6Define Enterprise Structures for Procurement

This chapter contains the following:

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:

  • Industry

  • Business unit requirements for autonomy

  • Business and accounting policies

  • Business functions performed by business units and optionally, centralized in shared service centers

  • Locations of facilities

Every enterprise has three fundamental structures that describe its operations and provide a basis for reporting.

  • Legal

  • Managerial

  • Functional

In Oracle Fusion, these structures are implemented using the chart of accounts and organization hierarchies. 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

  • Departments

Aligned these structures with your strategic objectives.

This figure illustrates a grid with Business Axis, representing the enterprise division, Legal Axis representing the companies, and the Functional Axis representing the business functions.

This figure illustrates a grid with Business Axis,
representing the enterprise division, Legal Axis representing the
companies, and the Functional Axis representing the business functions.

Legal Structure

The figure illustrates 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.

  • Owned by its shareholders, who may be individuals or other corporations.

Many other kinds of legal entities exist, 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 the entity is registered. When granted these privileges, legal entities are also assigned responsibilities to:

  • Account for themselves to the public through statutory and external reporting.

  • Comply with legislation and regulations.

  • Pay income and transaction taxes.

  • Process value added tax (VAT) collection on behalf of the taxing authority.

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.

The figure illustrates:

  • 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 contributes to 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 its 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 have to be reflected directly in the legal structure of the enterprise. The management structure can include divisions, subdivisions, lines of business, strategic business units, profit, and cost centers. In the figure,, the management structure is shown on the Business Axis. In Oracle Fusion Applications, the management structure is implemented using divisions and business units as well as being reflected in the chart of accounts.

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. 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 and selling, general, and administrative 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 includes:

  • Set Up Enterprise Structures business process, which consists of implementation activities that span many product families.

  • Information Technology, a second Business Process Model which contains the Set Up Information Technology Management business process.

  • Define Reference Data Sharing, which 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 to implement.

The following figure and tablet describe the Business Process Model structures and activities.

This figure shows the Business Process Model (BPM) structures:
Enterprise Planning and Performance Management: Set Up Enterprises
Structures and Information Technology: Set Up Information Technology
Management. The figure shows BPM activities including:: Define Enterprise,
Define Enterprise Structures, Define Legal Jurisdictions and Authorities,
Define Legal Entities, Define Business Units, Define Financial Reporting
Structures, Define Chart of Accounts, Define Ledgers, Define Accounting
Configurations, Define Facilitates, and Define Reference Data Sharing.

The table describes each BPM activity.

BPM Activities Description

Define Enterprise

Define the enterprise to get the name of the deploying enterprise and the location of the headquarters.

Define Enterprise Structures

Define enterprise structures to represent an organization with one or more legal entities under common control. Define 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 perform 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 has a manager, strategic objectives, a level of autonomy, and responsibility for its profit and loss.

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 your manufacturing and storage facilities as Inventory Organizations if Oracle Fusion tracks inventory balances there and Item Organizations if Oracle Fusion only tracks the items used in the facility but not the balances.

Define Reference Data Sharing

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

Note: Some product-specific implementation activities 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. The following are some questions and points to consider as you design your global enterprise structure in Oracle Fusion.

  • Enterprise Configuration

  • Business Unit Management

  • Security Structure

  • Compliance Requirements

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 US dollars. Your product line includes all the components to build and maintain air quality monitoring (AQM) applications 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 initial costs of these applications.

Analysis

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

  • Your company is required to report using US Generally Accepted Accounting Principles (GAAP) standards and UK Statements of Standard Accounting Practice and Financial Reporting Standards. How many ledgers do you want to achieve proper statutory reporting?

  • Your managers need reports that show profit and loss (revenue and expenses) for their lines of business. Do you use business units and balancing segments to represent your divisions and businesses? Do you secure data by two segments in your chart of accounts which represents each department and legal entity? Or do you use one segment that represents both to produce useful, but confidential management reports?

  • Your corporate management requires reports showing total organizational performance with drill-down capability to the supporting details. Do you need multiple balancing segment hierarchies to achieve proper rollup of balances for reporting requirements?

  • Your company has all administrative, account payables, procurement, and Human Resources functions performed at their corporate headquarters. Do you need one or more business units in which to perform all these functions? How is your shared service center configured?

Global Enterprise Structure Model

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

  • Creation of three separate ledgers representing your separate legal entities:

    • InFusion America Inc.

    • InFusion Financial Services Inc.

    • InFusion UK Services Ltd.

  • Consolidation of results for application components, installations, and maintenance product lines across the enterprise

  • All UK general and administrative costs processed at the UK headquarters

  • US Systems' general and administrative costs processed at US Corporate headquarters

  • US Financial Services maintains its own payables and receivables departments

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 one primary ledger in
Great Britain Pounds (GBP). InFusion UK also has 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 center with three
associated warehouses. InFusion Corporation shares one common item
master. The table indicates if the enterprise structure
entities are required or optional during an implementation.

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

  • The enterprise is required because it serves as an umbrella for the entire implementation. All organizations are created within an enterprise.

  • Legal entities are also required. They can be optionally mapped to balancing segment values or represented by ledgers. Mapping balancing segment values to legal entities is required if you plan to use the intercompany functionality. The InFusion Corporation is a legal entity but is not discussed in this example.

  • At least one ledger is required in an implementation in which you record your accounting transactions.

  • Business units are also required because financial transactions are processed in business units.

  • A shared service center is optional, but if used, must be a business unit.

  • Divisions are optional and can be represented with a hierarchy of cost centers or by a second balancing segment value.

  • Departments are required because they track your employees.

  • Optionally, add an item master organization and inventory organizations if you are tracking your inventory transactions in Oracle Fusion Applications.

Note: Some Oracle Fusion Human Capital Management and Oracle Sales Cloud implementations do not require recording accounting transactions and therefore, do not require a ledger.

Essbase Character and Word Limitations

The following is a comprehensive list of character and word limitations that apply to Essbase. All of the limitations apply to all of the Oracle General Ledger configurations summarized in the table.

The following table shows how the General Ledger configuration maps to Essbase.

General Ledger Configuration Maps to Essbase

Chart of Account Name

Cube Name

Chart of Account Segment Name

Dimension Name

Chart of Accounts Segment Value

Dimension Member Name

Chart of Accounts Segment Value Description

Alias for Member

Tree and Tree Version Name

Dimension Member Name

Primary Ledger Name

Dimension Member Name in Ledger Dimension

Secondary Ledger Name

Dimension Member Name in Ledger Dimension

Reporting Currency Name

Dimension Member Name in Ledger Dimension

Ledger Set Name

Dimension Member Name in Ledger Dimension

Accounting Calendar Period Names

Dimension Member Name in Accounting Period Name

Scenario Name Defined in Predefined Value Set Called Accounting Scenario

Dimension Member Name in Scenario Dimension

Even if case sensitivity is enabled in an aggregate storage outline for which duplicate member names is enabled, do not use matching dimension names with only case differences. For example, do not:

  • Name two dimensions Product and product.

  • Use quotation marks or brackets.

  • Use tabs in dimension, member, or alias names.

  • Use accent characters.

  • Use the characters for dimension or member names.

Restricted Characters

The following table lists the characters that are restricted and cannot be used at the beginning of dimension, member, or alias names.

Character Meaning

@

at sign

\

backslash

,

comma

-

dash, hyphen, or minus sign

For the accounting calendar period names, you can use a hyphen or an underscore in the middle of an accounting calendar period name. For example: Jan-15 or Adj_Dec-15 can be used successfully.

=

equal sign

<

less than sign

()

parentheses

.

period

+

plus sign

'

single quotation mark

_

underscore

For the accounting calendar period names, you can use a hyphen or an underscore in the middle of an accounting calendar period name. For example: Jan-15 or Adj_Dec-15 can be used successfully.

|

vertical bar

Other Restrictions

  • Don't place spaces at the beginning or end of names. Essbase ignores such spaces.

  • Don't use the following types of words as dimension or member names:

    • Calculation script commands, operators, and keywords.

    • Report writer commands.

    • Function names and function arguments.

    • Names of other dimensions and members (unless the member is shared).

    • Generation names, level names, and aliases in the database.

The following table lists additional words that should not be used.

List 1 List 2 List 3

ALL

AND

ASSIGN

AVERAGE

CALC

CALCMBR

COPYFORWARD

CROSSDIM

CURMBRNAME

DIM

DIMNAME

DIV

DYNAMIC

EMPTYPARM

EQ

EQOP

EXCEPT

EXP

EXPERROR

FLOAT

FUNCTION

GE

GEN

GENRANGE

GROUP

GT

ID

IDERROR

INTEGER

LE

LEVELRANGE

LOOPBLOCK

LOOPPARMS

LT

MBR

MBRNAME

MBRONLY

MINUS

MISSING, #MISSING

MUL

MULOP

NE

NON

NONINPUT

NOT

OR

PAREN

PARENPARM

PERCENT

PLUS

RELOP

SET

SKIPBOTH

SKIPMISSING

SKIPNONE

SKIPZERO

TO

TOLOCALRATE

TRAILMISSING

TRAILSUM

UMINUS

UPPER

VARORXMBR

XMRONLY

$$$UNIVERSE$$$

#MI

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 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 illustrates the ESC process for creating
an enterprise structure. The divisions, legal entities, business units,
reference data sets, business units, and reference data sets are created
based on your answers. You next establish job and position structures,
and then review and load your enterprise structure.

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 don't select this feature, then you must set up your enterprise structure using individual tasks provided elsewhere in the offerings, and you can't create multiple configurations to compare different scenarios.

Establish Enterprise Structures

To define your enterprise structures, use the guided flow within the Establish Enterprise Structures task to enter basic information about your enterprise, such as the primary industry. 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 enough information 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, you are prompted to set up a descriptive flexfield structure for jobs, and for positions if applicable. Descriptive flexfields enable you to get more information when you create jobs and positions.

Review Configuration

You can view a result of the interview process prior to loading the configuration. The review results, show the divisions, legal entities, business units, reference data sets, and the management reporting structure that the application will create when you load the configuration.

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.

Rolling Back an Enterprise Structure Configuration: Explained

The Enterprise Structures Configurator (ESC) provides the ability to roll back an enterprise configuration in the following circumstances:

Roll Back a Configuration Manually

You can manually roll back an enterprise configuration after loading it, for example, because you decide you do not want to use it. Clicking the Roll Back Configuration button on the Manage Enterprise Configuration page rolls back any enterprise structures that were created as a part of loading the configuration.

Roll Back a Configuration Automatically

If an error occurs during the process of loading the configuration, then the application automatically rolls back any enterprise structures that were created before the error was encountered.

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 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 company revenue of 120 million US dollars. Outside the US, InFusion employs 200 people and has revenue of 60 million US dollars.

Analysis

InFusion requires three divisions.

  • The US division covers the US locations.

  • The Europe division covers UK and France.

  • Saudi Arabia and the UAE are 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, 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 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.

The figure shows the InFusion Enterprise Configuration,
including the three divisions, tax reporting units, legal entities,
legislative data groups, business units, cost centers, and sales departments.

Divisions: 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 reflect directly the legal structure of the enterprise. The management entities and structure can include:

  • Divisions and subdivisions

  • Lines of business

  • Other strategic business units

  • 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 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 achieving business goals including profits. 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 generally reports to a top corporate executive.

By definition a division can be represented in the chart of accounts. Companies can use 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 permit up to three balancing segments. The values of the management segment can be 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 following rights and responsibilities to:

  • Own property

  • Trade

  • Repay debt

  • 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, expenses and income, pay transaction taxes, or perform intercompany trading.

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

  • Facilitating local compliance

  • Minimizing the enterprise's tax liability

  • Preparing for acquisitions or disposals of parts of the enterprise

  • Isolating one area of the business from risks in another area. For example, your enterprise develops property and also leases properties. You could operate the property development business as a separate legal entity to limit risk to your leasing business.

The Role of Your Legal Entities

In configuring your enterprise structure in Oracle Fusion Applications, 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

  • 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), which 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

Use the Enterprise Structures Configurator (ESC), to 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, 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 its enterprise structure. The corporation has 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:

  • InFusion Lighting Japan LE

  • InFusion Lighting US LE

  • InFusion Security UK LE

  • InFusion Security India LE

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. These registers are part of the Oracle Fusion Trading Community Architecture.

When your legal entities are trading with each other, represent them as legal entities and 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.

Several decisions you should consider when you create legal entities.

  • The importance of using legal entity on transactions

  • Legal entity and its relationship to business units

  • Legal entity and its relationship to divisions

  • Legal entity and its relationship to ledgers

  • Legal entity and its relationship to balancing segments

  • Legal entity and its relationship to consolidation rules

  • Legal entity and its relationship to intercompany transactions

  • Legal entity and its relationship to worker assignments and legal employer

  • Legal entity and payroll reporting

  • Legal reporting units

The Importance of Using Legal Entities on 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, a sales order creates an obligation on the legal entity that books the order to deliver the goods on the acknowledged date. The creation also creates an obligation on 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.

  • 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, Business Unit ACM UK has a default legal entity of InFusion UK Ltd. When a purchase order is placed in ACM UK, the legal entity InFusion UK Ltd is legally obligated to the supplier. Oracle Fusion Procurement, Oracle Fusion Project Portfolio Management, 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 wanted, 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 one segment 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 with 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. This solution is used 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 want to isolate the assets and liabilities for that entity.

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

If your enterprise regularly spins off businesses or holds managers accountable for utilization of assets, identify the business with a balancing segment value. If you account for each legal entity in a separate ledger, no requirement exists to identify the legal entity with a balancing segment value.

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 the portion is not a separate legal entity. If you do not map legal entities sharing the same ledger to balancing segments, you cannot distinguish them using intercompany functionality or track 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 feature to create intercompany entries automatically 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.

Tip: In the Oracle Fusion Supply Chain applications, you can model intercompany relationships using business units, from which legal entities are derived.
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 for 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 has 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 do the following:

  • Assign your business units to one primary ledger. For example, if a business unit is processing payables invoices, then it must post to a particular ledger. This assignment is required for your business units with business functions that produce financial transactions.

  • Use a business unit as a securing mechanism for transactions. For example, if you run your export business separately from your domestic sales business, then 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 provides the following advantages:

  • Enables flexible implementation

  • Provides consistent entity that controls and reports on transactions

  • Shares sets of reference data across applications

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 share reference data, such as payment terms and transaction types, across business units, or you can have each business unit manage its own set depending on the level at which you want 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 legal entities to ensure the uniqueness of sequencing.

In summary, use business units for:

  • Management reporting

  • Transaction processing

  • Transactional data security

  • Reference data sharing and definition

Brief Overview of Business Unit Security

A number of Oracle Fusion Applications use business units to implement data security. You assign roles like Accounts Payable Manager to users to permit them to perform specific functions, and you assign business units for each role to users to give them access to data in those business units. For example, users which have been assigned a Payables role for a particular business unit, can perform the function of payables invoicing on the data in that business unit. Roles can be assigned to users manually using the Security Console, or automatically using provisioning rules. Business Units can be assigned to users using the Manage Data Access for Users task in Setup and Maintenance.

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 one of two levels:

  • Business function level, such as Sales, Consulting, Product Development, and so on.

  • 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:

  • Country

  • Country and Division

  • Country and business function

  • Division

  • Division and legal entity

  • Division and business function

  • Business function

  • Legal entity

  • Business function and legal entity

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

  • If you use Oracle Fusion Financials, the legal entity option is recommended because of the manner in which financial transactions are processed.

  • The business unit level that you select determines how the application automatically creates reference data sets.

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 application displays a table listing both components. You select the check boxes at the intersections of the two components.

The business units listed by the application are suggestions only, and are meant to simplify the process to create business units. You aren't required to select all of the business units suggested. When you navigate to the next page in the ESC guided flow, the Manage Business Units page, you can't delete any of the business units 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 its enterprise structure. InFusion has 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
in different locations, and functions for each legal entity.

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. As a result, there is a reduction in the administrative burden and the time to implement new business units. For example, you can share sales methods, or transaction types across business units. You may also share certain 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 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 determine that certain aspects of your corporate policy can affect all business units. The remaining aspects are at the discretion of the business unit manager to implement. This allows your enterprise to balance autonomy and control for each business unit. For example, your enterprise holds business unit managers accountable for their profit and loss, but manages working capital requirements at a corporate level. In such a case, you can let managers define their own sales methods, but define payment terms centrally. In this example:

  • Each business unit has its own reference data set for sales methods.

  • One central reference data set for payment terms is 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 set up 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

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

  • Assignment to one set only, no common values allowed. This method is the simplest form of sharing reference data that allows assigning a reference data object instance to one and only one set. For example, Asset Prorate Conventions are defined and assigned to only one reference data set. This set can be shared across multiple asset books, but all the values are contained only in this one set.

  • Assignment to one set only, with common values. This method is the most commonly used method of sharing reference data that allows defining reference data object instance across all sets. For example, Receivables Transaction Types are assigned to a common set that is available to all the business units. You need not explicitly assign the transaction types to each business unit. In addition, you can assign a business unit-specific set of transaction types. At transaction entry, the list of values for transaction types includes the following:

    • Transaction types from the set assigned to the business unit.

    • Transaction types assigned to the common set that is shared across all business units.

  • Assignment to multiple sets, no common values allowed. The method of sharing reference data that allows a reference data object instance to be assigned to multiple sets. For instance, Payables Payment Terms use this method. It means that each payment term can be assigned to one or more than one set. For example, you assign the payment term Net 30 to several sets, but assign Net 15 to a set specific only to your business unit. At transaction entry, the list of values for payment terms consists of only the set that is assigned to the transaction's business unit.

Note: Oracle Fusion Applications contains a reference data set called Enterprise. Define any reference data that affects your entire enterprise in this set. Also update the data set going forward as you create new reference data items.

Business Units and Reference Data Sets: How They Work Together

Reference data sharing enables you to group set-enabled reference data such as jobs or grades to share the data across different parts of the organization. Sets also enable you to filter reference data at the transaction level so that only data assigned to certain sets is available to be selected. 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 assigned to the Common Set is always available, in addition to the reference data assigned to the set that corresponds to the business unit on the transaction.

Other types of reference data can be specific to certain business units, so you can 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 to use 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 figure that illustrates the structure of InFusion Corporation.
The enterprise has two divisions, with each division having two legal
entities. Each legal entity has one or more business functions related
to Sales and Marketing.

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:

  • Sales_Japan

  • Marketing_Japan

  • Sales_US

  • Sales_UK

  • Marketing_India

  • Sales_India

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 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. They 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:

  • Sales_Japan_Set

  • Mktg_Japan_Set

  • Sales_US_Set

  • Sales_UK_Set

  • Mktg_India_Set

  • Sales_India_Set

  • Grades_Set

The following table describes the default set assignment and the set assignment overrides for each business unit in InFusion:

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 assigns the data to the default set for each business unit. When setting up jobs, they assign the Jobs set and 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 can select data from the set that corresponds to the business unit they enter on the transaction, and any data assigned to the Common Set. For example, for transactions for the Marketing_Japan business unit, grades, locations, and departments from the Mktg_Japan_Set is available to select, as well as from the Common Set.

When using jobs at the transaction level, users can select jobs from the Jobs set and from the Common Set when they enter a sales business unit on the transaction. For example, when a manager hires an employee for the Sales_India business unit, the list of jobs is filtered to show jobs from the Jobs and Common sets.

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 either
from the job set or the common set.

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 the:

  • Common set

  • 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 includes grade in the:

  • Common set

  • 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.

Note the following:

  • The key to using jobs or positions depends on 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. For example, if you hire someone into a new role and want to transfer the position to another department.

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

  • The primary industry of your enterprise

  • How you manage your people

Primary Industry of Your Enterprise

The following table outlines information about Primary industries and how they set up their workforce.

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

Consider the following scenarios how industries manage their employee turnover:

  • Scenario 1: Replace employees by rehiring to the same role.

  • Scenario 2: Replace headcount but the manager uses the headcount in a different job.

  • Scenario 3: Rehire employees to the same position, but the manager requests reallocation of budget to a different post.

The following table displays suggestions of what the industry should use, either jobs or positions, in the above three scenarios:

Industry Scenario 1 Scenario 2 Scenario 3

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 headcounts, or have high turnover rates.

Retail Industry

ABC Corporation has high turnovers. It loses approximately 5% of its cashiers monthly. The job of the cashier includes three positions: front line cashier, service desk cashier, and layaway cashier. Each job is cross-trained to take over another cashier's 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 Corporation must replace each cashier lost to turnover. Since turnover is high in retail it's better for this industry to use positions.

Note the following:

  • An automatic vacancy is created when an employee terminates employment.

  • The position exists even when there are no holders. Having the position continue to exist 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 the position is empty.

  • You don't have to reassign these employees to another manager or supervisor. The replacement manager is assigned to the existing position.

Also, an added advantage to using Positions is when you hire somebody new, many of the attributes are inherited from the position. This speeds up the hiring process.

This figure illustrates the retail position setup.

A figure that illustrates the positions setup for a retail
store and the incumbent in each position. The cash supervisor position
is currently vacant and there are ten open positions for the front
line cashier, three open positions for the service desk cashier, and
two open positions for the layaway cashier.

Health Care Industry

Health care is an industry that must 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.

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

This figure illustrates the hospital position setup.

A figure that illustrates the positions setup for an
health care industry with surgeons, nurses, and interns in different
positions.

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.

A figure that illustrates an example of jobs setup in
the software industry. The Technology Department in XYZ Corporation
has three job titles, which are Developer, Quality Assurance Specialist,
and Technical Writer.

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 to identify additional details about the job, such as the nature of the work that is performed or the relative skill level required. 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 the job type and level, which
are additional attributes for the HR Application Specialist 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. A position belongs 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, consider whether 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 the title and position number,
which are additional attributes for the Manager 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. 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 can't set up multiple configurations and compare different scenarios. Using the Enterprise Structures Configurator is the recommended process for setting up your enterprise structures.

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 these levels:

  • Ultimate holding company as the top level

  • Divisions and country holding companies as the second level

  • 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.

  • 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 common data is shared or partitioned across business entities to avoid duplication and reduce maintenance effort. 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.

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 can't 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 different business units setting up and using the same grades, XYZ Corporation decides to create a set called Grades, which contains the grades. All business units in the organization have the Grades set so that the grades can be shared and used.

Note: For specific information about configuring reference data sharing for a particular object or product, refer to the relevant product documentation.

Reference Data Sets: Explained

Reference data sets are logical groups of reference data that various transactional entities can use depending on the business context. You can get started using either the common reference data set or the enterprise set depending on your implementation requirement. You can also create and maintain custom reference data sets, while continuing to use the common reference data set.

Consider the following scenario. Your enterprise can decide that only some aspects of corporate policy should affect all business units. The remaining aspects are at the discretion of the business unit manager to implement. This enables your enterprise to balance autonomy and control for each business unit. For example, your enterprise holds business unit managers accountable for their profit and loss, but manages working capital requirements at a corporate level. Then, you can let managers define their own sales methods, but define payment terms centrally. As a result, each business unit has its own reference data set for sales methods and one central reference data set for payment terms assigned to all business units.

Partitioning

Partitioning reference data and creating data sets provide you the flexibility to handle the reference data to fulfill your business requirements. You can share modular information and data processing options among business units with ease. You can create separate sets and subsets for each business unit. Alternatively, you can create common sets or subsets to enable sharing reference data between several business units, without duplicating the reference data.

The following figure illustrates the reference data sharing method. 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.

The figure shows a user having access to the business
data within a specific reference data set for the UK location. The
same user also has access to business data from different locations
- Tokyo, Paris, and Berlin, which are part of a common reference data
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. As a result, there is a reduction in the administrative burden and the time to implement new business units. For example, you can share sales methods, or transaction types across business units. You may also share certain 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 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 determine that certain aspects of your corporate policy can affect all business units. The remaining aspects are at the discretion of the business unit manager to implement. This allows your enterprise to balance autonomy and control for each business unit. For example, your enterprise holds business unit managers accountable for their profit and loss, but manages working capital requirements at a corporate level. In such a case, you can let managers define their own sales methods, but define payment terms centrally. In this example:

  • Each business unit has its own reference data set for sales methods.

  • One central reference data set for payment terms is 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 set up 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

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

  • Assignment to one set only, no common values allowed. This method is the simplest form of sharing reference data that allows assigning a reference data object instance to one and only one set. For example, Asset Prorate Conventions are defined and assigned to only one reference data set. This set can be shared across multiple asset books, but all the values are contained only in this one set.

  • Assignment to one set only, with common values. This method is the most commonly used method of sharing reference data that allows defining reference data object instance across all sets. For example, Receivables Transaction Types are assigned to a common set that is available to all the business units. You need not explicitly assign the transaction types to each business unit. In addition, you can assign a business unit-specific set of transaction types. At transaction entry, the list of values for transaction types includes the following:

    • Transaction types from the set assigned to the business unit.

    • Transaction types assigned to the common set that is shared across all business units.

  • Assignment to multiple sets, no common values allowed. The method of sharing reference data that allows a reference data object instance to be assigned to multiple sets. For instance, Payables Payment Terms use this method. It means that each payment term can be assigned to one or more than one set. For example, you assign the payment term Net 30 to several sets, but assign Net 15 to a set specific only to your business unit. At transaction entry, the list of values for payment terms consists of only the set that is assigned to the transaction's business unit.

Note: Oracle Fusion Applications contains a reference data set called Enterprise. Define any reference data that affects your entire enterprise in this set. Also update the data set going forward as you create new reference data items.

Assigning Reference Data Sets to Reference Objects: Points to Consider

You can assign the reference data sets to reference objects using 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 the 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 using a business context setting called the determinant type. A determinant type is the point of reference used in the data assignment process. The following table lists the determinant types used in the reference data assignment.

Determinant 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 (also called determinant value) is a value that corresponds to the selected determinant type. The determinant is one of the criteria for selecting the appropriate reference data set.

Reference Groups

A transactional entity may have multiple reference entities (generally considered to be setup data). However, all reference entities are treated alike because of similarity in implementing business policies and legal rules. Such reference entities in your application are grouped into logical units called reference groups. For example, all tables and views that define Sales Order Type details might be a part of the same reference group. Reference groups are predefined in the reference groups table.

Items and Supplier Site Reference Data Sharing: Explained

Some products, such as items and supplier sites, required special logic for reference data sharing and have implemented their own domain-specific ways for sharing 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 want 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:

  • Supplier qualification data, such as approved supplier lists

  • Catalog content, such as agreements, smart forms, public shopping lists, and content zones

  • Procurement configuration data

FAQs for Define Reference Data Sharing

What reference data objects can be shared across business units?

The following table 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, no common values allowed

Trading Community Model

Customer Account Site

Assignment to one set only, no common values allowed

Trading Community Model

Salesperson

Assignment to one set only, no common values allowed

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 Terms

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 multiple sets, no common values allowed

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, no common values 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

Order Management

Hold Codes

Assignment to one set only, with common values

Order Management

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 table 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 table 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 is a collection 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. 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-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 create and manage locations using the Manage Locations task in the Workforce Structures work area.

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 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.

Note the following:

  • 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.

A figure that illustrates how access to locations is
controlled using sets. If a location is associated with the common
set, then all users in that location can access all locations in the
common set.

Uploading Locations Using a Spreadsheet

If you have a list of locations already defined for your enterprise, you can upload them from a spreadsheet.

To use this option:

  • Download a spreadsheet template

  • Add your location information to the spreadsheet

  • Upload directly to your enterprise configuration

You can upload the spreadsheet multiple times to accommodate revisions.

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 you created for the geographic node start to apply for the location and may impact the availability of worker assignments at that location. You manage locations using the Manage Locations task in the Workforce Structures work area.

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 am 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 Oracle Fusion Global Human Resources, go to the Manage Locations page. Use the Manage Locations task in the Workforce Structures work area.

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 validates, corrects, and standardizes address information that you enter in the application. Address cleansing, unlike geography validation, validates both the geography attributes and the address line attributes.

To use the address cleansing functionality, you need to have license for the customer data quality application, because the feature is delivered using data quality integration.

You can specify the real-time address cleansing level for each country by choosing either of these options:

  • None: Specifies no real time address cleansing.

  • Optional: Provides option to cleanse addresses.

Once you have enabled address cleansing for a country, a Verify Address icon appears at address entry points in the application. Click the icon to perform address cleansing and receive a corrected, standardized address. If the application does not find a matching address, then an alert message is displayed.

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, under 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

This topic describes geography structures and the tasks you can perform using geography structures.

A geography structure is a hierarchical grouping of geography types for a country. The following table describes the geography structure for the United States.

Level Geography Type

1

State

2

County

3

City

4

Postal Code

You can use the geography structure to relate geography types for a country and define geography types for a country.

Relate Geography Types for a Country

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 geography type Country is implicitly at the highest level of the geography structure with level as 1. The subsequent geography types that you add after country are numbered in sequence.

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. To quickly create country structure, you can copy a structure from another country and modify the geography types for the country.

Define Geography Types for a Country

You can use any of the master reference geography types to create your geography structure. If required, you can create a geography type, before adding it to the country structure. Each geography type is added under the current lowest level.

Note: You cannot delete geography types that have associated geography data. You can only delete the lowest level geography type of the country structure.

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

Geography Hierarchy: Explained

This topic describes geography hierarchy and various aspects of geography hierarchy.

Geography hierarchy is a data model that creates conceptual parent-child relationships between geographies. At the highest level of the geography hierarchy is country, which is the parent, and the hierarchy contains several child geographies. The following table shows sample parent-child relationships in a geography.

California Parent of San Mateo county

San Mateo County

Parent of Redwood City

Redwood City

Parent of 94065

94065

Child

When you enter just 94065, the application determines that the postal code is in California and the corresponding city is Redwood City.

The application uses geography hierarchy information to facilitate business processes that rely on geography information, such as, tax calculation, order sourcing rules, and sales territory definition. The geography hierarchy information is centrally located and shared among other application offerings.

The geography hierarchy includes:

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

  • Geography type: Geography types are divisional grouping of user defined geographies, for example, Continent, Country Regions, and Tax Regions.

  • Geography usage: Geography usage indicates how a geography type or geography is used in the application.

  • Master reference geography hierarchy: The geography hierarchy data is considered the single source of reference for all geography related data such as geography types and geographies.

    The geography usage for the entire hierarchy is the master reference, and defined geography types and geographies are the master reference geography types and geographies. For example, you can create geography types called State, City, and Postal Code. Then, you can rank the State as the highest level, City as the second level, and Postal Code as the lowest level within the country structure.

  • User defined zones: User defined zones are a collection of geographical data, created from master reference data for a specific purpose. For example, while the territory zones are collections of master reference geographies ordered with a hierarchy, the tax and shipping zones are 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

  • Enable list of values

  • Tax validation

  • Geography validation

  • Geography validation control

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. If the setup for master geography data is incomplete, then the geography data is either not imported or created. As a result, the list of values for the address attribute does not list any geography data.

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 during address entry suggested values will be provided for the address element, but the address element will not be 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 Error, then an address cannot be saved if the values do not match the geography hierarchy data.

These are the geography validation levels you can choose:

  • Error - only completely valid addresses can be saved, with all mandatory address elements entered.

  • No Validation - all addresses can be saved including incomplete and invalid addresses.

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.

The Geography Dimension value in territories is derived from sell-to addresses of sales accounts. To use geography dimensions in territories, you must validate the geography elements in the addresses, such as state, city, and postal code. You can validate the address by enabling geography validation for each country using the Manage Geographies task. Perform the following in the Manage Geographies task:

  • Enable at least one level in the geography hierarchy for geography validation.

  • Enable geography validation for all geography levels that you intend to use for territory definition for each country.

  • If needed, enable a list of values containing specific geography elements. This will help users search and select appropriate geography values during addresses entry and eliminate all possibilities of wrong address entry.

You can set geography validation control to Error in the Manage Geography Validation page. This ensures that users can only use valid geography elements in addresses.

Note: If you have already created addresses before setting up geography validation for a country, you must enabling geography validation and then execute the Run Maintain Geography Name Referencing task for that country. This validates all your geography elements.

Importing Geographies: Explained

A geography, such as Tokyo or Peru, describes a boundary on the surface of the earth. You can create new geographies by importing data through interface tables. There are two options for populating the interface tables: using the tool of your preference to load the data or using file-based data import. If you plan to provide the data details in a source file, use the file-based import feature. If you will populate the interface table directly, run the geography loader process to import the data. Having a good understanding of the import entity, interface table, and destination table will help you prepare your import data.

Consider the following when importing geographies:

  • Nokia geography reference data

  • File-based import option

  • Geography loader process option

  • Import object entity, interface table, and destination tables

Nokia Geography Reference Data

Oracle Sales Cloud includes third-party (Nokia) master geography data for multiple countries that can be easily imported. You can import Oracle-licensed Nokia data from Navteq, for those countries where the data is available, such as the U.S. You can import Nokia Geography data using the Manage Geographies task. Search for the country, and select Import Nokia Data from the Actions menu. If the licensed Navteq data is not available for a particular country, then the Import Nokia Data action is disabled.

File-Based Import Option

The file-based import process reads the data included in your XML or text file, populates the interface tables, and imports the data into the application destination tables. The File-Based Data Import Setup and Maintenance task list includes the tasks needed to configure the geography import object, create source file mappings, and schedule the import activities.

Geography Loader Process Option

Populate the interface table with your import data, then navigate to the Run Geography Loader Setup and Maintenance task to schedule the import of data from the interface table to the destination table.

Import Object Entity, Interface Table, and Destination Tables

The geography import object consists of one entity and interface table that forms the geography. If you are using file-based import, you can map your source file data to import entity attributes that correspond to the interface table columns. The import activity process populates the interface table based on the mapping and your source file. If using the geography loader scheduled process, populate the interface table directly using your preferred tool. If you need the unique IDs of existing application data for your import data, use the Define Data Export Setup and Maintenance task list to export the information.

The following table lists the object entity, the interface table, the destination tables, and the resulting application object.

File-Based Import Entities Interface Tables Destination Tables Application Object

ImpGeography

HZ_IMP_GEOGRAPHIES_T

HZ_GEOGRAPHIES

HZ_GEOGRAPHY_IDENTIFIERS

HZ_GEOGRAPHY_TYPES_B

HZ_HIERARCHY_NODES

Geography

Importing Country Structures Using File-Based Import: Explained

This topic explains how to prepare and import country structure data from an external data source using the File-Based Data Import feature. A country structure is a hierarchical grouping of geography types for a country. For example, the geography structure for the United States has the geography type of State as the topmost level, followed by the County, then the City, and finally the Postal Code.

You can use the country structure to set up the following:

  • The relationships between geographies within a country

  • The types of geographies that you can define for a country

Consider the following questions when importing your data:

  • How does your legacy system or source system represent the geography data compared to how the application represents the same data?

  • Do you have to configure values in the application to map to your data values?

  • Do you have to customize the application to capture additional attributes that are critical to the way you do business?

  • What import features are available for importing your business object?

  • How do you verify your imported data?

Comparing Business Object Structures

You must understand how your country structure data corresponds with the data in the application so that you can map your legacy data to the data that the application requires. First, you must understand how the application represents the structure of the data for a country structure.

You must import a separate country structure import object for each country. Each of these import objects must contain the geography types that are used in the country's structure, organized in a hierarchy using geography level numbers. For example, if you're importing the country structure of Australia, the country structure could be the following: 1: Country, 2: State, 3: County, 4: Town, 5: ZIP.

Import Objects for the Country Structure

To facilitate importing country structures, the application incorporates the structure of the country structure into import objects. The import object for country structures is GeoStructureLevel.

Comparing Business Object Data

Each import object is a collection of attributes that helps to map your data to the application data and to support one-to-many relationships between the structural components that make up the country structure.

You must understand the attribute details of the import objects so that you can prepare your import data. . You can use reference guide files that contain attribute descriptions, values that populate attributes by default when you don't provide values, and validation information for each attribute. The validation information includes the navigation path to the task where you can define values in the application. For example, if you have values in your data that correlate to a choice list in the application, then the validation information for that attribute provides the task name in the Setup and Maintenance work area where you can define your values.

Extensible Attributes

If you need to extend the application object to import your legacy or source data, you must use Application Composer to design your object model extensions and to generate the required artifacts to register your extensions and make them available for importing. The corresponding import object is updated with the extensible attributes, which can then be mapped to your source file data. You can use the same source file to import both extensible custom attributes and the standard import object attributes.

Importing Country Structures Using File-Based Data Import

For the country structure business object, you must use the File-Based Data Import feature. You prepare XML or text source data files in a form that is suitable for a file-based import. The file-based import process reads the data in your source file, populates the interface tables according to your mapping, and imports the data into the application destination tables.

The Define File-Based Data Import Setup and Maintenance task list includes the tasks that are required to configure the import objects, to create source-file mappings, and to schedule the import activities. You submit file-based import activities for each import object. When you're creating a new country structure, you import the Country Structure object. You must be assigned the Master Data Management Administrator job role to access and submit the import activities for country structures.

Verifying Your Imported Data

You can view the list of import activities from the Manage Import Activities page. You can verify your imported data by clicking the Status column for your import activity.

Country Structure Import Objects: How They Work Together

This topic describes the Country Structure import object. You use the Country Structure import object when you submit a file-based import activity to import your country structure information. This topic introduces the following:

  • Target objects for the Country Structure import object

  • Target import object attributes

  • Reference guide files for target import object attributes

Country Structure Target Import Objects

The Country Structure import object contains one target import object. The target import object organizes the individual attributes of the different aspects of the geography structure. When updating an existing country structure, you must provide the parent reference information of the existing country structure. This reference information connects the imported geography structure to the existing one. Use the ImpGeoStructureLevel target import object to create and update country structure information.

Target Import Object Attributes

You must compare the attributes that you want to import with the target object attributes that are available and with their valid values. To evaluate your source data and Oracle Sales Cloud attributes for mapping and validation, you use a reference file. See the File Based Data Import for Oracle Sales Cloud guide available on the Oracle Sales Cloud Help Center (https://docs.oracle.com/cloud/latest/salescs_gs/docs.htm). In the File Based Data Imports chapter, see the topic for your import object of interest, which includes links to reference files for target import objects. A reference guide file includes attribute descriptions, default values, and validations performed by the import process. Review the validation for each attribute to determine whether there are functional prerequisites or prerequisite setup tasks that are required.

To import your source file data, you define a mapping between your source file data and the combination of the target object and target object attribute. You can predefine and manage import mappings using the Manage File Import Mappings task, or you can define the mapping when you define the import activity using the Manage File Import Activities task. Both tasks are available in the Setup and Maintenance work area.

Note: If any of the attributes you want to import does not have an equivalent target object attribute, then review the Application Composer extensibility features for country structures.

Reference Files for Target Import Object Attributes

To access reference files for this object's target import objects, see the File Based Data Import for Oracle Sales Cloud guide available on the Oracle Sales Cloud Help Center (https://docs.oracle.com/cloud/latest/salescs_gs/docs.htm). In the File Based Data Imports chapter, see the topic for your import object of interest, which includes links to reference files for target import objects.

For detailed information on importing geographies using file-based import, refer to Document No. 1481758.1, Importing Master Reference Geography Data, on the Oracle Support site.

The following table lists the reference file for the ImpGeoStructureLevel target import object.

Target Import Object Description Reference File Names

ImpGeoStructureLevel

Information that specifies a country's geography structure.

HZ_IMP_GEO_STRUCTURE _LEVELS_Reference

Importing Geographies Using File-Based Import: Explained

This topic explains how to prepare and import geography data from an external data source using the File-Based Data Import feature. A geography is any region with a boundary around it, regardless of its size. It might be a state, a country, a city, a county, or a ward. You must create or import geographies before you can associate them with custom zones and addresses.

Note: The application ships with third-party (Nokia) master geography data for multiple countries that can be easily imported. You can import Oracle-licensed Nokia data from Navteq, for those countries where the data is available, such as the U.S. You can import Nokia Geography data using the Manage Geographies task. Search for the country, and select Import Nokia Data from the Actions menu. If the licensed Navteq data is not available for a particular country, then the Import Nokia Data action is disabled. For more information, see Replacing Existing Master Geography Data with Revised Nokia Geography Data: Procedure.

If Nokia geography data is not available for a country, then use the information in this chapter to import it using File-Based Data Import.

Consider the following questions when importing your data:

  • How does your legacy system or source system represent the geography data compared to how Oracle applications represent the same data?

  • Do you have to configure values in the application to map to your data values?

  • What import features are available for importing your business object?

  • How do you verify your imported data?

Comparing Business Object Structures

You must understand how your geography data corresponds with the data in the application so that you can map your legacy data to the data that the application requires. First, you must understand how the application represents the structure of the data for a geography.

You must import a separate country structure import object for each country. Each of these import objects must contain the geography types that are used in the country's structure, organized in a hierarchy using geography level numbers. For example, if you are importing the country structure of Australia, the country structure could be the following: 1: Country, 2: State, 3: County, 4: Town, 5: ZIP.

Import Objects for the Geography

To facilitate importing geographies, the application incorporates the structure of the geography into import objects. The import object for the geography is ImpGeography.

Comparing Business Object Data

Each import object is a collection of attributes that helps to map your data to the application data and to support one-to-many relationships between the structural components that make up the geography.

You must understand the attribute details of the import objects so that you can prepare your import data. You can use reference guide files that contain attribute descriptions, values that populate attributes by default when you do not provide values, and validation information for each import object attribute. The validation information includes the navigation path to the task where you can define values in the application. For example, if you have values in your data that correlate to a choice list in the application, then the validation information for that attribute provides the task name in the Setup and Maintenance work area where you can define your values.

Note:

You can use the keyword importing geographies to search for related topics in Help.

Extensible Attributes

The application doesn't support extensible attributes for geographies. You can import only data for geography object that already exist by default in the application.

Importing Geographies Using File-Based Data Import

For the geography business object, you must use the File-Based Data Import feature. You prepare XML or text source data files in a form that is suitable for a file-based import. The file-based import process reads the data in your source file, populates the interface tables according to your mapping, and imports the data into the application destination tables.

The Define File-Based Data Import Setup and Maintenance task list includes the tasks that are required to configure the import objects, to create source-file mappings, and to schedule the import activities. You submit file-based import activities for each import object. When you're creating a new geography, you import the Geography object. You must be assigned the Master Data Management Administrator job role to access and submit the import activities for geographies.

When importing geography information, you must provide the parent reference information for all parent levels for the entity.

Verifying Your Imported Data

Oracle applications provide File-Based Import activity reports, which you can use to verify imported data. Users with the Master Data Management Administrator job role can also navigate to the Manage Geographies work area to view the imported geographies.

Geography Import Objects: How They Work Together

This topic describes the Geography import object. You use the Geography import object to import geography information.

This topic introduces the following:

  • Target objects for the Geography import object

  • Target import object attributes

  • Reference guide files for target import object attributes

Geography Target Import Objects

You can use the Geography import object to import geography hierarchy information to create or update the geography data of a country. To map the source data in your import file to the target attributes in the application, you must understand how the target objects are related and what attributes are included in each target object.

The target import objects in the Geography import object contain information about the geography hierarchy. When updating an existing geography, you must provide the parent reference information of the existing geography, which connects the geography to the country of which it is a part.

Use the ImpGeography target import object to create and update geography information.

Note: Before you import geography data for a country, you must define the country's geography structure.

Target Import Object Attributes

You must compare the attributes that you want to import with the target object attributes that are available and with their valid values. To evaluate your source data and Oracle Sales Cloud attributes for mapping and validation, you use a reference file. See the File Based Data Import for Oracle Sales Cloud guide available on the Oracle Sales Cloud Help Center (https://docs.oracle.com/cloud/latest/salescs_gs/docs.htm). In the File Based Data Imports chapter, see the topic for your import object of interest, which includes links to reference files for target import objects. A reference guide file includes attribute descriptions, default values, and validations performed by the import process. Review the validation for each attribute to determine whether there are functional prerequisites or prerequisite setup tasks that are required.

To import your source file data, you define a mapping between your source file data and the combination of the target object and target object attribute. You can predefine and manage import mappings using the Manage File Import Mappings task, or you can define the mapping when you define the import activity using the Manage File Import Activities task. Both tasks are available in the Setup and Maintenance work area.

Note: If any of the attributes you want to import do not have an equivalent target object attribute, then review the Application Composer extensibility features for geography.

Reference Files for Target Import Object Attributes

To access the reference guide files for the geography's target import objects, see the File Based Data Import for Oracle Sales Cloud guide available on the Oracle Sales Cloud Help Center (https://docs.oracle.com/cloud/latest/salescs_gs/docs.htm). In the File Based Data Imports chapter, see the topic for your import object of interest, which includes links to reference files for target import objects. For detailed information on importing geographies using file-based import, refer to Document No. 1481758.1, Importing Master Reference Geography Data, on the Oracle Support site.

The following table lists the reference file for the ImpGeography target import object.

Target Import Object Description Attribute Reference File Names

ImpGeography

Contains information that captures a country's geography hierarchy details, such as geography type, geography code, and so on.

HZ_IMP_GEOGRAPHIES_T _Reference

Importing Geographies Using File-Based Data Import: Worked Example

This example demonstrates how to import data using the File-Based Data Import tool. In this example, you have a source file containing geography data that you want to import into the application so that the geography data can be used for real time address validation and tax purposes.

The following table summarizes the key decisions that you must make in this scenario.

Decisions to Consider In This Example

What type of object are you importing?

Geography

What file type are you using for your source data?

Text file

Where are you uploading your source data file from?

Your desktop

What data type is your source data file?

Comma separated

Which fields are you importing into the application?

All, except for the RecordTypeCode field

When do you want to process the import?

Immediately

Summary of the Tasks

You perform the following steps to create an import activity and activate the import:

  1. Determining what information is in the source file.

  2. Creating and scheduling the import activity.

  3. Monitoring the import results.

Prerequisites for Importing Additional Geography Data After Your Initial Import

  1. Ensure that the combination of the Source ID and Parent Source ID values is unique for each row of data within a single import. However, your source data files don't need to have the same Source ID and Parent Source ID values as your previously imported geography data. If the geography structure levels and the parents for each geography value are the same, then the changed IDs will not affect the import.

  2. Ensure that all the parents of a child geography are included in your data file so that the child geography can be added. For example, if you originally imported US, CA, and San Francisco, and now you want to import the city of San Jose in CA, then your data file must include US, CA, and San Jose.

  3. Check that your source data file has the correct values for the geography data that you have already loaded. For example, if your initial import included the value US for country and CA as state, and in a subsequent import you have California as a state, then your geography import creates two state records (CA and California) in the application data, with the US as the country parent.

Determining What Information is in the Source File

  1. The source geography data files must include a unique Source ID value for each row of data and Parent Source ID value for the parent of that row of data. The Source or Parent Source IDs should not be longer than 18 characters.

  2. You can structure your geography source data, as shown in the following table.

    Geography Level Name Source ID Parent Source ID

    1 (Country)

    US

    1

    NA

    2 (State)

    CA

    11

    1

    3 (County)

    Alameda

    111

    11

    4 (City)

    Pleasanton

    1111

    111

    4 (City)

    Dublin

    1112

    111

Creating and Scheduling the Import Activity

You can create an import activity, enter the import details, and schedule the import. An import activity includes selecting the source file or file location, mapping the source file to the database, and scheduling the import.

  1. In the Setup and Maintenance work area, search for the Manage File Import Activities task. Click Go to Task.

  2. In the Manage Import Activities page, click Create.

  3. In the Create Import Activity: Map Fields page, map each field from your source file to the target object and attribute, as shown in the following table.

    Field Value

    Name

    Master Reference Geographies

    Object

    Geography

    File Type

    Text File

    File Selection

    Specific file

    Upload From

    Desktop

    File Name

    Choose relevant file from desktop

    Data Type

    Comma separated

    Note: Ensure that the file type that you select in the Create Import Activity: Set Up page matches the file type of the source data file.

  4. Click Next.

  5. In the Create Import Activity: Map Fields page, map each field from your source file to the Oracle Sales Cloud database object and attribute, as shown in the following table.

    Column Header Example Value Ignore Object Attribute

    Primary Geography Name

    Primary Geography Name

    United States

    Imp Geography

    Primary Geography Name

    Country Code

    US

    No

    Imp Geography

    Country Code

    Record Type Code

    0

    Yes

    Imp Geography

    Record Type Code

    Source ID

    10265

    No

    Imp Geography

    Source ID

    Parent Source ID

    1053

    No

    Imp Geography

    Parent Source ID

    If you don't want to import a column in the text file, then you can select Ignore.

    Note: If you can't map the fields from your source file to the relevant target object, then see the import object spreadsheets.

  6. Click Next.

  7. In the Create Import Activity: Create Schedule page, select Immediate in the Schedule field so that the import will start as soon as you activate it.

    Instead of immediately importing the data, you can choose a date and time to start the import. You can also specify whether the import will be repeated and the frequency of the repeated import.

  8. Click Next.

Monitoring the Import Results

You can monitor the processing of the import activity and view the completion reports for both successful records and errors.

  1. In the Create Import Activity: Review and Activate page, verify your import details in the Import Details, File Details, Import Options, and Schedule sections. Update the import details if required by navigating to the previous screens using the Back link.

  2. Confirm your import details, and click Activate to submit the import.

    After the import activity has finished, the Status field value changes to Completed.

Importing and Exporting Territory Geography Zones: Explained

Territory geography zones are geographical boundaries that you can set up to replicate your organization's regions, such as a Pacific Northwest sales region. You can set up territory geography zones in one application instance, and then after the territory geography zones are defined you can export the territory zones and import them into another application instance.

To define your territory geography zones and then import your territory zones into another application instance, you must complete the following steps:

  1. Import the master reference geography data into the application.

  2. Define your territory geography zones using the Manage Territory Geographies task.

  3. Export the territory geography zones.

  4. Import the territory geography zones into another application instance.

Import the master reference geography data

Firstly, you need to import the master reference geography data. Master reference geography data consists of geography elements such as country, state, and city, and is required for any geographical information you store in the application, such as address information used in customer and sales records. For more information, refer to the Geography Hierarchy: Explained topic listed in the related topics section. Master reference geography data can be imported into the application using the Manage File Import Activities task in Setup and Maintenance - refer to the Importing Master Reference Geography Data: Worked Example topic listed in the related topics section for more information.

Define your territory geography zones

Once the master reference geography data has been imported, you can then create your territory geography zones in the application using the Manage Territory Geographies task in Setup and Maintenance. For more information, refer to the Managing Territory Geographies: Worked Example topic listed in the related topics section.

Export the territory geography zones

Once you have completed importing the master reference geography data and defining your territory geography zone tasks, you can create a configuration package to export the territory zone data. For more information, refer to the Exporting Setup Data demo listed in the related topics section.

Import the territory geography zones

Once you have downloaded your configuration package for your territory geography zone setup, you can import the territory zones into another application instance. For more information, refer to the Importing Setup Data listed in the related topics section.

Note: Ensure that you import your master reference geography data into the new application instance before you import the configuration package.

Managing Geography Structures, Hierarchies, and Validation: Worked Example

This example shows how to configure the geography structure, hierarchy, and validation for a country geography, using the United Kingdom country geography as an illustration.

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.

Defining the Geography Structure

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

To create the geography hierarchy for United Kingdom, 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. In the Geography Hierarchy section, click United Kingdom to highlight the table row, and click Create.

  4. In the Create County page, Primary and Alternate Names section, enter Berkshire in the Name field.

  5. Click Save and Close.

  6. In the Geography Hierarchy section, click Berkshire to highlight the table row, and click Create.

  7. In the Create Post Town page, Primary and Alternate Names section, enter Reading in the Name field.

  8. Click Save and Close.

Defining the Geography Validations

To specify the geography validations for the geography types you added to United Kingdom, define the geography mapping and validation for the United Kingdom default address style format. Then, 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. In the 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. Select the Enable List of Values and Geography Validation options.

  5. For the Post Town geography type, click the City list item in the Map to Attribute field.

  6. Select the Geography Validation option.

  7. In the Geography Validation Control section, select Error in the Geography Validation Level for Country list.

  8. 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 one level under another geography in a geography hierarchy?

Select the geography that you want your geography to be created under, and then click the Create icon. This will allow you to create a geography for a geography type that is one level under 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.

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 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

  • Income Tax Jurisdiction

  • Transaction Tax Jurisdiction

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 must 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.

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.

Creating Legal Jurisdictions, Addresses and Authorities: Examples

Define legal jurisdictions and related legal authorities to support multiple legal entity registrations, which are used by Oracle Fusion Tax and Oracle Fusion Payroll.

Legal Jurisdictions

Create a legal jurisdiction by following these steps:

  1. Navigator > Setup and Maintenance > Manage Legal Jurisdictions > Go to Task.

  2. Select Create.

  3. Enter a unique Name, United States Income Tax.

  4. Select a Territory, United States.

  5. Select a Legislative Category, Income tax.

  6. Select Identifying, Yes. Identifying indicates the first jurisdiction a legal entity must register with to do business in a country.

  7. Enter a Start Date if desired. You can also add an End Date to indicate a date that the jurisdiction may no longer be used.

  8. Select a Legal Entity Registration Code, EIN or TIN.

  9. Select a Legal Reporting Unit Registration Code, Legal Reporting Unit Registration Number.

  10. Optionally enter one or more Legal Functions.

  11. Save and Close.

Legal Addresses for Legal Entities and Reporting Units

Create a legal address for legal entities and reporting units by following these steps:

  1. Navigator > Setup and Maintenance > Manage Legal Address > Go to Task.

  2. Select Create.

  3. Select Country.

  4. Enter Address Line 1, Oracle Parkway.

  5. Optionally enter Address Line 2, and Address Line 3.

  6. Enter or Select the postal code, 94065.

  7. Select Geography 94065 and Parent Geography Redwood Shores, San Mateo, CA.

  8. Optionally enter a Time Zone, US Pacific Time.

  9. OK.

  10. Save and Close.

Legal Authorities

Create a legal authority by following these steps:

  1. Navigator > Setup and Maintenance >Manage Legal Authorities > Go to Task.

  2. Enter the Name, California Franchise Tax Board.

  3. Enter the Tax Authority Type, Reporting.

    Note: Create an address for the legal authority.
  4. Select Create.

  5. The Site Number is automatically assigned.

  6. Optionally enter a Mail Stop.

  7. Select Country, United States

  8. Enter Address Line 1, 121 Spear Street, Suite 400.

  9. Optionally enter Address Line 2, and Address Line 3.

  10. Enter or Select the postal code, 94105.

  11. Select Geography 94105 and Parent Geography San Francisco, San Francisco, CA.

  12. OK.

  13. Optionally enter a Time Zone, US Pacific Time.

  14. Optionally click the One-Time Address check box.

  15. The From Date displays today's date. Update if necessary.

  16. Optionally enter a To Date to indicate the last day the address can be used.

    Note: You can optionally enter Address Purpose details.
  17. Select Add Row.

  18. Select Purpose.

  19. The Purpose from Date will default to today's date.

  20. Optionally enter a Purpose to Date.

  21. OK.

  22. Save and Close.

Creating Legal Entities, Registrations, and Reporting Units: Examples

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.

Legal Entity

Create a legal entity by following these steps:

  1. Navigator > Setup and Maintenance > Manage Legal Entity > Go to Task.

  2. Accept the default Country, United States.

  3. Enter Name, InFusion USA West.

  4. Enter Legal Entity Identifier, US0033.

  5. Optionally enter Start Date. When the start date is blank the legal entity is effective from the creation date.

  6. Optionally enter an End Date.

  7. Optionally, if your legal entity should be registered to report payroll tax and social insurance, select the Payroll statutory unit check box.

  8. Optionally, if your legal entity has employees, select the Legal employer check box.

  9. Optionally, if this legal entity is not a payroll statutory unit, select an existing payroll statutory unit to report payroll tax and social instance on behalf of this legal entity.

  10. Enter the Registration Information

  11. Accept the default Identifying Jurisdiction, United States Income Tax.

  12. Search for and select a Legal Address, 500 Oracle Parkway, Redwood Shores, CA 94065.

    The legal address must have been entered previously using the Manage Legal Address task.

  13. OK.

  14. Optionally enter a Place of Registration.

  15. Enter the EIN or TIN.

  16. Enter the Legal Reporting Unit Registration Number.

  17. Save and Close.

  18. Navigator > Setup and Maintenance > Define Legal Entries > Manage Legal Entity > Select to set scope.

  19. Select the Manage Legal Entity.

  20. In the *Legal Entity list, select Select and Add.

  21. Click Apply and Go to Task.

  22. Select your legal entity.

  23. Save and Close.

    This sets the scope for your task list to the selected legal entity.

  24. Save and Close.

Legal Entity Registrations

A legal entity registration with the same name as that of the legal entity is created by default. To verify this, locate the Manage Legal Entity Registrations task and then select Go to Task. To create another registration for the legal entity follow these steps:

  1. Navigator > Setup and Maintenance > Manage Legal Entity Registrations: Verify that the Legal Entity scope value is set correctly.

  2. Go to Task.

  3. Select Create.

  4. Enter Jurisdiction.

  5. Enter Registered Address.

  6. Enter Registered Name.

  7. Optionally enter Alternate Name, Registration Number, Place of Registration, Issuing Legal Authority, and Issuing Legal Authority Address, Start Date, and End Date.

  8. Save and Close.

Legal Reporting Unit

When a legal entity is created, a legal reporting unit with the same name as that of the entity is also automatically created. To create more legal reporting units or modify the settings follow these steps:

  1. Navigator > Setup and Maintenance > Define Legal Reporting Unit. > Manage Legal Reporting Unit. Verify that the Legal Entity scope value is set correctly.

  2. Go to Task

  3. Select Create.

  4. Enter Territory, United States.

  5. Enter Name.

  6. Optionally enter a Start Date.

  7. Enter Registration Information.

  8. Search for and select Jurisdiction.

  9. Enter Main Legal Reporting Unit information.

  10. Select the value Yes or No for the Main Legal Reporting Unit. Set value to yes only if you are creating a new main (primary) legal reporting unit.

  11. Enter the Main Effective Start Date, 1/1/11.

  12. Save and Close.

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 following rights and responsibilities to:

  • Own property

  • Trade

  • Repay debt

  • 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, expenses and income, pay transaction taxes, or perform intercompany trading.

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

  • Facilitating local compliance

  • Minimizing the enterprise's tax liability

  • Preparing for acquisitions or disposals of parts of the enterprise

  • Isolating one area of the business from risks in another area. For example, your enterprise develops property and also leases properties. You could operate the property development business as a separate legal entity to limit risk to your leasing business.

The Role of Your Legal Entities

In configuring your enterprise structure in Oracle Fusion Applications, 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

  • 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), which 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. These registers are part of the Oracle Fusion Trading Community Architecture.

When your legal entities are trading with each other, represent them as legal entities and 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.

Several decisions you should consider when you create legal entities.

  • The importance of using legal entity on transactions

  • Legal entity and its relationship to business units

  • Legal entity and its relationship to divisions

  • Legal entity and its relationship to ledgers

  • Legal entity and its relationship to balancing segments

  • Legal entity and its relationship to consolidation rules

  • Legal entity and its relationship to intercompany transactions

  • Legal entity and its relationship to worker assignments and legal employer

  • Legal entity and payroll reporting

  • Legal reporting units

The Importance of Using Legal Entities on 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, a sales order creates an obligation on the legal entity that books the order to deliver the goods on the acknowledged date. The creation also creates an obligation on 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.

  • 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, Business Unit ACM UK has a default legal entity of InFusion UK Ltd. When a purchase order is placed in ACM UK, the legal entity InFusion UK Ltd is legally obligated to the supplier. Oracle Fusion Procurement, Oracle Fusion Project Portfolio Management, 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 wanted, 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 one segment 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 with 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. This solution is used 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 want to isolate the assets and liabilities for that entity.

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

If your enterprise regularly spins off businesses or holds managers accountable for utilization of assets, identify the business with a balancing segment value. If you account for each legal entity in a separate ledger, no requirement exists to identify the legal entity with a balancing segment value.

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 the portion is not a separate legal entity. If you do not map legal entities sharing the same ledger to balancing segments, you cannot distinguish them using intercompany functionality or track 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 feature to create intercompany entries automatically 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.

Tip: In the Oracle Fusion Supply Chain applications, you can model intercompany relationships using business units, from which legal entities are derived.
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 for 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 that include a legislative data group (LDG). This example includes LDGs, which aren't an organization classification, to show how to partition payroll data by associating them with a payroll statutory unit.

Simple Configuration

This example illustrates a simple configuration that does not include any tax reporting units.

Note the following:

  • 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 these countries report at the legal entity level.

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

A figure that illustrates 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

This example illustrates a more complex configuration. In this enterprise, you define one legal entity, InFusion US as a payroll statutory unit with two separate legal entities, which are also legal employers. This model shows multiple legal employers that are associated with a single payroll statutory unit. 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 you can categorize the balances separately by one of the following:

  • Payroll statutory unit

  • Legal employer

  • 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.

A figure that illustrates an example of an enterprise
with one payroll statutory unit, multiple legal employers and multiple
tax reporting units. The multiple legal employers are associated with
a single payroll statutory unit.

One Payroll Statutory Unit and Two Tax Reporting Units

This model makes no distinction between a legal employer and a payroll statutory unit. You define tax reporting units as subsidiaries to the legal entity.

In this enterprise, legal entity is the highest level of aggregation for payroll calculations and reporting. Statutory reporting boundaries are 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. The legal entity is both a legal employer and a payroll statutory unit and that has two tax reporting units.

A figure that illustrates an example of 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

In this model, the enterprise has one legal entity. 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 wouldn't typically:

  • Report on tax reporting unit balances within a legal employer

  • Categorize balances 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. The tax reporting units are independent from the legal employer.

A figure that shows an example of 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

In this model, the enterprise has two legal entities. The 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 wouldn't typically:

  • Report on tax reporting unit balances within a legal employer

  • Categorize balances 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 figure that illustrates an example of an enterprise
with multiple payroll statutory units with several tax reporting units.
The enterprise has two legal entities in which the legal employers
and tax reporting units are independent of each other.

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). 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.

Use the Manage Legal Reporting Unit HCM Information task to designate an existing legal reporting unit as a tax reporting unit. If you create a new legal reporting unit that belongs to a legal employer (that is not also a payroll statutory unit), you select a parent payroll statutory unit and then, when you run the Manage Legal Reporting Unit HCM Information task, you designate it as a tax reporting unit and select the legal employer.

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 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, multiple company 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

  • Third parties

  • Tax authorities

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 model your external relationships to legal authorities more accurately. 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're 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 with 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:

  • Indicate that business unit tax setup is used and maintained based on the configuration of the associated legal entity at transaction time. The tax setup of the associated legal entity setup is either specific to the legal entity or shared across legal entities using the Global Configuration Owner setup.

  • Indicate that tax setup is used and maintained by a specific business unit. Create configuration options for the business unit to indicate that the subscribed tax content is used for the transactions created for the business unit.

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't modify the party tax profile for a bank as it's view only. You can only modify the bank record.

Note: You don't need to set up party tax profiles for third parties. Taxes are still calculated on transactions for third parties that don't have tax profiles.

Tax Authorities

Set up a tax authority party tax profile using the Legal Authorities setup 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: Applicable to legal entities and legal reporting units. Business units that use their own tax setup don't have defaults and controls.

  • Tax registrations: Applicable to legal reporting units.

  • Party fiscal classifications: Applicable to legal entities and legal reporting units.

  • Tax reporting codes: Applicable to legal entities, legal reporting units, and business units who don't use the tax setup of the legal entity.

  • Configuration options: Applicable to legal entities and business units who don't use the tax setup of the legal entity.

  • Service subscriptions: Applicable to legal entities and business units who don't use the tax setup of the legal entity.

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 must 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

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, similar 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.

When a legal entity is created through a back-end process, a legal entity party tax profile is created, when you:

  • Save a tax regime to which the legal tax entity subscribes.

  • Save the configuration owner tax option that are defined for the legal entity.

You can also create a party tax profile for a legal entity manually. Use the Create Legal Entity Tax Profile page or edit the tax profile that was automatically generated with the relevant tax information.

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. Some 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 sales offices. For example, set up legal reporting units to represent your company and its offices for 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 operations 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, only one identifying registration can be defined by the legal authority used for the legal entity or legal reporting unit and associated with the legal reporting unit.

Define Chart of Accounts for Enterprise Structures: Manage Chart of Accounts Structures and Structure Instances

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:

  • Effectively manages an organization's financial business.

  • Supports the audit and control of financial transactions.

  • Provides flexibility for management reporting and analysis.

  • Anticipates growth and maintenance needs as organizational changes occur.

  • Facilitates an efficient data processing flow.

  • Enables delegation of responsibility for cost control, profit attainment, and asset utilization.

  • Measures performance against corporate objectives by your managers.

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:

  • A general ledger used in conjunction with an enterprise profitability management (EPM) product, which has data standardized from each operation, is a thin general ledger. Use this variation if your solution is project-based, and Oracle Fusion Project Portfolio Management is implemented. More detailed reporting can be obtained from the Projects system. In the thin general ledger, business units, divisions, and individual departments are not represented in the chart of accounts.

  • A thick general ledger:

    • Has segments representing all aspects.

    • Captures every detail of your business.

    • Runs frequent posting.

    • Defines many values in each segment.

    A thick general ledger is designed to serve as a repository of management data for a certain level of management. For example, a general ledger designed to provide management data to supervise operations, such as daily sales, without invoice details.

  • A primary and secondary ledger, with one thick general ledger and the other a thin general ledger, provides dual representation to meet reporting requirements.

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:

  • Minimal chart of accounts

    • Short list of cost centers

    • Short list of natural accounts

      • Short list of cost accounts

      • Summary level asset and liability accounts

    • Low number of optional segments

  • Infrequent posting schedule

A thin general ledger:

  • Has natural accounts at a statutory reporting level, for example, payroll expense, rent, property taxes, and utilities.

  • Has cost centers at the functional expense level, such as Research and Development or Selling, General, and Administrative, rather than at department or analytic levels.

  • 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:

  • Maximum use of the chart of accounts

    • Long list of natural accounts

    • Long list of cost centers

      • Long list of costing accounts

      • Detailed asset and liability accounts

  • Frequent posting schedule

A thick general ledger had details 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:

  • Track entered currency balances at the level of an operational dimension or segment of your chart of accounts, such as by department or cost center

  • Generate financial allocations at the level of an operational dimension or segment

  • Report using multiple layered and versions of hierarchies of the operational dimension or segment from your general ledger

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

  • Minimal disclosure to the authorities in addition to the requirements listed above. For example, in some European countries, fiscal authorities examine ledgers at the detailed account level.

  • Fiscal only adjustments, allocations, and revaluations, which don't impact the thick general ledger.

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 an operational dimension or segment are entered by the user, then a thick primary ledger is the better choice.

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

  • Storage and maintenance needed for both the general ledger and subledger accounting entries

  • System resources required to perform additional posting

  • In summary, you have:

    • Minimum demand on storage, maintenance, and system resources with the use of a thin ledger

    • Greater demand on storage, maintenance, and system resources with the use of a thick ledger

    • Greatest demand on storage, maintenance and system resources with the use of both thick and thin ledgers

    Note: Generally speaking, there is a trade-off between the volume of journals and balances created and maintained versus system resource demands. Actual performance depends on a wide range of factors including hardware and network considerations, transaction volume, and data retention policies.
Summary

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

  • Downstream EPM system and its capabilities

  • Business intelligence system and its capabilities

  • Subledger systems and their capabilities and characteristics, including heterogeneity

  • General ledger reporting systems and their capabilities

  • Maintenance required for the thick or thin distributions and record keeping

  • Maintenance required to update value sets for the chart of accounts segments

  • Preferences of the product that serves as a source of truth

  • Level at which to report profitability including gross margin analysis

  • Industry and business complexity

Chart of Accounts: How Its Components Fit Together

The important elements in a basic chart of accounts in Oracle Fusion Applications included 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 illustrates 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.

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:

  • Order of segments

  • Width of segments

  • Prompts

  • Segment labels, such as balancing, natural account, and cost center.

The chart of accounts further defines:

  • Combination of value sets associated with each segment

  • Type of segment

  • Default values for the segments

  • Additional conditions designating the source of the values using database tables

  • 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.

Caution: You must use Independent validation only for the Accounting Key Flexfield value sets. Other validations prevent you from using the full chart of accounts functionality, such as data security, reporting, and account hierarchy integration. Dependent values sets are not supported.

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.

  • Balancing: Ensures that all journals balance for each balancing segment value or combination of multiple balancing segment values to use in trial balance reporting. The three balancing segment labels are: primary, second, and third balancing. The primary balancing segment label is required.

  • Cost Center: Facilitates grouping of natural accounts by functional cost types, accommodating tracking of specific business expenses across natural accounts. As cost centers combine expenses and headcount data into costs, they are useful for detailed analysis and reporting. Cost centers are optional, but required if you are accounting for depreciation, additions, and other transactions in Oracle Fusion Assets, and for storing expense approval limits in Oracle Fusion Expense Management. If you are implementing Oracle Fusion Procurement, you can use cost centers for business intelligence reporting and to route transactions for approval.

  • Natural Account: Determines the account type (asset, liability, expense, revenue, or equity) and other information specific to the segment value. The natural account segment label is required.

  • Management: Optionally, denotes the segment that has management responsibility, such as the department, cost center, or line of business. Also can be attached to the same segment as one of the balancing segments to make legal entity reporting more granular.

  • Intercompany: Optionally, assigns the segment to be used in intercompany balancing functionality.

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.

  • Security rules: Prohibit certain users from accessing specific segment values. For example, you can create a security rule that grants a user access only to his or her department.

  • Cross-validation rules: Control the account combinations that can be created during data entry. For example, you may decide that sales cost centers 600 to 699 should enter amounts only to product sales accounts 4000 to 4999.

Create Chart of Accounts, Ledger, Legal Entities, and Business Units in Spreadsheets: Explained

Represent enterprise structures of your chart of accounts, ledger, legal entities, and business unit configuration to track and report on your financial objectives and meet your reporting requirements. These components are the underlying structure for organizing financial information and reporting.

The chart of accounts within the ledger facilitates:

  • Aggregating data from different operations, from within an operation, and from different business flows

  • Consistent definitions to your stakeholders in compliance with legislative and corporate reporting standards and aids in management decisions

Rapid implementation is a way to configure a financial enterprise and financial reporting structures quickly using sheets in a workbook that upload lists of:

  • Companies (legal entities)

  • Ledgers by country

  • Business units

  • Chart of accounts and segment values

  • Segment value hierarchies

  • Financial sequences

  • Required subledger accounts

Once the sheets have been uploaded, the application creates your:

  • Chart of accounts structure and instance

  • Segment value hierarchies

  • Key accounts such as retained earnings

  • Required subledger accounts

  • Calendar

  • Primary ledgers by country

  • Legal entities and their locations

  • Business units

  • Document and journal sequences

The following figure illustrates the flow of the enterprise structure setup. Legal entities (companies) incur transactions that are identified by business units with business functions. Transactions that are recorded in subledgers are transferred to the ledger. A ledger consists of a calendar, a currency, and a chart of accounts. A chart of accounts consists of segments, some of which are assigned segment labels, such as cost center, natural account, and balancing segment. Legal entities can be assigned balancing segment values.

This figure shows the flow of the enterprise structure
setup from the legal entities to the ledger.

Here's additional information for some of the common setup objects that are created:

  • Legal Entity: Identifies a recognized party with rights and responsibilities given by legislation, which has the right to own property and the responsibility to account for themselves.

  • Chart of Accounts: Configures accounts consisting of components called segments that are used to record balances and organize your financial information and reporting.

  • Segment: Contains a value set that provides formatting and validation of the set of values used with that segment. When combined, several segments create an account combination for recording your transactions and journal entries.

  • Segment Label: Identifies certain segments in your chart of accounts and assigns special functionality to those segments. The required segment labels are:

    • Balancing Segment: Ensures that all journals balance for each balancing segment value or combination of multiple balancing segment values to use in financial processes and reporting. The three balancing segment labels are: Primary balancing segment, Second balancing segment, and Third balancing segment. The Primary balancing segment label is required and must be the first segment in the Rapid Implementation spreadsheet.

    • Natural Account: Facilitates processes in the General Ledger application, such as retained earnings posting. For each child value, you must assign an Account Type. You can select from one of the general choices to mark the account value as an Asset, Liability, Owner's Equity, Revenue, or Expense account.

      If the account is used by the rapid implementation solution to provide accounts for setup objects, select the appropriate Expanded Account Type value for the child account. Examples of expanded account types required for setup objects are:

      • Owner's Equity - Retained Earnings: To set up General Ledger ledgers.

      • Liability - Accounts Payable: To set up Payables common options.

      • Asset - Accounts Receivable: To set up Receivables receipt methods.

      Accounts tagged with expanded account types are automatically assigned a financial category. You can override the default category in the Financial Category field, or leave it out.

    • Cost Center: Facilitates grouping of natural accounts by functional cost types, accommodating tracking of specific business expenses across natural accounts.

  • Ledger: Maintains the records and is a required component in your configuration. The rapid implementation process:

    • Creates your primary ledgers by combining your chart of accounts, calendar, and currency as well as other required options defined in the sheets.

    • Assigns a default value for the fourth component, which is the subledger accounting method. The subledger accounting method is used to group subledger journal entry rule sets together to define a consistent accounting treatment.

      Note: The standard accrual method is the default subledger accounting method assigned to the primary ledger.
    • Creates a General Ledger balances cube for each ledger with a unique chart of accounts and calendar combination. Each segment is created as a dimension in the balances cube along with the standard cube dimensions.

  • Business Units with Business Functions: Identifies where subledger transactions are posted and provides access to perform subledger business processes. When configured, business units are assigned to a primary ledger and a default legal entity.

  • Subledger: Captures detailed transactional information, such as supplier invoices, customer payments, and asset acquisitions. Uses subledger accounting to transfer transactional balances to the ledger where they are posted.

Note: Segment Value Hierarchies: You can create more than one hierarchy for any of your chart of accounts segments during initial setup. You can also create additional hierarchies after the initial setup is done by uploading the rapid implementation spreadsheet data.

Document and Journal Sequences: You can create sequences for each legal entity or ledger based on the predefined country defaults. Document sequences are created for:

  • Payables invoices

  • Payments

  • Receivables invoices

  • Receivables credit memos

  • Receivables adjustment activities

Reporting and accounting journal sequences are created for subledger journals and General Ledger journals.

Create Chart of Accounts, Ledger, Legal Entities, and Business Units in Spreadsheets: How They're Processed

The Create Chart of Accounts, Ledger, Legal Entities, and Business Units rapid implementation process consists of the following steps:

  1. Entering data into the sheets.

  2. Verifying the entered data and resolving any errors.

  3. Uploading the first file generated.

  4. After successful upload of the first file, uploading the second file generated for the rest of the configuration.

Process Overview

Begin by downloading the Rapid Implementation for General Ledger workbook using the Create Chart of Accounts, Ledger, Legal Entities, and Business Units in Spreadsheet task on the Setup and Maintenance work area.

The Rapid Implementation for General Ledger workbook includes the following sheets:

  • Instructions

  • Chart of Accounts, Calendar, and Ledger

  • Business Units

  • Companies and Legal Entities

  • Natural Accounts

  • Financial Sequences

Sheets for entering other segment values and hierarchies for additional segments of your chart of accounts are created automatically by entering the segments on the Chart of Accounts, Calendar, and Ledger sheet and then clicking Add Segment Sheets or Generate Additional Hierarchy on that same sheet.

Instructions Sheet

Read the planning tips, loading process, best practices, and recommendations. Refer to the sample data worksheet to get an idea of how to enter the data and generate the required upload files.

The following figure shows the section of the Instructions sheet called Rapid Implementation Template with Sample Data. This section includes the sample data template as a guide to data entry.

This figure shows the sample data template on the
Instruction sheet.

Chart of Accounts, Calendar, and Ledger Sheet

Enter the data to create your ledger, chart of accounts, currency, and calendar, and to set the required ledger options.

The following figure shows an example of the Chart of Accounts, Calendar and Ledger sheet with sample values.

This figure shows the Chart of Accounts, Calendar
and Ledger sheet populated with values to create a ledger with its
three components: chart of accounts, calendar, and currency.

An explanation of each field and button on the sheet follows.

  • Name: Enter the name of your primary ledgers.

    A primary ledger is created for each unique country that's entered in the Companies and Legal Entities sheet. The country code is appended to the name you specified to create the primary ledger. For example, if one of the legal entities is based in the United States and another in Canada, and the ledger name is InFusion Ledger, then two primary ledgers, InFusion Ledger US and InFusion Ledger CA, are created.

    All the primary ledgers that are created use the same chart of accounts, account hierarchies, and accounting calendar. Legal entities and their primary balancing segment values are assigned to the primary ledger of their respective countries.

  • Currency: Enter the ledger currency in which most of your transactions are entered if you're not entering legal entity data. If you're entering legal entities, leave this field blank. The currency is supplied by default based on the country.

  • Period Frequency: Select one of the available frequencies.

  • Adjusting Periods: Select the number of periods used to enter closing, auditing, or other adjustments in the General Ledger at quarter or year end. The entries are tracked in the adjusting period and not in your monthly activity.

  • Fiscal Year Start Date: Enter the start date of the calendar for your ledgers. The date can't be changed after the ledgers are created.

    Caution: Select a period before the first period in which you plan to load history or perform translations to enable running translation. You can't run translation in the first defined period of a ledger calendar.
  • Chart of Accounts section: Enter your segments, segment labels, short prompts, and display width data that's used to create your chart of accounts. Plan this data carefully because you're defining the basic structure for your accounting and reporting.

    • Segment: Enter the names of your segments.

    • Segment Label: Select which segment the application uses for certain processing, such as the Primary Balancing Segment, which is used to balance journal entries.

      If you select an Intercompany Segment label, you must complete at least one intercompany rule. You must also select the Enable Intercompany Balancing option, using the Specify Ledger Options task, for the Balancing API to perform intercompany balancing. Also note that the same hierarchy specified for the primary balancing segment is also used for the intercompany balancing segment automatically.

      If you plan to enable segment value security rules for the primary balancing segment, then you should not assign the Intercompany Segment label to the Intercompany segment. By default, the Rapid Implementation spreadsheet assigns the same value set to the Company and Intercompany segments if the Intercompany Segment label is assigned. If you want to use segment value security rules for the Company segment where a user can only access Company 01, that user can't transact with other companies in an intercompany transaction, because segment value security rules are assigned at the value set level.

      What you should do instead is not assign the Intercompany Segment label to the Intercompany segment. Use the Add Segment Sheets button to add sheets for any unqualified segments, and assign the values directly. Assign the same values to the Company and Intercompany segments. You must then assign the Intercompany segment label to this segment by navigating to the Edit Key Flexfield Segment Intercompany page using the application pages to use the intercompany segment in intercompany balancing.

    • Short Prompt: Enter a short name for the segment for the application to use.

    • Display Width: Enter the segment size. Select carefully and leave room for growth. For example, if you have 89 cost centers, enter 3 for the display length to allow for more than 100 cost centers in the future.

  • Add Segment Sheets button: Select to create sheets for additional segments. Only the Company and Natural Accounts sheets are provided.

    From the new segment sheet, you can click Generate Additional Hierarchy to create more than one hierarchy for any of your chart of account segments. This creates a worksheet and populates it with the data already entered for that segment. Change this data as required for the new hierarchy. You can create additional hierarchies during initial setup or after the initial setup is done.

  • Step 1: Validate button: Click to validate your entered data. An actionable validation report is generated if any errors occur in data entry. Correct these errors before proceeding by clicking each error on the report. Clicking the error navigates you to the exact sheet and cell on that sheet where the error can be found.

  • Step 2: Generate Chart of Accounts File button: Click to create a file that is then uploaded to create the chart of accounts structures, values, and hierarchies.

  • Step 3: Generate Ledger, LE, and BU File button: Click to create a file that is then uploaded to create ledgers, legal entities and their locations, business units (BU), and document and journal sequences.

Business Units Sheet

Enter the name of your business units and related default legal entities.

The following figure shows an example of the Business Units sheet with sample values for the Name and Default Legal Entity Name fields.

This figure shows the Business Units sheet.

You can enter more than one business unit per ledger. Business units are created with entered names. Based on the default legal entity entered in the Business Units sheet, the respective country's primary ledger is supplied by default for the business unit. The first legal entity that is associated with the ledger is supplied by default for all the business units of that country.

Companies and Legal Entities Sheet

Enter a list of your legal entities with their addresses, registration number, reporting unit registration number, and assigned parent or child value. You can create up to nine levels of parent values to use to roll up your legal entities to meet corporate and local reporting requirements.

The registration number identifies legal entities registered for your company and recognized in law for which you want to record and perform transactions. The reporting unit registration number identifies the lowest level component of a legal structure that requires registrations.

The following figure shows portions of the Companies and Legal Entities sheet with sample values. The sheet includes columns for different levels of parent values, the child value, and company description. The Legal Entity columns include name, identifier, country, address information, and registration numbers.

This figure shows the Companies and Legal Entities
sheet populated with the companies and their addresses and registration
numbers.

To create additional hierarchies for the company segment for reporting or other purposes, click the Generate Additional Hierarchy button on this sheet. This creates a worksheet and populates it with the data already entered for that segment. Change this data as required for the new hierarchy. You can create additional hierarchies during initial setup or after the initial setup is done.

Note: For the Company segment, adding legal entity information isn't supported on the new hierarchy's sheet.
Note: When a new hierarchy sheet is created, the name for that sheet is derived by adding a counter to the sheet name. For example, when you click Generate Additional Hierarchy on the Companies and Legal Entities sheet, the new sheet is named Companies and Legal Entities 1. When you click Generate Additional Hierarchy again, another sheet is generated with the name Companies and Legal Entities2.

Natural Accounts Sheet

Enter the account values used to record the type of balance.

The following figure shows a portion of the Natural Accounts sheet with sample parent and child values and descriptions. The sheet also includes columns for the account type and financial category.

This figure shows the Natural Accounts Sheet with
values, account type, and financial category.
  • Parent Values, Child Values and Descriptions: Enter to create segment values and build hierarchies. Child values are the postable account values. To define hierarchies, enter parent values. Hierarchies are used for chart of accounts mappings, revaluations, data access sets, cross-validation rules, and segment value security rules. The balances cube and account hierarchies are also used for financial reporting, Smart View queries, and allocations.

  • Account Type: Enter to identify the type of account: Asset, Liability, Revenue, Expense, or Owner's Equity. Account types are used in year-end close processes and to correctly categorize your account balances for reporting.

    If the account is used by the rapid implementation solution to provide accounts for setup objects, select the appropriate Expanded Account Type value for the child account. Examples of expanded account types required for setup objects are:

    • Owner's Equity - Retained Earnings: To set up General Ledger ledgers.

    • Liability - Accounts Payable: To set up Payables common options.

    • Asset - Account Receivable: To set up Receivables receipt methods.

    Accounts tagged with expanded account types are automatically assigned a financial category. You can override the default category in the Financial Category field, or leave it out.

  • Financial Category: Enter to identify groups of accounts for reporting with Oracle Transactional Business Intelligence.

  • Generate Additional Hierarchy: To create additional hierarchies for the company segment for reporting or other purposes, click the Generate Additional Hierarchy button on this sheet. This creates a worksheet and populates it with the data already entered for that segment. Change this data as required for the new hierarchy. You can create additional hierarchies during initial setup or after the initial setup is done.

Financial Sequences Sheet

Enable document or journal sequences to assign unique numbers to transactions to meet legal requirements.

The following figure shows the Financial Sequences sheet with sample values for the Restart and Initial Value columns.

This figure shows the Financials Sequences sheet
where you set restart and initial values for financial document and
journal sequences.

The transactions the document sequences are created for include:

  • Payables invoices

  • Payments

  • Receivables invoices

  • Receivables credit memos

  • Receivables adjustment activities

Reporting and accounting journal sequences are created for:

  • Subledger journals

  • General Ledger journals

Complete the following steps on the Financial Sequences sheet:

  1. Restart: Set to restart the numbering based on one of the following criteria:

    • Annually: Restart sequence numbers once a year.

    • Monthly: Restart sequence numbers each month.

    • Never: Never restart sequences numbers. Continue with the same sequence.

  2. Initial Value: The beginning number in the sequence.

Upload the Sheets

After you complete the other sheets, return to the Chart of Accounts, Calendar, and Ledger sheet and perform the following steps:

  1. Click Step 1: Validate. The process validates your data entry. Ensure the validation report has no errors.

  2. Click Step 2: Generate Chart of Accounts File. The process generates a data file called ChartOfAccounts.xml with the entered chart of accounts and hierarchies setup data. Save the file to a network or local drive.

  3. Click Step 3: Generate Ledger, LE, and BU File. The process generates a data file called FinancialsCommonEntities.xml with the entered ledger, legal entities, and business unit setup data. Save the file to a network or local drive.

  4. Navigate to the Setup and Maintenance work area. Search for and select the Upload Chart of Accounts task. The Upload Enterprise Structures and Hierarchies process is launched.

  5. Accept the default selection of the Upload Enterprise Structure option.

    The following figure shows the Upload Enterprise Structures and Hierarchies process page with Upload Enterprise Structure as the selected parameter.

    This figure shows the Upload Enterprise Structures
and Hierarchies process page.
  6. Click Browse and select the first file that you saved called ChartOfAccounts.xml.

  7. Click Submit.

  8. Verify that the process completed without errors or warnings.

  9. Navigate to the Setup and Maintenance work area. Search for and select the Upload Ledger, Legal Entities, and Business Units task. The Upload Enterprise Structures and Hierarchies process is launched.

  10. Accept the default selection of the Upload Enterprise Structure option.

  11. Click Browse and select the second file that you saved called FinancialsCommonEntities.xml.

  12. Click Submit.

  13. Verify that the process completed without errors or warnings.

Tip: You can't change the chart of accounts, accounting calendar, or currency for your ledgers after the setup is created. Open the first accounting period to begin entering data with a user that has proper access to the newly-created primary ledger.

Create Additional Hierarchies After Initial Setup

To create more than one hierarchy for any of your chart of account segments after the initial enterprise structure setup:

  1. Click the Generate Additional Hierarchy button on the segment's sheet for which you want to create the additional tree or tree version. This creates a new worksheet and populates the sheet with the data already entered for that segment. Change the data as required for the new hierarchy.

  2. To create the hierarchy based on the data in the particular sheet in context only, click the Generate File for This Hierarchy Only button. This generates a .zip file for the particular hierarchy. Perform the following steps to either create a tree, or a new version of an existing tree, for the particular segment.

  3. Navigate to the Setup and Maintenance work area. Search for and select the Upload Chart of Accounts task. The Upload Enterprise Structures and Hierarchies process page opens.

  4. Select the Upload Hierarchy option.

    The following figure shows the Process Details page for the Upload Enterprise Structures and Hierarchies process with the parameters set to upload the hierarchy and create a hierarchy.

    This figure shows the Process Details page for
the Upload Enterprise Structures and Hierarchies process.
  5. Select to either create a hierarchy or tree version per your requirement.

  6. Specify the required parameters.

  7. Click Choose File and select the .zip file that you saved earlier.

  8. Click Submit.

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.

Creating Chart of Accounts Structure and Instances: Examples

In Oracle 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. A chart of accounts structure defines the key attributes for your chart of accounts. These attributes include the number of segments, the segment sequences, the segment names, segment prompts, segment labels, for example natural account and primary balancing, and default value sets.

The chart of accounts instance is exposed in user interfaces and processes. By default, a chart of accounts instance inherits all of the attributes of the chart of accounts structure, meaning that all instances of the same structure share a common shape and have the same segments in the same order. However, at the chart of accounts instance level, you can override the default value set assignments for your segments and assign a unique account hierarchy that determines the parent and child relationships between the value set values. At the chart of accounts instance level, you can determine whether to generate new account combinations dynamically instead of creating them manually.

Chart of Account Structure

You are creating a chart of accounts structure as you set up a chart of accounts for your enterprise, InFusion America, Inc. Follow these steps:

  1. From the Setup and Maintenance work area, navigate to the Manage Chart of Accounts task.

  2. Select the General Ledger module and click Search.

  3. Click Manage Structures to open the Manage Key Flexfield Structures page.

  4. Select the General Ledger row and click the Create icon to open the Create Key Flexfield Structure page.

  5. Enter a unique structure code, INFUSION_AM_COA_STRUCTURE, and name, InFusion America COA Structure. Provide an optional description, InFusion America Inc. chart of accounts structure.

  6. Select a delimiter to visually separate the segment values.

  7. Click Save.

  8. To create a new segment, click the Create icon to open the Create Key Flexfield Segment page.

    1. Complete the fields, as shown in this table.

      Field Value

      Segment Code

      INFUSION_AM_CO

      Name

      InFusion America Company

      Description

      InFusion America Inc.

      Sequence Number

      1

      Prompt

      Company

      Short Prompt

      CO

      Display Width

      2

      Column Name

      Segment1

      Default Value Set Code

      INFUSION_AM_COMPANY

    2. Select a segment label, Primary Balancing Segment, to indicate its purpose within your chart of accounts.

      Note: Two segment labels are required: primary balancing segment and natural account segment. These labels are not used with each other or with other labels in a specific segment.
    3. Click Save and Close.

    4. Click Done.

    5. Define additional segments following the same process.

Chart of Account Instance

You are creating a chart of accounts instance as you set up your chart of accounts for your enterprise, InFusion America, Inc. Follow these steps:

  1. From the Setup and Maintenance work area, navigate to the Manage Chart of Accounts task.

  2. Select the General Ledger module and click Search.

  3. Select the General Ledger row and click Manage Structure Instances to open the Manage Key Flexfield Structure Instance page.

  4. Click the Create icon to open the Create Key Flexfield Structure Instance page.

  5. Enter a unique structure instance code, INFUSION_AM_COA_INSTANCE, and name, InFusion America COA Instance. Provide an optional description, InFusion America Inc. chart of accounts structure instance.

  6. Select the Dynamic combination creation allowed option to indicate that you want to dynamically generate account combinations.

  7. Associate your instance with the structure InFusion America Structure.

    Note: By default, an instance inherits the key attributes of the associated structure. Some attributes, such as the value set assigned to each the segment, can be modified.
  8. Click Save.

  9. To modify an instance segment, select the segment row and click Edit.

  10. Select the Required, Displayed, and BI enabled options.

    Note: Select the Required and Displayed options for all segments including those intended for future use. The recommended best practice is to define one segment for future use and set a default value. This ensures room for expansion in your chart of accounts and that the extra segment is populated in the account combinations.

    Select the BI (Business Intelligence) enabled option to use key flexfield segments in Oracle Fusion Transactional Business Intelligence. The business intelligence option is only valid when enabled on segments with segment labels. The second step is to populate the BI Object Name field for each of the segment labels on the Manage Segment Label page opened from the Manage Key Flexfields page.

  11. Click OK.

  12. Click Save and Close.

  13. Define additional instances following the same process.

    Note: Alternatively, proceed directly with creating your value set values by selecting the corresponding Value Set Code in the Segment Instances table.
  14. Click Done.

  15. Click Deploy Flexfield.

  16. Click OK.

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.

The three balancing segment labels are:

  • Primary

  • Second

  • Third

Note: The primary balancing segment label is required.

By enabling multiple balancing segments for your chart of accounts, you can produce financial statements for each unique combination of segment values across one, two, or 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.

  • Intercompany balancing: Adds lines to unbalanced journals using intercompany rules.

  • Opening first period of the accounting year: Calculates retained earnings amounts at the level of granularity that totals revenue and expense account balances for multiple balancing segment value combinations. This applies to standard and average balances.

  • Importing journals: Adds lines using the suspense account on unbalanced journals.

  • Posting journals: Adds additional lines to unbalanced journals for the following enabled account types:

    • Suspense

    • Rounding

    • Net income

    • Retained earnings

    • Cumulative translation adjustments from replication of revaluation journals to reporting currencies and for multiple reporting currency account type specific conversion

  • Posting prior period journals: Calculates any income statement impact and posts to the appropriate retained earnings account.

  • Translating balances: Supports multiple balancing segments for the following accounts:

    • Retained earnings: Calculated translated retained earnings are post to the retained earnings accounts by balancing segment. Retained earnings accounts represent the summing of the translated revenue and expense accounts across multiple balancing segment values.

    • Cumulative translation adjustment: Amounts posted by balancing segment to these accounts represents currency fluctuation differences between ranges of accounts which use different rate types. For example, period end rates are used for asset and liability accounts and historical rates for equity accounts.

  • Revaluing Balances: Supports multiple balancing segments when calculating gain or loss accounts.

  • Creating Opening Balances: Initializes reporting currency balances by converting from the total primary currency. Any difference in the reporting currency amounts is offset by populating retained earnings accounts.

  • Closing year end: Supports multiple balancing segments when calculating the income statement offset and closing account in the closing journals.

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.

Several points must be consider when using multiple balancing segments:

  • Journal entry processing

  • Implementation timing

  • Change options

  • Migration adjustments

Journal Entry Processing

Multiple balancing segments ensure that account balances come from journal entries where the debits equal the credits. 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 using optional second and third balancing segments, remember that these chart of accounts segment labels are set from the beginning of time. Ensure that balances are immediately maintained in accordance with the necessary balancing actions to produce consistent financial reporting for the wanted 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.

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 uses a second and third balance segments, steps must be taken to ensure the proper transition. The required adjustments are extensive.

For ledgers associated with a migrated chart of accounts, the balances must be adjusted manually. The manual adjustment is to ensure that the second and third balancing segments are consistent as though these segment labels have been in place since the beginning of entries for these ledgers. Recomputing and updating of the following processes is required to reflect the correct balancing for each account using the second and third balancing segments.

  • Intercompany balancing

  • Suspense posting

  • Rounding imbalance adjustments on posting

  • Entered currency balancing

  • Revaluation gains or losses

  • Retained earnings calculations at the opening of each new fiscal year

  • Cumulative translation adjustments during translation

Note: All previously translated balances must also be purged. New translations must be 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 illustrates 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:

  • Company: Primary balancing segment

  • Cost Center: Second balancing segment

  • Account: Natural account segment

The following table shows a journal that was entered to transfer advertising and phone expense from company 1, cost center A to company 2, cost center B.

Line Account Debit Credit

1

Company 1-Cost Center A-Advertising Expense Account

600

2

Company 2-Cost Center B-Advertising Expense Account

600

3

Company 1-Cost Center A-Phone Expense Account

800

4

Company 2-Cost Center B-Phone Expense Account

800

The posting process creates journal lines to balance the entry across the primary and second balancing segments, company and cost center. The following table shows all of the journal lines, including balancing lines 5 through 8, which were automatically created.

Line Account Debit Credit

1

Company 1-Cost Center A-Advertising Expense Account

600

2

Company 2-Cost Center B-Advertising Expense Account

600

3

Company 1-Cost Center A-Phone Expense Account

800

4

Company 2-Cost Center B-Phone Expense Account

800

5

Company 1-Cost Center A-Balancing Account

600

6

Company 2-Cost Center B-Balancing Account

600

7

Company 1-Cost Center A-Balancing Account

800

8

Company 2-Cost Center B-Balancing Account

800

FAQs for Manage Charts of Accounts Structures and Structure Instances

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. All segments of the chart of accounts are required and have to be enabled. The unused segments can be assigned value sets that have a single value in the chart of accounts structure instance. The value is set as a default for that segment so that the extra segments are automatically populated when an account account combination is used.

Define Chart of Accounts for Enterprise Structures: Value Sets and Value Set Values

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

  • Validation Type

  • Format Assignments

  • Security Rules

  • Values Definition

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 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:

  • Independent: The values are independently selected when filling out the segment in the account combination.

  • Table Validated: The values are stored in an external table to facilitate maintenance and sharing of the reference data.

Caution: You must use Independent validation only for the Accounting Key Flexfield value sets. Other validations prevent you from using the full chart of accounts functionality, such as data security, reporting, and account hierarchy integration. Dependent values sets are not supported.

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.

  • Set the values to conform to the value set length and type.

  • Enter the value, its description, and its attributes including the Enable check box, Start Date, and End Date.

  • Assign the following attributes: Parent or Summary check box, Posting is allowed, and Budgeting is allowed.

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 the summary indicator, 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.

Creating a Value Set for Your Chart of Accounts: Example

Create your value sets before creating your chart of accounts. A value set can be shared by different charts of accounts or across different segments of the same chart of accounts.

Scenario

You are creating a company value set to be used in your chart of accounts for your enterprise, InFusion America, Inc. Follow these steps:

  1. Navigator > Setup and Maintenance > Manage Chart of Accounts Value Sets >Go to Task.

  2. Click the Create icon on the toolbar of the Search Results table. The Create Value Set page opens.

  3. Enter a unique Value Set Code, InFusion America Company, and an optional Description, Company values for InFusion America Inc.

  4. Select General Ledger from the list in the Module field.

  5. Select Independent as Validation Type.

    Note: You must use Independent validation only for the Accounting Key Flexfield value sets. Other validations prevent you from using the full chart of accounts functionality, such as data security, reporting, and account hierarchy integration. Dependent values sets are not supported.
  6. Select Character as the Validation Data Type.

  7. Save and Close.

Configuring Chart of Account Segments for Business Intelligence: Explained

To map the Oracle General Ledger accounting flexfield in the Oracle Fusion Transaction Business Intelligence (BI) Repository file (RPD) for Oracle Fusion Financials, populate values in the Manage Key Flexfields user interface. These values enable the chart of accounts segments for Oracle Fusion Transactional BI. The values also provide the mapping with BI Object names that are used as dimensions for each of the chart of accounts segments.

Follow these steps to select the BI enabled option for all chart of account segments that you intend to map in the RPD.

  1. From your implementation project or the Setup and Maintenance page, query for Manage Key Flexfields > Go to Task.

  2. Enter GL# in the Key Flexfield Code field.

  3. Click Search.

  4. Click Manage Structure Instances.

  5. Click Search.

  6. Click the specific chart of accounts and click the Edit icon.

  7. Click the specific segment and click the Edit icon.

  8. Select the BI enabled option.

  9. Click Save. This should be done for all segments in every chart of accounts structure instance that you intend to be mapped in the RPD.

  10. Click Save and Close.

  11. Click Done.

Follow these steps to specify a BI object name for each segment label. This name is the logical table name in the RPD that is used as the dimension for the corresponding segment.

  1. From your implementation project or the Setup and Maintenance page, query for Manage Key Flexfields > Go to Task.

  2. Enter GL# in the Key Flexfield Code field.

  3. Click Search.

  4. Select the Actions menu and click Manage Segment Labels.

  5. Populate the BI Object Name field for all the segment labels that must be mapped in the RPD. Complete the fields, as shown in this table.

    Segment Label Code BI Object Name

    FA_COST_CTR

    Dim - Cost Center

    GL_BALANCING

    Dim - Balancing Segment

    GL_ACCOUNT

    Dim - Natural Account Segment

  6. Click Save.

Note: For all the nonqualified segment labels, populate the BI Object Name with one of the following values:
  • Dim - GL Segment1

  • Dim - GL Segment2

  • Dim - GL Segment3

  • Dim - GL Segment4

  • Dim - GL Segment5

  • Dim - GL Segment6

  • Dim - GL Segment7

  • Dim - GL Segment8

  • Dim - GL Segment9

  • Dim - GL Segment10

Deploy the flexfield using the Deploy Flexfield button on the Manage Key Flexfields page. For more information about extending both key and descriptive flexfields into Oracle Fusion Transactional BI, refer to the Oracle Fusion Transactional Business Intelligence Administrator's Guide.

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.

  • Budgetary control only

  • Start Date

  • Period Frequency

  • Adjusting Period Frequency

  • Period Name Format

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.

Budgetary Control Only Check Box

Select the check box for Budgetary control only to use the calendar for budgetary control only. Budgetary Control refers to the group of system options and the validation process of determining which transactions are subject to validation against budgets and budget consumption to prevent overspending.

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.

If the 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.

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

In the Period Name Format region enter the following fields:

  • User-Defined Prefix: 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.

  • Format: A predefined list of values filtered on the selected separator and only displays the options that match the selected separator.

  • Year: 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 a calendar. Once you set a calendar period status to open or future enterable, you can't edit the period.

Settings That Affect Calendar Validation

Calendar validation runs automatically after you save the calendar.

How a Calendar Is Validated

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

Validation Data Example

Unique period number

2 assigned for two periods

Unique period name

Jan-17 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 17

Single or double quotes in the period name

Jan '17

Nonadjusting periods with overlapping dates

01-Jan-2017 to 31-Jan-2017 and 30-Jan-2017 to 28-Feb-2017

Period date gaps

01-Jan-2017 to 28-Jan-2017 and 31-Jan-2017 to 28-Feb-2017

Missing period numbers

Periods 1 through 6 are defined for a calendar with 12 months

Period number gaps

1, 3, 5

Period numbers not in sequential order by date

Period 1 covers 01-Jan-2017 to 31-Jan-2017 and period 2 covers 01-Mar-2017 to 31-Mar-2017, and period 3 covers 01-Feb-2017 to 28-Feb-2017.

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, 2015 in a 2017 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:

  • Start date of September 1, 2014.

  • End date is August 31, 2015.

  • 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, 2014 to December 31, 2014, then 2014 or just 14, depending on the period format selected, is appended to each period's name. For the remaining periods covering January 1, 2015 to August 31, 2015, then 2015 or 15, 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 2015, then 2015 or just 15, 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 cannot 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 are 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 Offerings: 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. To create a legal entity or ledger, first 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 setup tasks are opened from either an implementation project or directly from the Setup and Maintenance work area.

The financial applications have two predefined implementations:

  • The Oracle Fusion Accounting Hub offering: Used to add the Oracle Fusion General Ledger and Oracle Fusion Subledger Accounting application features to an existing enterprise resource planning (ERP) system to enhance the reporting and analysis.

  • The Oracle Fusion Financials offering includes the Oracle Fusion General Ledger and Oracle Fusion Subledger Accounting application features and one or more subledger financial applications.

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

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 or 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:

  • You have companies that require different account structures to record information about transactions and balances. For example, one company may require a six-segment account, while another needs only a three-segment account structure.

  • You have companies that use different accounting calendars. For example, although companies may share fiscal year calendars, your retail operations require a weekly calendar, and a monthly calendar is required for your corporate headquarters.

  • You have companies that require different functional currencies. Consider the business activities and reporting requirements of each company. If you must present financial statements in another country and currency, consider the accounting principles to which you must adhere.

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. Transactions from your subledgers are posted to your primary ledgers and possibly, secondary ledgers or reporting currencies based on balance, subledger, or journal level settings. Local and corporate compliance can be achieved through an optional secondary ledger. Provide 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. 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.

  • Records transactional balances by using a chart of accounts with a consistent calendar and currency, and accounting rules implemented in an accounting method..

  • 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 that affect the number of primary ledgers required are:

  • Corporate year end

  • Ownership percentages

  • Local government regulations and taxation

  • Secondary ledgers

Secondary Ledgers

A secondary ledger:

  • Is an optional ledger linked to a primary ledger for the purpose of tracking alternative accounting.

  • Can differ from its primary ledger by using a different accounting method, chart of accounts, accounting calendar, currency, or processing options.

When you set up a secondary ledger using the Manage Secondary Ledger task, you select a data conversion level. The data conversion level determines what level of information is copied to the secondary ledger. You can select one of the following levels: Balance, Journal, Subledger, or Adjustment Only.

  • Balance: When you run the Transfer Balances to Secondary Ledger process, balances are transferred from the primary ledger to the secondary ledger.

  • Journal: When you post journals in the primary ledger, the posting process copies the journals to the secondary ledger for the sources and categories that you specify in the Journal Conversion Rules section on the Map Primary to Secondary Ledger page.

    In the Journal Conversion Rules section, you can do one of the following:

    • Accept the default setting of Yes for the journal source and category combination of Other, and then specify the source and category combinations to exclude from the conversion.

    • Set the journal source and category combination of Other to No, and then specify the source and category combinations to include in the conversion.

  • Subledger: When you run the Create Accounting process in the primary ledger, the process creates subledger journals for both the primary and secondary ledgers. When you run the Post Journals process in the primary ledger for journals that are created through methods other than the Create Accounting process, the posting process copies the primary ledger journals to the secondary ledger. For any journals that you don't want copied by posting, you can change the settings in the Journal Conversion Rules section on the Map Primary to Secondary Ledger page. To prevent duplication, posting doesn't copy any journal that originated from subledgers, regardless of the settings in the Journal Conversion Rules section.

    Caution: You don't have to specify journal conversion rules for your subledgers because journal conversion rules are applicable only to postings from Oracle Fusion General Ledger. The Create Accounting process automatically produces accounting for both the primary and the secondary ledger, regardless of the journal conversion rule settings.
  • Adjustment Only: This level is an incomplete accounting representation that holds only adjustments. The adjustments can be manual adjustments or automated adjustments from subledger accounting. This type of secondary ledger must share the same chart of accounts, accounting calendar, period type, and currency as the associated primary ledger.

Tip: To obtain a complete secondary accounting representation that includes both transactional data and adjustments, use ledger sets to combine the ledgers when running reports.
Example

Your primary ledger uses US Generally Accepted Accounting Principles (GAAP) and you maintain a secondary ledger for International Financial Reporting Standards (IFRS) accounting requirements. You first decide to use the subledger conversion level for the IFRS secondary ledger. However, since most of the accounting between US GAAP and IFRS is identical, the adjustment only level is the better solution for the secondary ledger. The subledger level requires duplication of most subledger and general ledger journal entries and general ledger balances. The adjustment only level transfers only the adjustment journal entries and balances necessary to convert your US GAAP accounting to the IFRS accounting. Thus, requiring less processing resources.

Tip: To avoid difficult reconciliations, use the same currency for primary and secondary ledgers. Use reporting currencies or translations to generate the different currency views to comply with internal reporting needs and consolidations.

Reporting Currencies

Reporting currencies maintain and report accounting transactions in additional currencies. Consider the following before deciding to use reporting 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.

  • Best practices recommend that you 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 maintain and report accounting records in different currencies, you do this by defining one or more reporting currencies for the ledger. When you set up a reporting currency using the Manage Reporting Currency task, you select a currency conversion level. The currency conversion level determines what level of information is copied to the reporting currency.

You can select one of the following levels: Balance, Journal, Subledger.

  • Balance: When you run the Translate General Ledger Account Balances process, balances are transferred from the specified ledger to the reporting currency and converted.

  • Journal: When you post journals, the posting process copies the journals to the reporting currency for the sources and categories that you specify in the Journal Conversion Rules section on the Create or Edit Reporting Currency pages.

    In the Journal Conversion Rules section, you can do one of the following:

    • Accept the default setting of Yes for the journal source and category combination of Other, and then specify the source and category combinations to exclude from the conversion.

    • Set the journal source and category combination of Other to No, and then specify the source and category combinations to include in the conversion.

  • Subledger: When you run the Create Accounting process in the primary ledger, the process creates subledger journals for both the primary ledger and the reporting currency. When you run the Post Journals process in the primary ledger for journals that are created through methods other than the Create Accounting process, the posting process copies the primary ledger journals to the reporting currency. For any journals that you don't want copied by posting, you can change the settings in the Journal Conversion Rules section on the Edit Reporting Currency page. To prevent duplication, posting doesn't copy any journal that originated from subledgers, regardless of the settings in the Journal Conversion Rules section.

    Caution: You don't have to specify journal conversion rules for your subledgers because journal conversion rules are applicable only to postings from Oracle Fusion General Ledger. The Create Accounting process automatically produces accounting for both the primary ledger and the reporting currency, regardless of the journal conversion rule settings.
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.

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

  • You operate in a country whose unstable currency makes it unsuitable for managing your business. As a consequence, you manage your business in a more stable currency while retaining the ability to report in the unstable local currency.

  • You operate in a country that is part of the European Economic and Monetary Union (EMU), and you select to account and report in both the European Union currency and your National Currency Unit.

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

The process of designing an 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.

Primary ledgers are connected to reporting currencies and secondary ledgers to provide complete reporting options. You map the chart of accounts for the primary ledger to the chart of accounts for the secondary ledger. 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.

The following figure provides an example of an enterprise structure with primary ledgers, secondary ledgers, a reporting currency, legal entities, business units, and balancing segments, and shows their relationships to one another.

This figure shows the components of an enterprise structure
and their relationship to one another.

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.

If the primary and secondary ledgers use different:

  • Charts of accounts, a chart of accounts mapping is required to instruct the application on how to propagate journals from the source chart of accounts to the target chart of accounts.

  • Accounting calendars, the accounting date, and the general ledger date mapping table are used to determine the corresponding nonadjusting period in the secondary ledger. The date mapping table also provides the correlation between dates and nonadjusting periods for each accounting calendar.

  • Ledger currencies, currency conversion rules are required to instruct the application on how to convert the transactions, journals, or balances from the source representation to the secondary ledger.

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 application 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 has 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:

  • Allows for flexible implementation

  • Provides a consistent entity for controlling and reporting on transactions

  • Enables sharing of sets of reference data across applications

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.

Creating Primary Ledgers: Example

Create a primary ledger as your main record-keeping ledger. Like any other ledger, a primary ledger records transactional balances by using a chart of accounts with a calendar, 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.

Scenario

You have been assigned the task of creating a primary ledger for your company InFusion America.

  1. Navigator > Define Accounting Configurations > Manage Primary Ledgers > Go to Task.

  2. Click the Create icon.

  3. Complete the fields, as shown in this table.

    Field Value

    Name

    InFusion America

    Description

    InFusion America primary ledger for recording transactions.

    Chart of Accounts

    InFusion America Chart of Accounts

    Accounting Calendar

    Standard Monthly

    Currency

    USD

    Accounting Method

    Standard Accrual

  4. Click Save and Edit Task List to navigate back to the accounting configuration task list.

    Note: You can't change the chart of accounts, accounting calendar, or currency for your ledger after you save the ledger.

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 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 Options

  1. Review the Accounting Calendar that defaults from your ledger.

  2. Select Jan-2017 as the First Open Period for your ledger.

    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-2016.

  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 entries in the wrong period.

Selecting Subledger Accounting Options

  1. Accept the default Accounting Method from your ledger.

  2. Select US American English as your Journal Language.

Completing the Period Close Options

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

    This account is required for general ledger to move the 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.

    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 Journal Processing Options

  1. Complete the fields, as shown in this table.

    Field Value

    Enable Suspense

    General Ledger

    Default Suspense 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. Complete the fields, as shown in this table.

    Field Value

    Enable journal approval

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

    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 for primary, second, and third balancing segments) on intercompany journals and transactions.

    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:

  • Purge all translated balances.

  • Change the CTA account.

  • Rerun translation.

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:

  • Enter and post journals to bring the ending balances for your income statement accounts to zero at the end of each accounting year

  • Purge actual translated balances

  • Update the retained earnings account

  • Reverse the journal entries use to bring the ending account balances to zero and rerun translation

Assigning Legal Entities and Balancing Segments: Examples

Optionally, assign legal entities and balancing segments to your accounting configuration.

Assign Legal Entities

Assign one or more legal entities to your configuration by following these steps:

  1. Navigator > Setup and Maintenance work area > Define Ledgers > Define Accounting Configurations > Assign Legal Entities task.

  2. If scope is:

    • Not set: Select Scope link > Assign Legal Entities radio button > In the Primary Ledger drop down Select and Add > Apply and Go To Task > Select your ledger > Save and Close.

    • Set, click Go to Task

  3. Click the Select and Add icon.

  4. Enter your legal entity.

  5. Apply > Done.

  6. Save and Close.

Assign Balancing Segments to Legal Entities

Assign balancing segment values to your legal entities by following these steps:

  1. Navigator > Setup and Maintenance work area > Define Ledgers > Define Accounting Configurations > Assign Balancing Segment Values to Legal Entities task.

  2. If scope is:

    • Not set: Select Scope link > Assign Balancing Segment Values to Legal Entities radio button > In the Primary Ledger drop down Select and Add > Apply and Go To Task > Select your ledger > Save and Close.

    • Set, click Go to Task.

  3. Click the Create icon.

  4. Select the balancing segment value. Optionally, add a Start Date.

  5. Save and Close to close the create page.

  6. Save and Close.

Assign Balancing Segments to Ledgers

Assign balancing segment values directly to your ledger by following these steps:

  1. Navigator > Setup and Maintenance work area > Define Ledgers > Define Accounting Configurations > Assign Balancing Segment Value to Ledger task.

  2. If scope is:

    • Not set: Select Scope link > Assign Balancing Segment Value to Ledger radio button > In the Primary Ledger drop down Select and Add > Apply and Go To Task > Select your ledger > Save and Close.

    • Set, click Go to Task.

  3. Select the balancing segment value.

  4. Optionally enter a start date.

  5. Save and Close.

Note: The balancing segment values that are assigned to the ledger represent nonlegal entity transactions, such as adjustments. If you use legal entities, you must assign balancing segment values to all legal entities before assigning values to the ledger. The only available balancing segment values that can be assigned to ledgers are those not assigned to legal entities.

Define Accounting Configurations of Enterprise Structures: Manage Reporting Currencies

Reporting Currency Balances: How They're Calculated

Reporting currency balances, set at the journal or subledger level, are updated when General Ledger journals are posted and converted to your reporting currencies. This process includes:

  • General Ledger manual journals, periodic journals, and allocations.

  • At the subledger level, journals from Oracle Fusion Subledger Accounting.

  • Other journals 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 journals converted to each of your reporting currencies.

  • Includes them in the same batch as the original journal with a status of Posted.

Settings That Affect Reporting Currency Balances

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 must be set specifically for reporting currencies, such as the currency conversion level. The currency conversion levels are Balance, Journal, and Subledger.

Note: Secondary ledgers can't use subledger level reporting currencies.

Multiple dependencies exist between a reporting currency and its source ledger. Therefore, complete your period opening tasks, daily journal or subledger level reporting currencies accounting tasks, and period closing tasks in the correct order. The following table describes some of the tasks for each task type.

Type Tasks

Period Opening

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

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

Period Closing

  • 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, journals are posted in your reporting currency when you:

  • Create accounting.

  • Post journal entries.

  • Translate balances.

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:

  • Manual Journals: Enter a manual journal batch in your reporting currency at the journal or subledger level by using the Create Journals page. Select the journal or subledger level reporting currency from the ledger's list of values. Continue in the same manner as entering any other manual journal.

  • Conversion Rounding: Use the reporting currency functionality to round converted and accounted amounts using the same rounding rules used throughout your Oracle Fusion Applications. The reporting currency functionality considers several factors that are a part of the currencies predefined in your applications, including:

    • Currency Precision: Number of digits after the decimal point used in currency transactions.

    • Minimum Accountable Unit: Smallest denomination used in the currency. This might not correspond to the precision.

  • Converted Journals: Generate and post automatically journals in your reporting currencies when you post the original journals in the source ledger for the following types of journals:

    • Manual journals

    • Periodic and allocation journals

    • Unposted journals from non-Oracle subledger applications

    • Unposted journals from any Oracle Fusion subledger that does not support reporting currency transfer and import

    • Optionally, revaluation journals

  • Unconverted Journals: Rely on the subledger accounting functionality to convert and transfer Oracle Fusion subledger journals, for both the original journal and the reporting currency journal, to the General Ledger for import and posting. The reporting currency conversion for these journals is not performed by the General Ledger.

  • Approving Journals: Use the journal approval feature to process reporting currency journals through your organization's approval hierarchy. You can enable journal approval functionality separately in your source ledger and reporting currencies.

  • Document Numbers: Accept the default document numbers assigned by the General Ledger application to your journal when you enter a journal in your ledger. The converted journal in the reporting currency is assigned the same document number. However, if you enter a journal in the reporting currency, the document number assigned to the journal is determined by the reporting currency.

  • Sequential Numbering: Enable sequential numbering to maintain the same numbering in your reporting currency and source ledger for journals, other than those journals for Oracle Fusion subledgers. Do not create separate sequences for your reporting currencies. If you do, the sequence defined for the reporting currencies is used. The sequences can cause the document numbers not to be synchronized between the ledger and reporting currencies.

    Note: General Ledger enters a document number automatically when you save your journal if:
    • The Sequential Numbering profile option is set to Always Used or Partially Used.

    • Automatic document numbering sequence is defined.

    If you use manual numbering, you can enter a unique document number.

  • Revaluation: Run periodically revaluation in your ledger and reporting currencies as necessary to satisfy the accounting regulations of the country in which your organization operates.

  • Account Inquiries: Perform inquires in the reporting currency. You can:

    • Drill down to the journal detail for the reporting currency balance.

    • Drill down to see the source ledger currency journal amounts from any automatically converted journal that was created when the original journal posted.

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 journal or subledger level reporting currencies, statistical journals are generated for your reporting currencies, but the journals are not converted.

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 has 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 do the following:

  • Assign your business units to one primary ledger. For example, if a business unit is processing payables invoices, then it must post to a particular ledger. This assignment is required for your business units with business functions that produce financial transactions.

  • Use a business unit as a securing mechanism for transactions. For example, if you run your export business separately from your domestic sales business, then 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 provides the following advantages:

  • Enables flexible implementation

  • Provides consistent entity that controls and reports on transactions

  • Shares sets of reference data across applications

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 share reference data, such as payment terms and transaction types, across business units, or you can have each business unit manage its own set depending on the level at which you want 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 legal entities to ensure the uniqueness of sequencing.

In summary, use business units for:

  • Management reporting

  • Transaction processing

  • Transactional data security

  • Reference data sharing and definition

Brief Overview of Business Unit Security

A number of Oracle Fusion Applications use business units to implement data security. You assign roles like Accounts Payable Manager to users to permit them to perform specific functions, and you assign business units for each role to users to give them access to data in those business units. For example, users which have been assigned a Payables role for a particular business unit, can perform the function of payables invoicing on the data in that business unit. Roles can be assigned to users manually using the Security Console, or automatically using provisioning rules. Business Units can be assigned to users using the Manage Data Access for Users task in Setup and Maintenance.

Define Business Units: Assign Business Unit Business Function

Business Functions: Explained

A business unit can perform many business functions in Oracle Fusion Applications.

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:

  • Billing and revenue management

  • Collections management

  • Customer contract management

  • Customer payments

  • Expense management

  • Incentive compensation

  • Marketing

  • Materials management

  • Inventory management

  • Order fulfillment orchestration

  • Payables invoicing

  • Payables payments

  • Procurement

  • Procurement contract management

  • Project accounting

  • Receiving

  • Requisitioning

  • Sales

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. In such cases, any segment that allows the identification of associated revenue and costs can be used as a profit center identification. The segment can be qualified as a cost center segment.

However, there are 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:

  • Billing and revenue management

  • Collections management

  • Customer payments

  • Expense management

  • Materials management

  • Payables invoicing

  • Project accounting

  • Receiving

  • Requisitioning

Business Unit Hierarchy: Example

For example, your InFusion America Company provides:

  • Air quality monitoring systems through your division InFusion Air Systems

  • Customer financing through your division InFusion Financial Services

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

  • System Components by products: Air Compressors and Air Transmission

  • Installation Services by services: Electrical and Mechanical

The following figure shows an example of a business unit hierarchy.

This figure 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 Service Provider Relationships

Shared Service Centers: Explained

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

Service Provider Model

The service provider model centralizes the following business functions:

  • Procurement

    • Services business units that enable the Requisitioning business function.

    • Processes requisitions and negotiates supplier terms for client business units.

  • Payables Payment

    • Services business units that enable the Payables Invoicing business function.

    • Processes payments for client business units.

  • Customer Payments

    • Services business units that enable the Billing and Revenue Management business function.

    • Processes payments for the transactions of client business units assigned the Billing and Revenue Management business function.

This functionality is used to frame service level agreements and drive security. The service provider relationships provides you with a clear record of how your business operations 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 for 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.

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 businesses. 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:

  • Reduce and consolidate the number of control points and variations in processes, mitigating the risk of error.

  • Increase corporate compliance to local and international requirements, providing more efficient reporting.

  • Implement standard business practices, ensuring consistency across the entire enterprise and conformity to corporate objectives.

  • Establish global processes and accessibility to data, improving managerial reporting and analysis.

  • Provide quick and efficient incorporation of new business units, decreasing start-up costs.

  • Establish the right balance of centralized and decentralized functions, improving decision making.

  • Automate self-service processes, reducing administrative costs.

  • Permit business units to concentrate on their core competencies, improving overall corporate profits.

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 takes 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 Enterprise Contracts behaves during contract authoring.

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

  • Enable related accounts

  • Set currency conversion details

    Note: You must select a default currency in the customer or supplier business function properties page, if not populated automatically from the ledger assigned to the business unit in the assign business function setup task.
  • Manage project billing options

  • Set up clause numbering

  • Set up the Contract Terms Library

    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.

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 is derived 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:

  • Enter invoice transaction conversion details if the invoice and ledger currencies can be different.

  • Enter revenue transaction conversion details if the revenue and ledger currencies can be different for as-incurred and rate-based revenue.

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 act differently for external contracts (customer billing) or intercompany and interproject contracts (internal billing).

Set these options, which apply to all contracts:

  • Select the Transfer Revenue to General Ledger option if you want to create revenue accounting events and entries, and transfer revenue journals to the general ledger. If this option is not selected, then revenue can still be generated, but will not be transferred to the general ledger.

  • Indicate if a reason is required for credit memos that are applied to invoices.

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

  • Select an invoice numbering method, either Manual or Automatic. The invoice numbering method is the method that Oracle Fusion Receivables uses to number its invoices, upon release of draft invoices from Project Billing.

    • If the invoice numbering method is Manual, then select an invoice number type, which sets the type of Receivables invoice numbers that are allowed. Valid values are Alphanumeric and Numeric.

    • If the invoice numbering method is Automatic, then enter the next invoice number to use when generating Receivables invoice numbers.

  • Select the Receivables batch source to use when transferring invoices to Receivables.

Set this option only for customer billing:

  • Indicate if you want contract authors to manually enter the Receivables transaction type on the customer contracts they create.

Managing Clause Numbering

You can choose to number clauses manually or automatically.

If you choose the automatic numbering method, you must select a determinant level for the numbering. You must then select the appropriate clause sequence category from document sequences that you set up for this numbering level.

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:

  • Enable clause and template adoption.

  • Set the clause numbering method.

  • Set the clause numbering level for automatic clause numbering of contracts.

  • For a contract with no assigned ledger or legal entity, set the document sequence to Global or Business Unit level.

  • Enable the Contract Expert enabling feature.

  • Specify the layout for printed clauses and contract deviation reports.

Enabling Clause Adoption

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

  1. Specify a global business unit

    You must designate one of the business units in your organization as the global business unit by selecting the Global Business Unit option. This makes it possible for the other local business units to adopt and use approved content from that global business unit. If the Global Business Unit option is not available for the business unit you are setting up, this means that you already designated another business unit as global.

  2. Enable automatic adoption

    If you are implementing the adoption feature, then you can have all the global clauses in the global business unit automatically approved and available for use in the local business by selecting the Autoadopt Global Clauses option. If you do not select this option, the employee designated as the Contract Terms Library Administrator must approve all global clauses before they can be adopted and used in the local business unit. This option is available only for local business units.

  3. Specify the administrator who approves clauses available for adoption

    You must designate an employee as the Contract Terms Library administrator if you are using adoption. If you do not enable automatic adoption, then the administrator must adopt individual clauses or localize them for use in the local business unit. The administrator can also copy over any contract terms templates created in the global business unit. The clauses and contract terms templates available for adoption are listed in the administrator's Terms Library work area.

  4. Adopt global clauses for new business unit

    If you are creating a new local business unit and have to adopt existing global clauses, run the Adopt Global Clauses for a New Business Unit process. Refer to the Enterprise Scheduler processes topic for more information.

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 setting the clause numbering level. Then select the appropriate clause sequence category for the specified numbering level. You must have previously set up document sequences for the document sequence categories of global, ledger, and business unit. 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:

  • The printed contract terms

    Enter the RTF file you want used for formatting the printed clauses in the Clause Layout Template field.

  • The contract deviations report

    The RTF file you select as the Deviations Layout Template determines the appearance of the contract deviations report PDF. This PDF is attached to the approval notification sent to contract approvers.

Define Business Units: Specify Supplier Contract Management Business Function Properties

Supplier Contracts Business Unit Setup: Explained

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

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

Note: The customer must select a default currency in the customer or supplier business function properties page, if not automatically populated from the ledger assigned to the business unit in the assign business function setup task.

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:

  • Enable clause and template adoption.

  • Set the clause numbering method.

  • Set the clause numbering level for automatic clause numbering of contracts.

  • For a contract with no assigned ledger or legal entity, set the document sequence to Global or Business Unit level.

  • Enable the Contract Expert enabling feature.

  • Specify the layout for printed clauses and contract deviation reports.

Enabling Clause Adoption

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

  1. Specify a global business unit

    You must designate one of the business units in your organization as the global business unit by selecting the Global Business Unit option. This makes it possible for the other local business units to adopt and use approved content from that global business unit. If the Global Business Unit option is not available for the business unit you are setting up, this means that you already designated another business unit as global.

  2. Enable automatic adoption

    If you are implementing the adoption feature, then you can have all the global clauses in the global business unit automatically approved and available for use in the local business by selecting the Autoadopt Global Clauses option. If you do not select this option, the employee designated as the Contract Terms Library Administrator must approve all global clauses before they can be adopted and used in the local business unit. This option is available only for local business units.

  3. Specify the administrator who approves clauses available for adoption

    You must designate an employee as the Contract Terms Library administrator if you are using adoption. If you do not enable automatic adoption, then the administrator must adopt individual clauses or localize them for use in the local business unit. The administrator can also copy over any contract terms templates created in the global business unit. The clauses and contract terms templates available for adoption are listed in the administrator's Terms Library work area.

  4. Adopt global clauses for new business unit

    If you are creating a new local business unit and have to adopt existing global clauses, run the Adopt Global Clauses for a New Business Unit process. Refer to the Enterprise Scheduler processes topic for more information.

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 setting the clause numbering level. Then select the appropriate clause sequence category for the specified numbering level. You must have previously set up document sequences for the document sequence categories of global, ledger, and business unit. 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:

  • The printed contract terms

    Enter the RTF file you want used for formatting the printed clauses in the Clause Layout Template field.

  • The contract deviations report

    The RTF file you select as the Deviations Layout Template determines the appearance of the contract deviations report PDF. This PDF is attached to the approval notification sent to contract approvers.

Define Workforce Structures: Manage Locations

Locations: Explained

A location identifies physical addresses of a workforce structure, such as a department or a job. You create and manage locations using the Manage Locations task in the Workforce Structures work area.

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 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.

Note the following:

  • 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.

A figure that illustrates how access to locations is
controlled using sets. If a location is associated with the common
set, then all users in that location can access all locations in the
common set.

Uploading Locations Using a Spreadsheet

If you have a list of locations already defined for your enterprise, you can upload them from a spreadsheet.

To use this option:

  • Download a spreadsheet template

  • Add your location information to the spreadsheet

  • Upload directly to your enterprise configuration

You can upload the spreadsheet multiple times to accommodate revisions.

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 Oracle Fusion Global Human Resources, go to the Manage Locations page. Use the Manage Locations task in the Workforce Structures work area.

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 am 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 you created for the geographic node start to apply for the location and may impact the availability of worker assignments at that location. You manage locations using the Manage Locations task in the Workforce Structures work area.

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

Divisions: 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 reflect directly the legal structure of the enterprise. The management entities and structure can include:

  • Divisions and subdivisions

  • Lines of business

  • Other strategic business units

  • 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 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 achieving business goals including profits. 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 generally reports to a top corporate executive.

By definition a division can be represented in the chart of accounts. Companies can use 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 permit up to three balancing segments. The values of the management segment can be 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)

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