Oracle General Ledger

In this article we will understand the concepts of AGIS, its basic setup , and one simple transaction flow.

Now a days many companies are going global to gain new customers and access new markets.This would mean we would have multiple legal entities/subsidiaries catering to the different nation’s/local rules and regulations of those  regions.And in a larger more diverse country or area, it might also be required to have multiple legal entities and multiple business units.

Let’s say that we have a datawarehouse in china and two other subsidiaries located in US and UK.And the datawarehouse in china provides the materials for the US and UK subsidiaries.In this case an intercompany transaction has occurred.And there can also be scenarios when the materials are transaferred between the US and UK subsidiaries based on the market demand. In this case also an intercompany transaction has occurred. Now the above intercompany transactions are recorded in US and UK financials records of the subsidiary legal entities.But from the consolidated entity’s perspective there is no transaction as no unrelated entities are involved and hence the changes in the account balances caused by these kind of journals needs to be eliminated while performing financial reporting

Let us take one more example, where a shared payables service is there and the invoices against all the business group subsidiaries is to be paid by this single legal entity. This would also result in intercompany transactions.

Thus intercompany transactions can happen across legal entities and across ledgers too.The following diagram depicts all the directions in which the intercompany transactions can happen between the parent and the susbsidiaries

Inaddition, we can have multiple business units in a diverse country or area under a single legal entity.The transactions can happen between these business units too and these kind of transactions would become Intracompany transactions.

We can capture these intercompany/intracompany transactions effectively using AGIS(Advanced Global Intercompany System).Let us see the setup that is needed to implement the AGIS and the one complete AGIS intercompany transaction flow in the below mentioned pdf document.

AGIS setup and intercompany Transaction creation example

Deepthi Reddy

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