Organizational Model of Oracle EBS and Security

Organizational Model of Oracle EBS and Security

EBS is primarily designed to manage operations. Financial data are meme by products. Financial measures are certainly the best reflection of how the business is doing, but they are only a reflection. True business activity is in the operations that generate financials transactions – warehouse receipts, services delivered, and orders entered, etc. Oracle EBS provides the operational controls needed to optimize financials results and capture financials transactions at a level of detail that supports rigorous measurement of operations.

The term Organization in everyday life refers to a company, corporation, government agency, or charity. But this term has a specific meaning in EBS. Do not expect the EBS meaning of it to correspond to the day to day life meaning of term organization. The term Organizations in Oracle EBS can be ledgers, legal entities, operating units, or inventory organizations.

An organization model is required to support fundamental business requirements. Multi-Org is a feature that supports multiple organizations within a single instance of the database. You can setup multiple ledgers with in single instance, with each ledgers having its own sub-ledgers or secondary ledgers. The biggest advantage is the capability to support different legal entities spread across different ledgers. In addition, even within the same legal entity, users can be assigned to different operating units so they cannot see or use data from other operating units, thus providing a high level of security.

Multi-org is not required where sub-ledger processing is centralized or where there is only one ledger. Similarly, multi-org is not required where one ledger has AP, PO, AR and OM and another ledger has none of these, but only GL. Multi-org requires only one installation of the software and only one database instance to support an unlimited number of ledgers, thus it provides viewing across multiple ledgers and easier administration of software upgrades.

Multi-Org is defined by a hierarchy – A business group consist of ledgers, which are made up of legal entities, which are made up of operating units, which consist of inventory organizations.

Business Group
The Business Group is an Organization that represents the consolidated enterprise, a major division, or an operation company and has no accounting impact.

Sets of Books (in R12 this is Sub-ledger Accounting module handles this)
A set of books (SOB) / Ledger is a financial reporting entity that shares the three Cs: a particular chart of accounts (accounting flexfield structure), functional currency, and financial accounting calendar. The SOB concept is similar in a Multi-Org environment. Basically the Set of Books separate the accounting's for a legal Entity. A company which operates in separate cities or separate line of businesses may separate their accounting transactions across units through separate Ledgers. General Ledger module secures transaction information (journal entries, balances) by legers. When you use General Ledger, you choose a responsibility that specifies a ledger. You then see information only for that ledger.

Legal Entity

A legal entity is accompany for which, by law, one must prepare fiscal or tax reports, including a balance sheet and a profit-and-loss report. In accounting terms, the legal entity is the smallest business unit for which you need to be able to produce a balance set of accounts. For nonprofit organizations the legal entity is equivalent to a fund. Legal entities consist of one or more operating Units.

Operating Unit

Operating units represent buying and selling units within the organization. The operating unit concept is most apparent in Oracle Order management, Oracle Receivables, Oracle Purchasing and Oracle Payables. The transaction data that these modules hold – purchase orders, invoices, payments, and receipts – are partitioned by operating unit. That is to say, one operating unit cannot see the purchase orders, invoices, payments, and receipts for another operating unit, even if the same vendor or customer is involved. The customer and vendor list are shared across operating units. The address sites are partitioned by operating units.  Fixed asset books are assigned here.

Inventory organizations
An inventory organization represents an organization for which you track inventory transactions and balances, and manufactures or distributes products. Examples include manufacturing plants, warehouses, distribution centers, and sales offices. The following products and functions secure information by inventory organization: Inventory, Bills of Material, Engineering, Work in Process, Master Scheduling/MRP, Capacity, and purchasing receiving functions. To run any of these products or functions, you must choose an organization that is classified as an inventory organization.

The organizational model is a strict hierarchy. The minimum configuration is a server supporting one financials database instance, with one ledger, one legal entity, and a single operating unit related to one inventory organization. More complex organizations can be modeled by introducing multiplicity at any level.

So at any point in time in EBS,

1.     GL is secured by Ledgers (Set of Books),

2.     AR, AP, OM and Purchasing modules are secured by the Operating Units

3.     Fixed asset is secured by asset book assigned for the operating units.

We follow the same model for OBI Apps – Financial Analytics too, where,

1.     GL facts are secured by Ledgers

2.     AP facts are secured by Purchasing Organization (operating units)

3.     AR facts are secured by sales Organizations (operating units)

4.     FA facts are secured by books (asset books)