To report period-end activities in the reporting currency, Account Type Specific Conversion is available so you no longer have to repeatedly run revaluation and translation to get your most current reporting currency balances. This feature applies well to multi-national customers, especially in financial services, where a high volume of feeder system transactions and frequent adjustments occur during the period-end close cycle.

This streamlined process converts transactions directly using SFAS 52 remeasurement compliant period or historical rates according to the natural account type. Transactions entered in the ledger can be converted to the reporting currency using period-end rates for balance sheet accounts and period-average rates for income statement accounts. You can also supply historical rates or historical amounts for individual owner's equity items.

Reporting Currency Account Type Specific Conversion simulates real-time revaluation and translation system. This eliminates the need to run revaluation and translation multiple times during the period close cycle. Revaluation runs are reduced by posting, in the ledger, all foreign currency balance sheet transactions using period-end rates and all foreign currency income statement transactions using period-average rates. Translation is replaced by the Reporting Currency (journal and subledger level) functionality which maintains reporting currency information at both transaction and balance levels. The reporting currency amounts in the reporting journals are calculated by converting from the ledger currency instead of the transaction currency. Historical rates or historical amounts can be input for any owners' equity or other transaction. If the transaction currency and the reporting currency are the same, the reporting currency amounts may not be the same as the transaction currency amounts since the reporting currency is calculated from the accounted amount, not the entered amount. Any currency conversion differences in the ledger currency are captured in a cumulative translation adjustment account in the reporting currency.

Posting of foreign currency transactions in the ledger using different rates for balance sheet and income statement accounts is supported by ADI 7.0 and higher. Simply select multiple foreign currency journals when you create the Journal Wizard spreadsheet and do not enter any conversion type for the line. For any owners' equity or other transaction requiring an historical rate or amount, just enter the required conversion rate or conversion amount in the appropriate column of the worksheet.

To support Reporting Currency Account Type Specific Conversion, the following steps are required:

• Create currency conversion types

• Modify the Journal - Journal Entry Lines descriptive flexfield

• Set the new profile options

• Enable and set up rounding differences accounts

• Populate currency conversion rates

Each of these steps is discussed in detail below.

Inherit Conversion Type

This determines whether Reporting Currency should inherit the conversion type used in the primary journals.

Create Currency Conversion Types

The currency conversion types to hold income statement and balance sheet conversion rates are created through the Conversion Rate Types form. These conversion types are used by ADI to convert to the ledger currency. They are also used when posting to convert from the ledger currency to the reporting currency.

Modify the Journal - Journal Entry Lines Descriptive Flexfield

You will need to define two unique segments for this descriptive flexfield:

• Rate Number

• Amount Number

These segments will be used exclusively for Reporting Currency Account Type Specific Conversion and must not be used to hold other values. For each of the segments, you will need to uncheck the Value Required field in the Descriptive Flexfield Segments window.

Rate Number Segment

This segment will an overriding historical rate to convert the source ledger currency to the reporting currency for that journal line (rate segment).

Amount Number Segment

This segment will hold the historical amount expressed in the reporting currency (amount segment).

Set the New Profile Options

Six new profile options are provided which are enabled at the site, application, and responsibility levels. If you choose to assign these profile options at the responsibility level, they must be assigned to a responsibility for the ledger.

The profile options are as follows:

GL/MRC: Income Statement Conversion Type

This option specifies the daily conversion type to convert income statement (revenue or expense) transactions from the transaction currency to the ledger currency and from the ledger currency to the reporting currency. Typically, it is the average currency exchange rate of the period. The same rate should be entered for each day in the period.

GL/MRC: Balance Sheet Conversion Type

This option specifies the daily conversion type to convert balance sheet (asset, liability, and owners' equity) transactions from the transaction currency to the ledger currency and from the ledger currency to the reporting currency. Typically, it is the end of period currency exchange rate. The same rate should be entered for each day in the period.

GL/MRC: Reporting Book Using Overriding Historical Rates/Amounts

This option identifies the main reporting currency that overriding historical rates or amounts entered in ADI should apply to. There can be one and only one main reporting currency for each ledger. For all other reporting currencies, no overriding historical rates or amounts will be used and all amounts will be converted based on account type.

GL/MRC: Historical Rate Segment

This is a descriptive flexfield segment name indicating the segment in the journal entry line descriptive flexfield that holds overriding historical rates, typically for owners' equity lines.

GL/MRC: Historical Amount Segment

This is a descriptive segment column name indicating the segment in the journal entry line descriptive flexfield that holds overriding historical amounts, typically for owners' equity lines.

If the profile options MRC/GL: Reporting Book Using Overriding Historical Rates/Amounts, GL/MRC: Historical Rate Segment, or GL/MRC: Historical Amount Segment are set at the responsibility level, you should ensure that different responsibilities for the same ledger have the same values for these options.

Enable and Set Up Rounding Differences Accounts

When foreign currency transactions are converted to ledger or reporting currency, there may be out-of-balance conditions because journal lines are converted at different currency exchange rates. The Rounding Differences feature tracks these out-of-balance amounts in a separate journal line. This feature is enabled by setting it at the source ledger. When you select this feature, you must also identify the account used to track the rounding differences.

To support FASB 52 criteria, typically the rounding difference is assigned to a gain/loss account in the ledger, and an owners' equity account (CTA) in the reporting currency.

Populate Currency Conversion Rates

For both daily conversion types, you must populate the conversion rates. Typically, these rates will be the same for every day in the period. The date range feature in the Daily Rates form or the open interface allows users to easily enter rates for all days. If the daily rates were not available when posting to the ledger or reporting currency and prior rates were used, the period-end and period-average rates must be loaded before revaluation can be performed.

Other Sources

• For further information about defining descriptive flexfields, see Oracle E-Business Suite Flexfields Guide.

The processing changes to ADI Journal Wizard are for the primary journals, not the reporting journals. These changes are only effective when you have enabled the Account Type Specific Conversion functionality. The Journal Wizard changes allow you to enter the overriding historical rates or historical amounts in the new descriptive flexfield segments. The overriding rates or amounts are used to convert to the main reporting currency and are not used by Journal Wizard for processing. Journal Wizard does validate that the amounts entered in these segments are numeric.

There are a number of currency conversion options for foreign currency transactions entered using Journal Wizard. If there is an EMU Fixed Rate relationship between the transaction currency and the ledger or reporting currency, the conversion type automatically defaults to EMU Fixed and the conversion rate is derived by Journal Wizard according to the euro triangulation rules. This overrides any conversion data you have entered. For other foreign currency transactions, the potential conversion options are:

• Account Type Conversion

• Historical Rate Conversion

• Historical Amounts

• Other (Exception Processing)

Each of these is described below.

Account Type Conversion

Enter only the conversion date. Journal Wizard determines the conversion rate based on the account type, the values of the "GL/MRC: Income Statement Conversion Type" and the "GL/MRC: Balance Sheet Conversion Type" profile options, and the conversion date.

Historical Rate Conversion

Enter a historical rate in the conversion rate column. Journal Wizard uses that rate to calculate the converted amount. Typically, if you have entered a historical rate to convert to the ledger currency, you will also populate the corresponding descriptive flexfield segment column with the historical rate for converting from the ledger to the main reporting currency.

Historical Amounts

Enter an amount in the converted debit or converted credit columns. Journal Wizard uses this entered amount as the converted amount. Conversion Type, Conversion Date, and Conversion Rate should be left blank by the user in this case. Entered historical amounts override any other entered conversion data. Typically, if you have entered a historical amount for the ledger currency, you will also populate the corresponding descriptive flexfield segment column with the historical amount for the main reporting currency.

Other (Exception Processing)

Enter the conversion type and conversion date. Journal Wizard looks up the rate in the GL_DAILY_RATES table and uses that rate to calculate the converted amount.

There are some differences in the processing between transactions entered through ADI Journal Wizard and transactions from automated feeds. The processing for each is discussed below.

ADI Journal Wizard

After you finish entering journals in Journal Wizard, submit the upload to General Ledger. Once you have set up the GL/MRC: Historical Rates Segment profile option, ADI validates that all other associated profile options are assigned properly. If there are not valid values for all required profile options, ADI reports an error. In addition to the standard Journal Wizard validations, the following conditions also create errors for the journal line:

• A conversion rate needed cannot be found (see below).

• The user supplies both a historical rate and a historical amount in the descriptive flexfield segments.

• The data entered in either of the descriptive flexfield segments is not numeric.

During the upload, Journal Wizard calculates the converted amounts for the primary journals based on the data entered for that journal line as discussed above under Transaction Entry.

Conversion Rate Not Found

If conversion is based on account type, during the upload Journal Wizard looks up the conversion rate based on the conversion date. If no rate is loaded for that date and you have enabled the option when no rate is found to Use Last Rate, Journal Wizard searches back to find the last entered rate and uses that to convert the balances. The only exception is if the number of days between the conversion date and the last entered rate exceeds the value in the profile option MRC: Maximum Days to Roll Forward Conversion Rate, in which case Journal Wizard reports an error for that journal line.

If conversion is based on any other conversion type or the option when no rate is found is set to Report Error, and there is no rate loaded for the conversion date, Journal Wizard reports an error for that journal line.

Automated Feeds

You have a number of currency conversion options for foreign currency transactions from the automated feeds. If there is an EMU Fixed Rate relationship between the transaction currency and the ledger currency, the conversion type automatically defaults to EMU Fixed and the conversion rate is derived by Journal Import according to the euro triangulation rules. This overrides any conversion rate or type information provided directly by the feeds. For other foreign currency transactions, the potential conversion options are:

• Account Type Conversion

• Historical Rate Conversion

• Historical Amounts

Each of these is described below:

Account Type Conversion

The feed provides period end rates for balancing sheet account lines and period average rates for income statement account lines, directly in the conversion rate column. Conversion type and date columns should be left blank. Alternatively, the feed can choose to provide period end rate type and period average rate type for the appropriate account class lines, and let Journal Import derive the rates accordingly.

In addition, the feed can choose to perform the account type based conversion and provide the converted amounts directly. This approach allows the feed to group lines from different account classes converted with different rates into the same journal header, as long as the entered amounts are in balance.

Historical Rate Conversion

The feed provides a historical rate in the conversion rate column for an owners' equity account. Journal Import uses that rate to calculate the converted amount.

Historical Amounts

The feed provides a historical amount in the converted debit or converted credit column directly for an owners' equity account. Conversion Type, Conversion Date, and Conversion Rate should be left blank in this case. Any converted amounts provided override other types of conversion information.

Foreign Currency Primary Journals Posting

If a primary journal from any source becomes out of balance due to different currency exchange rates used for different journal lines, posting balances the journal in a new journal line with the account specified for rounding differences in the ledger definition. This account should be the income statement gain/loss account.

Reporting Journals Generation

The process to create reporting journals is the same for transactions from both automated feeds and ADI Journal Wizard. Following the same account type based rules, posting determines the conversion type to use through the corresponding profile options. It then looks up the conversion rate using the same conversion date used for the ledger's journals. This rate is multiplied by the ledger currency amount to calculate the reporting currency amount.

If an overriding historical conversion rate or converted amount was entered in the descriptive flexfield rate segment columns, conversion will not be based on account type. Instead, if a rate was entered in the rate segment, that rate is multiplied by the ledger currency amount to derive the reporting currency amount. If an amount was entered in the historical amount segment, that amount is used as the reporting currency amount.

Any gain/loss lines generated in posting due to different exchange rates used for converting to the ledger currency will be converted into the reporting currency using the rate type for income statement accounts.

Conversion Rate Not Found

If no rate is found for a conversion date, posting follows the No Rate Action option selected for the journal source and category. If Use Last Rate was selected, posting uses the last entered rate for that conversion date. The only exception is if the number of days between the conversion date on the transaction and the date of the last entered rate exceeds the number of days in the Number of Days to Find Last Rate in the reporting currency definition. If that is the case, as well as the case where No Rate Action is set to Report Error, the reporting journal will not be created and posting in the ledger will fail.

Reporting Currency Journals Posting

If a reporting currency journal becomes out of balance due to different currency exchange rates used for the journal lines, posting balances the journal in a new journal line with the account as specified for rounding differences in the ledger definition. For compliance with FASB 52 criteria, the account for this journal line should typically be an owners' equity account (CTA).

Once the ledger's journals have been created, they can be viewed using Journal Inquiry in the ledger. When you select a journal, you will be able to view the entered transaction currency and converted ledger and reporting currency amounts. Any overriding historical rates or amounts for converting to the reporting currency can also be viewed in the journal line descriptive flexfield.

In the reporting currencies, you can view the reporting journals which contain the entered transaction currency and the converted reporting currency amounts. The entered transaction currency amounts are the same as those in the ledger's journals.

Reporting

You can use the Financial Statement Generator (FSG) to create reports across both the ledger and the reporting currencies. These reports could show transaction, ledger, and reporting currency balances side-by-side on the same report. In General Ledger, you can specify the currency of each column in an FSG report and the ledger or reporting currency the balances should be derived from. The following describes how you would define columns with different currency requirements:

Transaction Currency Column (except amounts entered in the currency of the reporting currency)

Enter a control value number in the Currency field for the column. Enter the name of the ledger in the Ledger field in the Account Assignments window. Assign the transaction currency to the control value number and select the Currency Type as Entered in the report definition.

Entered Reporting Currency Column

Enter a control value number in the Currency field for the column. Enter the name of the reporting currency in the Account Assignments window. Assign the ledger currency to the control value number and select the Currency Type as Entered in the report definition.

Ledger Currency Column

Enter the ledger currency in the Currency field. Enter the name of the ledger in the Ledger field in the Account Assignments window.

Reporting Currency Column

Enter the currency of the reporting currency in the Currency field. Enter the name of the reporting currency in the Ledger field in the Account Assignments window. You can run many standard reports in the ledger for both the transaction and the ledger currencies. In the reporting currency, the same standard reports can be run for both the transaction and the reporting currencies. The standard reports that show transaction currency data include:

• Foreign Currency Account Analysis Report

• Foreign Currency General Ledger Report

• Foreign Currency Journals Report

• Journal Entry Report

• Journal Line Report

• Trial Balance Reports

Example

Assume there is GBP ledger and a USD reporting currency. Now, suppose a user creates the following EUR journal entry in ADI with an effective date of January 10, 2000. The journal entry is summarized in the following table:

Line 20 contains an owners' equity account and the user has specified a historical rate of .630 for converting EUR to GBP (ledger currency). The user has also specified a historical rate of 1.56 to use when converting this line from GBP to USD (reporting currency) for the reporting journal. For line 30, the user has specified a converted debit of 170 in the ledger and has specified a historical amount of 280 in the reporting currency.

Assume that the "GL/MRC: Income Statement Conversion Type" profile option is set to Period-Average, and the "GL/MRC: Balance Sheet Conversion Type" profile option is set to Period-End. Suppose the daily conversion rates for January 10, 2000 are as listed in the following table:

The resulting journal will appear as detailed in the following table:

The asset account on line 10 was converted using the Period-End rate, the owner's equity account on line 20 was converted using the specified historical rate, the owner's equity account on line 30 was converted using the entered historical amount, and the revenue account on line 40 was converted using the Period-Average rate. Due to the different rates, converted debits do not equal converted credits.

Assume that a gain/loss account of 01.5100 has been identified as a rounding differences account for their ledger. Then, after the journal has been posted, it would appear in the ledger as listed in the following table:

Posting has automatically added the gain/loss line to balance converted debits and converted credits. Posting has also loaded the desired GBP to USD conversion rates into the Reporting Currency Historical Conversion Rate descriptive flexfield. For the asset account, the Period-End conversion type was used. For the revenue and expense accounts, the Period-Average conversion type was used. For the owner's equity account on line 20, the conversion rate was already specified, so the value of attribute5 was unchanged. For the owner's equity account on line 30, a historical amount was specified, so the value of Reporting Currency Historical Conversion Rate descriptive flexfield was left empty.

When the above journal is posted, the reporting journal will be created as listed in the following table:

Again, converted debits no longer equal converted credits due to the different exchange rates.

Assume in the reporting currency that the cumulative translation adjustment account 01.5000 has been defined as a rounding differences account. Then, after the reporting journal is posted, it will appear as listed in the following table:

Note that a cumulative translation adjustment line (01.5000) has automatically been added by posting to balance converted debits and converted credits.