Hello Hasan,

I am not sure how Operating Units relate to Legal Entity. I have gone through all the related videos and I have a few doubts/questions

a) Legal entities own the AR,AP invoices/transactions and banks. But Operating Units are assigned to a Ledger. Again when Operating Units transfer the data it goes to the ledger - the Ledger(not the LE) - is it not? Would you please clarify this interaction between Ledger, OU & LE?
General Ledger is not related to OU but is related to LE - how so?
b) In one of your video you had a raised a situation where you mentioned a situation where you said - "Would you be creating 2 responsibilities each for CM,AP,AR if you have 2 OU's -how would that work? I could not understand the solution/conclusion to this problem?
c)If you have a situation where you have two companies with same 4C's but one of them wants Journal approval to be turned on and the other wants to enable the budgets - in this situation you would need to have seperate companies - is it not?

Thanks,

Arun

A and B are pretty open questions. Honestly I did not quite comprehend them. Please be specific in asking questions so that I can attempt to answer them. Lectures are replete with explanations on LE, OU, and ledgers.
For first part of your question C, you enable journal approvals at ledger level. You can place companies in two different ledgers if the two differ in their preferences on approval workflow.

Hi Arun,

Let me try to explain the first concern you have:-

a. Let's say you have an enterprise, Arun Enterprises which has operations in two countries.
i. Arun India Ops
ii. Arun US Ops

This is a typical scenario which nowadays exists coz of globalization. Coming to the point, let's say that India and US operations have the power to hire on their own but both of them belong to a single enterprise. (Hence this is a dual Business Group situation, one for US and for India).

Since these operations are in two different companies, the basic difference between them is in their functional currency. Sicne we know that if one of the 4Cs change, we need a different LEDGER.
Hence, the situation has come up like this :

Arun Enterprise
|
--------------------
| |
Arun US BG Arun India BG

This is about the Business group setup.

Now coming to the GL part of it.

As we have derived that there will be two ledgers, the setup is like this

Arun India Ops Ledger Arun US Ops Ledger


Lets focus only on the India Ops for sake of understanding.
Now, the situation is that you have one operation in India which is Arun India Software Ops and this is the only Indian legal face of Arun India Ops.

Arun India Ops
|
Arun India Software Ops ----> Legal Entity

By legal face, I mean that the tax authorities of India know Arun India Ops as Arun India Software Ops, which is known as legal entity.
Thus the relationship between a ledger and a legal entity is as follows :-

Ledger is a "book" (as Hasan always quotes) which has journals in it. By defining a ledger at the India Ops level, you have said that all of your accounting will conform to the rules mentioned in your Ledger.

Defining a legal entity (in this case Arun India Software Ops) inside the ledger means that all your accounting reports are derived from the accounting entries, entered in a Ledger following a rule.

So in other words, Legal Entity is responsible for all accounting reports to the shareholders as well as the to the tax authorities. How are the reprts generated? It is through the journal entries in a Ledger to which this LE is tied.

Now coming to the Operating unit, lets say that your India Software Ops is served to the trading community from Bangalore. Hence Arun India Bangalore becomes your operating unit.

Though LE have the right to trade, but they cannot unless they are served by one centre, which is known as Operating Unit. Operating Unit in other words, are the trading face of Legal Entity. The trading community trades with the Arun India Software Ops (LE) through your Arun India Bangalore(OU).

Just a note: that a OU can be trading with vendors, customers etc. on behalf of more than LE.

Regards,
Abhigyan

Thanks Abhigyan. But tell me if you have a situation where you have multiple companies like 01,02,03,04 etc and you want to ensure they are all balanced do you have to add all four of them as balancing segments in the ledger or just one of them and Oracle would ensure that others are similarly balanced based on the entries passed?

Thanks,
Arun

Hi Arun,
I am assuming that you have defined Company (with values 01,02,03 etc) as your balancing segment. First thing is, you have to attach all the balancing segment values to your ledger in order to enter journals for those balancing segment values. So this answers your doubt that which is that you need to attach all the BSVs to your ledger.
Secondly, for the balancing part , GL balances all unbalanced entries for the company segment in a Journal (and posts it to a suspense account).
Hope this clarifies something.

Regards,
Abhigyan

Hi Arun,
A small addendum to what has been said earlier. What I have said in my last post is true only if you have ledger with a Legal Entity.
If the ledger is without any legal entity (i.e. it is used only for internal purposes like management reporting on the transactions), then if you do not mention any BSV at the ledger level then you can enter JE for all the BSVs (i.e. companies). But once you enter a BSV, the ledger assumes that it is specific for that BSV only.

In short, till the time you assign a BSV (either to a ledger or to a LE based ledger) you can enter transactions for all BSVs.

The second point which I have said about GL balancing unbalanced entries still holds true.


Thanks and Regards,
Abhigyan

Oracle will make sure your debits and credits are balanced per each balancing segment value irrespective of which balancing segment values are assigned to legal entities.