The captioned profile option has been obsoleted in Oracle R12 version. All the customized report used this profile option “MO: Top Reporting Level” and value set “XLA_MO_REPORTING_LEVEL” should be re-written.
If customer used this profile option in his 11i custom reports , Customer might have been using this profile option to set the reporting level at SoB,Legal Entity or Org. However, in Release 12 the highest level is always a Ledger. Thus, these profiles are no longer needed in Release 12 and you will need to update the custom reports by basing them ledger and Mo profiles instead of SoB and MO: Top Reporting Level.