Guest Post: Custom Balancing by 2 segments in EBS R12

Sangeeta
Sangeeta Sameer, IT Leader – Finance, Renewables ERP at GE Power & Water

This is a guest post from Sangeeta Sameer, who worked for Oracle for 6 years before moving on to work for GE where has held a number of senior positions.  She has also joined the board of the OAUG Multinational Special Interest Group.

At the Collaborate 2014 Conference, David Haimes and I presented a custom solution to enable balancing by 2 segments of the Chart of Accounts in Release 12.1.3 of Oracle e-Business Suite. The attached PowerPoint and Paper that we presented describes in detail the requirements and the custom solution.

So when David asked me to write a guest post about this topic, I thought about what else I would include in the paper if we were writing it again. While the paper talks about the requirement to create a balanced Trial Balance by 2 segments, it does not expand on why we need a balanced Trial Balance by 2 segments. Global corporations like General Electric (GE) need better granularity and accountability for the financial performance of their geographical divisions and lines of businesses by being able to create a Balance Sheet at both a Legal Entity/Statutory level and Business Unit/Management Entity level. GE is a Global conglomerate that has diverse businesses operating in a large number of countries. GE needs the ability to create a balanced Trial Balance by the Legal Entity (LE) and the Management Entity (ME) segments in the Chart of Accounts.

The ability to automatically balance by more than one segment is not a new requirement for GE, and I think it would be a requirement for other multinational companies as well. This requirement is explained quite well in Oracle Fusion Applications Enterprise Structures Concepts Guide 11g Release 5 (11.1.5) – Part # E22899-05. See the section titled “Legal Entity and Its Relationship to Balancing Segments”. While Fusion Applications are able to balance by up to 3 segments in the Chart of Accounts, Oracle e-Business Suite (EBS) Applications are able to balance by one segment only.

In prior EBS Release 11i implementations at GE, the requirement to balance by 2 segments was satisfied by developing custom solutions that needed to be re-visited for Release 12. For example, one of the solutions in 11i was for a custom program to bring balancing entries into the Interface Table. With the introduction of SLA in Release 12, this 11i solution was no longer a good one for R12. The solution described in the attached Paper and PowerPoint is a much more robust solution, and is live in Production for 2 different ERP Projects at GE.

The OAUG Multinational Special Interest Group (SIG) is organizing a webinar on June 11th at 10.30 am Pacific (1.30 pm Eastern) on this topic. David and I will repeat the presentation from Collaborate 2014, and look forward to sharing this solution again. The webinar will be one hour long, including 20-25 minutes for Q&A.

The link to register for this webinar is:
https://www4.gotomeeting.com/register/790696327

Collaborate 14 Paper: Balancing by 2 Segments

It is a very common requirement to automatically balance by two different segments of the chart of accounts, typically the Legal Entity and some sort of Management Entity (department, line of business, cost center, etc).  Fusion financials allows you to balance by up to three segments, which is always a well received feature.  However at Collaborate you can learn how one company built a custom to do this in EBusiness Suite.  I’m honored to have been asked to Co-present with GE on this topic, they have done some really good work here and I’m sure it will be of great interest to others too.  So come along and join us, you’ll get the specifics of what they did, the details are below:

Session ID: 13941
When: 10 Apr 11:00 AM-12:00 PM
Room: Level 1, Marco Polo – 801
Speakers: Sangeeta Sameer, General Electric (GE),  David Haimes, Oracle Corporation
Abstract: This paper describes the Custom solution that General Electric (GE) implemented in collaboration with Oracle to achieve Balancing by 2 segments in Release 12.1.3 of Oracle E-Business Suite (EBS). GE has the business need to Balance by both the Legal Entity (LE) and Management Entity (ME) segments in the Chart of Accounts. While Fusion Applications allow Balancing by 3 segments, Oracle EBS Applications do not have this Functionality. This paper covers the requirements and solution in detail for 2 Segment Balancing.

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…

FSAH and AGIS Intercompany Implementation thoughts

Written by David Haimes

As Intercompany transactions are very likely to cross systems they are a good candidate for integration in a ‘Hub’ of some sort.

In R12 the Financials Services Accounting Hub (FSAH) allows integration of third party systems to Oracle and is incredibly powerful and flexible.

Let’s use a simple example:

Company A and B both use two different Ledgers. A Sales Invoice is issued by Company A (to Company B) for $5,000

The accounting needs to be created as below, they need to be booked with the same accounting date in the same period.

In Company A

Debit Intercompany AR $5,000
Credit Intercompany sales $5,000

In Company B

Debit Expense or inventory (per content), $5,000
Credit Intercompany AP, $5,000

So there’s a number of options that come to mind (in no particular order).

1) Using Oracle Accounting Hub you can account for transactions form third party systems, it uses the Subledger accounting engine to process accounting events defined for the third party system. If your invoice systems are third party applications, you could create 2 events (one for each company/ledger/party to the transaction) for the sales invoice and get the full accounting out of the single system integration.

2) Enter these transactions in AGIS, the specific accounting will be entered/generated and approvals from company A and B obtained before AGIS either books it direct to GL or generates the Invoice for company A and B if required.

3) It may not be ideal to force users to navigate to a different screen (or change some import process, EDI, XML feed etc) to issue Intercompany invoices from other invoices as in 2) above. So continue to enter in your regular sales invoice system but run a process which detects an invoice is Intercompany and cancels it, then generates a transaction for it in AGIS (via the Open Interfaces) or FSAH.

I don’t think any one of these is right for all situations, detailed analysis of the particular implementation environment and requirements needs to be done to figure out the best approach. If you have any thoughts, better suggestions or experience then please share them in the comments.

AGIS Out of the Box

outofthebox.jpg

When I was about 10 years old I got a new electric train set for Christmas, but before I got to play with it I had to pinch a plug from one of my siblings toys and fit the only available (and dangerously mismatched) fuse in it. Then I had to read a complicated set of instructions to assemble a delicate set of parts and it was a minor miracle that I had it working before the New Year.

Now when I buy something new, the first thing I do is open the box, turn it on and press buttons to work out how to use it, if I get stuck I maybe look to see if they have a quick start guide. Consumer goods manufacturers make things very intuitive and ready to work right out of the box these days and we have grown to expect that. Remember that iMac add? step 1: plug into power, step 2: plug into a phone line, step 3: – there is no step 3! Wow can I have an ERP system like that please?

When designing AGIS for R12 we tried to minimize the time it would take to get started entering transactions in an initiative we internally called ‘AGIS out of the Box’. I have to give credit to this idea to my former bosses Joe and Terrance for initiating this, but the whole team stopped, sat down and thought about what we could do to allow users to open the box and start using AGIS right away.

We came up with a few ideas

1) No profile options Continue reading “AGIS Out of the Box”

New Intercompany features in R12

R12 introduces the new product Advanced Global Intercompany System (AGIS), which takes forward the features provided by GIS in 11i GL and adds a number of important new capabilities. The major new capabilities are:

Oracle Intercompany is FUN

In release 12 of Oracle financials we decided to pull the existing Global Intercompany System (GIS) functionality out of the GL product, add a whole bunch of new functionality and make it a product in its own right. We decided to call this new product (wait for it…) Advanced Global Intercompany System (AGIS) – I bet you didn’t see that name coming! Continue reading “Oracle Intercompany is FUN”