2Prepare to Implement Joint Venture Management

Prepare to Implement Joint Venture Management

What You Need to Know About Oracle Financials

Understanding the business process model in Oracle Fusion Applications will help you understand how to set up Joint Venture Management to identify the accounts that contain your joint venture transactions. The following table provides an overview of the parts of the business process model that pertain to the identification and processing of transactions through Joint Venture Management:

Business Process Model Components Relationship to Joint Venture Management
Business unit In Oracle Fusion Applications, business units define many business functions that can be rolled up in a management hierarchy. A business unit can process transactions on behalf of many legal entities and has the responsibility for its profit and loss. In Joint Venture Management, you specify the business unit in Oracle Financials Cloud in which your joint venture financials are managed. Selecting a business unit automatically identifies the chart of accounts (COA) in the primary ledger of the business unit.
Chart of accounts

The chart of accounts enables tracking of cost center, account, and other segment levels.

In the Joint Venture System Options, you specify the segment label associated to the primary segment in the Financials chart of accounts where the financial transactions of all your joint ventures are managed. By default, Joint Venture Management uses the segment associated with the Cost Center Segment label. But you can specify a different segment label in the system options if your joint venture transactions are managed under a segment with a different segment label.

Ledgers

Oracle Fusion Applications reflect the traditional segregation between the general ledger and associated subledgers. Transactions are captured in the subledgers and periodically posted in detail to the primary ledger in subledger accounting. Transactions are posted in summary or in detail from the primary ledger in subledger accounting to the general ledger.

As part of the day-to-day business of managing the operations of a joint venture, the managing partner pays expenses and receives revenue. These transactions are entered in the appropriate subledger such as Payable Invoices, Receivable Invoices, just to name a few. All transactions entered into these subledgers are eventually posted in detail to subledger accounting. Typically, these types of transactions are directly related to a specific joint venture.

The second source of transactions for Joint Venture Management is the general ledger. Joint Venture Management only identifies transactions in the general ledger that did not originate from subledger accounting. These transactions typically are indirect charges or allocated amounts to a joint venture.

Joint Venture Management uses the details that you enter in joint venture definitions to identify the accounts in Financials that contain the transactions for your joint ventures. The following illustration shows the flow of identifying and processing expenses and revenue from Financials through Joint Venture Management: This image shows two vertical sections, the left one representing Financials and the right section representing Joint Venture Management. In the Financials section, it has a box representing "Expenses Incurred" and "Revenue Received", and an arrow from this box that crosses over to the Joint Venture Management section to a box that represents the "Calculate Distribution Amounts for Partners" process. This process has an arrow pointing to another box in the Joint Venture Management section that represents the "Create Distributions and AR Invoices" process. In the Financials section, there is another lower level of boxes that represent "Subledger Accounting Journals" in "Subledger Accounting," and "Journal Entries" in "General Ledger." There is an arrow labeled "Identify transactions" that originates from these boxes and crosses over to the Joint Venture Management section to a box that represents "Joint Venture Transactions," which shows "Transaction 1, Transaction 2, …, and Transaction N." From this box, an arrow labeled "Calculate distributions" points to another box that represents "Joint Venture Distributions," which shows "Partner A share of Transaction 1, Partner B share of Transaction 2, …, and Partner Z share of Transaction N."

Prerequisites and Assumptions

Joint Venture Management is a functional area of Oracle Financials Cloud. As such, you must be using Financials to manage the financial accounts for your joint venture transactions before implementing Joint Venture Management. Each user of Joint Venture Management might require an additional subscription to Oracle ERP Cloud.

Note: If you use an accounting solution other than Oracle Financials Cloud, you can use Oracle Accounting Hub to import your joint venture transactions into Financials.

Use of Auditing and Other Common Cloud Features

Because Joint Venture Management is part of Oracle ERP Cloud and Financials, you can use common features available with Oracle ERP Cloud with your Joint Venture Management implementation. This includes common features such as auditing, which you can enable to monitor user activity and all configuration, security, and data changes that have been made to Joint Venture Management. For information about using auditing and other common features, see:

Audience and Scope

These implementation instructions pertain to the following users with these responsibilities:

User Responsibilities
Administrator with the IT Security Manager Role Uses the Security Console to set up Joint Venture Management users with the proper security and roles to perform actions according to the privileges in each role.
Application Implementation Consultant (Cloud Administrator)
  • Enables the Joint Venture Management and Data Security for Joint Venture Management features under the Financials offering on the Offerings page in Functional Setup Manager (FSM).

  • Configure business unit access to Joint Venture Management users and roles.

  • Uses the migration services in FSM to move invoicing partner and joint venture definition data from a source to target environment.

  • Sets up rules in subledger accounting to override the revenue account in invoice distributions for joint venture receivable invoices and credit memos.

  • Sets up Oracle Financials to capture the transaction date in subledger accounting and general ledger journals.

  • If the Joint Venture Management integration with Project Costing is enabled, sets up supporting references to capture project details in cost-related transactions in Oracle Financials.

  • Creates lookups for Joint Venture Management user-defined field values. (Optional)

Joint Venture Administrator
  • Sets up invoicing partners.

  • Creates joint venture definitions.

  • Sets up Joint Venture System Options to specify transaction date sources for joint venture transactions. (Optional)

  • If the Joint Venture Management integration with Project Costing is enabled, sets up Joint Venture System Options to identify project details when distributing cost adjustments to Project Costing.

Note: The system options reference supporting references that an Application Implementation Consultant must set up in Oracle Financials to capture transaction date and project details.
Joint Venture Accounting Manager
  • Uses the Joint Venture Accounting Manager Dashboard to view charts that contain metrics about joint ventures and their associated transactions and distributions.

Note: A joint venture accounting manager can also view, but not edit, joint venture setup details, transactions, distributions, and joint venture invoices in Receivables.
Joint Venture Accountant
  • Creates joint venture definitions.

  • Schedules and runs Joint Venture Management processes in the Enterprise Scheduler Service (ESS).

  • Reviews and updates joint venture transactions and distributions. (Optional)

  • Creates and manages partner contributions.

Note: As you can see here, the joint venture administrator and joint venture accountant can create joint venture definitions. This gives you the flexibility to determine who has this responsibility within your organization.