketing Organization

In Oracle Fusion Customer Relationship Management (CRM), you can define sales and marketing organizations. Sales organization hierarchies are used to report and forecast sales results. Sales people are defined as resources assigned to these organizations.

In some enterprises, the HCM departments and hierarchies correspond to sales organizations and hierarchies. It is important to examine the decision on how to model sales hierarchies in relationship to department hierarchies when implementing customer relationship management to eliminate any possible redundancy in the definition of the organizations.

The following figure illustrates a management hierarchy, in which the System Components Division tracks its expenses in two cost centers, Air Compressors and Air Transmission. At the department level, two organizations with a classifications of Department are defined, the Marketing Department and Sales Department. These two departments can be also identified as a Resource Organizations, which will allow assigning resources, such as sales people, and other CRM specific information to them. Each department is represented in the chart of accounts by more than one cost center, allowing for granular as well as hierarchical reporting.

The figure illustrates a management hierarchy, in which the System Components Division tracks
its expenses in two cost centers. The department is defined as an
organization with a classification of Marketing Department, and a
classification of Sales Department.

Cost Organization

Oracle Fusion Costing uses a cost organization to represent a single physical inventory facility or group of inventory storage centers, for example, inventory organizations. This cost organization can roll up to a manager with responsibility for the cost center in the financial reports.

A cost organization can represent a costing department. Consider this relationship when determining the setup of departments in HCM. There are no system dependencies requiring these two entities, cost organization and costing department, be set up in the same way.

Define Workforce Structures: FAQs for Manage Job Families

What's the difference between a job set and a job family?

A job family is a group of jobs that have different but related functions, qualifications, and titles. They are beneficial for reporting. You can define competencies for job families by associating them with model profiles.

A job set is an organizational partition of jobs. For example, a job set can be global and include jobs for use in all business units, or it can be restricted to jobs for a specific country or line of business. When you select a job, for a position or an assignment, the available jobs are those in the set associated with the business unit in which you are working, and also those in the Common set.

Define Workforce Structures: Manage Job

Jobs: Example

Jobs are typically used without positions by service industries where flexibility and organizational change are key features.

Software Industry

For example, XYZ Corporation has a director over the departments for developers, quality assurance, and technical writers. Recently, three developers have left the company. The director decides to redirect the head count to other areas. Instead of hiring all three back into development, one person is hired to each department, quality assurance, and technical writing.

In software industries, the organization is fluid. Using jobs gives an enterprise the flexibility to determine where to use head count, because the job only exists through the person performing it. In this example, when the three developers leave XYZ Corporation, their jobs no longer exist, therefore the corporation has the flexibility to move the headcount to other areas.

This figure illustrates the software industry job setup.

Jobs setup example

Define Workforce Structures: Manage Person Search Relevance Profile Option Values

Search Relevance Profile Options: Explained

The strength of the relationship between the person performing a gallery search and each person whose assignment appears in the search results can determine the order of the results: the stronger the relationship, the closer to the top of the results an assignment appears. The search relevance profile options control how the strength of the relationship between the searcher and the search result is calculated.

Weighting Profile Options

Using the following profile options, you can change the weighting applied to the relevant factors.


Profile Option

Description

HR: Organization Hierarchy Weight

Specifies the weighting applied to the relationship strength value for the organization hierarchy proximity factor.

HR: Position Hierarchy Weight

Specifies the weighting applied to the relationship strength value for the position hierarchy proximity factor.

HR: Manager Hierarchy Weight

Specifies the weighting applied to the relationship strength value for the manager hierarchy proximity factor.

HR: Location Proximity Weight

Specifies the weighting applied to the relationship strength value for the location proximity factor.

HR: Selection History Weight

Specifies the weighting applied to the relationship strength value for the selection history factor.

HR: Social Network Weight

Specifies the weighting applied to the relationship strength value for the social network factor.

The default value of each weighting profile option is 0.5. To increase the relevance of a factor relative to other factors, you increase its weighting; to decrease its relevance, you reduce its weighting.

HR: Selection History Timeout

The number of times the searcher selects a person's assignment from the search results during a specified period, which is 7 days by default, is recorded automatically. You can specify this period for the enterprise on the HR: Selection History Timeout profile option.

HR: Maximum Hierarchy Proximity

When the searcher's primary assignment is in the same organization, position, or manager hierarchy as a person's assignment, the strength of the relationship depends on their proximity to each other in the hierarchy. The maximum number of hierarchy boundaries to include in the calculation is 4 by default. You can set this value for the enterprise on the HR: Maximum Hierarchy Proximity profile option.

HR: Relationship Priority Factor

The searcher can specify a rating for a search result, and each rating is associated with a multiplying factor. On this profile option, you can specify the highest possible multiplying factor that can be applied to a search result. By default, the multiplying factor is 2. If you increase its value, you increase the significance of the searcher's own ratings relative to other factors.

Define Facilities: Manage Facility Shifts, Workday Patterns, and Schedules

How Schedule Components Fit Together

Schedules are comprised of workday patterns and exceptions. Workday patterns are comprised of shifts.

First, create shifts and then assign them to workday patterns. Next, create a schedule that is a collection of workday patterns. You can also create exceptions to assign to schedules. All of these components are illustrated in the following diagram:

Schedule components flow diagram

Shift

A shift is a period of time, typically expressed in hours, and it can be defined by a start time and an end time, or a duration. A shift can be for a work period or a off period. You can create time, duration, and elapsed shifts.

Workday Pattern

A workday pattern is a collection of shifts for a specific number of days. You can create time, duration, and elapsed workday patterns.

Exception

An exception is a record of a date that overrides the availability of a resource to which a schedule has been assigned. For example, a resource is assigned a schedule that includes December 25 as a working day. An exception can be created for December 25 and applied to that schedule to override resource availability for that date. Exceptions can also be for a date time period such as 9 AM to 11 AM on December 25th.

Schedule

A schedule is defined by a start date, an end date, and a sequence of workday patterns to be followed between those dates. A schedule can also contain exception dates that override the availability of resources to which the schedule is assigned. Quarter Types such as 4-4-5, 4-5-4 are supported.

Managing Shifts: Examples

A shift is a period of time, typically expressed in hours, that is used to build workday patterns. Workday patterns are used to build schedules. There are multiple types of shifts you can create. The following scenarios illustrate each type:

Managing Time Shifts

Next month you are adding a second shift for your manufacturing operations. This new shift will start right after your regular first shift. You can create a time shift that starts at 4:00 p.m. and ends at 12:00 a.m . There are restrictions in updating existing shifts and patterns. Shifts and patterns cannot be updated if they effect a schedule. If a shift is created but not assigned to a pattern (or assigned to a pattern but pattern is not assigned to a schedule) it can be updated. If a pattern is created and not assigned to a schedule it can be updated.

Managing Time Shifts with Punch Details

Your division has decided that the employees in the office must clock in and out for lunch starting next week. All employees will take the same lunch hour. Add punch shift details to the existing shift so that employees punch in at 8:00 a.m.; they punch out for lunch from 11:30 a.m. to 12:30 p.m.; they punch back in at 12:30 p.m.; and they punch out for the day at 5:00 p.m.

Managing Time Shifts with Flexible Details

Jorge Sanchez is a contractor who is starting work in your department next week. His hours will be flexible, so you need to create a new time shift with flexible details that he can use to record his time. He will have a flexible start time from 7:00 a.m. to 9:00 a.m. and a flexible end time from 4:00 p.m. to 6:00 p.m. His core work hours will be from 9:00 a.m. to 4:00 p.m.

Managing Duration Shifts

One of the divisions in your organization does not use fixed start and end times for its daily shifts; the division only records the total duration of the shift and indicates if resources are available or not during that time. All of the employees in the division are available for 24 hours straight, and then they are not available for the next 24 hours. You should create a duration shift that indicates that resources are available for 24 hours, and create a second duration shift that indicates that resources are not available for 24 hours.

Managing Elapsed Shifts

The employees in the Human Resources department all work 8 hours a day, but the start and end times vary by employee. Some employees start at early as 6:00 a.m.; while others don't start until 9:00 a.m. Create an elapsed shift with a duration of 8 hours, where all employees are assumed to be available for the number of hours in the shift at any time during the day.

Managing Workday Patterns: Examples

A workday pattern is a collection of shifts for a specific number of days. There are multiple types of workday patterns you can create. The following scenarios illustrate each type:

Managing Time Workday Patterns

Your department works a Monday through Friday workweek with 8 hour shifts each day. Time patterns always have time shifts. That is, the shift will have start time and end time. You can create a time workday pattern with a length of 7 days and details of an 8 hour time shift for days 1 through 5. Days 6 and 7 are considered nonworking days. Remember that time patterns always have time shifts, that is, have a start time and an end time.

Managing Duration Workday Patterns

A new group of employees start next month, and each employee will work a schedule where he or she is available for 10 hours, and then not available for the next 16 hours, and then available for 10 hours again, and so on. This pattern starts on midnight of the first day of the next month. Create a duration workday pattern with a 10 hour available duration shift, followed by a 16 hour not available duration shift. Do not specify the pattern length or start and end days, and the pattern will repeat for the length of the schedule to which it is associated.

Managing Elapsed Workday Patterns

In the summer, several divisions in your organization work only 4 hours on Fridays. They work extended hours on Wednesdays and Thursdays to cover the 4 hours they will not work on Fridays. Create an elapsed workday pattern with a length of 7 days. Days 1 and 2 will have an 8 hour shift assigned; while days 3 and 4 will have a 10 hour shift assigned. Finally, day 5 will have a 4 hour shift assigned. As in the time workday pattern, days 6 and 7 are considered nonworking days.

Define Facilities: Manage Inventory Organizations

Inventory Organizations: Explained

An inventory organization is a logical or physical entity in the enterprise that is used to store definitions of items or store and transact items.

You select the following usages in the inventory organization's properties:

Item Management

Inventory organizations used for item management, which are the same as item organizations, store only definitions of items. Use inventory organizations for item management when the storage or movement of inventory does not need to be physically or financially tracked. For example, in a retail implementation you can create an inventory organization for item management to store the names of items that are listed by and sold through each retail outlet, while a different system tracks physical inventory and transactions. If it is necessary in the future, you can change an inventory organization's usage from item management to item and inventory management in the inventory organization's properties.

Item and Inventory Management

Inventory organizations used for item and inventory management store and transact items, in addition to item definitions. An inventory organization used for item and inventory management is associated with one business unit, one legal entity, and one primary ledger. Use inventory organizations for item and inventory management when the storage or movement of inventory needs to be physically and financially tracked. Inventory organizations used for item and inventory management can represent facilities such as manufacturing centers, warehouses, or distribution centers. You cannot change an inventory organization's use from item and inventory management to item management.

Inventory Organization: Critical Choices

In Oracle Fusion, storage facilities, warehouses, and distribution centers are implemented as inventory organizations.

Inventory organizations are:

There are two types of inventory organizations:

Storage and manufacturing facilities are related to other organizational entities through a business unit that stores, manufactures, and distributes goods through many factories, warehouses, and distribution centers. The material parameters are set for both the facilities, enabling movement of material in the organization. This business unit has the business function of Materials Management enabled. Oracle Fusion Applications allow many inventory organizations to be assigned to one business unit.

Note

Currently, Oracle Fusion Applications do not include manufacturing capabilities, so setup your manufacturing facilities outside of Oracle Fusion applications.

Distribution Center as an Inventory Organization

A distribution center can store inventory that is the responsibility of different business units. In this situation, assign an inventory organization to each business unit as a representation of the inventory in the distribution center. The multiple inventory organizations representing the inventory are defined with the same location to show that they are a part of the same distribution center.

In the following figure the two business units, Air Compressors and Air Transmission, share one distribution center in Atlanta. The two inventory organizations, Air Compressors and Air Transmission represent the inventory for each business unit in the Atlanta distribution center and are both assigned the Atlanta location.

The figure illustrates the distribution
centers within the business units acting as inventory organizations
for the respective business units.

Legal Entities Own Inventory Organizations

A legal entity owns the inventory located in a storage or manufacturing facility. This ownership is assigned through the relationship of the inventory organization representing the inventory and the legal entity assigned to the inventory organization. The legal entity assigned to the inventory organization shares the same primary ledger as the inventory organization's business unit.

The inventory is tracked in the inventory organization owned by the legal entity of which the business unit is part. All transactions are accounted for in the primary ledger of the legal entity that owns the inventory.

The figure below illustrates the inventory owned by InFusion Air Quality legal entity. The InFusion Air Quality legal entity is associated with the Air Compressors business unit, which is associated with the two Air Compressors inventory organizations. Therefore, InFusion Air Quality legal entity owns the entire inventory in both the Dallas and Atlanta locations.

The figure illustrates the default
legal entity of a business unit owns the inventory in the inventory
organization of the business unit.

Facility Schedules Are Associated with Inventory Organizations

A prerequisite to defining an inventory organization is to define a facility schedule. Oracle Fusion Applications allow you to associate an inventory organization with a schedule.

Facility schedules allow creating workday calendars for inventory organizations that are used in the Oracle Fusion Supply Chain Management product family. For example, use workday calendars in the scheduling of cycle counts and calculating transit time.

Inventory Organization Prerequisites: Points to Consider

You can create a new inventory organization, or select an existing organization to define as an inventory organization.

Before creating inventory organizations:

Setting Up Inventory Organization Dependencies

When you create an inventory organization, you must associate it to dependencies, such as business units and legal entities. For this reason, create these dependencies before creating an inventory organization.

Planning Inventory Organization Parameters

Before creating an inventory organization, plan the inventory organization's parameters

Consider the following when planning to configure an inventory organization's parameters

Rounding the Reorder Quantity: How It Affects Min-Max Planning Reorder Calculations

When you specify to round reorder quantities, min-max planning reorders for item subinventories are automatically rounded up or down.

Settings That Affect Rounding the Reorder Quantity

Reorder quantities for an item subinventory are calculated based on:

How Rounding the Reorder Quantity Affects Min-Max Planning Reorder Quantity Calculations

If you enable rounding the reorder quantity for the inventory organization, and specify the fixed lot multiple for the item subinventory, the reorder quantity is rounded up. If you disable rounding the reorder quantity for the inventory organization, and specify the fixed lot multiple for the item subinventory, the reorder quantity is rounded down.

Note

To round reorder quantities, you must specify a fixed lot multiple.

Example: Rounding the Reorder Quantity

Assume that the reorder quantity is 24. If you enable rounding the reorder quantity and specify 10 for the fixed lot multiple, the reorder quantity is rounded up to 30. If you disable rounding the reorder quantity and keep the fixed lot multiple at 10, the reorder quantity is rounded down to 20.

Selecting Lot Number Uniqueness Control: Critical Choices

Select one of the following lot number uniqueness control options to apply to the items in your inventory organization:

No Uniqueness Control

You can assign the same lot number to multiple items in the same inventory organization and across inventory organizations. The following table provides an example of how lot numbers are generated when uniqueness control is not applied, both within and across inventory organizations.


Within Inventory Organization

Across Inventory Organizations

Item AS100 (printer) / Lot LN100

Item AS100 (printer) / Lot LN100

Item AS101 (laptop computer) / Lot LN100

Item AS101 (laptop computer) / Lot LN100

Across Items

You can only assign a unique lot number to a single item in one inventory organization. If the same item is also in a different inventory organization, you must assign that item a unique lot number. The following table provides an example of how lot numbers are generated when uniqueness control is applied across items, both within and across inventory organizations.


Within Inventory Organization

Across Inventory Organizations

Item AS100 (printer) / Lot LN100

Item AS100 (printer) / Lot LN300

Item AS101 (laptop computer) / Lot LN200

Item AS101 (laptop computer) / Lot LN400

FAQs for Manage Inventory Organizations

What happens if I select the Supplier item sourcing type for replenishment?

Items are replenished from an external supplier.

What happens if I create an inventory organization as a logistics services organization?

The inventory organization is not costed, and shipment lines from different logistics service provider customers cannot be packed in the same packing unit.

Define Facilities: Manage Item Organizations

Item Organization: Explained

An item organization defines an item when inventory balances are not stored and inventory storage or inventory movement is not reflected in the Oracle Fusion Applications. For example, you would use an item organization in a retail scenario, if you need to know the items that are listed by and sold through each retail outlet even though inventory and transactions are recorded in another system. In Oracle Fusion Customer Relationship Management (CRM), item organizations are used to define sales catalogs.

Note

Item Master Organization: Explained

An item master organization lists and describes items that are shared across several inventory organizations or item organization.

The following example shows the choice between inventory organizations that track inventory transactions, stored in two warehouses, and item organizations that just track items, listed in two sales catalogs.

The figure shows the difference between
inventory organizations that track inventory transactions, stored
in two warehouses, and item organizations that just track items, listed
in two catalogs.

For the most efficient processing, you should:

Note

Oracle Fusion allows multiple item masters, however, use this capability cautiously. If you acquire a company, there may be value in allowing the old item master to exist for a transition period. If you manage your subsidiaries as separate businesses, there may be reduced value in a single item master.