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Topic

    Ravi Upadhyayulla
    Legal Entity - Business unit mapping
    Topic posted January 15, 2018 by Ravi UpadhyayullaBlue Ribbon: 750+ Points, last edited January 30, 2019, tagged Financials, Payables, Receivables, Subledger Accounting 
    1650 Views, 8 Comments
    Title:
    Legal Entity - Business unit mapping
    Summary:
    We have over 160+ legal entities (LE) we are looking for mapping business units to LE
    Content:

    Hi,

    We have over 160+ legal entities (LE) and we are looking to limit them by business unit (BU), instead of showing all 160+ on invoice entry screens and users might select the wrong LE.

    We are generating some accounts based on LE using SLA rules so want to limit the LE by BU to generate correct accounting entries.

    Thanks

    Ravi

     

    Comment

     

    • Shaan

      Hi Ravi,

      It depends how you're planning to define your organisation structure. If you're able to provide some more details then I might be able to help you. 

      You need to consider the following to start with in your org design.

      • How many countries do you operate in?
      • How are you planning to define your HR Business Groups?
      • How your LEs and BUs related to from Business point of view?
      • How do you want to provide access to users for different modules? etc.

       

      • Jeremy Downey

        Hi Shaan,

        My name is Jeremy and I am working with Ravi.  We are in a few countries, however the bulk of our legal entities is in Canada.  We would like to tie Legal Entities (lets say 10 of them) to a particular Business unit.  So when a user has access to that particular BU security, they only see those 10 LE's.

        I know that the LE's are tied to the ledger, and that the BU is linked to the ledger as well, but I don't believe you can link LE's to a BU (except for the Default Legal Entity assigned on the BU setup.

        Any assistance would be greatly appreciated as I am not aware of any way to do this with standard functionality.

        Thanks,

        Jeremy

         

    • Fareed Masood

      I dont think it is possible to restrict Legal Entities access to BUs within the same ledger. One other option I could think of is grouping these LEs by Line of Business. Since you already want to restrict a specific number of LEs to a BU, I assume all those LEs have the same Line of Business or each of those LEs within a group are created for a unique business and their businesses roll up to a Line of Business at which Management Reporting is generated. If this scenario exist, then create multiple BUs within the same Ledger. Have a separate segment in Chart of Account structure to track LOB. Create Security and Cross Validation Rules to restrict usage of LOB value to specific LE in an account combination, assign LE (company) segment values to Legal Entity and allow users to select the Legal Entity name in transaction header when they are entering transactions. I have seen in some cases, we ended up defining multiple ledgers and BUs despite the fact that each of the ledger have common 4C's (COA, Calendar, SLA Method, Currency). The driving factors behind these were period close cycle, data access security, Legal Entity assignment and access to name a few.

    • Shyam Santhanam

      Are you having user always manually enter the invoices or is this coming in automatically as a feed? Also are these standalone invoices or matched to purchase orders (or Sales orders)?

    • Srinivasan Sampath

      Jeremy,

      I am not aware any functionality linking the LE and BU. As you rightly said its linked through Ledger. Hence once you select the BU, it is expected to display all the LE linked to the Ledger to which the BU is linked. But to my surprise, it brings all the LEs irrespective of Ledger. One of the oracle note suggests that its intended.

      In EBS the LE for an AP Invoice is derived based on the BSV used in Invoice distribution, but do not have an explicit field for LE for selection. I am not sure of the significance of LE selection in cloud, may be its used for some tax requirement.

      We will be able to create an invoice in a LE using a BSV not associated with the LE. I believe it is functionally wrong.

      Cloud allows to change the LE even after accounting the Invoice. Oracle suggests to use the account override feature to correct the accounting. Its not very convincing for me.

      We have option to default the LE Based on Supplier Bill-to Address or BSV used in the Liability account of the Supplier Site. Probable solution is to bring the Default LE and hide this LE LOV through a ADF personalization, so that user need not select the LE while entering invoices.

      Srini

       

    • Fareed Masood

      Hi Srini

      I believe in EBS also there is an explicit field for Legal Entity Name on AP Invoice Header. It is a hidden field and the value is defaulted based on the Default Legal Entity Profile Option setting. I also believe the significance of LE Name at Invoice level is for Tax purposes only and see no other purpose for that. Unless Oracle has planned some future offerings that are dependent on this field. However, if we are using a BSV value in Invoice Distribution that is assigned to a legal entity in Ledger setup, then the LE Name on Invoice should correspond with the BSV value used in distribution else it will throw an error. This is an important factor we should keep in mind and be very careful in assignment of BSV values to LE as it has downstream impacts in transactions.

      thanks

      Fareed

      • Srinivasan Sampath

        Hi Fareed,

        Thanks for your update. I was able to create an invoice, validated and accounted with a BSV that is not linked to the LE selected in the Invoice header. System did not throw any error. I hope so long as the BSV belongs to a LE associated to the Ledger, it wont throw error.

        Considering a shared service scenario and considering the Automatic offset feature, we could expect multiple invoice distributions having BSVs belonging to multiple legal entities of the same ledger. Which is allowed in EBS and I hope it will be allowed in Fusion also.

        Fusion allows us to change the LE even after accounting the Invoice.

        Regards

        Srini

    • Swarup Banerjee

      just to add, please keep an eye on payment as you use one BU for multiple LEs. certain parameters for  payment(ACH/positive pay) are  from business  units.