Oracle Online Training Materials – Usage Agreement

Oracle Online Training Materials – Usage Agreement
Use of the information, documents and online training courses (collectively, “Materials”) found on this area of the Site constitutes agreement with the following terms and conditions (as well as those set forth in the Purpose and Disclaimer sections below): 1. Oracle is pleased to allow its business partner (“Partner”) to download and copy the Materials found on this area of the Site. The Materials are proprietary information of Oracle. Partner or other third party at no time has any right to resell, redistribute or create derivative works from the Materials. The use of the Materials is restricted to the non-commercial, internal training of the Partner’s employees only. The Materials may not be used for training, promotion, or sales to customers or other partners or third parties. 2. Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners. 3. Oracle disclaims any warranties or representations as to the accuracy or completeness of any Materials. Materials are provided "as is" without warranty of any kind, either express, implied or statutory, including without limitation the implied warranties of merchantability, satisfactory quality, fitness for a particular purpose, accuracy, timeliness and non-infringement of third-party rights. The information contained herein is subject to change without notice. 4. Under no circumstances shall Oracle be liable for any loss, damage, liability or expense incurred or suffered which is claimed to have resulted from use of these Materials. As a condition of use of the Materials, Partner agrees to indemnify Oracle from and against any and all actions, claims, losses, damages, liabilities and expenses (including reasonable attorneys' fees) arising out of Partner’s use of the Materials. 1

Purpose: This document provides an overview of features and enhancements included in Oracle Fusion Applications 11gR1 Release and applicable updates. It is intended solely to help you assess the business benefits of upgrading your existing Oracle Products to this release, or implementing completely new Oracle developed products, and planning your I.T. Projects. Disclaimer: This document in any form, software or printed matter, contains proprietary information that is the exclusive property of Oracle. Your access to and use of this confidential material is subject to the terms and conditions of your Oracle Software License and Service Agreement or other applicable contract with Oracle, with which you agree to comply. This document and information contained herein may not be disclosed, copied, reproduced or distributed to anyone outside Oracle without Oracle’s prior written consent. This document is not part of your license agreement nor can it be incorporated into any contractual agreement with Oracle or its subsidiaries or affiliates. This document is intended to outline our general product direction. It is intended for informational purposes only and solely to assist you in planning for the implementation and upgrade of the product features described. Release information contained in this document is not a firm development plan. Release information published here should not be used as the basis for customer delivery commitments, as part of marketing efforts, or during contract negotiations. This is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality, and inclusion or not thereof in the commercially available version of the Software, if any, is subject to change at any time and is always at Oracle’s sole discretion. This document is not considered part of the applicable program documentation. Due to the nature of the product architecture, it may not be possible to safely include all features described in this document without risking significant destabilization of the code. 2

Oracle Fusion Financials Enterprise Structures Implementation and Configuration Considerations – Part 2

Agenda Overview Key Features Additional Resources Legal Entities
Ledgers and Accounting Configurations Business Units Additional Resources 4

Overview Financial Enterprise Structures
Financial enterprise structures are the entities that define the reporting, legal and business aspects of your enterprise Financial Enterprise Structures Financial reporting structures* - Charts of accounts - Calendars - Currencies Legal entities - Legal jurisdictions and authorities - Legal reporting units - Legal entities Ledgers and accounting configurations Business units - Business units and business functions - Reference data sets Oracle Fusion Enterprise Structures Implementation and Configuration Considerations * Covered in a separate implementation training: Oracle Fusion Financials Enterprise Structures Implementation and Configuration Considerations – Part 1 5

Overview Key Features Legal entities
Legal jurisdictions and authorities Legal entities and legal reporting units Ledgers and accounting configurations Accounting configurations General ledger options* Period close components* Business units Business units and business functions Reference data sets * Covered in a separate implementation training: General Ledger Implementation and Configuration Considerations 6

Legal entities Legal entities 7

Feature Summary Legal entities
Create your legal entities to represent all or part of your enterprise's business and management framework Assign your legal entities one or more legal reporting units to support specific reporting requirements Register your legal entities and legal reporting units with the legal authorities in the jurisdictions where your business operates Create your legal entities and legal reporting units and register them with legal authorities in the jurisdictions where you operate 8

Implementation Concepts (1/3) Legal entities
A legal entity is a recognized party with rights and responsibilities given by legislation Define a legal entity for each registered company or other entity recognized in law for which you want to record assets, liabilities, and income pay transaction taxes perform intercompany trading A legal entity can optionally be designated as Legal employer – refers to a legal entity that employs workers Payroll statutory unit – refers to a legal entity registered to pay and report on payroll tax and social insurance on behalf of one or many legal entities, depending on the structure of your enterprise 9

Each of your legal entities has one or more legal reporting units to support local reporting requirements Legal reporting units were referred to as establishments in R12 E-Business Suite When a legal entity is created, a main legal reporting unit with the same name gets automatically created You must register your legal entities and reporting units with legal authorities in the jurisdictions where you conduct business A legal authority is a government or legal body that is charged with powers to make laws, collect fees and taxes, and remit financial appropriations for a given jurisdiction Example: The Internal Revenue Service is the authority for enforcing income tax laws in the United States 10

Legal entity Legal entity Legal entity registrations Register your legal entity with legal authorities in the jurisdictions where you conduct business. Jurisdiction Registration number Legal address Issuing legal authority Legal entity Legal reporting units Legal reporting unit registrations Register your legal reporting units with legal authorities to meet reporting requirements in each local area 11

Relevant Setup Tasks Legal entities
Under the Financials offering locate the task groupings below and navigate to the tasks needed to successfully bring your legal entity setup into completion Define Common Applications Configuration for Financials Define Enterprise Structures for Financials Define Legal Jurisdictions and Authorities for Financials Manage Legal Jurisdictions Manage Legal Authorities Manage Legal Addresses Define Legal Entities for Financials Manage Legal Entities Manage Legal Entity Registrations Define Legal Reporting Units for Financials Manage Legal Reporting Units Manage Legal Reporting Unit Registrations 12

Ledgers and accounting configurations
13

Feature Summary Ledgers and accounting configurations
Ledgers are record-keeping structures that you create to record your transactions and track your financial results An accounting configuration consists of one or more ledgers grouped under the umbrella of specific legal, business and transaction processing requirements Create your ledgers and complete your accounting configurations to record your transactions and monitor your financial performance 14

Key Decisions (1/2) Ledgers and accounting configurations
How many accounting configurations should I define? An accounting configuration is uniquely identified by its primary ledger which is the main record-keeping structure of the setup. To determine the number of primary ledgers, your enterprise structure analysis must begin with your financial, legal, and management reporting requirements. For example, if your company has separate subsidiaries in several countries worldwide, enable reporting for each country's legal authorities by creating multiple primary ledgers that represent each country with the local currency, chart of accounts, calendar, and accounting method. Use secondary ledgers or reporting currencies linked to your country specific primary ledgers to report to your parent company from your foreign subsidiaries. If your company just has sales in different countries, with all results being managed by the corporate headquarters, create one primary ledger with multiple balancing segment values to represent each legal entity. Use secondary ledgers or reporting currencies to meet your local reporting requirements, as needed. Limiting the number of primary ledgers simplifies reporting because consolidation is not required. Other considerations, such as corporate year end, ownership percentages, and local government regulations and taxation, also affect the number of primary ledgers required. 15

Key Decisions (2/2) Ledgers and accounting configurations
How many legal entities should I assign to an accounting configuration? The number of legal entities you assign to an accounting configuration is affected by several legal, business and country-specific considerations. Define an accounting configuration with no legal entity assigned if a legal entity context is not required for transaction processing (e.g. management reporting or consolidation purposes), or use it to supplement the accounting contained in other accounting configurations that have legal entities assigned. Define an accounting configuration with one legal entity if you have strict legislative requirements that require the legal entity to maintain its accounting data separate from other legal entities; or have specific legal or statutory rules that require a separate ledger for the legal entity; or require different primary ledger attributes from other legal entities, such as a different chart of accounts, calendar, currency, accounting method or ledger processing options; or have autonomous document sequencing, period close or tax requirements for each legal entity. Define an accounting configuration with multiple legal entities if you operate in a country that allows several legal entities to share the same primary ledger attributes and processing options, and do not have autonomous document sequencing, period close or tax requirements for each legal entity. 16

Implementation Concepts (1/9) Ledgers and accounting configurations
Every ledger is identified by 4 basic components, and a set of ledger processing options The accounting method defines the set of accounting rules (e.g. accrual basis, cash basis) used in Fusion Subledger Accounting to record the financial impact of subledger transactions Chart of accounts Currency Ledger options Optional ledger components to customize journal, period close and balancing processing. For example: Enable average balance processing Enable Intercompany accounting Period close options Enable journal approval Journal balancing options Journal import options Ledger Accounting calendar Accounting Method 17

There are 3 types of ledgers in Fusion General Ledger Primary ledger – the main record-keeping ledger and a required component in your setup. Every accounting configuration is uniquely identified by its primary ledger. The primary ledger is closely associated with the subledger transactions and provides context and accounting for them. Secondary ledger – an optional ledger linked to a primary ledger for the purpose of tracking alternative accounting. A secondary ledger can differ from its primary ledger in its chart of accounts, accounting calendar, currency, accounting method or processing options. Reporting currency – an optional, additional currency representation of a primary or secondary ledger. A reporting currency can differ from its source ledger in its currency and some processing options, but shares the same chart of accounts, accounting calendar and accounting method with it. 18

An accounting configuration is uniquely identified by its primary ledger, and consists of optional, multiple accounting and currency representations to fit your enterprise needs optionally assigned one or more legal entities to meet specific legal and business requirements optionally assigned one or more secondary ledgers and reporting currencies to meet specific currency, reporting or transaction processing requirements 19

Secondary ledgers A secondary ledger is linked to a primary ledger, and can be maintained at one of four data conversion levels Balance level – only general ledger balances are maintained in this secondary ledger via the Transfer Balances to Secondary Ledger process Journal level – the General Ledger Posting process transfers the journal entries to the secondary ledger Subledger level – the Subledger Accounting engine creates the subledger journals to both the primary and secondary ledger; the Posting process transfers the remaining journal entries to the secondary ledger Adjustment only – incomplete accounting representation that only holds adjustments (manual, or automated from Subledger Accounting); it must share the same chart of accounts, accounting calendar and currency as its primary ledger 20

Reporting currencies A reporting currency is linked to a primary or secondary ledger, and can be maintained at one of three data conversion levels Balance level – only general ledger balances are maintained in the reporting currency via the Translation process Journal level – the General Ledger Posting process transfers the journal entries to the reporting currency Subledger level – the Subledger Accounting engine creates the subledger journals to the reporting currency; General Ledger converts the remaining journal entries to the reporting currency during the Posting process. 21

Balancing segment value assignments Best practices recommend that you assign specific balancing segment values to each legal entity in your accounting configuration Helps you identify legal entities during transaction processing and reporting, and eases your requirement to account for your operations to regulatory agencies and tax authorities If you do not assign any balancing segment values to your legal entities, then all balancing segment values will be available for transaction processing 22

Balances cubes Multidimensional structures that store your financial balances and enable high-speed, interactive financial reporting and analysis Balances cubes pre-aggregate your balances at every possible point of summarization, thus ensuring immediate access to financial data and obviating the need for an external data warehouse for financial reporting A balances cube is uniquely identified by the combination of a chart of accounts and an accounting calendar. Average balances are tracked in a separate balances cube Chart of Accounts Accounting Calendar Unique balances cube Unique average balances cube 23

Balances cubes (cont’d) Completing an accounting configuration launches a process to create or update balances cubes If the combination of a ledger’s chart of accounts and calendar is new, the system creates a new balances cube. If your accounting configuration contains an average balance enabled ledger, an additional average balances cube is created If the combination of a ledger’s chart of accounts and calendar already exists, the system simply adds the ledger(s) to the corresponding balances cube Balances in the cubes are automatically maintained by the following general ledger processes: posting, open period and translation 24

Balances cubes (cont’d) Consist of a set of defining business entities called dimensions Chart of accounts segments Each segment is a separate dimension. Includes published hierarchies/tree versions Currency Flat list of all available currencies Accounting periods Roll up to quarters and years Ledgers Roll up to ledger sets Other accounting dimensions currency type  amount type  balance amount  accounting scenario Balances cube 25

Best Practices Ledgers and accounting configurations
Implementation question Recommendations and best practices I plan to run the translation process in Fusion General Ledger. How does this impact my first opened period? If you plan to run the translation process, select the first opened period for your ledger to be later than the first defined period in the associated accounting calendar. You cannot run translation in the first defined period of a ledger’s calendar. Which data conversion level should I use for my secondary ledger and reporting currency? Secondary ledgers and reporting currencies provide functional benefits, but produce additional volumes of journal entry and balance data, resulting in extra performance and memory costs. When adding a secondary ledger or a reporting currency, consider your needs, and select the least costly data conversion level that meets your requirements. If you operate in an environment with a highly inflationary economy and fluctuating exchange rates, consider using subledger- or journal-level reporting currencies and secondary ledgers. This will help you better reflect and track your financial data in the alternate representation and minimize restating your balances frequently due to rate fluctuations. 26

Relevant Setup Tasks Ledgers and accounting configurations
Under the Financials offering locate the Define Accounting Configurations iterative task list and navigate to the tasks needed to successfully bring your accounting configuration into completion Define Common Applications Configuration for Financials Define Accounting Configurations Manage Primary Ledgers Assign Legal Entities Specify Ledger Options Assign Balancing Segment Values to Legal Entities Assign Balancing Segment Values to Ledger Manage Reporting Currencies Define Secondary Ledgers Manage Secondary Ledgers Complete Primary to Secondary Ledger Mapping Review and Submit Accounting Configuration 27

Business units and reference data sets
28

Feature Summary Business units and reference data sets
Create your business units, assign them business functions and associate them with a ledger in order to process and partition your business transactions Share your reference data by grouping them into reference data sets and associating those with or more business units Create your business units to process your transactions and facilitate reference data sharing 29

Key Decisions (1/2) Business units and reference data sets
What are the considerations that affect my business units implementation? A business unit is an enterprise structure that processes and generates business transactions, by performing one or more business functions. You assign your business units to one primary ledger. This assignment is mandatory for your business units with business functions that produce financial transactions. Deciding on the number of business units to implement depends upon several factors: Security: You use business units to secure and segregate your transactional data. For example, if you run your export business separately from your domestic sales business, secure the export business data to prevent access by the domestic sales employees. To accomplish this security, set up the export business and domestic sales business as two separate business units. Reference data sharing: Business units process transactions using reference data sets that reflect your business rules and policies. You can share reference data, such as payment terms and transaction types, across business units. If your enterprise has country specific requirements that affect your reference data, consider creating separate reference data sets and business units to meet these local requirements. 30

Key Decisions (2/2) Business units and reference data sets
What are the considerations that affect my business units implementation? (cont’d) (Continued) Deciding on the number of business units to implement depends upon several factors: Processing requirements: Implement your business units based on your primary ledgers and legal entity setup and processing requirements. For instance, in countries where document sequencing is required for subledger transactions, define your business units in alignment with your ledger definition, because the uniqueness of sequencing is only ensured within a ledger. In these cases, define a single ledger and assign one legal entity and business unit (1:1:1 model). If multiple legal entities are accounted for in a single primary ledger, your business units can process transactions on behalf of multiple legal entities (1:M model). Shared service centers: You can define relationships between business units to outline which business unit provides services to the other business units. Your business units that have the requisitioning business function can define relationships with business units that have the procurement business function enabled. If you operate in this model, consider minimizing the number of business units assigned to your primary ledgers because security considerations might not be as prominent in the case of a shared service center. 31

Implementation Concepts (1/5) Business units and reference data sets
A business unit is an enterprise structure that processes and generates business transactions on behalf of one or more legal entities The notion of business unit in Fusion Financials is very similar to the R12 E-Business Suite operating unit concept A business unit performs one or more business functions that determine what activities it is used for Business functions represent business processes or activities that describe how a business unit is used Examples include billing and revenue management, customer payments, payables invoicing, procurement, requisitioning, etc. 32

Use business units in the following ways Partition transactions – business transactions generated in a particular business unit is stored separately from transactions processed in other business units Secure transactions – assign data roles associated with your business units to your users to secure access to your business transactions Share reference data – reference data objects can be shared across multiple business units, thus significantly reducing setup efforts 33

You assign your business units one primary ledger and a default legal entity This assignment is mandatory for business units with business functions that produce financial transactions In some cases the legal entity is explicit in your transactions; however if the legal entity context needs to be derived from your business unit, then the default legal entity is used if the derivation rules cannot find a better match A business unit can process transactions on behalf of one or more legal entities There is no direct relationship between a business unit and a legal entity The mapping is inferred from the primary ledger assigned to the business unit and its associated legal entities 34

In Fusion Applications, your can share your reference data objects across several business units, by grouping them into reference data sets Reference data sharing can considerably reduce the cost of setting up new business units Assign your business units a default set to assign it automatically to all reference data objects You can override the default set individually for each reference data object. For example, assign separate sets for payment terms, transaction types, and sales methods to your business units 35

Business units process your business transactions on behalf of one or more legal entities Assign your business unit a default set Assign your business unit business functions Assign your business unit a primary ledger and default legal entity The mapping between a business unit and legal entities is inferred from the primary ledger assigned to the business unit and its associated legal entities Business transaction Business unit Default set (can override) Business functions Primary ledger Default legal entity Reference Data Legal entities 36

Best Practices (1/4) Business units and reference data sets
To streamline the implementation of your business units, follow the steps below: (Prerequisite) Maintain your reference data sets. Note that the “Common Set” data set is predefined in the system. Create your business unit and assign it a default set. This automatically generates mappings between all reference data objects and the business unit, via the default set. Example Reference data set Common Set (predefined) Enterprise Set USA Set Reference data object Set assignment Payment Terms Common Set Transaction Types Memo Lines Example Business unit InFusion USA Sales Default set Common Set 37

Assign business functions to your business unit Associate your business unit with a primary ledger and a default legal entity. This is mandatory for business functions that produce financial transactions. Customize your default business unit set assignments by associating specific reference data objects with different data sets Example Business functions Payables invoicing Billing and revenue management Customer payments Example Primary ledger InFusion USA Corporate Default legal entity InFusion USA Example Reference data object Set assignment Payment Terms Enterprise Set Transaction Types USA Set Memo Lines Common Set 38

Assign your reference data to specific reference data sets. For example, assign your payment terms to the following sets: Use your business units to process and generate your business transactions. Reference data in your transactions will be filtered according to the business unit set assignments. Example Payment term Reference data set Net 30 Enterprise Set Net 45 1%/10 Net 30 USA Set Example Create a Payables invoice and specify “InFusion USA Sales” as its business unit. The available payment terms for your invoice will be limited to “Net 30” and “Net 45”, since the “Enterprise Set’ reference data set is assigned to the “Payment Terms” reference data object. 39

Implementation question Recommendations and best practices Do I need to validate my set assignments before using a business unit? When you create a business unit, you assign it a default set. Before a business unit can be used, you must navigate to the set assignments page in order to generate set assignments data, perform reviews and corrections, and make sure to confirm the selections by saving the generated data. How do I secure my transactional data using business units? Business units are used by a number of applications to implement data security. When a business unit is created or when a business function is enabled for a business unit, the application can trigger the creation of data roles for this business unit based on the business function's related job roles. Therefore, based on the correspondence between the business unit and the job roles, appropriate data roles are generated automatically. You assign data roles to your users to give them access to data in business units and permit them to perform specific functions on this data. 40

Relevant Setup Tasks Business units and reference data sets
Under the Financials offering locate the Define Business Units iterative task list and the Maintain Common Reference Objects task grouping and navigate to the tasks needed to successfully bring your accounting configuration into completion Define Common Applications Configuration for Financials Define Business Units Manage Service Provider Relationships View Service Clients View Available Asset Books Specify Customer Contract Management Business Function Properties Specify Supplier Contract Management Business Function Properties Manage Business Unit Set Assignment Assign Business Unit Business Function Configure Procurement Business Function Configure Requisitioning Business Function Maintain Common Reference Objects Define Reference Data Sharing Manage Reference Data Sets Manage Set Assignments for Set Determinant Type 41

Financial Enterprise Structures How they fit together (1/2)
Example Your company, InFusion Corporation, is incorporated in the USA and UK Air quality monitoring systems Financial services arm to provide funding 4 business units: AQM (UK and USA), Financial Svc, and a corporate services business unit that provides common administrative, payroll and procurement services The corporate ($ currency) and UK (£ currency) primary ledgers share the same chart of accounts and accounting calendar, so they will reside in the same balances cube The Financial Services ledger uses a different chart of accounts, so it will go to a different balances cube You assign one or more legal entities to your primary ledgers; each legal entity is assigned one or more balancing segment values (BSV) that map to the Company segment in your charts of accounts 42

Financial Enterprise Structures How they fit together (2/2)
Example (cont’d) Legend Legal entity InFusion Corp. (Holding Co) Primary BSV Ledger Business unit InFusion (UK) Ltd. InFusion USA West Inc. InFusion USA East Inc. InFusion USA Fin Services SA InFusion UK Co 04 InFusion USA Corporate Co 02 Co 01 Co 03 InFusion USA Financial Services Co 05 AQM UK AQM USA Corporate SSC Financial Svc 43

Additional Resources Oracle Fusion Enterprise Structures Implementation and Configuration Considerations Oracle Fusion Financials Enterprise Structures Implementation and Configuration Considerations – Part 1 Oracle Fusion General Ledger Implementation and Configuration Considerations 44

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