There are many changes in how organization units are defined and used in R12. An Organization can represent a Ledger, a Business Group, a Legal Entity, an HR Organization, an Operating Unit, and an Inventory Organization. You may define the relationships among organizations. View the original Blog post: http://www.eprentise.com/blog/r12/organization-setup-in-r12/ Website: www.eprentise.com Twitter: @eprentise Google+: https://plus.google.com/u/0/+Eprentise/posts Facebook: https://www.facebook.com/eprentise Ensure your data is Complete, Consistent, and Correct by using eprentise software to transform your Oracle® E-Business Suite.

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Organization Setup in R12
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2. Organization Setup in R12
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© 2014 eprentise, LLC. All rights reserved.
eprentise® is a registered trademark of eprentise, LLC.
FlexField Express and FlexField are registered trademarks of Sage Implementations, LLC.
Oracle, Oracle Applications, and E-Business Suite are registered trademarks of Oracle Corporation.
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Author: Helene Abrams
Published: June 15, 2009
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3. Organization Setup in R12
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There are many changes in how organization units are defined and used in R12. An Organization can
represent a Ledger, a Business Group, a Legal Entity, an HR Organization, an Operating Unit, and an
Inventory Organization. You may define the relationships among organizations.
A Business Group is the highest level in the organization hierarchy structure, usually representing the
consolidated enterprise, an operating company, or a major division. The business group secures the
employee information in all applications except for HR. For example, when you request a list of employees
for approvals or expense reports, you will see all employees assigned to a business group. This is a little
bit confusing, because within the HR applications, you can assign a security profile at the HR organization
level providing a much more granular view of confidential information such as salaries or social security
numbers.
The concept of a Legal Entity is much more developed in R12 than it was in 11i. A legal entity is the
organization unit level at which you report taxes and maintain the corporate banking relationships. The
LEGAL_ENTITY_ID column is added to the transaction tables in 12, allowing the ability to track transactions
at a Legal Entity level. In R12, you assign a Legal Entity to a Ledger instead of to a Set of Books. It is
recommended that you assign one (or more) balancing segment values in your chart of accounts to a
legal entity.
An HR Organization typically represents the functional management or reporting groups within a business
group. You may also define HR organizations for tax and government reporting or for third-party
payments.
The Operating Unit is tied to a ledger (instead of a Set of Books) and, as it was in R11, continues to
partition transactions. A ledger can have many operating units assigned to it. Responsibilities determine
the security for operating units. A responsibility can access only the transactions for the operating unit(s)
to which it has been assigned. An operating unit also controls access to reports and concurrent requests.
If you set up a profile option MO: Operating Unit, then the responsibility can only access a single
operating unit. If you want a responsibility to access multiple operating units, then you must define a
security profile with multiple operating units assigned and assign it to the MO: Security Profile option.
The MO: Default Operating Unit option also allows you to specify the default operating unit for the
transactions entered by that responsibility. Operating units are not directly associated with legal entities,
though they are assigned to a ledger and to a default legal context (Legal Entity). A user can assign any
operating unit to a transaction or copy transactions to a different operating unit if access to the operating
unit is authorized by the security profile for the responsibility.
With the new Multiple Organization Access Control (MOAC) feature in R12, transactions may be posted to
different operating units and legal entities from a single responsibility. In order to do this, you set up a
security control (MO: Security Profile) to assign multiple operating units and legal entities to a single
responsibility. An Inventory Organization is the organization that manufactures or distributes products or
for which you track inventory transactions and balances.
An inventory organization is associated with a parent operating unit, but can serve other operating units
under a different ledger. As such, each inventory organization is attached to a legal entity and a ledger.
You can specify the inventory organizations that are available for each responsibility. You can enter
purchase orders and assign for receipt any inventory organization. Your purchase order operating unit
and receiving inventory organization can be in different ledgers to receive against a purchase order. The

4. Organization Setup in R12
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following applications secure information by inventory organization: Oracle® Inventory, Bills of Material,
Engineering, Work in Process, Master Scheduling/MRP, Capacity, and Purchasing receiving functions. To
run any of these applications, you must choose an organization that has been classified as an inventory
organization.
Other organization structures may be set up to reflect hierarchies in different subledgers. For example,
you can define organizations for project expenditures to manage project control requirements in Oracle
Projects. Oracle Assets uses asset organizations to perform activities for a specific Oracle Assets corporate
book.
Some information is set up at the organization unit level, while other data is set up once for the entire E-
Business Suite. All flexfield definitions, customer and supplier headers, Oracle Assets, General Ledger,
Oracle Inventory, and Oracle Manufacturing products are set up only once in the instance. Oracle Cash
Management, Accounts Payable, Purchasing, Accounts Receivable, Order Management, Project
Accounting, and Sales & Services are set up at the operating unit level. Site information for suppliers and
customers is also at the operating unit level. The following shows the data that must be set up for each
operating unit:

5. Organization Setup in R12
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Cash Management
 Bank accounts
Order Management
 System parameters
 Hold sources
 Transaction types
 Payment types
Purchasing
 Document approval
controls
 Change order
controls
 Supplier sites
 Financial options
 Control rules/groups
 Purchasing options
 Job/position controls
 Freight carriers
 Document controls
Sales and Marketing
 Territories
 Territory types
 Territory groups
 Territory qualifiers
 Territory Accesses
 Interest category sets
 Promotion word
processors
 Collateral categories
Payables
 Supplier sites
 Withholding
tax
certificates
and
exceptions
 Distribution
sets
 Withholding
tax codes and
groups
 Payables
options
 Reporting
entities
 Financial
options
 Expense
report
templates
 Signing limits
 Procurement
and credit
card
 Card
programs
 Card profiles
 GL account
sets
Projects
 Maintain PA
Period Statuses
 GL Periods for
Projects
 Project
Templates
 Create Projects
 Search Project
 Personalize
Region
 Create View
 Current
Reporting Period
 Grants – Award
Template, Award
 Grants –
Implementation
Options
 Implementation
options
 Bill rate
schedules
 Project types
Project Setup and
Implementation
 Project templates
 AutoAccounting
Receivables
 AutoAccounting
 Contact phones
 Customer
address
 Customer
relationships
 Customer bank
accounts
 Distribution sets
 Transaction
sources
 Lockbox
definitions
 Memo lines
 Receipt sources
 Receivables
activities
 Remit to address
 Remittance bank
accounts
 Salesperson,
sales territories
assigned to
salespersons
 System options
 Transaction types
Services
 Service
parameters
 Access control
templates
Code sets Note: The procurement and credit card setup is a shared setup for both Internet Expenses and Payables. Note: Expenditure types are
not operating unit specific but if the expenditure type requires a cost rate, then the rate is operating unit specific.
Learn more about eprentise Reorganization software at this link.

6. Organization Setup in R12
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Curious?
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About eprentise
eprentise provides transformation software products that allow growing companies to make their Oracle® E-Business
Suite (EBS) systems agile enough to support changing business requirements, avoid a reimplementation and lower the
total cost of ownership of enterprise resource planning (ERP). While enabling real-time access to complete, consistent
and correct data across the enterprise, eprentise software is able to consolidate multiple production instances, change
existing configurations such as charts of accounts and calendars, and merge, split or move sets of books, operating
units, legal entities, business groups and inventory organizations.