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Oracle Advanced Global Inter-company System

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Oracle Advanced Global Inter-company System

Oracle Advanced Global Inter-company System
Introduction:

Basically, Advanced Global Inter-company System enables you to create, resolve and reconcile inter-company transactions. Most important thing to remember is while preparing the consolidated financial statement, the balances of the inter-company transactions must be eliminated or adjusted otherwise it might result in overstated financial results & failure to eliminate these inter-company transactions can lead to errors.

To avoid this we can use specific accounts to record these transactions .Defining these transactions that are identified as inter-company transactions in the specific accounts. But the question is that where or when to define these accounts? These accounts must be defined as a part of the General Ledger Setup Process.

Difference between Inter-company & Intracompany Transactions:
We have seen the purpose of Inter-company transactions & how it can be used but at the same time its necessary to understand the basic difference between the Inter-company transactions & Intracompany Transactions.

  • Intercompany Transactions:

Intercompany Transactions are transactions that occur between two or more legal entities in an enterprise.

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In the above example, ABC Constructions is a Corporate Construction Group that has legal entities at various places in the world. A transaction that takes place between the ABC Commercials USA and ABC Residencies Dubai which are Legal Entities of ABC Constructions India is called an Intercompany Transactions.

  • Intracompany Transactions:

Intracompany transactions are transactions that occur between organizations represented by Balancing Segment Values in the same Legal entity of a corporate group. In this manner organizations could be a cost center, a warehouse or any plant.

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As shown in the diagram, ABC Commercials USA is a Legal Entity which has Manufacturing & Services as its departments. A transaction between Manufacturing & Services is called as an Intracompanny Transactions.

Intercompany Reporting:
Advanced Global Intercompany System provides extensive reports that help you in reviewing and reconciling transactions reports. Intercompany reports are built using Oracle XML Publisher technology which enables you to easily change the layout and publishing format of the reports thus allowing you to customize the reports to suite your requirements. The reports available in Intercompany are:

  • Oracle Inter-company Transaction Summary Report
  • Oracle Inter-company Account Details Report
  • Inter-company Reconciliation Report
  1. Oracle Inter-company Transaction Summary Report:
    The Inter-company Transaction Summary report includes all appropriate transaction columns. This report provides information about inter-company transaction lines grouped by outbound and inbound transactions. You can customize this report for one or more inter-company organizations. Specifically, use this report to find if a period contains open transactions in it by listing the transactions for a particular batch or transaction status.
  2. Oracle Inter-company Account Details Report
    The Inter-company Account Details report provides information about accounting details (outbound and inbound transactions) of inter-company transactions. Outbound transaction accounts include initiator distribution and initiator receivables accounting. Inbound transaction accounts include recipient distribution and recipient payables accounting.
  3. Inter-company Reconciliation Report
    Reconciliation is the process of ensuring an inter-company transaction is   accounted in Receivables for the initiator legal entity and Payables for the recipient legal entity. The Inter-company reconciliation report enables you to check any discrepancies or missing transactions.

Bharti Patil

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