•  Subscribe to this Blog

  • Sign up for email updates

  • Disclaimer

    Opinions expressed in this blog are entirely my own and do not reflect the position of Oracle or any other corporation. Any advice or recommendations discussed on this sites (or sites they link to) are not validated by Oracle.
  • web metrics

Can I assign an Operating Unit to Multiple Legal Entities?

Posted on December 11, 2007 by David Haimes

The short answer is sort of. Which is not much help to anyone, hopefully you will have a few moments to read on and I can explain myself. This post assumes that you understand the relationship between Legal Entities and Ledgers which I discussed in an earlier post.

XLE brandIn R12, a new Legal Entity Configurator was introduced in financials and Legal Entities defined here are are assigned to Ledgers and/or Balancing Segments (Company Codes). However it is not possible to assign a Financials Legal Entity to an Operating Unit, you can only define a Default Legal Context (DLC) to an Operating Unit. This assignment can cause confusion as it is only possible to assign one DLC, but I can use more than one LE in that Operating Unit. The key word in DLC is default.

When I am in Payables or Receivables the LE is stamped on the transactions and used to identify the Legal Owner for Legal reporting as well as Tax calculation. The invoice exists within an OU and that OU has a ledger which will account the transactions, if that has more than one LE associated with it then a hierarchy of LE derivation is used to default an LE, the last resort being the DLC.

For example in AR the Legal Entity derivation hierarchy for transactions is

  1. Transaction Type
  2. Batch Source

Assigning a LE to a transaction type or batch source is optional and only the LE’s mapped to the Ledger associated with the OU are available to assign.

So in R12 we have much better support for many LE accounted in a single OU as we clearly mark the LE on the transactions.

Filed under: Oracle Financials, Oracle Intercompany | Tagged: , , , , , ,

« Is Google Just an Oracle Wannabee? Friday Night Writes »

8 Responses to “Can I assign an Operating Unit to Multiple Legal Entities?”

  1. Mary, on April 15th, 2008 at 2:22 pm Said:

    I inadvertently assigned the incorrect balancing segment value to legal entity and proceeded to define the MO structure. All Application setups are not completed.
    I can change the description of the balancing segment value, but I cannot update the legal entity to reflect the correct balancing segment value.

    One USD ledger is defined
    Two Legal Entitles are defined
    Two Operating Units are defined
    Multiple Inventory Orgs defined
    LE A segment value is 112
    LE B segment value is 111

    I need LE A segment value to be 111
    And LE B segment value to be 112
    I have logged a SR with Oracle Support. Why can BSV not be changed once the record is saved?
    Mary

  2. David Haimes, on April 15th, 2008 at 2:32 pm Said:

    I think the idea is to prevent update one transactions have been created - switching the BSV assignment with transactions in progress would be a big problem for processing and also reporting on completed transactions would be problematic.

    In the UI it is difficult for us to know if a BSV has been used or not in either a transaction or another Set Up, so this is why changing assignment is not allowed.

    If you have not entered any transactions at all, or done any other dependent set up - it might be worth considering changing this via the back end (be careful with this of course, it’s never recommended by Oracle)

  3. Aman Khan, on April 18th, 2008 at 2:46 am Said:

    HI David,

    I created a new ledger and assign LE & 2 operating units to it, after that i run replicate seed data request and created security profile & run security list maintenance in HR.
    I assigned security profile to payable responsibility by mo: sec. profile option.

    When i switched responsibility and click on invoice batches/expense reports then it gives error message: You do not have access privileges to any operating unit or check if mo: security profil or mo: oper unit include any operating unit.

    Can you plz explain the reason ?

    Thanks.

  4. Sefa Şahin, on June 15th, 2008 at 1:12 am Said:

    Thanks good document

  5. Bernardo Pedroso, on June 27th, 2008 at 5:30 am Said:

    I have a question regarding this: is it possible and/or advisable to have multiple balancing segments in one OU?
    I’m in release 11.5.10 and I have to add several small companies with very low volumes of sub-ledger transactions. It seems to me that multiple balancing segments in an OU would suffice.

    Thanks

  6. David Haimes, on June 27th, 2008 at 9:00 am Said:

    Bernardo,

    Yes it is very common to have multiple balancing segments in a single OU and you should certainly consider it but there are a couple of caveats:-

    Do you need to secure access to these balancing segments individually in the subledger? If so they may need an OU each.

    Do you have any requirements for gapless sequencing for any of these balancing segments (common if they are in some European countries, e.g. Italy)? If so you may need to give them an OU of their own.

    Hope this helps
    David

  7. Bernardo Pedroso, on June 30th, 2008 at 2:31 am Said:

    Thanks for your reply.

    Our biggest reservations are around accounting: will AP and AR create sub-ledger balanced entries (without intercompany accounts)? I think it will but the documentation Ive seen is not clear enough to dissipate all doubts. Have you seen docs on this subject?
    Around the sequencing issue, we are willing to allow the user to select the document sequences (with defaults) and this is in the Netherlands which is not as strict as Italy.

    Regards,
    Bernardo

  8. David Haimes, on July 1st, 2008 at 9:26 am Said:

    Bernardo,

    AP and AR can create balanced entries, as long as your set up is correct.

    However you do the have the option of defining intercompany accounts, they you will get the balancing when you account for each transaction.

Leave a Reply