Whitepaper: Oracle Cloud Enterprise ConfigurationKey Concepts and Intent

Here is a list of key concepts regarding Oracle Cloud Enterprise Configuration. The intent is have you understand the nomenclature used when discussing Enterprise Configuration. Your implementer will guide you in this “first step” required implementation task known as “Workforce Structures.”

Fundamental Structures

Every enterprise has three fundamental structures, legal, managerial, and functional that describes its operations and provide a basis for reporting. These fundamental structures are implemented using the chart of accounts and organization hierarchies. Although many alternative hierarchies can be implemented and used for reporting, you are likely to have one primary structure that organizes your business into divisions, business units, and departments aligned by your strategic objectives. Oracle converted this definition into a visual presentation:

Legal Structure (Legal Entity) – A legal entity can own and trade assets and employ people in its registered jurisdiction. Enterprises use legal entities to establish their enterprises’ identity under the laws of each country in which they operate. Legal entities have the following responsibilities:

Account to the public via statutory and external reporting. Comply with legislation and regulations. Pay income and transaction taxes. Process value added tax (VAT) collection of behalf of the collecting authority.

Management Structure – the management structure is implemented using divisions and business units as well as being reflected in the chart of accounts.

Functional Structure – the functional structure is implemented using departments and organizations (like, sales, marketing, project, cost and inventory organizations).

Workforce Structure Terms

Enterprise – the highest level of a business’ hierarchy. The enterprise serves as an umbrella for the entire implementation. All organization objects are created within the enterprise.

Division – Hierarchy of cost centers or a balancing segment value. By creating divisions, you can manage costs and reporting separately from enterprise, balancing segment or business unit levels.

Legal Entity – Defined as a legal employer. You can identify the legal entity as a payroll statutory unit; the application then transfers the legal reporting unit associated with the legal entity to Oracle Cloud HCM as a tax reporting unit.

Business Unit – Financial transactions are processed in business units.

Departments – Employees are tracked in departments.

Cost Centers – created to track and report on costs within a unit of activity (departments) or a group of employees.

Balancing Segment – Oracle Cloud allows for three balancing segments which provide rollup of balances. Balancing segments are used by Finance to create financial trail balances and segregate values by desired areas.

Tax Reporting Unit (TRU) – Legal reporting unit responsible for collecting and reporting on taxes by country.

Legislative Data Group (LDG) – A means of partitioning payroll and related data. At least one legislative data group is required for each country where the enterprise operates. Each legislative data group is associated with one or more payroll statutory units.

Payroll Statutory Unit (PSU) – A legal entity registered to report payroll tax and social insurance. A legal employer can also be a payroll statutory unit, but a payroll statutory unit can represent multiple legal employers. Each person has a payroll relationship to a payroll statutory unit (PSU), and one or more assignments to a payroll and other employment structures.

Oracle presented a typical organization hierarchy with this visual presentation (the only item missing in the Organization Chart below is the PSU because a LDG can contain multiple PSUs while multiple LEs can belong to one PSU):

Prepared by Peter Walsh January 2016