8Intercompany Processing Rules

This chapter contains the following:

Define intercompany system options to set up intercompany processing rules at the enterprise level, based on your specific business needs.

To maintain consistency throughout an enterprise, intercompany transaction processing rules should be defined at the enterprise level. By standardizing these rules, an enterprise can minimize disputes, decrease processing time, and cut administrative costs.

Before setting up intercompany system options, you must determine how to process your intercompany transactions. For example, to:

  • Enforce an enterprise-wide currency or allow intercompany transactions in local currencies.

  • Allow receivers to reject intercompany transactions.

  • Determine the minimum transaction amount that's processed.

Overview of Intercompany Balancing Rules

Intercompany balancing rules are used to generate the accounts needed to balance journals that are out of balance by legal entity or primary balancing segment values. You specify the intercompany receivables and intercompany payables accounts that you want to use as the template for building the intercompany receivables and intercompany payables accounts. The intercompany balancing feature then uses these rules to generate the accounts of the balancing lines it creates.

Journals lines are first summarized by the legal entity and are balanced by the legal entity. Since a legal entity can have many primary balancing segment values, it's possible that a journal could have multiple lines for a legal entity with different primary balancing segment values. In that case, when intercompany balancing is done, the lowest primary balancing segment value within each legal entity in the journal is used. After this, balancing occurs across balancing segment values within each legal entity.

These same rules are also used to generate the intercompany receivables account and intercompany payables account of transactions entered in the Intercompany module.

The intercompany balancing rules are also used to generate the intercompany receivables account for the provider side of an intercompany transaction. The balancing rules also used to generate the intercompany payables account for the receiver side of an intercompany transaction.

Overview of Intercompany Allocations

The two processes you can use for intercompany allocation generation are Generate Intercompany Allocations and Generate General Ledger Allocations. You can use both processes for single-ledger allocations or cross-ledger allocations. The Generate Intercompany Allocations process updates Oracle Fusion Intercompany tables. The Generate General Ledger Allocations process updates Oracle Fusion General Ledger tables.

FAQs for Intercompany Allocations

Use the social feature on the Intercompany Transactions work area to invite others to share information.

Here's how you use the social feature:

  1. Navigate to the Intercompany Transactions work area.

  2. Search for the intercompany transaction.

  3. Click Social and then click Share. Optionally, click Join to join an existing conversation.

  4. Create a related conversation. And invite other cost center owners to join the conversation.

  5. Upload the allocation spreadsheet for them to review.

As cost center owners, you can post questions. And other cost center owners can see responses to the questions because they're owners.

Each cost center owner can validate their intercompany allocation in the conversation itself. This creates a lasting record.

Intercompany Reconciliation

Generate the Intercompany Reconciliation Report

Use the Reconciliation Report to reconcile your inner company accounts.

Perform the following steps to generate the Intercompany Reconciliation Report:

  1. Navigate to the Springboard items from the landing page.

  2. Click General Accounting Infolets.

  3. On the IC Reconciliation infolet, click Reconcile Intercompany Accounts to start the Extract Intercompany Reconciliation process.

  4. Click Actions and then click Run.

  5. Select the value for the report parameters: Provider Ledger, Provider Accounting Period, and Additional Currency.

    Note: Ensure that the entries in the fields Provider Ledger and Provider Accounting Period match the ledger on the dashboard. The Additional Currency must also match the currency of the ledger on the dashboard.
  6. Select Conversion Rate Type and Conversion Date. These two parameters are enabled after you select the Additional Currency.

  7. Click Submit.

  8. Click Refresh until you see the report.

    Note: The Period summary report is displayed only after the Extract Intercompany Reconciliation process is completed.
  9. Click Actions drop-down list and select History toview previously run reports in thePeriod Summary. If the Provider Legal Entity or Receiver Legal Entity is displayed as 'unassigned', it means the primary balancing segment value on the balancing line is not assigned to a legal entity.

  10. Select an item under Entered Amount Difference in Transaction Currency column to view the Summary by Source report.

  11. Review Intercompany Receivables GL Balanceand Intercompany Payables GL Balance in the Summary by Source report. Identify the roles which have a higher balance and the journal lines that are in one, but may not be in the other balance.

    Note: If there is a difference between the Intercompany receivables and payables amounts, drill down further on both intercompany receivables and payables amounts to identify the journal lines that appear in one but not the other.
    1. Click the line which appears in one but not the other.

    2. On the Journal Lines page, click the journal name to review it and determine if it has been correctly posted to the intercompany account.

    3. If the journal has been posted incorrectly, reverse it so that the Intercompany Receivables GL Balance and Intercompany Payables GL Balance accounts on Summary by Source report match.

Overview of Intercompany Reconciliation

Intercompany reconciliation provides you with reports to assist you with reconciling your intercompany receivables and intercompany payables accounts and identifying differences.

The main goal of the reports is to make it easy for you to identify either the receiver side or provider side of a transaction that has not been posted to the intercompany receivables or intercompany payables account.

The reports show the following intercompany lines:

  • Intercompany receivables and intercompany payables lines generated by the intercompany balancing feature.

  • Intercompany receivables and intercompany payables lines generated for the provider and receiver of each intercompany transaction.

The following are not included on the intercompany reconciliation reports: