EBusiness Suite Legal Entity FAQ

I’ve been preparing these for a presentation at Oracle OpenWorld next week, they were mostly taken from the questions asked by Alyssa Johnson in her comment, but they are very typical questions that I get asked a lot.

What is the difference between the 11i GRE/LE and R12 LE?

  • GRE/LE is upgraded as an LE in R12
  • In 11i GRE/LE was often a dummy LE, not real LE structure and had little use
  • R12 LE has a more robust definition
  • R12 LE is used more by processes and reports across financials

Where does the LE impact R12 processing?

  • Short answer – Tax, Intercompany (AGIS), Global Features

Why should I assign BSVs to my LEs in the Ledger?

  • It is optional, if your BSV is your company code, you have an implied LE there in your GL
  • It helps with some LE derivation for transaction stamping
  • Allows you to run reports by LE
  • May make Intercompany rules easier to define

In 11i, the LE doesn’t really correspond to the true Legal Entities of the Organization (e.g. only one LE is setup even though there are multiple companies). What is going to break in R12 if I leave it that way?

  • Nothing will break if you do nothing and stay with one ‘dummy’ LE
  • You won’t get all the good stuff we talked about earlier

Is there a connection between the LE and the BU?

  • If you map LE to Ledgers / BSV, there is an indirect LE-OU relationship
  • There is a Default Legal Entity for an OU (Default Legal Context) which in some cases(1:1:1) it will be the only LE so it is a direct assingment

If you want to add anything to this, or have more questions then fine the comments section below…

Author: David Haimes

I'm Senior Director in the Oracle Research and Development Organization, with close to 20 years working in various roles on the development of the Financial Management product suite.  Since the summer of 2016 my focus is exclusively on working with customers and longer-term design work, particularly around next-generation functional and technical architecture. My task is to figure out NOW what the financial management system of the next 3, 5 or more years should look like and start working toward it.  At the moment the majority of my time is spent working on Blockchain or Distributed Ledger Technologies (DLT), leading the effort for all of SaaS applications.  I'm also interested in AI, Machine Learning and new UX and interaction paradigms such as chat bots. I started out in Oracle UK and found my way out to Oracle's Redwood Shores, California HQ in May 2000.  My previous role was product owner for Fusion Accounting Hub, General Ledger, Intercompany and Legal Entity products in Oracle Fusion Financials and eBusiness Suite General Ledger. I have also worked on EMEA Globalizations, Federal and Public Sector Financials, XML Payments and a variety of projects on other products down the years.

27 thoughts on “EBusiness Suite Legal Entity FAQ”

  1. Good one David…..these are the most common questions in every functional consultant’s and client’s mind whenever they go for a Financials implementation……In my recent R12 financials implementation we had rounds of discussion just on these points…….

    Like

    1. Hi Kamal,

      Glad to hear they are useful. These set ups are key concepts and it is important to get these right or you can cause issues further down the line. I think this is a good choice of topic by the OAUG GL SIG for the OpenWorld meeting.

      Like

  2. Hi David,
    Your blog has been a great help to me in trying to understand the role of the LE within R12. So, having read your comment about “You won’t get all the good stuff we talked about earlier” if you do not correct your LE configuration prior to moving to R12, I am interested to hear your view on the following:
    We appear to have multiple dummy LE’s setup up for each OU within R11i – these to not reflect the structure of the business. As we are intending to upgrade to R12 (as opposed to re-implementing), how would you suggest we go about cleaning things up?

    Like

    1. Richard,

      I think it is best if I admit that I cannot remember what we recommend doing before during and after upgrade. I have been working on a small project called Fusion Apps recently and I need to dig around to refresh my memory or ask some of the people who I know deal with this day to day.

      Like

    2. Richard,

      There is a document on My Oracle Support that gives advice on common issues with upgrade (including SQL to identify them) and how to resolve them.

      Please look on My Oracle Support for Release 12 Trouble Shooting Legal Entity Upgrade Issues (Doc ID 1190103.1)

      Hope this Helps

      Like

      1. Hi David,

        Many thanks for your reply, it is very much appreciated. Unfortunately however I am unable to find the document on Metalink, I searched by both Title and Number! Could you please check if it available – if so I will raise an SR to obtain it.

        Kind regards
        Richard

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  3. Hi David,

    Need your help to understand more assigning BSV’s to a LE.
    As per Note “R12: Legal Entities Setup and Usage [ID 726522.1]” – LE can be assigned to One or more Balancing Segment Values (BSV) within the Ledger. What is the implication if we assign BSV’s across the ledgers.

    Regards,
    Sucheth

    Like

  4. Hi David,
    Need your advice;
    We are doing R12 implementation for one of our client in Singapore. As per Singapore regulatory requirement they should maintain two separate books i.e., all the SGD transactions in one book with functional currency as SGD & rest of the FCY transactions in a separate book with functional currency as USD.
    With the above requirement I understand that we need to define two Primary Ledgers. But my concern is they have 4 operating entities 2 OU’s under each ledger & all the 4 entities can cross charge each other at the GL level.
    Can you please explain how best we can achieve this? Also would like to know more on BSV’s assignment, is it mandatory to assign BSV within the ledger or can we assign across the ledger? If so what is the implication?
    Regards,
    Sucheth

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  5. Hi David,

    Thanks for your response. I would like to elaborate more on the requirement. Below is the extract of the regulatory body’s statement

    In the late 1960s, it was recognized that given appropriate support and incentives, a market similar to the Eurodollar could be developed in Singapore. As a site for this offshore market, Singapore offered several advantages including a sound financial infrastructure, an excellent communications network, a stable government and a geographical location with a time zone advantage. To allow for better domestic monetary control, any financial institution seeking approval to operate in this Asian Dollar Market (ADM) was required to set up a separate book-keeping unit for such transactions. This Asian Currency Unit (ACU) is permitted to accept deposits from, and lend to other banks and non-bank customers in all currencies other than the Singapore dollar. Transactions with residents were initially subject to various restrictions but those restrictions have been removed with the liberalization of exchange controls in 1978.
    Banks’ Singapore dollar transactions are separately booked in the Domestic Banking Unit (DBU). Operationally, the difference between a DBU and an ACU lies in the booking of Singapore dollar transactions. While banks operating in Singapore must book all Singapore dollar transactions in the DBU, they may also choose to book foreign currency transactions in the DBU. Nearly all commercial banks and merchant banks in Singapore operate ACUs.

    Having said that, currently our client is using Sun GL system & they maintain two separate books one DBU with functional currency SGD & the other ACU with functional currency USD. There will intercompany transactions between DBU & ACU.
    Referring to above details do you still consider setup one Primary Ledger & assigning reporting or secondary ledger or setup two Primary ledgers?

    Your advice will be of great help for us.

    Regards,
    Sucheth

    Like

  6. Hi David,
    We are just evaluating the scenario where there is one OU and multiple LE’s. Obviously, the default LE on the OU will not be correct for every transaction in this scenario. How do the subledgers (AP, AR, PO) determine the LE?
    Is the defaulting hierarchy for each type of transaction / module documented anywhere?
    I would like to understand the defaulting hierarchy so we can determine the appropriate setup.

    Appreciate your help.
    Rgds,
    K

    Like

      1. Hi David,
        Thanks for all your help. Note says the BSV be assigned to Ledger ! This is against Oracle’s strong recommendation to assign BSV to LE.

        Also I tried following scenario LEa BSV=01,02 & LEb BSV=03, 04 both under single ledger. Now I could go to Payables & create invoice with Legal Entity=LEa but Balancing segment=03. Do you have any thoughts on this.

        Thanks in advance for your help.

        Like

  7. OK, thanks. I have seen the AR one around Metalink and on your blog but nothing on any of the other modules that use OUs.

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  8. Dear David
    Your posts on Legal entity and inter- company are very informative can you please explain what is Default legal context from what Ii could gather LE and OU there is no direct relation

    Like

    1. The Default Legal Context is simply a way to default an LE on transactions. So if no other LE can be derived when you are entering a transaction, the default legal context will be defaulted onto the transaction although you will be allowed to change it.

      This particularly helpful when I only have one LE per OU

      Like

  9. Hi David,

    Thank you for the very lucid explanation on LE differences between 11i and R12. However we face a very typical issue with our R12 upgrade of AGIS (I know its your baby :) ).

    During the upgrade all our GIS subsidiaries were upgraded into IC Organizations with default LE. However after our upgrade we have created new Legal Entities and trying re-assign the true LEs to the IC Organizations which the “Organization update” wouldn’t allow to…

    What do you recommend in such a scenario ? Is there a recommendation pre vs post upgrade corrections ?? Appreciate your authoritative advice in this regard.

    Thanks,
    Raghu

    Like

    1. The best practice would be to consider creating your LE in 11i before the upgrade.

      It should be possible to work around it some other way with re-running of specific upgrade scripts, or a simple SQL update, but you need to be careful there to check it is supported

      Like

  10. David, I have a question, currently we are in 11i, and we have recently required a company. We are trying to decide is we need a separate company because it will have a separate EIN. But we plan on integrating this new company into our US business. Is there a way to keep them separated without creating a separate company code? thanks Gretchen

    Like

    1. Hi Gretchen,
      It is very much best practice to create a new company code as they are a new Legal Entity.
      If integrating them involves moving their assets, liabilities etc. to be owned by another Legal Entity then that transaction (an Intercompany Transaction) would need to be recorded appropriately between the two company codes.

      Like

  11. Hi David:
    I have a question about how to realize it in R12 during the following circumstance:
    Our client is in Germany, it has two braches based in netherlands and peru. The branches do not have their own financial statement to report but have Tax statuary report to local government in local currency. the headquarterh in Germany also have intercompany transaction with the branches like selling and purchasing. So does it need assign a bsv to each branch within the hq’S ledger or make them a different legal entity? For the peru branch whose functional currency is not euro, must make another ledger for it or can have a better solution?
    Hope get your help on this situation to solve Our problem during the implementation.
    Thanks

    Like

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