271370685-SAP-Foreign-Currency-Revaluation-Q-A.docx

March 26, 2018 | Author: Anonymous Bx6nmtISK | Category: Exchange Rate, Currency, Clearing (Finance), Valuation (Finance), Financial Statement


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Lauren Zhang: Our company code is live, but we didn't enable GroupCurrency. Now we want to enable Group Currency. What are the things we could do, and have to be careful of? Rohana Gunawardena: Lauren, thank you for the first question. The good news is that Group Currency can be activated post go-live for company codes in New-GL and Classic-GL; howeve r, this is not an end user process. It requires special conversion tools to enable Group Currency as data records need to be populated for all historic GL transactions. I have personally worked on Group Currency conversions and my company, QS&S, provides this specialist service including the conversion tools which we have built. The conversion process is relatively quick for an SAP project with this level of impact. Remember, it hits typically 12 – 16 weeks with on-site resources to help guide you through the project. The key aspect is the testing of all financial processes to ensure there are no custom processes which have not been converted. Typically, there are three test conversions: Sandbox, Dev, and QA, prior to the production conversion. Pallavi Rastogi: FAGL_FC_TRANS posts based on a financial statement version into, usually, CTA accounts setup to account for financial statement buckets. Is there a way for it to go back and post to the source GL account instead of just acknowledging the source GL account in the text? Rohana Gunawardena: Pallavi, great to get your question. The posting behavior you request can be achieved for non-open item accounts through the application of an SAP Note. I have implemented this for several clients and it works very well and simplifies config. and postings for end users. As with many SAP notes, the description and instructions do not sound quite like what you may want, but it will do the job. There will be quite a bit of config. change to achieve your end result after applying the note: - SAP Note 1227385 -- FAGL_FC_TRANS: Using valuated account as adjustment account I would be most interested in understanding your accounting department’s requirement to eliminate this posting. before proceeding with this type of change. . This will be corrected when you run translation at month end and post to the CTA account. you would have to manually enter the GC value for the clearing item at the same time as the LC value -. different exchange rates are picked up for the GC calculation. I would strongly advise mapping out the accounting on a spreadsheet and walking through it with your Finance users so they fully understand the impact. At the time of Clearing transaction in the local currency system translates the value in Group Currency. What you need to consider is if using a historic exchange rate for an open item clearing posting is the correct accounting process. but you have overstated the cash account by GC 10. To eliminate the difference. Standard clearing would force GC 10 to the Exchange rate difference account. Manually changing the cash posting to LC 100 GC 120 would get the desired result. When the payment comes in 3 months later. which creates a line item for the Exchange rate difference gain/loss account. In most cases. The process mentioned could be incorporated as part of a Z clearing program.so the GC value of the clearing item matches the GC value of the open item. Consider a customer invoice with LC 100 GC 120. valuation of cash.Fariyal K: When the company code has more than one currency. resulting in an imbalance. How can we avoid this? Rohana Gunawardena: Generally.instead of letting SAP calculate GC at the current rate -. most US accounting departments like this functionality as it helps them keep track of realized FX gains and losses. e. the values are LC 100 GC 110. one is Group Currency and the other is Company Code Currency. I would say this is not the correct accounting.g. The automated posting to the Exchange rate difference account occurs as the document must balance Dr & Cr postings in all currencies. As the original open item and the new clearing item are posted at different dates. SAP posts the difference to the Exchange rate difference account. Is it considered difference realized? Rohana Gunawardena: Adriana. I can’t list all of it here. When monthly valuation is run. great to hear from you. vendor payment i s made or customer payment is received. Configure both posting accounts using IMG node “Prepare Automatic Postings for Foreign Currency Valuation (OBA1)” -. will they not be out of balance with the asset subledger depreciation areas for the additional local currencies? . This applies for valuation in New-GL and Classic-GL. Even the CTA account can vary by source G/L account. these accounts may or may not be the same as the adjustment accounts for receivables and payables. Gerry Rodrigues: We are about to add two additional local currencies to each company code and have the following questions: 1) Is it mandatory that you have depreciation areas for each additional local currency? If so. Generally I would not apply the phrases realized/unrealized gain or loss to a cash account. I assume you are talking about a foreign currency bank account.g.will use key KDB or KDF depending on the config. when the asset reconciliation accounts are translated at month end in ECC. One side will post back to the bank account or an offsetting adjustment account. Both sides of the JV can be controlled by configuration. as this would be a balance in foreign currency and not local currency. In this case. It is only realized on conversion of the bank balance to local currency. the other side posts to the CTA (Cumulative Translation Adjustment) account. Depending on the configuration.Adriana Marturet: Is the valuation in each period closing for Bank GL accounts on foreign currency registered on the same correction account (Local Account for Adjusting Receivables/Payables)? The currency valuation of bank GL Account is reversed in each period closing. I went through this at SAP Financials 2012 Las Vegas – but send me an e-mail if you want to go through this with me.) The term realized gain/loss is typically applied to gains/losses when an open item (receivable or payable) is cleared. otherwise no valuation change relative to local currency. (There are quite a few steps to the config. I would consider it unrealized. approach you take. e. there is a two sided JV. Do other customers have this requirement to post the FX reval adjustment back to the original open item account? If so. and 884639 apply only when you have one ledger. 2) I recommend running translation in ECC over BI for the following reasons: . and group currency fields) to include the third local currency.2) What are the advantages of running month end translation in ECC (New GL) vs. Do refer to my response to the first question which talked about the special conversion tools required to activate additional local currencies post golive. Again. local. or is this currency stored in a different table? Rohana Gunawardena: Gerry.If valuation and translation are part of the close cycle. During the currency activations I have been involved with. cleaning up any issues can be problematic as end users have moved on to the next month’s issues . only in the consolidation tool e. generating the depreciation areas requires custom tools as a straight copy will not create asset history. there have been no issues with out of balance depreciation areas.If valuation and translation are performed downstream. 1) Yes you do need matching depreciation areas for each additional local currency. what solutions are possible? 4) Does adding a third local currency e. thank you for your questions. so it allows the most flexibility . type 40 or 50 extend the classic GL table GLT0 (which only has transaction.Adjustments are closer to the source data so it’s easier to track any discrepancies .Valuation and translation functionality is most developed in GL. EC-CS or BPC? 3) The New GL foreign currency revaluation process (FAGL_FC_VAL) does not allow posting of the adjustment back to the original open item account.Easier to include valuation and translation as part of the close cycle . 1094379. SAP notes 1227385.g. it’s easier to detect issues early on and the pressure is on to clean up the data .g. where only one month’s delta is posted on each valuation run. e.7 version where we had the ability to check "Balancesheet Valuation" and SAP did not reverse the FC valuation. thanks for the clarification. customer reconciliation account. Vijayakumar Aluru: To Gerry Rodrigues' 3rd question: Chile has a statutory requirement to state revaluated debtor and creditor balances and this was possible in R/3 4.g. How can we state revaluated balances? Rohana Gunawardena: Vijay. The option you mention is called Delta valuation. SAP currently posts 100% valuation each month reversing prior month valuation. They will need to post entries per customer and will have many adjustment postings which may get printed on customer statements or confuse AR clerks. Local/Company Code Currency and Group Currency).g. Delta valuation is an option in New-GL. Do note for New-GL monthly balances are held in table FAGLFLEXT which already has 4 currency buckets so it can accommodate LC3. When you set up Local Currency 3 (e. and local currency 2 (typically set up as Document/Transaction Currency. define 2nd currency as Hard Currency or other currency type you will store in LC3. But with ECC 6 it’s no longer possible -. using transaction OBS2 create ledger L2 with total table GLT0. At first. Hard Currency) there is no bucket left in GLt0 and the table cannot be modified. posting back to the open item account sounds like a good idea.FAGL_FC_VAL Delta Logic Foreign Currency Valuation . it will be a problem for end users.all FC valuations get reversed. local currency 1. What is required is a new ledger using table GLT0. 4) The classic G/L table GLT0 only has three currency buckets (by month) which cover document currency. Now I know what the real question is. but if you think through the details. See SAP Notes: 1006684 – FAGL_FC_VAL Delta Logic Enhancement 960661 .3) All customers I have worked with have used an offsetting account for translation posting back to an open item account. When we account in SAP. I would recommend heavy testing of multiple scenarios prior to go-live. they managed to get an exception from the local regulator or foun d a legal workaround so they did not need to activate delta postings. in O B22? If not. Do these conversions happen only if you have config. Lets say CAD1000 was transferred at USD 1099 by different banks. however. To really see what is a workable solution for you. I have clients who operate in some countries (not Chile) that at first instance appear to require delta postings. Is there a better way? Rohana Gunawardena: This additional detail makes things clearer. This configuration is not heavily used and has a lot of notes. Harish Menta: Hi Rohana.SAP recognizes delta postings are a legal requirement in some countries. You do need to manually enter both the USD and CAD amounts in the JV rather than let SAP calculate the other value. However. this loads one bank account at a time and will not cross-ref transactions across different accounts. 1) The Group currency config. what . the exchange rate is different and auditors are stating our actual balance in bank in CAD & USD is not the same as banks balances that we show in books. I agree the USD and CAD should match the bank statements. in OB22 should have the Source Currency option 1 or 2 for doing the Foreign Currency Translation? 2) When Journal entry posted in the system. I will need to see the step by step process you follow and the exact issue the auditors have. the system converts the document currency to Local Currency and also to Group Currency. So we are manually entering these bank transfers in SAP with exact values as per bank statements in CAD and USD. One option to save work on data entry is have a look at the SAP Electronic Bank Statement functionality. This may be something your users want to look at. after working with their external auditors. and SAP values should be same as bank balances. Funds are transferred from CAD to USD accounts at different banks. Vijayakumar Aluru: Group currency is USD. I have a few questions. It’s similar to physical cash. Trnsln of 2nd and 3rd lcl crcy fm 1st lcl/trns crcy In the SAP Note. See SAP Note 335608 for more details. in T001. If you do not have them in OB22. system is looking at for converting the Document Currency to Local Currency and also Document Currency to Group Currency? Could you please explain the behavior of the system? Rohana Gunawardena: Harish. they cannot simply be added. are only active if they are configured in OB22 per company code.config. For LC to DC or DC to LC conversion. You need to choose what is right for your business. there will be scenarios where the outcome is not what is expected. the systems look at the local currency config. I have been at a client that started with option 1 and then switched to option 2: SAP Note 335608 -. Hard Currency. which may not necessarily be standard best practice. 1 or 2. I would recommend working with your accounting department running through key business transactions with setting 1 and setting 2 in a . Harish Menta: But the argument is if the option for the group currency source translation is 1. OBY6. As mentioned in an earlier reply. etc. “Translation from first local currency” -the reason being the company’s local legal books are based on local currency balances in most cases. Group Currency. Group Currency. etc. that way it avoids decimal differences that might cause due to DC--> LC (happens at the time of Valuation with the oprion1) and LC -->GC (happens at the time of translation) when system is doing Foreign Currency Translation. Hard Currency. thanks for your question. 1) SAP best practice is setting 2. there are some examples that will expand on the impact of the two options. 2) As standard SAP FI-GL always has document currency and local currency active. can only be activated post go-live with a special conversion. right? So why does SAP suggest to use 2 instead of 1 for Group Currency Config in Ob22? Rohana Gunawardena: Whichever option you choose. then the system will pick up directly Document currency to Group currency. See my comment to Lauren. Al Susinskas: When defining multiple local currencies for a company code. e. this is a simple setting in SAP but does cause a lot of discussion. Henri Barnard: We have foreign subs with local currencies other than USD. SAP does not correctly reflect a realized currency gain or loss on the transactions. With these subsidiaries not being branches of the parent company.” the reason being the company’s local legal books are based on local currency balances in most cases. how should the "source currency" setting be typically set for the additional local currencies? Rohana Gunawardena: Al. “Translation from first local currency. The note has some good examples. James Abbott: Has anyone installed SAP/FI without GC enabled and then had to enable it years later? If so. SAP best practice is setting 2. However. Make sure you get end user sign-off on your decision. This is a scenario many companies find themselves in. what are some of the lessons you learned from the project? Rohana Gunawardena: Great question.Trnsln of 2nd and 3rd lcl crcy fm 1st lcl/trns crcy for more details. company who did not activate Group Currency for company codes when they went live and now have issues with consolidated financial statements or are looking to move to New-GL to meet IFRS (International Financial Reporting Standards) requirements and cannot get the required reporting without GC being active. on the Group Currency side (LC2). with more details on that scenario.sandbox system and comparing the accounting results. SAP reflects USD realized gains and losses in the same transactions. how come SAP . When they invoice sales and receipt cash in their own local currency. above. See SAP Note 335608 .g. If you look at the data in your ledger carefully. The solution above worked at another client. It is unlikely I can solve it on the forum. Reading your question. e-mail me so I can look at this in more detail with you. It is likely I will have to logon to your system to see the issue. this is an interesting scenario.”. Rohana Gunawardena: I have worked on this issue: Look at configuration in IMG node. FAGL_FC_VAL it does not post the corresponding impact in group currency (LC2). . Have you made an entry in either of the two columns marked as “Add. If the solution does not work for you. postings are only made if the currency code of the first currency type m atches the currency code of the additional currency type. you may see some company codes have the GC value for valuation postings and others do not.calculates the realized gains and losses in my subsidiaries' books at group currency level? Rohana Gunawardena: Henri. and took quite a bit of work to get to it. If not. IMG > Financial Accounting (New)> General Ledger Accounting (New)> Periodic Processing> Valuate> Define Valuation Areas. My first inclination would be to check the configuration. Send me an e-mail and we can set up a time to go through this in detail. fields T033-CURTP2 and T033-CURTP3? These fields should be blank. This is an issue that will take some investigation.e. but I assume you have done this already. I agree that this is unusual behavior. Henri Barnard: When we run valuations in SAP i.curr.
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