RECEIVABLES LE - REL 12.pdf

Preparing for an Oracle R12 UpgradeMay 17th-20th, 2010

New and Changed Features forLegal Entity Uptake

E-Business Suite Key Initiative for reporting and other legal compliance regarding the legal owner of debts and assets

Stamping all activity with Legal Entity (LE) identifier

Legal Entity identifies the legal owner of a debt or an assetOracle Applications did not have an object called Legal Entity in 11iDifferent representations of Legal Entity throughout Oracle ApplicationsAmbiguous representations left the concept open to misuse and misinterpretation R12.0 Legal Entity solution provides a centralized, secure setup that is used across the E-Business Suite for reporting and other legal compliance

Legal Entity UptakeBackground

Legal Entity Model

Legal Entity

Ledger

OU

Inv Org

BankAccount

BG

Primary

Inv Org = Inventory OrganizationOU = Operating UnitBG = Business Group

No direct relationship

X

Remittance/internal bank Accounts are now owned by the Legal Entity instead of Operating Unit, and can be used by any of the Operating Units sharing the same Ledger as that Legal Entity.

There is no direct relationship now between Legal Entity and Operating Unit. This concept allows Operating Units to be governed by more than one jurisdiction, but the accounting is still performed in a single ledger.

Multiple Legal Entities can be associated with a single Ledger, allowing the LEs to share the same ledger and chart of accounts, calendar and currency. Each LE points to one Ledger. Multiple Operating Units can also be associated with a single Ledger. Each OU points to

Legal Entity UptakeBackground

Trading Community Architecture (TCA) is used to model Legal EntitiesLegal Entities are considered PartiesFirst Party and Third Party Legal Entities are involved in a transaction

First Party Legal EntityLegal Entity that belongs to your own corporate structure (enterprise) Initiates and owns the transaction

Third Party Legal EntityLegal Entity with whom the deploying company/First Party has a trading relationship In the case of Receivables, this is a customer

LE uptake pertains to the First Party Legal Entity only

LE information is available in all Receivables WorkbenchesReceivables stamps each transaction and receipt header with the Legal Entity The user may be required to select or update the Legal Entity assignment

Each transaction belongs to only one Legal EntityAssigning Legal Entity to all transactions enables tax calculation, supporting the centralized tax solution

Legal Entity UptakeDescription

Legal Entity UptakeLegal Entities and Accounting

Legal Accounting Environment Type: ExclusiveLedger records the accounting for one Legal EntityLedger mapped to LE

Legal Accounting Environment Type: SharedLedger records the accounting for more than one Legal EntityBalancing Segment Values mapped to LE

Legal Entity

Ledger

BSV

Legal Entity Ledger

BSV = Balancing Segment Value

Legal Entity Uptake Legal Entities and Shared

Accounting

Ledger

OU 2OU 1

BSV 6 – 7BSV 1 – 5

LE 2LE 1Operating Units can be associated with multiple Legal Entities in shared accounting environment if they are assigned to the same ledger as the Legal Entity

LE = LedgerBSV = Balancing Segment ValueOU = Operating Unit

Exclusive vs. Shared Accounting Environment:Exclusive: single Legal Entity assigned to Ledger

LE derived from Operating Unit

the LE value cannot be updatedShared: Legal Entities share the same Ledger

users will need to set up the hierarchy to derive LE

the default LE can be updated by the user

Legal Entity Uptake Description – Defaulting for

Transactions

Legal Entity derivation hierarchy for transactions

1. Transaction Type

2. Batch Source

Assigning a LE to a transaction type or batch source is optional

Only the LE's mapped to the Ledger associated with the OU are available to assign

User should chose only one layer in the hierarchy to minimize set up replication

Legal Entity Uptake Description – Defaulting for

Transactions

Remittance or Internal Bank Account linked to Legal Entity

Bank Account is assigned to Receipt Method

Receipt Method is required on all receipts

Legal Entity Uptake Description – Defaulting for Receipts

Receipt Method

Receipt Header

BankAccount

LegalEntity Default LE

Legal Entity UptakeBenefits

Effectively supports central initiative for legal compliance andflexible business management

Stamping identifies the owning legal entity on legal documents accounted for in Oracle Applications

Easily manages transactional data by legal entity Tracking data from the legal perspective enables detailed reporting at legal entity, establishment, and registration level

Accurately provides tax calculation for legal entityAssists with enforcement of tax calculation and reporting for all jurisdictions

Setup and Process

Update Transaction Batch Source

AutoInvoiceLE Not Passed

Assign LE to invoice line

LE exist on Transaction

Type?

Create invoice

User update LE value for lines

No

Yes

Automated process

Legal Entity UptakeSetup and Automated Process

Update Transaction Type

SETUP PROCESS

LE exist on Batch Source?

Group lines by LE

Generate Error

Yes

No

Shared AccountingEnvironment Only

Is LE Valid?

No

Legal Entity UptakeSetup – Update Transaction Type

Query Transaction TypeSelect LE value

Legal Entity UptakeSetup – Update Batch Source

Query transaction Batch Source

Select LE value

Importing invoices AutoInvoice assumes the LE is correct, if it is activeIf LE is not passed, AutoInvoice attempts to default the LEAutoInvoice Validation report displays “Invalid Legal Entity”

If Legal Entity is not valid, orIf Legal Entity cannot be determined

User corrects errors via the Interface Lines FormsAfter Import

If the invoice can be incompleted, users can update the defaulted value in a shared-accounting environments

invoice must have no activity, not be posted and not printedIf System Option “Allow Change to Printed Transactions” is turned on, Receivables still does not allow changes to LE

If users change LE value, the eTax engine recalculates tax

Legal Entity Uptake Process - AutoInvoice

Importing Regular Credit MemosCredit memo LE should be same as LE of the original invoiceIf feeder system does not pass LE, AutoInvoice stamps credit memos with same LE of original invoice If LE is inactivated between invoice import and credit memo import, the credit memo is created with the inactive LEusers cannot update a system stamped value

Legal Entity is a new mandatory grouping rule

Legal Entity Uptake Process - AutoInvoice

Update Transaction Batch Source

Enter ManualTransaction header

Assign LE to invoice Header

LE exist on Transaction

Type?

User assign LE

No

Yes

Automated process

Legal Entity UptakeSetup and Manual Process

Update Transaction Type

SETUP PROCESS

LE exist on Batch Source?

Yes

No

User continue invoice creation

Shared AccountingEnvironment Only

Legal Entity UptakeProcess – Manual Transaction

Select fromLegal Entity List of Values

The application of On-Account Credit Memos performs much the same as in 11iApplication must be to transactions in the same Operating UnitApplication across Legal Entities is allowed as long as all transactions are of the same OU When cross-Legal Entity applications occur, SLA performs inter-company accounting

Legal Entity Uptake Process – On Account Credit

Memos

Bills Receivables use same logic as transactions for stamping the LEManual Assignments are limited to transactions that are stamped with the same LE as the BRLE is mandatory selection and batching criteria during Bills Receivable Batching process

If LE on the transactions are different, then multiple BR’s are created.

If a BR is exchanged for another BR, they must belong to the same LE

Legal Entity Uptake Process – Bills Receivable

All receipts inherit the LE from the bank account:manual, Automatic, Lockbox and Post Quick Cash Programs

Refunds automatically inherit LE from the original receiptLE is mandatory selection and grouping criteria for transaction during automated receipt batch creation processReceipt application across Legal Entities is allowed if the receipt and transactions are in same OU

SLA will perform inter-company accounting for cross-LE receipt applications or cross-LE receipt clearing

Legal Entity Uptake Process - Receipts

LE Default

Data Flow

Legal Entity UptakeProcess – Claim LE Defaulting

Receipt Method

Receipt Header

BankAccount

LegalEntity

Receipt Application

InvoiceClaim

Non-InvoiceClaim

Invoice

ClaimResolution