R12 Legal Entity configurator

Architectural Changes in R12 Financials

• • • • • •

Legal Entity Ledger Sets Accounting Engine(SLA) Transaction Based Taxes(EBTAX) Intercompany Accounting (AGIS) Multi-Organization Access Control(MOAC)

Relevance of LEGAL ENTITY

Organization Modeling .

… Organization Modeling Business Group GRE/LE Legal Entity Ledger Operating Unit BSV Inventory Org .

… Organization Modeling Legal Entity in 11i Reporting Entity SOB BSV GDFs GRE/LE System Options Belgium VAT Reporters Profile Options Operating Unit Brazilian Companies .

OU and SOB were tightly coupled.… Organization Modeling Legal Entity in 11i • • • LE . transaction flows and compliance when the legal rules and business operations were not monolithic or top-down. GRE/LE. System Options GDFs Reporting Entity SOB BSV GRE/LE Belgium VAT Reporters Profile Options Operating Unit Brazilian Companies . Problem in accounting. Global Financial Structure was 1:1:1.

New design in R12 .

Registrars. SA. Local. Funds.. LOBS. Partnerships… Inc. Whatever = “Decision Making Tags” Subsidiary Company Subsidiary Company Subsidiary Company Subsidiary Company Subsidiary Company • Parent companies (LEs) “own or control” subsidiaries (LEs) • LEs create commercial transactions .Legal Entity – The Reality Legal Authorities Countries. GmBH. Ltd.. Etc. Agencies. States. “exist in the outside world” Managed & analyzed by Management Orgs Divisions. LLC. Taxation. Regulates Complies Subsidiary Public Company Company (regional parent) Public Company (ultimate parent) Subsidiary Company (business parent) Legal Entities Registered Companies. Cost Centers. Regulators. Plants.

LEs comply with whatever need compliance : “Legal” in LE. Enabled First Party stamp Added Establishments: map Registrations to Authorities GRE/LE not touched Authorities as TCA parties LE Configurator . • • • • • • Addresses. etc. Officers. LEs file the accounts and take care of accounting.Legal Entity – The Reality What LE Means ? What R12 tried to address ? • • • • • LEs pay TAX – Need Tax Registrations Trade between LEs need Intercompany. LEs own money and bank accounts.

New structure in R12 .

… Organization Modeling Legal Entity Architecture (LEA) in R12 11i Link Bank Account Legal Entity Not in R12 Operating Unit Inventory Org Business Group Ledger .

… Organization Modeling LEA in R12 Bank Account Legal Entity 11i Link Not in R12 Operating Unit • • • Releases OU as a surrogate for the real world Legal Entity OU retains is primary role in managing user access LE now manages local jurisdiction requirements Inventory Org Business Group Ledger .

LE Relationship with Accounting Structure and OU • Accounting Structure – In GL. LE is mapped to Ledger and BSV • Operating Unit – No Direct Relationship between LE and OU – Relationship is derived from OU assigned to Ledger and LE mapped to Ledger .

LE Relationship with Accounting Structure and OU • Accounting Structure – In GL. LE is mapped to Ledger and BSV Legal Legal Entity Establishment • Operating Unit – No Direct Relationship between LE and OU – Relationship is derived from OU assigned to Ledger and LE mapped to Ledger Business Operating Accounting Transactions Ledger (SOB) BSV Unit .

LE Design . aka Company code) within a Ledger.Models • 1:Many – LE are mapped to the Balancing Segment Value (BSV. so multiple LE are accounted for in a ledger. – An OU will have one Ledger assigned so transactions for many LE are processed and accounted in a single OU • 1: 1: 1 – A single LE is mapped to a Ledger – An OU will have one Ledger assigned – Therefore an OU only has one LE (that means it is easy to derive the LE given the OU) .

What Model Should I use ? .

the 1:1:1 model is recommended for most non US regions. .• That Depends on where the LE is registered • The 1:M model is recommended and preferred in the US.

How to Set Up Legal Entity ? .

– Setup and Maintain History • Maintain history of Registrations for comparative reporting and analysis. .Legal Entity Configurator  Legal Entity Configurator – is the central place to – Setup and Maintain: • • • • • • • Legal Entities Establishments Registrations Jurisdictions Legal Authorities Legal Addresses Legal Contacts – Setup and Maintain Legal Associations • Map Establishments to BSVs in a Ledger. • Map Establishments to OUs. and Business Locations to enable tax calculation. Inv Orgs.

pay taxes and account for themselves. – Initiates and Owns Transactions. repay debt.  Establishment – “Building block” of a Legal Entity.Key Concepts  First Party Legal Entity (LE) – Legal Entity of the Deploying Company. – 100% owned and controlled by the Legal Entity. collecting fees/taxes and making financial appropriations. trade. – It can own property. . – Required for registrations within local level Jurisdictions.  Legal Authority – Legal body in charge of enforcing legislation.

establishments).  Default Legal Context – One of the Legal Entities sharing the Ledger will be stored on the Operating Unit (OU) when the OU is created. This LE will provide any downstream process with a DLC. . The first party legal entity is the legal entity that owns the transaction.  Legal Entity Stamping – Stamping is the identification and recording of the first party legal entity for the given transaction. OUs. etc) and legal constructs (legal entities.… Key Concepts  Jurisdiction – Is a formulation of a legislative category and territory to which legal rules are grounded. which will act as a proxy for the owning LE.  Legal Associations – Centralized repository and a common mechanism for maintaining associations between business entities (BSVs.

United States.Set Key Profile Options • Default Country – This profile option determines the default value for the Territory in the Create Legal Entity page Profile Value Country Name Description This will be the default Territory in the Create Legal Entity page. For example. .

Profile Value Description If this option is set to “Yes”. Yes No .Set Key Profile Options • LE: Generate Legal Entity Identifier – This profile option determines whether the Legal Entity Identifier is generated automatically or entered manually. If this option is set to “No”. the user must enter the Legal Entity Identifier manually. the Legal Entity Identifier is generated automatically based on the International Organization for Standardization (ISO) code of the Country of Registration. plus the Registration Number (of the Identifying Jurisdiction) which qualifies an entity to be a Legal Entity in that particular territory.

Set Key Profile Options • HZ: Generate Party Number – This profile option determines whether the Organization Number is generated automatically or entered manually. Profile Value Yes Description If this option is set to “Yes”. the Organization Number is generated automatically. If this option is set to “No”. The Main Establishment’s Organization Number will be the Legal Entity Organization Number appended with ETB. No . the user must enter the Organization Number manually.

No . Profile Value Yes Description If this option is set to “Yes”. the Change Effectivity region is displayed in the Update Registrations page and the user can enter an effective from date as well as comments for the change. If this option is set to “No”.Set Key Profile Options • LE: Change Affectivity – This profile option determines whether the Change Affectivity Region is enabled and displayed in the Update Registrations page . the Change Effectivity region is not displayed in the Update Registrations page.

Legal Entity Setup Process Step 1: Enter Legal Information The Territory chosen sets the context of the information required Activity Classification .

Legal Entity Setup Process Step 1: Enter Legal Information These are required attributes for a French Territory .

Legal Entity Setup Process Step 2: Enter Detail Main Information Automatically generated LE Identifier and Org Number Registration Number is the SIREN and EIN/TIN Numbers .

Step 2: Enter Detail Main Information Legal Entity Setup Process .

Legal Entity Setup Process Step 2: Enter Detail Main Information Ends a Legal Entity eTax Attributes .

Legal Entity Setup Process Step 3: Enter Legal Entity Registrations Jurisdiction and Legal Authority Functions such as income tax declaration .

Legal Entity Setup Process Step 3: Enter Legal Entity Registrations Identifying Flag .

Legal Entity Setup Process Step 4: Enter Contact Information .

a legal association is created between the legal entity that is being created/updated and the selected legal entity.Step 5: Add/Review Intercompany Exceptions Legal Entity Setup Process When adding an Intercompany Exception. .

.Legal Entity Setup Process Step 6: Review The History subtab displays any changes that have been made to the Legal Entity’s Registration.

Legal Entity Setup Process Step 6: Review Main Establishment Flag .

Affects of LE in R12     Cash Management (Bank) Receivable (Transaction and Receipt) Payables (Invoice and Payment) LE and TCA .

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