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.
In 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
- Transaction Type
- 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.
Enterprise Applications by David Haimes 
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
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Hi Mary,
I am in a similar situation.
I am interested in knowing how you have resolved the issue. Would it be possible share the configuration steps / back end scripts that have provided the solution.
Thanks,
Sunil
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Hi ,
We configured and Inventory Org and in the org setup form associated an incorrect LE. This was many months ago and was noticed when some interco transactions had incorrect LE assigned.
Rather than go through the full cycle of creating a Inv Org, preferred route is to update the LE at the Inv Org setup to correct one.
Testing to date seems to be successfully. Has anyone done this before – got any advice why to do / not do?
Thanks
Martyn
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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)
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Hi David,
Thanks for the beautiful post.
I had small query with respect to Bank Account Transfer across Le’s.
Here is my Business Structure:
2 Ledgers defined L -1 , L-2 ,
2 LE’s LE1 & LE2 mapped :to L-1 & L-2
Each LE has respective OU and Inv Org’s.
Both Ledgers using same COA.
Now want to have Same Bank Account payments between LE1 & LE2.
Can this be possible with AGIS. ?
Regards,
Sujit
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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.
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Hi Aman,
How did you resolve this issue?
Cheers,
Saheed
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Thanks good document
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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
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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
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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
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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.
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Hi ,
Can we transfer item created in Inventory org of one operating Unit to Inventory org of another Operating Unit, in case of Multi -Org Setup…?
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Neeti
Inventory has Intercompany functionality that is based on Operating Units. This generates Intercompany Invoices for the transfer of goods across Operating Units, I think that’s the feature you would be interested in.
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Thanks a lot David for your reply..
I guess I had
I would like to know whether we can assign an item created in Master Organization of an Operating Unit (OU1) to an inventory organization of a different Operating Unit(OU2) in multi-org setup…?
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Thanks a million for a most informative blog. I have a query on a certain situation. We have 5 branches, each operating totally independently, which are all part of the same legal entity. Each branch would like to independently control the close of their AR and AP periods. This, as I understand it, can only be accomplished by assigning each operating unit to its own ledger. However, as there is only a single legal entity, is there any way in which to accomodate this requirement in Oracle R12? Can a single legal entity reference multiple ledgers and, if so, are there any implications I should be aware of?
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Mark,
If each branch is in it’s own ledger you’ll have to do consolidation to get results for the Legal entity, you will have to set up each OU and do stuff like create 5 supplier sites (1 per OU) for each of your suppliers. you will not be able to use automatic balancing to deal with Intacompany. These are the first extra pieces of work that come to mind and I’m sure there is a lot more trouble in store. We don’t usually see people trying to create more ledgers and OU than they totally have to, so I’d say avoid this.
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Hi Mark,
I am laying out the migration of 2 – 11.5.10.2 and 1 – 11.0.3 environments into one r12. The company has legal entities all over the world and account for them in these enviornments. They have established around 40 OU’s in their 3 environments which are mostly by country.
My question is: When diagraming out the Ledgers, LE’s and OU’s for system design for the world-wide r12 footprint i am not always sure if i should group countries into LE’s (a.k.a “Europe” which runs multiple LE’s through the OU) or not?
They have to be able to Auto-Balance I/C within the OU and from what i have tested and learned you have to have all of the BSV’s assigned either within a single LE or all to the ledger to be able to take advantage of the I/C Auto Balance features.
Their are no situatuations in which they would want to restrict auto-balancing of I/C…..Its a rare need and i would accomplish with a secutiry rule if i needed to restrict it anyway!
I’m just trying to make sure i haven’t missed anything in my research and thought you would have a good viewpoint i would value to hear.
Thanks in advance,
Dan
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Dan
Automatic i/c balancing will work across LE so you should avoid creating dummy LE such as ‘europe’. It does not work across Ledgers, so all the LE/BSV you want to balance automatically need to be in the same ledger and the same OU.
You may have an issue in some European countries with your sequencing if you need gapless sequencing for each LE as this is only available by Ledger/OU – that is a big gotcha for many European LE in a single ledger
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Great Blog:
Can I assign an Operating Unit to Multiple Legal Entities? This is a really good question.
One which is not well documented.
We are in a design phase, in which the business have given us a requirement to have a single BG a number LE’s in a Global roll out under a single primary ledger and each LE BSV attached to a single operating unit.
How would you secure AP and AR transactions/suppliers/customers between LE’s?
Or is the Only answer use another Operating Unit
Your thoughts are much appreciated
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Apologies Dave
I think I mis-typed my email address please can you revert back to me on my query about a single OU and security in R12
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If you want to secure transactions in AP and AR you need to use OU to partition them.
If you are in a shared service center type environment then using 1 OU for all the LEs will work fine as you can still run all your reports at the LE level etc.
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Javier,
A further thought. If you want to secure by LE, but don’t want to maintain all the Set Up across multiple OU. Maybe is it better to consider having one OU per LE to drive security and work on a custom way to synch the setup data across the OU maybe – this is a different approach but gets the same end result of security be LE but minimizing the set up overhead?
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Hi David
This is a nice thought, Oracle have a product called iSetup perhaps this might cover synch/multiple OU set up…this is an alternative idea however if there is no automated way….other than config monkeys…replicating the same config then might rule this option out.
Under a single OU adding a new LE/country becomes a BSV in a single corporate primary ledger and if necessary a new secondary ledger for stat purposes.
Javi
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Hi David
I am going to go down the Custom.PLL route -The custom .pll will be dependant on a profile option ‘Legal Entity’, which should be updateable at the responsibility. All Financial responsibilities should have a value of ‘Yes’ and any Superuser responsibility lthat needs access to all the transactions will have a ‘No’ or blank against this custom profile, which will then not enforce this custom .pll on ‘Transactions’ and ‘Transaction Summary’ windows. Payment Windows, Receipt Windows, AP invoice windows etc….
Javier
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Hi Javier, this is from david Haimes blog – could u fwd me the steps that you suggested to secure data by LE in case of one OU for multimple LE in a Ledger ?
you could send it to me on my email us_rs5@rediffmail.com
thanks in advance for your help!
Kathy
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Hi David and Javier and Kathy,
We are on 11.5.7 and our client has acquired another company. We currently have US and Ireland LE with separate OUs. We now want to create a new BSV for the acquired entity and place it as new LE attached to US OU. Please suggest how to do this? or if it is the right approach?
Please forward me the steps that you suggested to secure data by LE in case of one OU for multimple LE ?
you could send it to me on my email
er.nishant121181@gmail.com
thanks in advance for your help!
Nishant
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Javier, Kathy,
I am in a similar situation.
My company has need for multiple LEs but one or two OUs.
We are re-implementing and going from a 1:1 LE:OU to a M:1 LE:OU.
Our concern is what needs to change in the subledgers (PO, AP, AR, PA, FA) and in SLA to ensure all transactions and accounting happen appropriately and with the correct accounting. Basically, since the subledgers are OU centric, what changes are required to ensure users can still transact.
Thanks,
Rick
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Javier,
That seems like a neat solution, It would be great if you keep me and other readers updated with how it works out. It would make a great blog post – you or I should write it up.
Thanks,
David
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Hi David,
I need some help regarding 1:M, like 1 OU have multiple LE’s setup.
We are implementing Project Accounting(PA) also, our structure is like this:
Company :Dep :Account: Asset :IC :Future1
Each Company have 1 BSV value.
for Example: in Mexico client have 4 Legal entity’s(4 Registered company’s) in Ledger Mexico book attached 4 LE’s, like LE1,LE2,LE3,LE4, these are the registered company’s, but we have only one OU, one OU is attached to one LE.
in PA, the inter company will work like between LE’s, when i open my PA responsibility for Mexico, that is attached to one OU and it is tied to LE1, how i need to do Inter company between LE1 to LE2, unless untill i have different OU, that OU tied to LE2, then only Pa created AP and AR invoice.
where are Borrow and lent functionality will work between Departments under one OU.
how come in Project, you can attached one OU for multiple LE’s and how we can do Inter company Invoice.
Thanks,
Srini..
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Srini ,
I am from oracle projects development team. Can explain how your project organizations are created for these 4 LE. Do you have separate organization definition for each LE ?
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Thanks for your Reply Sridhar.
Under Global Hierarchy:
XYZ Business Group
XYZ OU — OU ( This is only one OU)
XYZ.Company-100 — This is Company 1
Test Organization -This is Project Org and Exp Org
Unit Test Ogranization — This is Project Org and Exp Org
ABC.Company-200 – This is Company 2
Test1 Organization -This is Project Org and Exp Org
Unit Test1 Ogranization — This is Project Org and Exp
Org
These 2 are basically 2 LE’s, in Organization classification we can say these company’s, but actually these are LE’s in GL, the they assign Each LE one BSV value like 100 for first LE and 200 for Second LE.
XYZ.Company-100
ABC.Company-200
In Projects B&L happen under one OU, between different Orgs/Departments and Under one LE, different OU’s also we can use B&L Transactions.
But between LE’s here, how we need to do Inter company.
In this Country only have 4 LE’s, in other Country they have 10 LE’s, how to do cross LE’s diff combinations inter company.
In Projects we have guidelines, like between LE’s we can setup Inter company, like create Inter company Project and Assign Provider and Receiver Controls, etc.
I am from oracle projects development team. Can explain how your project organizations are created for these 4 LE. Do you have separate organization definition for each LE ?
Thanks,
srini..
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From business perspective does the company deals with two legal entity under one organization , I mean not the organization definition in EBS , I mean business organization . Management chain that heads the organization.
The reason i am asking these. Questions is to understand how oracle projects should be enhanced
How do you derive the balance segment for core costing transaction , and for revenue in oracle projects.
From business perspective which legal entity project belongs to, do you use organization as basis to know the legal entity or something else ?
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Hi Sridhar,
Thanks for your reply, Yes the Project belongs to different entity and Employees belongs to different entity.
Can you send me you email address, i can send some docs, you can see. My email gsrinivasan11@gmail.com
Thanks,
srini..
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Hi David
I am in the process of writing the functional specs as soon as I have a clear approach be sure I will update this post!
Best Regards
Javier
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Hi David,
Can we assign a Single Operating Unit TO multiple address
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Deepak,
What is the requirement here – what will you use the address – Operating Unit association for?
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Hi David,
Is the any way to identify/differentiate the tables storing legal entity id , operating unit id and inventory id. As column name for all the tables will be organization_id or org_id. How can we make it out what value is getting stored. Is it legal entity id or is it Operating Unit id or inventory org id ? (If same organization is set as BG,LE,OU and Inv org)
Thanks
Srirang
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Hi David,
In R12 if we setup 2 ledgers and 2 legal entities and 2 operating units and 2 inventory orgs
ie. LE1->LEDGER1->OU1->INV1
LE2->LEDGER2->OU2.->INV2
My questions are: If OU1 is the shared service purchasing unit, can it purchase for INV2 and OU2 even though they are in a different Ledger. How would the intercompany balance ?
Can INV1 representing a shared service warehouse, issue product to OU2 and INV2.
Does Oracle’s idea of shared services only work for multiple operating units within the same Ledger ?
Thank you very much.
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Hi There
I have this same question around Srirang’s question about one OU purchasing or paying for another OU, if those two OUs are assigned to different ledgers. On first glance, it seems you would have to use AGIS…. to get it into both ledgers?
Thx.
Angela
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Our Financial Director is concerned that the intercompany functionality selling/shipping org will not allow us to analyze our true intercompany sales and true intercompany COGS from customer sales and COGS. How can we determine customer profitability at the legal entity (Co. 01) P&L, if the intercompany transactions from the shipping org debits – COGS and the revenue transaction credits intercompany revenue account. He states that there is a mismatch between the intercompany revenue recorded at the shipping org will not have the corresponding intercompany COGS account recorded; The same holds true for the selling org where a debit is recorded to the intercompany COGS and the credit is record to Trade Revenue. How do you truly segregate intercompany revenue and intercompany COGS in one legal entity (shipping org)? I realize at the consolidate level the combination of all transactions from 01- LE -shipping org and 02 LE-selling org will determine allows us to determine intercompany revenue and intercompany COGS. We are using an intercompany segment in our COA in our R12.1 environment
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R12 can i change one operating unit from one ledger to other ledger and when i create invoice adn transaction it will be mapped and where will it reflect in the ledger 2 or one
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Hello,
Please send your AIGS / Intercompany setup. And also the the steps you are following to do intercompany transactions. Please mention the GL code description with GL code.
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hi all, do we have an API to create and update legel entity in R12?
help would be very much appreciated…
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Jeremy, we had a requirement to create a few hundred new legal entities as part of our R12.1 upgrade. I originally tried to do this within R12 but was unable to figure out a method that worked correctly across modules. So instead I wrote two scripts to handle this as follows:
Script 1: Create GREs in HR module in R11i (immediately before upgrade)
Script 2: Disable GREs within HR module in R12 (immediately after upgrade)
This way the upgrade itself turned the GREs into Legal Entities, and we did not disrupt HR/Payroll by introducing GREs that should not be used.
Carrie Hollack
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Hi David
I have setup 2 LEs, single ledger, single OU. I can see where to set the LE at a transaction level on AR however in Payables what is the mechanism to assign the non default LE to the invoice line – when I show field on invoice the LE field is greyed out.
Great blog- appreciate your help
Cheers
Finn
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Hi David,
Is it possible to assign an inventory org a legal entity that is different from the OU legal entity in 11i. I have come acroos a scenario where the client wants to create a new legal entity but assign the inventory to an existing OU which is assigned to a different legal entity. please explain.
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Hi Folks,
We have requirement for triggering intercompany journals at the subledger level.
Intercompany transaction takes place between two legal entities which are with two different ledgers
Example :
Ledger 1 for US and Ledger 2 for UK
US legal entity is linked to ledger1 and UK legal entity is linked to Ledger2
A internal requisition will be raised from UK legal entity on US legal entity in turn there will be a ISO raised in US operating unit which is under US legal entity and Good are shipped from US to UK. Shipped goods are received in UK Operating unit which is under UK legal entity.
For this transaction we need the intercompany Journals to be triggered at subledger level itself.
Can any please suggest the possible solution.
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Please answer the question asked by neeti
I would like to know whether we can assign an item created in Master Organization of an Operating Unit (OU1) to an inventory organization of a different Operating Unit(OU2) in multi-org setup…?
{OR}
Can we assign the item to an operating unit under the different legal entity
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Can we have one legal entity(Multiple balancing segments assigned to same le) and multiple operating units.. then in future if we decide to split the one LE to multiple , will that be causing any issues ?
Raj
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Splitting an LE is complex legally, from a business point of view. It is not a case of just splitting LEs you need to transfer assets liabilities and everything open from one LE to the new ones.
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Hello David, We have a proposed org structure with LE 1 & LE 2 sharing one Ledger and one OU. Is there a way to account all revenue in LE1 only and perfom Intercompany invoicing to account transfer price in LE2? Appreciate your help, thanks.
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I do accept as true with all of the concepts you have presented for your post. They’re really convincing and will definitely work. Still, the posts are very quick for novices. Could you please extend them a little from next time? Thanks for the post.
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