Multi Currency Processing

MultiCurrency processing

Components of MultiCurrency Processing in PeopleSoft

1. Currency Configuration: This includes configuring Currency Code, Currency Quotation Method, Currency Codes - Euro, Currency Denominations, Currency Code Report, and Currency Exchange Calculator etc.

2. Market Rates: This includes configuring Market Rate Index, Market Rate Type, Market Rate

Definitions, Market Rates, and Cross/Reciprocal Rate calculation etc. 3. Ledger Group: Use this used to group detail ledger(s) into a Ledger Group and optionally choose to

synchronize journal postings to all ledgers in the group. Each ledger in the ledger group can have its own base currency.

4. Currency Controls Configuration: This is used for configuring the following currency controls: Currency Balancing, Base Currency Adjustment, Foreign Currencies Per Journal, Translate Ledger Exchange Rate and Rounding Adjustment Option.

5. Multi-Currency Transactions and Processes: This is used to configure and run ledger revaluation and translations on ledger balances. These multi-currency processes create adjustment journals. The screens include: Journals, Sub system transactions, Ledger Translation, Ledger Revaluation, and Translation Within Ledger.

The below diagram depicts data flow of data amongst above five components.

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Market Rates and Journal

Follow the steps below to understand how foreign currency amounts, base currency amount and currency exchange rates are calculated for foreign currency transactions.

1. Review Currency Quotation Method for EUR-USD2. Review effective dated Market Rates for USD-EUR conversion3. Enter Journals with different dates to confirm that the correct effective dated market rates are

used

1. Review Currency Quotation Method

Login with User Id GLS2 - Gunther Kiley

Navigation: Main Menu >> Set Up Financials/Supply Chain >> Common Definitions >> Currency >> Currency Quotation Method

Enter From Currency Code: EUREnter To Currency Code: USD

Click on “Search” push button

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Verify the Rate Quotation Basis is “Direct” and Auto Reciprocate check box is “Checked”

2. Review Market Rates


Navigation: Main Menu >> Set Up Financials/Supply Chain >> Common Definitions >> Currency >> Currency Quotation Method

Enter From Currency Code: EUREnter To Currency Code: USDClick on “Include History” check box

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Click on “Search” push button

Verify the effective dated exchange rates

3. Enter Journal


Navigation: Main Menu >> General Ledger >> Journals >> Journal Entry >> Create/Update Journal Entries

Business Unit: US001Journal ID: NEXTJournal Date: 12/23/2002Click on “Add” push button

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Enter Journal Header details

Enter Journal Line details

Account: 100000 (Petty Cash)Currency: EURAmount: 100Click on “Save” Push Button

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If the event if the Business User requires change/update the effective dated Market Rate after entering the Journal entry, the system gives a user an option to recalculate exchange rates. The system recalculates exchange rates for manual journal edits only and only when the “Recalc Currency Exchange Rates” is checked on the “User Preference” page.

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For the Journal Dated 12/13/2002, the system automatically picks up the latest active market rate equal or prior to the Journal date


Understanding Foreign Currency Processing

PeopleSoft software enables you to manage financial information in multiple currencies. You can use a currency code ChartField to designate different currencies within a ledger or store each currency in a different ledger. PeopleSoft software provides specific input, processing, and reporting features that support the European Common Currency (euro), currency conversions, remeasurement, revaluation, translation, and a complete audit trail of all multicurrency processing.

Multibook The multibook feature for PeopleSoft General Ledger and its feeder systems enables you to use multiple base currencies, each in the form of a ledger that is defined for a business unit. Each ledger may have its own base currency, or it may inherit the base currency from the General Ledger business unit. In a multibook environment, you can post a single transaction to all base currencies (all ledgers) or to only one of those base currencies (individual ledger). For example, you can carry one set of books in your local (functional ) currency and another set of books in the currency of your parent organization (reporting) currency. The translation to a reporting currency is in realtime. So, you do not have to run the translation process at month end, but you can still use the process to get the translated result at month end if you choose to do so.You can use a secondary multibook ledger as a currency translation ledger within a ledger group. The currency translation ledger functions as your reporting ledger by maintaining realtime balances for all accounts in the specified currency during the accounting period. At the end of the accounting period, you can run the Translate Within Ledger process to generate a translation adjustment within the multibook currency translation ledger for selected accounts. This enables you to maintain the realtime balance for certain accounts in the ledger.PeopleSoft software maintains currency translation ledgers differently from the way it maintains other secondary ledgers within a multibook ledger group. Typically, when a transaction is posted to a multibook ledger group, the system uses the foreign currency amount of the primary ledger as the transaction amount of the secondary ledger. However, currency translation ledgers use the base currency amount of the primary ledger as the transaction amount.

Revaluation

When you adjust the base currency value of balance sheet accounts that are maintained in a foreign currency, this is termed revaluation. You generally perform revaluations at the end of each accounting period to reflect the actual base currency value of assets and liabilities as exchange rates fluctuate between the base and foreign currencies. You make adjusting entries to the accounts that are being revalued with an offsetting entry to a revaluation gain or loss account. The gain or loss account is sometimes referred to as an unrealized exchange gain or loss.

In this example and as shown in this graphic, a London based subsidiary of a Swiss company records a purchase made in Mexican pesos. The Swiss company is owned by a United States corporation.

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http://docs.oracle.com/cd/E16365_01/fscm91pbr0/eng/psbooks/fsgl/htm/fsgl03.htm#ge0bf214a544bf14c_ef90c_10e0791cc9f__1c20


The following correlates the terminology and the currencies:Foreign currency MXN (Mexican Peso)Base currency GBP (British pounds)Functional currency CHF (Swiss francs)Reporting currency USD (United States dollars)

MULTIPLE BOOK LEDGERS AND LEDGER TRANSLATIONSPeopleSoft allows organizations to maintain multiple ledgers for one company, each with its own base currency. The Keep Ledgers in Sync feature allows real-time updates/translation to all ledgers. Alternatively, PeopleSoft allows ledger translations in a batch process, which can run every night or at the end of each month depending on business needs.

LEDGER REVALUATIONSBy creating adjusting journal entries, the revaluation process adjusts the base currency ledger balances due to fluctuations in currency exchange rates. The system also creates corresponding entries for any gain or loss that results from the revaluation process.

CURRENCY TRIANGULATIONCross-currency triangulation allows organizations to convert two currencies by using a third currency as a reference. For example, cross-currency triangulation is used to convert a country's native currency to the euro (EUR) upon its entry into the European Economic and Monetary Union. During the replacement period, the native currency is quoted directly against the euro using a fixed exchange rate. When the euro completely displaces the currency, the native currency no longer exists and is no longer quoted.

CURRENCY CONTROLSPeopleSoft allows organizations to configure the following currency controls in the General Ledger:

Currency balancing options—Balance by all currencies or by base currency only. Base currency adjust options—Allow or disallow base currency adjustments. Foreign currencies per journal—Allow multiple, one, or no foreign currencies. Translate ledger exchange rates—Control the default exchange rate for the translation ledger. Rounding adjust option—Adjust last journal line or add adjusting journal line.

Understanding Foreign Currencies in Journal Entries

Login with User Id NIRAVSHAH

Navigation: Main Menu >> General Ledger >> Journals >> Journal Entry >> Create/Update Journal Entries

Business Unit: US001Journal ID: NEXTJournal Date: 12/29/2011Click on “Add” push button

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Enter Journal Header details

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Enter Journal line details

Validate the Journal entrySelect Edit Journal and click on “Process” push button.

Submit the Journal for Approval.

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Login with GLS4: Gertie Saint-Amand

Click on Worklist and select the Journal to be approved.

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Navigate to Approval Tab

Post the approved Journal

Login with User Id: NIRAVSHAHNavigate to the Lines TabSelect “Post Journal” process and click on “Process” push button and click on “OK” push button.

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Verify the Journal Status is “P”

Query the JRNL_LN record for the Journal Date “12/29/2011”

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Keep Ledger in Sync

Example: A Canadian business has a fully owned USA subsidiary. The Canadian parent company (whose base currency is CAD) needs real-time CAD equivalent ledger balances of its US business (whose base currency is USD) for quick consolidated reporting. Solution: Setup two ledgers for the US GL business unit, one USD ledger and another CAD ledger, and group the two into a multibook. The USD ledger will be the primary ledger, hence journal entries will only be allowed to the USD ledger. By posting journals to the USD ledger, the CAD ledger will be updated automatically; thus, the two ledgers will always be In-Sync. Follow these step-by-step instructions: # Step Step Description1 verify Ledger Template use the PeopleSoft delivered template called STANDARD2 setup Detail Ledgers setup two detail ledgers: LOCAL and CANADA

3 setup Ledger Groupgroup the above two detail ledgers into a ledger group called ACTUALS and configure them to be always in Sync

4setup Ledgers For A Business Unit

attach the ledger group to the GL business unit US001

5 open periodsopen periods 2009/1 thru 2011/12 for GL business unit US001 and ledger group ACTUALS to be able to post Journals

6 update market rates update market rates7 enter journal enter a journal to create test data

8review ledger & journal tables

finally, review the LEDGER and JRNL_LN tables

The graphic below show how you would configure the ledger group.

Login with user Id: NIRAVSHAH

Navigate to Main Menu >> General Ledger >> Ledgers >> Ledger Group

Set ID: SHARELedger Group: ACTUALClick on “Add” push button

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The graphic below shows a query on the ledger table:

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Check “Keep in Sync” to simultaneously post journals to all the ledgers in a ledger group. This is, the system automatically generates the journal lines for the secondary ledger (CANADA)When unchecked, the system posts journals either to all ledgers or to a single ledger based on your selections in the Journal Entry – Header and Journal Generator Template – Defaults pages.

The Base currency of the LOCAL ledger will always be the USD regardless of the base currency of the GL Business Unit it will be attached to.

Similarly, the base currency for CANADA ledger will always be CAD

The Default Rate Type Is a required field. It specifies the Rate Type that is used for the secondary lines. Te Default Rate Type has the same value as the Rate Type if the field is populated.The Default Rate Type value is overwritten with the Rate Type specified on the primary journal line.If the Rate Type is blank in the ledger group and the primary journal line then the system uses the Default Rate Type value from the ledger group.

Multi Currency Processing

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