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Transcript of sapfinancials-foreigncurrencyvaluationconfiguration-131020011300-phpapp01
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SAP Financials
Configuration of Foreign Currency Valuation in SAP ECC6.0
Prepared By:
Ms. Pramila Nagaraj
First Class MBA Finance Graduate (2010) - FRESHER
Global Academy of Technology, Bangalore (VTU- Belgaum)
SAP Financials Associate Certified Consultant Trainee/Fresher
Certified Candidate @ Source One Management Services Pvt. Ltd Bangalore
2013 Copy Rights Reserved SourceOne Management Services Pvt. Ltd, Bangalore
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Foreign Currency Valuation in SAP ECC 6
This is the process to translate and adjust foreign currency amount of
monetary accounts to local amount by a current suitable exchange rate(standard exchange rate).We carry out the foreign currency valuation before we create the financial
statements. The valuation includes the following accounts and items:1. Foreign Currency balance sheet accounts, that is , G/L accounts that we
manage in a foreign currency (the balances of the G/L accounts in foreign
currency are valuated)
2. Open items (Customers, Vendors, G/L accounts) posted in Foreign Currency(
the line items are valued)Transaction Code FAGL_FC_VAL valuates open items in foreign currency as
wells as the foreign currency balance sheet accounts.In order to carry out a foreign currency Valuation, we need to make certain
settings in the customizing: Currency Customizing Defining the Valuation Method Defining the G/L account for exchange rate differences from the
valuation. We must also specify balance sheet adjustment accounts forreceivable and payable accounts
Let us see the customizing or configuration part of foreign currency valuation
in the IMG:Step 1: Maintain the Exchange rate type (T-code OB07)Path in IMG:SAP Net weavers -> General Setting -> Currencies -> check the exchange
rate type.The below screen appears. Either we can use the existing entries or create a
new entry. If we create a new entry save the data .For our example, we will be
using the Exchange rate determination M Standard Translation at average
rate.
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Step 2: Maintain the translation Ratio: (T-Code: OBBS)The relationship between currencies must be maintained per exchange rate
type and currency pair using translation ratios. This usually has to beperformed only once.Path in IMG:SAP Net weavers -> General Setting -> Currencies -> Define translationratios for Currency translation
We update the data through New Entries and save the data.
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Step 3: Maintain Currency exchange Rate, Validity period (T-code: OB08)In direct quotation, one unit of foreign currency is quoted for the local
currency, whereas in indirect quotation, one unit of local currency is quoted
for the foreign currency. We update the data through New Entries and save
the data to the system.Path in IMG:SAP Net weavers -> General Setting -> Currencies -> enter the exchangerates.In our example, we will maintain indirect quotation between USD and EUR
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Step 4: Configuration of Valuation Method (T-Code: OB59)The below screen will appears. We need to define the valuationmethod/procedure by creating a new entry.
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Path in IMG:Financial accounting (New) General Ledger Accounting (New) PeriodicProcessing Valuate Define Valuation Methods.Once we select the new entry, another screen to select the valuation procedureand the exchange rate determination appears as below:
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Let us further discuss about the various Valuation procedure/ methodavailable for configurationLowest Value Principle: The valuation is only displayed if the valuationdifference between the local currency amount and the valued amount isnegative. That is, an exchange loss has taken place. The valuation is calculatedper item total. Items with invoice reference are viewed together.Strict Lowest Value Principle: The valuation is only displayed if, as a
consequence, the new valuation has a greater devaluation and /or a greaterrevaluation for credit entries than the previous valuation. The valuation iscalculated per item total. Items with invoice reference are viewed together.Always valuate: If we select this procedure, revaluations are also taken intoconsideration.
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Revaluate Only: If we select this method system only does a revaluation ifapplicable but does not do devaluation where there is exchange lossReset: If we select this parameter then the open items are valuated at the
acquisition price. This way the valuation difference is set to Zero. The oldvaluation method is reset. The account determination is reversed: The revenuethat arises is posted to the expense account.Exchange rates are types are attached to the valuation method.Determine rate type from Account balance : If we select this field, theaccount balance/group balance in the relevant foreign currency is used todetermine the exchange rate type. This is relevant for account balancerevaluation.A document type SA is attached to the valuation method. For our example, wehave strict lowest value principle as valuation method.Step 5: Define the valuation area:Path in IMG:Financial accounting (New) General Ledger Accounting (New) PeriodicProcessing Valuate Define Valuation area.Once the below appears, we can create a new entry and mention a valuationarea along with the valuation method and company code currency. For ourexample, we have the R0 as Valuation area and R001 as Valuation Method.
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Step 6: Assign the Valuation areas and Accounting Principles:Once the valuation area is defined in the above step assign with the accountingprinciple as shown in the below screen. As per our example, valuation area R0
is assigned with accounting principle GAAPPath in IMG:Financial accounting (New) General Ledger Accounting (New) PeriodicProcessing Valuate Assign Valuation areas and accounting principles.
Step 7: Create two G/L accounts to record the Gain/Loss from the foreigncurrency valuation and one Balance sheet adjustment account:We need to create two G/L account in FS00, One for Gain/Loss UnrealizedForeign Currency Revaluation and the other one for Gain/Loss Realized
Foreign Currency Revaluation
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Also we need one more Balance sheet adjustment account for Receivable orpayable (adjustment account) to post the foreign currency valuation of openitems. (Since we cannot post the reconciliation account directly)For our example, we have 700400 as Gain/Loss Realized Foreign CurrencyRevaluation, 700420 as Gain/Loss Unrealized Foreign Currency Revaluationand 121020 as Customer receivables domestic (adjustment account).
Step 8: Assign the G/L accounts to prepare automatic postings forForeign Currency Valuation: (T-code: OBA1)
Path in IMG:Financial accounting (New) General Ledger Accounting (New) PeriodicProcessing
Valuate
Foreign Currency Valuation
Prepare Automaticposting for Foreign Currency Valuation.
Once we enter the above Screen, to enter the GL accounts, we need to double click the
transaction KDF Exchange rate Diff: Open items/GL account to valuate the
exchange rate difference in open items.We can see a dialogue box asking for Chart of
Accounts. We can also see arrow. If we click arrow, the system will ask us to enter our
Valuation area and the GL accounts and Balance sheet adjustment account will be
defined at the valuation area level.
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Alternatively we can enter the GL account at chart of account Level as shown in the
below screen.
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In the below shown Screen shot we need to update the GL accounts as a newentry.In Our example, we have 121000 as GL account (Reconciliation account) forcustomers, 700400 as Realized Gain/loss on Exchange rate determination,700420 as unrealized gain/loss in the Valuation tab and Finally 121020 asBalance Sheet adjustment account for Customers.
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Save the data.
Now, let us customize automatic posting for Exchange rate difference in foreign
currency balances e.g. Bank Accounts held in foreign currency.
We need to go back to the Maintain FI configuration: Automatic PostingProcedure Screen (OBA1) and need to double click the transaction KDB Exchange rate Diff: Using Exchange Rate Key to valuate the exchange ratedifference in Foreign Currency . Once we double Click the option for chart ofaccount and valuation area will pop up same as the transaction KDF.
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Alternatively we can enter the GL account at chart of account Level as shown
in the below screen.
In this screen we will enter the Exchange rate difference Key, Expense accountand E/R gains.Exchange rate difference key can either be blank or we can enter a key with 4digits e.g. 0001. In case we create this exchange rate key then the same has tobe updated in the GL code of the foreign currency account i.e. control data tabwhich has the field exchange rate difference key. Only when it is attached thesystem will revalue the foreign currency account. Expense account and E/R gains need to be filled with the GL account createdfor unrealized foreign exchange loss or gain. The loss/gain on Revaluation isunrealized and will be reversed in the next month. We can have two separateaccounts or the same account.
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Save the data. With this the configuration Part for foreign Currency valuation iscompleted.
Execution of the Foreign Currency valuation:
A Foreign currency valuation is necessary if vendor/customer account containsopen items in a foreign currency. The amounts of these open items weretranslated into the local currency at the time they were entered using the
current exchange rate.The exchange rate is probably different at the time of closing, and open items
need to be valuated again. A program valuates the open items using the newexchange rate and enters the valuation difference in the valuation line items. Italso creates the valuation posting.Path in SAP Easy Access:Accounting Financial Accounting General ledger PeriodicProcessing Closing ValuateFAGL_FC_VAL- Foreign CurrencyValuation (New)Let us see how to execute the foreign currency valuation. For our example, wehave one foreign vendor100032 and we will valuate on a key date29-03-2011Before we start with the execution of the foreign valuation, we need to makesure the exchange currency rate is maintained in the transaction code OB08
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First Step:Post few entries in FB60/FB70 in foreign currency .In our example we takeFB60.
Second step:Enter the company code, Key date and Valuation area in the First part. In the
second part, First tab fill the Batch Input name to process the batch,Document date and posting date to post the entry after valuation. We should
not check create posting now. We should first see the test result and thencome back and click create posting.
In the second part, Second tab select the vendor / customer/ GL account for which we
need to valuate the open items. In our example, we are going to do the valuation for
one Vendor100032. So select the valuate vendor and fill the vendor accountnumber. If we select the customer, vendor and GL and leave the account number
blank, the system will valuate all the accounts.
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Once updated, click F8 to execute.
The output will appear in the screen as shown below. Points to be noted are:a)Messages box should contain a green box and should not show any errors.b)Select the amount in document currency and document currency from the
layout and check out the exchange rate.
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If we want to see the Currency and exchange rate of the document/Invoice, double
click the transaction. The system will lead us to below screen. If we click the document
header, we can see the currency and exchange rate.
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Third Step:
Once we have checked the details and confirm that there is no error, we will goback to first screen, First part and check the box Create posting.
The output will be with the box showing 3 messages and 2 posting.
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If we click the 3 message box we get the display of the messages as below
Fourth step:We need to process the batch input. Either we can go through the path menusystem ->Services -> Batch Input -> Session or use T-Code SM35.
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System will take us to the below screen where we need to Process the batch
Once we click the process tab we get a dialogue to select the processing mode and
additional function.
Once the batch processing is completed we see a tick mark in the second column. If
we get any errors we need to check the log and fix the errors.
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Once the process is completed, check the GL account. The entry will be posted and reversed on the next day.
See the below screen shot of the GL account.