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Currency. 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.
Fariyal K: When the company code has more than one currency, one is
Group Currency and the other is Company Code Currency. At the time of
Clearing transaction in the local currency system translates the value in
Group Currency, which creates a line item for the Exchange rate difference
gain/loss account. How can we avoid this?
Rohana Gunawardena: Generally, most US accounting departments like
this functionality as it helps them keep track of realized FX gains and
losses. I would be most interested in understanding your accounting
departments requirement to eliminate this posting.
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,
different exchange rates are picked up for the GC calculation, resulting in
an imbalance. SAP posts the difference to the Exchange rate difference
account.
To eliminate the difference, you would have to manually enter the GC
value for the clearing item at the same time as the LC value -- instead of
letting SAP calculate GC at the current rate -- so the GC value of the
clearing item matches the GC value of the open item. What you need to
consider is if using a historic exchange rate for an open item clearing
posting is the correct accounting process. In most cases, I would say this
is not the correct accounting.
Consider a customer invoice with LC 100 GC 120. When the payment
comes in 3 months later, the values are LC 100 GC 110. 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,
but you have overstated the cash account by GC 10. This will be corrected
when you run translation at month end and post to the CTA account. The
process mentioned could be incorporated as part of a Z clearing program.
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, e.g. valuation of cash, before proceeding with this type of change.
2) What are the advantages of running month end translation in ECC (New
GL) vs. only in the consolidation tool e.g. 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. SAP notes 1227385, 1094379, and 884639 apply only when you
have one ledger. Do other customers have this requirement to post the FX
reval adjustment back to the original open item account? If so, what
solutions are possible?
4) Does adding a third local currency e.g. type 40 or 50 extend the classic
GL table GLT0 (which only has transaction, local, and group currency
fields) to include the third local currency, or is this currency stored in a
different table?
Rohana Gunawardena: Gerry, thank you for your questions. Do refer to
my response to the first question which talked about the special
conversion tools required to activate additional local currencies post golive.
1) Yes you do need matching depreciation areas for each additional local
currency. During the currency activations I have been involved with, there
have been no issues with out of balance depreciation areas. Again,
generating the depreciation areas requires custom tools as a straight copy
will not create asset history.
2) I recommend running translation in ECC over BI for the following
reasons:
- Adjustments are closer to the source data so its easier to track any
discrepancies
- Valuation and translation functionality is most developed in GL, so it
allows the most flexibility
- Easier to include valuation and translation as part of the close cycle
- If valuation and translation are part of the close cycle, its easier to
detect issues early on and the pressure is on to clean up the data
- If valuation and translation are performed downstream, cleaning up any
issues can be problematic as end users have moved on to the next
months issues
3) All customers I have worked with have used an offsetting account for
translation posting back to an open item account. At first, posting back to
the open item account sounds like a good idea, but if you think through
the details, it will be a problem for end users, e.g. customer reconciliation
account. 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.
4) The classic G/L table GLT0 only has three currency buckets (by month)
which cover document currency, local currency 1, and local currency 2
(typically set up as Document/Transaction Currency, Local/Company Code
Currency and Group Currency). When you set up Local Currency 3 (e.g.
Hard Currency) there is no bucket left in GLt0 and the table cannot be
modified. What is required is a new ledger using table GLT0, using
transaction OBS2 create ledger L2 with total table GLT0, define 2nd
currency as Hard Currency or other currency type you will store in LC3.
Do note for New-GL monthly balances are held in table FAGLFLEXT which
already has 4 currency buckets so it can accommodate LC3.
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 4.7 version where we had the ability to check
"Balancesheet Valuation" and SAP did not reverse the FC valuation. But
with ECC 6 its no longer possible -- all FC valuations get reversed. How
can we state revaluated balances?
Rohana Gunawardena: Vijay, thanks for the clarification. Now I know
what the real question is.
SAP currently posts 100% valuation each month reversing prior month
valuation. The option you mention is called Delta valuation, where only
one months delta is posted on each valuation run. Delta valuation is an
option in New-GL.
See SAP Notes:
1006684 FAGL_FC_VAL Delta Logic Enhancement
960661 - FAGL_FC_VAL Delta Logic Foreign Currency Valuation
sandbox system and comparing the accounting results. Make sure you get
end user sign-off on your decision.
James Abbott: Has anyone installed SAP/FI without GC enabled and then
had to enable it years later? If so, what are some of the lessons you
learned from the project?
Rohana Gunawardena: Great question.
This is a scenario many companies find themselves in, e.g. 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. See my comment to Lauren, above, with more details on
that scenario.
Henri Barnard: We have foreign subs with local currencies other than
USD. When they invoice sales and receipt cash in their own local currency,
SAP does not correctly reflect a realized currency gain or loss on the
transactions. However, on the Group Currency side (LC2), SAP reflects
USD realized gains and losses in the same transactions. With these
subsidiaries not being branches of the parent company, how come SAP