Activating Currency in a Non-Currency Environment

Purpose

Overview

If you have been using EnterpriseOne software without multicurrency activated and are now changing to multicurrency processing, review and complete the items in the Prerequisites Setup section. Upon completing them, complete the task Updating Domestic Currency Codes to update all existing transactions from a blank currency code to a valid currency code. Finally, after updating the domestic currency codes, you must complete additional Post Conversion Tasks. Then you can begin working in a multicurrency environment.

In case you are setting up EnterpriseOne Software for the first time with multicurrency, only review the items in the Prerequisites Setup section and ignore the Updating Domestic Currency Codes section.

Scope

This document is intended for Finance Functional users who will be involved in the multicurrency processing in the General Accounting system.

Details

Prerequisites Setup

If you have been using EnterpriseOne software without multicurrency activated and are now changing to multicurrency processing, review and complete the following actions:

Setting Up Multicurrency Constants

Before you can use any of the multicurrency features, you must set up the following system wide constants in the General Accounting Constants program (P0000):

• Multicurrency Conversion Constant
• Intercompany Settlements Method
• Multicurrency Intercompany Transactions
• Offset Method

Use these constants to specify the default conversion method for multicurrency processing to allow multicurrency intercompany transactions and to specify an intercompany settlement method. The system stores this multicurrency information in the General Constants table (F0009).

Multicurrency Conversion Constant (Y, N, Z)

To activate EnterpriseOne Multicurrency Processing, you must set the constant in the Multicurrency Conversion field as follows depending on the default conversion method that you want to use for converting amounts from one currency to another:

• 'Y' Multiplier method
• Use the multiplier rate to convert amounts from one currency to another.
• The system multiplies the foreign amount by the exchange rate to calculate the domestic amount.

• 'Z' Divisor method
• Use the divisor rate to convert amounts from one currency to another.
• The system divides the foreign amount by the exchange rate to calculate the domestic amount.

Example:

1 US Dollar (USD) = 50 Indian Rupees (INR) or 1 INR = .0200000 USD.

For 'Y' Multiplier method, assuming USD is the domestic currency of the company and INR foreign, the system will do the following:

Domestic amount (in USD) = Foreign Amount * Exchange Rate

5000 INR * (.0200000) = 100.00 USD.

For 'Z' Divisor method, assuming USD is the domestic currency of the company and INR foreign, the system will do the following:

Domestic amount (in USD) = Foreign Amount / Exchange Rate

5000 INR / 50 USD = 100.00 USD.

When the multicurrency conversion constant is activated, the system displays currency fields on various entry and inquiry forms. You can override the default conversion method when you set up specific currency relationships.

Intercompany Settlements Method

Typically, companies that work with different base currencies create transactions and balancing entries between their companies. These are called intercompany transactions. If the organization allows transactions between its companies, and those companies have different base currencies, the companies will be out of balance unless you create and post balancing entries. These balancing entries ensure that the net balance for each company equals zero i.e. debits equal credits. You can enter and distribute invoices, vouchers, and journal entries to multiple companies with different base currencies. The post program makes currency adjustments and automatic entries for the intercompany settlements.

For example, assume the organization consists of companies in France, Canada, and the United States with base currencies of the euro (EUR), Canadian dollar (CAD), and U.S. dollar (USD) respectively. You create a USD transaction that is distributed to general ledger accounts in the French company (EUR) and Canadian company (CAD). The journal entry distribution crosses company and currency boundaries and, therefore, balancing entries must be created for the multicurrency intercompany settlements.

To perform intercompany settlements between companies with different base currencies, you must assign a method in the Intercompany Settlements field in the General Accounting Constants program (P0000). Following methods are valid for EnterpriseOne Multicurrency Processing:

• '2' Detail method
  • Create intercompany settlements without a hub company.

• '3' Configured hub method
  • Create intercompany settlements using a configured hub company.
  • Using this method, you can have companies with different base currencies within the same configured hub, which uses a common currency.

Allow Multi-Currency Intercompany Transactions

Even if a company does not enter intercompany transactions, be aware that EnterpriseOne software was designed to allow multicurrency intercompany transactions and settlements. Regardless of whether you actually enter intercompany transactions, you must select the check box to allow multicurrency intercompany transactions and specify the intercompany settlement method '2' or '3' in the General Accounting Constants program. As long as you do not enter batches that contain transactions between companies, the system does not create intercompany transactions and settlements.

Offset Method (P0000)

The intercompany settlement method that you specify in the General Accounting Constants program must be compatible with the offset method specified in the Accounts Receivable Constants and Accounts Payable Constants programs. The offset entry method is the method that the system uses when posting vouchers, payments, invoices, receipts, and drafts to the Account Ledger table (F0911). If the methods are not compatible, the system issues an error message when you post transactions to the general ledger.

Following table shows the intercompany settlement methods and their compatibility with the Accounts Receivable and Accounts Payable offset methods:

The post program uses the offset method to determine whether to create an offset entry for each detail record by batch, transaction, or pay item. For Multicurrency Processing, you cannot use the batch offset method 'B' because the post programs cannot post batches of invoices, vouchers, receipts, and payments that contain one or more foreign or alternate currencies.

Setting Up Currency Codes

Overview

Currency Codes need to be setup for every currency in which you will transact business with other listed companies. After you set up currency codes, you assign them to:

• Companies.

• Monetary Accounts.

• Suppliers and Customers.

• Ledger Types.

The currency codes that are provided in the EnterpriseOne software are recognized by the International Organization for Standardization (ISO).

Setup

You setup currency codes in Work with Currency Code and Rates (P0013) application. For currency amounts to reflect the correct decimal positions, you must set up a currency code for each currency with which you work. For each currency code, you also assign a program that converts amounts to words when writing payments.

The system stores currency code information in the Currency Codes table (F0013).

Currency Code

Define a three-character currency code for each currency used.

Display Decimals

• Enter a value that designates the number of decimals to be used in currency amount fields.
• For example, the number of decimals is 2 for USD Dollars, zero for Japanese Yen, and 3 for Cameroon Francs.
• The default value for the number of decimals in the data dictionary is 2.

Amount to Word Translator

• Enter the translator program number from UDC table 98/CT used by the AP payment program to convert numeric values to words.
• Each translator program number is hard coded and converts numeric values to words on payments based on the language specified for the translator program, regardless of the language specified for the user profile.
• The number of decimal places is also hard coded in the translator program.
• For example, translator program number X00500FR is a French program that would convert 2,454.25 EUR to DEUX MILLE QUATRE CENT CINQUANTE QUATRE ET 25/100*******************************.
• You can override the translator program number assigned to a currency in the processing options for a print payment program such as R04572.
• If you leave the Amount to Word Translator field blank and do not assign a translator program number in the print payment program, the system converts numeric values to English words.
• Examples of different values are:
  • X00500 - US Dollars
  • X00500UK - British Pounds
  • X00500FR - French Francs
  • X00500D - German Marks
  • X00500I - Italian Liras

How Currency Decimals are handled?

The number of decimal positions that the system displays for an amount varies according to the currency code and the type of ledger used for the transaction. Following table describes how the system manages decimals in a multicurrency environment:

Setting Up Companies

You use the Work with Companies program P0010 to set up your companies for multicurrency for following:

• Assign the base currency for each company.
• Decide whether to use currency restatement and, if so, which method.
• Decide whether to maintain account balances by currency.

The system stores company currency information in the Company Constants table (F0010).

You must set up the following multicurrency information for each company in your organization under the Currency tab:

Domestic Currency

• Assign a domestic currency code to specify the base currency of a company.
• The system maintains amounts in the AA ledger in the domestic currency, using the correct decimal positions as specified for the currency code.
• After you assign a currency code to a company and enter transactions, do not change the currency code. Changing the currency code affects the integrity of the data.

Restatement Computation

• Identify the computation method to use for balance currency restatement.
• You can assign the same ID to multiple companies.
• To override the computation ID assigned to a company, you can specify a different ID in processing option for the Balance Restatement program (R11414A).
• For more information on how to process Balance Restatement (R11414A), refer to Overview of Balance Restatement Method (R11414A).

Detailed Currency Restatement

• Enter a value that identifies whether a company allows detailed currency restatement processing:
  • Blank
    • Do not allow detailed currency restatement processing.
  • 1
    • Allow detailed currency restatement processing.
    • The system automatically determines whether to use the Y (multiplier) or Z (divisor) method.
    • The method is the opposite of the multicurrency conversion method set up in General Accounting Constants.
  • Y
    • Allow detailed currency restatement processing.
    • Enter 'Y' (multiplier) if the multicurrency conversion method in General Accounting Constants is 'Z' (divisor).
  • Z
    • Allow detailed currency restatement processing.
    • Enter 'Z' (divisor) if the multicurrency conversion method in General Accounting Constants is 'Y' (multiplier).

Post Account Balances by Currency

• Check this option to post records to Foreign Currency ledger (CA) by currency in the Account Balances table (F0902).
• The system uses the account ranges specified in AAI item PBCxx to post account balances by currency.
  • The Confirmation - AAI Setup form appears if you have not set up the required account ranges for AAI item PBCxx for the company or for default company 00000. If this form appears, click Yes to display the Set Up Multiple AAI Items form and add the ranges for PBCxx. Then click OK to return to the Company Setup form.
  • If you click No and do not set up the required AAI item ranges, be aware that the general ledger post program posts journal entries for the company as summarized balances with mixed currencies instead of detailed balances by currency. The post program sends a warning to the work center that the balances were not posted by currency because AAI item PBC was not found.
• If you do not select this option, the system summarizes all currency amounts in one total amount.
• For more information, see Overview of Post Balance by Currency.

Setting Up Monetary Accounts

For most general ledger accounts, you want the system to accept transactions in any currency. This is accomplished by not assigning a currency code to the account. For those accounts in which you want to accept only transactions in a specific currency, you must assign a currency code to the account. These accounts are called monetary accounts. Monetary accounts are usually bank or cash accounts.

For example, a Japanese organization has a company with a currency that is Japanese yen, and that company has a bank account that is Canadian dollars (CAD). If you assign CAD as the currency of that account, it becomes a monetary account and the system accepts only transactions in that currency.

You use the Work with Accounts program (P0901) to set up your monetary accounts. The system stores currency codes for monetary accounts in the Account Master table (F0901).

*Assign a currency code to an account to designate it as a monetary account.

Setting Up Ledger Types

When you work with multiple currencies, the system uses ledger types AA (actual amounts) and CA (foreign currency amounts) and, optionally the following restatement ledger types:

Use the Ledger Type Rules Setup application (P0025) to define the financial rules for the ledger type and, if applicable, assign a specific currency code.

Setting Up Address Book

For customers and suppliers, you must assign currency codes respectively in the Customer Master (P03013) and Supplier Master (P04012) to specify the currency of their invoices and vouchers.

Assigning Currency Codes to a Customer Record

Access the Customer Master Revision form (P03013). Currency code information for customers is stored in the Customer Master by Line of Business table (F03012).

Currency Code

• Enter the code that identifies the default currency that the system assigns when you enter invoices for the customer.
• You can override this value when you enter the invoice, or you can leave this field blank and assign the currency code for each transaction.
• Default of blank uses the currency of the company assigned to the customer record as the default.
• The Currency Code field is CRCD in the F03012 table.

A/B Amount Codes

• Enter the currency in which you want amounts stored in the address book.
• The address book system stores amounts such as the credit limit, invoiced this year, invoiced this year, invoiced prior year, and so on.
• The currency that you specify is used to record and store transaction history.
• Default of blank uses the currency code specified in the Amount Currency Code processing option. If that processing option is blank, the system uses the currency code of the company assigned to the Business Unit field on the Address Book Revision form (P01012).
• The A/B Amount Codes field is CRCA in the F03012 table.

Assigning Currency Codes to a Supplier Record

Access the Supplier Master Revision form (P04012). The currency codes that you assign on this form are stored in the Supplier Master table (F0401).

Default Code

• Enter the code that identifies the default currency that the system assigns when you enter vouchers for the supplier.
• You can override this value when you enter the voucher, or you can leave this field blank and assign the currency code for each transaction.
• Default of blank uses the currency of the company assigned to the supplier record as the default.
• This is the CRRP field in the F0401 table.

A/B Amount Code

• Enter the currency in which you track address book amounts for the supplier, including amounts vouchered this year and the prior year.
• The currency that you specify is used to record and store transaction history.
• Default of blank uses the currency code specified in the Amount Currency Code processing option. If that processing option is blank, the system uses the currency code of the company assigned to the Business Unit field on the Address Book Revision form (P01012).
• This is the CRCA field in the F0401 table.

Setting Up Multicurrency AAIs

You set up AAIs to define accounts for multicurrency processing in the EnterpriseOne General Accounting system for:

• Unrealized gains and losses on monetary accounts revaluation.
• Posting balances by currency.
• Multicurrency intercompany settlements.
• Detailed Currency Restatement (R11411).

When the system calculates unrealized gains and losses on monetary accounts, posts account balances by currency, and restates amounts in a different currency, it uses AAIs to distribute the amounts to the correct general ledger accounts.

Some AAI items have a suffix of xxx to accommodate a three-character currency code. You use the xxx suffix to set up multiple currency-specific AAI items for each company. If you do not specify a currency code, the system uses the currency code of the company as the default.

You can set up AAIs for company 00000, or you can set up specific AAIs for an individual company. Each AAI item in the EnterpriseOne system has a hierarchical order by which the system locates an account number. This is an example of a hierarchical order:

1. AAI item with xxx (currency code). If not found, the system searches for 2.
2. AAI item for a specific company. If not found, the system searches for 3.
3. AAI item for company 00000. If not found, throws an error.

Setting Up Exchange Rates

As part of working with multiple currencies, you need to ensure that the transactions that you enter are based on the most current exchange rates as quoted in the international financial market. The exchange rates:

• Provide a default rate when you enter a multi currency transaction.
• Calculate realized gains and losses on foreign and alternate currency receipts and payments.
• Calculate unrealized gains and losses on open foreign currency invoices and vouchers.
• Are used for valuation of open transactions for monetary bank accounts.

You use the Work with Currency Exchange Rates program (P0015A) to set up and control the exchange rates for various currencies. The system stores exchange rates information in the Currency Exchange Rates table (F0015).

From Currency Code and To Currency Code

When you initially set up the EnterpriseOne system for multicurrency processing, you set up exchange rates between the currency of a company (the from currency) with whom you do business and the domestic currency (the to currency). Throughout the EnterpriseOne Multicurrency Processing system, the from currency refers to the foreign currency and the to currency refers to the domestic currency.

Effective Date

The beginning date that an exchange rate is effective for a currency relationship.

Calculation Method

Select one of the following calculation methods for exchange rate:

• Inverse method
  • This method multiplies or divides the foreign amount by the exchange rate to calculate the domestic amount.
  • The exchange rate of the multiplier and divisor are the inverse of each other.
• No inverse method
  • This method multiplies or divides the foreign amount by the exchange rate to calculate the domestic amount.
  • The exchange rate of the multiplier and divisor are the same rate and not the inverse of each other.
• Triangulation method
  • This method multiplies or divides the foreign amount by an exchange rate between the foreign and triangulation currencies to derive a calculated amount, then divides or multiplies the calculated amount by an exchange rate between the triangulation and domestic currencies to calculate the domestic amount.
  • This method must be used in combination with the no inverse method. It can be used as an alternative to creating currency cross-currency relationships.

Allow Spot Rate

• Spot rates are exchange rates entered at the time of transaction entry.
• Check the option to indicate that a spot rate is applicable for a particular currency relationship.

Conversion Method (Y/Z)

• Enter 'Y' to use the Multiplier method when converting from one currency to another. The system multiplies the foreign amount by the multiplier exchange rate to calculate the domestic amount.
• Enter 'Z' to use the Divisor method when converting from one currency to another. The system divides the foreign amount by the divisor exchange rate to calculate the domestic amount.
• You set up the default conversion method in the General Accounting Constants program (P0000). You can accept or override the default conversion method when you set up a currency relationship using the Currency Exchange Rate Entry program (P0015A).
• The system uses this conversion method for currency calculations and it does not use the default conversion method specified in the General Accounting Constants program.

Multiplier Rate

• Enter a number that a foreign currency amount is multiplied by to calculate a domestic currency amount.
• The number in this field can have a maximum of seven decimal positions.
• If more are entered, the system adjusts to the nearest seven decimal positions.
• Depending on the calculation method, do one of the following:
  • For the inverse method, enter the multiplier exchange rate for the currency relationship.
  • For the no inverse method, enter the multiplier exchange rate for the currency relationship if the conversion method is Y (multiplier) or enter the divisor exchange rate if the conversion method is Z (divisor).
  • For the triangulation method, enter the no inverse exchange rate for the first leg of the triangulation relationship.

Divisor Rate

• Enter a number that a foreign currency amount is divided by to calculate a domestic currency amount.
• The number you enter in this field can have a maximum of seven decimal positions.
• If more are entered, the system adjusts to the nearest seven decimal positions.
• Depending on the calculation method, the following applies:
  • For the inverse method, enter the divisor exchange rate for the currency relationship.
  • For the triangulation method, enter the no inverse exchange rate for the second leg of the triangulation relationship.

Unlike other setup tasks, setting up exchange rates is a recurring task. After the initial exchange rate setup, you must update currency exchange rates on a regular basis to provide a default rate for transactions and for realized and unrealized gains and losses. After the initial setup, you can continue to set up exchange rates using the Currency Exchange Rate Entry program (P0015A). Or, if you have a large volume of exchange rates to set up at one time, consider using the Currency Exchange Rates Speed Revisions program (P11154) or the External Exchange Rate Processor program (R0015Z1). For more information on R0015Z1, refer to Document 664752.1 Overview of Currency Exchange Rates Upload Process.

Updating Domestic Currency Codes

Overview

To change to multicurrency processing, you must run the Load Domestic Currency Code programs to update all existing transactions with a valid currency code. Prior to running these programs, all records must have a blank currency code. The program does not finish if any records have a currency code.

To update existing transactions with a currency code, you run the Load Domestic Currency Code program for each EnterpriseOne system that you use. These batch programs also update the mode for each transaction and print an error report if either of these situations exist:

• A company does not exist in the Company Constants table (F0010).

• A company does not have a domestic currency code.

To setup a company or assign a currency code to a company, refer to Setting up Companies.

Following table lists the Load Domestic Currency Code programs and the tables that they update:

Post Conversion Tasks

After you run the Load Domestic Currency Code programs to update transactions with valid currency codes, you must:

• Determine whether you need to run the Update Display Decimals program. For more information, refer to Display Decimals Update for Data Item Class QTYINV and Data Dictionary Item QNTY.
• Repost the account ledger to update the currency code fields in the F0902 table. For more information, refer to Overview of Repost Account Ledger Integrity Report.
• Close the fiscal year to update the balance forward fields in the F0902 table. For more information, refer to Overview of Annual Close Report.