4 Multi-Currency & Budgeting

7/23/2019 4 Multi-Currency & Budgeting

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R12: Oracle Financials


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Module: MultiCurrency & Budgeting


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Module Objectives

Discussion on the following concepts:

MultiCurrency

Foreign Currency Journals

Conversion

Translation

Revaluation

Multi-Currency Reports & Profile Options

Budgeting

Budget Accounting Cycle

Budget Inquiry


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MultiCurrency


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MultiCurrency & Budgeting

What is MultiCurrency?

Capability to handle transactions in anynumber of currencies.

Helps to develop and maintain productiverelationships with international customers

and vendors.


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Foreign Currency Concepts

Three key foreign currency concepts:

Conversion:

Conversion refers to foreign currency transactions that are immediately

converted at the time of entry to the functional currency of the ledger inwhich the transaction takes place.

Revaluation:

Revaluation adjusts asset or liability accounts that may be materiallyunderstated or overstated at the end of a period due to a significant

fluctuation in the exchange rate between the time the transaction was

entered and the end of the period.

Translation:

Translation restates an entire ledger or balances for a company from the

functional currency to a foreign currency.



Setup: Defining Foreign Currencies

Enable multiple currencies as the first step to use the multi-currency

features.



Setup: Conversion Rate Types

Conversion rate is used to convert foreign currency journal amounts

to functional currency equivalents.

Conversion rate types: Spot Corporate

User

EMU Fixed

User Defined



Setup: Rates

Rates are shared across ledgers

Subledgers share the same General Ledger rate definition

Loading rates automatically

Maintain daily and historical rates



Setup: Rates Manager

A new user-friendly tool to manage daily and historical rates

Cross Rate rules can be applied to maintain consistency



Foreign Currency Journals from Subledger

Many foreign-denominated transactions are originally entered and

then settled in subledgers such as Payables and Receivables.

Foreign currencyobligation is

entered in OraclePayables

Payables journalentry is recorded in

General Ledger

Foreign currency isrevalued and the

unrealized gain orlost is recorded

Payables journalentry is recorded inGeneral Ledger

Realized foreigncurrency gain or lossis calculated

Foreign currencyobligation is paidin Oracle

Payables


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Concepts: Conversion

Based on the foreign currency, conversion rate type and conversion

rate, General Ledger converts foreign currency journal amounts to

functional currency equivalents.

Functional currency

DR. Rent...2,500 Euro

CR. Cash..2,500 Euro

CONVERT 1 Euro = .9 US DollarsDR. Rent... 2,250 US$

CR. Cash..... 2,250 US$

Foreign currency


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Concepts: Revaluation

Revalue account balances to reflect the change in the exchange rate

between the transaction entry date and the reporting date.

Upon revaluation, the change will be applicable only on the functionalcurrency.

Functional currency Functional currency

Conversion at the time of theforeign currency transaction

Revaluation at the end ofthe accounting period

Foreigncurrencies

Foreigncurrencies


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Concepts: Revaluation Example

REVALUE 1 Euro = .81 US Dollars

CR. Unrealized Gain.. 100 US$

Entered Journal Entry Lines

DR. Rent.10,000 Euro

CR. Cash.10,000 Euro

Convert 1 Euro = .8 US Dollars

DR. Rent. 8,000 US$

CR. Cash.... 8,000 US$

DR. Rent.... 100 US$


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Concepts: Translation

Foreign currency translation is a process that lets you restate your

functional currency account balances into a reporting currency.

Foreign currency

Functional

Balance Sheet

Assets Liabilities

ForeignBalance Sheet

Assets Liabilities

100,000 60,000

Period endRate = 0.75

HistoricalRate = 0.70

75,000 45,000

Owner's Equity

Owner's Equity40,000

28,000

Period endRate = 0.75

Functional currency


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Concepts: Translation

General Ledger selects translation rates based on the GL Account

Type and Translation Rate Type:

HistoricalEquity

Period-AverageRevenue, Expense

HistoricalNon-Monetary Assets, Liabilities

Period-EndMonetary Assets, Liabilities

Translation Rate TypeGL Account Type


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Translation: Balances & Rates Used

Account Type

Assets

Liabilities

Revenue

Expense

Equity

Balance and Rate Used in Translation

Cumulative balance and period-end rate

Periodic balances and period average rates

Periodic balances and period average rates

Cumulative balance and period-end rate

Cumulative balance and period-end rate unlesshistorical rates are defined for these accounts


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Foreign Currency Reports

Daily Conversion Rates Listing

Historical Rates Listing

Period Rates Listing

Foreign Currency General Ledger Report

Foreign Currency Journals Report

Foreign Currency Detail Trial Balance Report

Foreign Currency Summary 1 Trial Balance Translation Trial Balance

Foreign Account Analysis Report

Foreign Account Analysis Report with Payables Detail


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MultiCurrency Profile Options

GL: Income Statement Accounts Revaluation Rule

GL: Revaluation: Autoquery Last Run Ranges

GL: Owners Equity Translation Rule

Journals: Allow Multiple Exchange Rates

Journals: Display Inverse Rate


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Budgeting


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What is Budgeting?

Budgeting is the process ofidentifying, gathering,

summarizing, and

communicating financial and

non-financial information about

an organization's future activities.

A t f B d t


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Anatomy of a Budget

Name: FY08PLAN

CC100 .. $3000

CC200 .. $1500

Jan-2008 to Dec-2008 PeriodsPeriods

AccountsAccounts

AmountsAmounts

A budget consists of periods, accounts, and amounts


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Budgeting in Oracle

Oracle provides various tools to define, maintain and track budgets:

Manual Budgets in General Ledger

Enterprise Planning and Budgeting

Upload via ADI

Upload from non-oracle systems

B d t A ti C l


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Budget Accounting Cycle

Steps of the budget accounting cycle:

Define budgets and budget organizations.

Enter budget amounts.

Review and correct budgets.

Freeze Budgets.

Report on budgets.


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Define Budgets

Create a budget to represent a

collection of estimated

amounts for a range of

accounting periods.

You can create budget

hierarchies by assigning

lowerlevel budgets to a

master budget: Top-down budgeting

Bottom-up budgeting

Middle-out budgeting

Maintain multiple versions of

the budgets.


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Define Budget Organizations

Budgeting hierarchies enable you to

control budgeting authority, and

easily identify budgets that exceed

control limits.

Contain ranges of accounts that

make up the budget.

Create as many budget

organizations as you need, provided

their account ranges do not overlap

for the same currency within thesame ledger.


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Budget Entry Methods

Methods to enter budgets:

Enter budget amounts

Enter budget journals

Upload budgets

Transfer budgets

Budget Wizard (ADI)

Create Budget Formula

Create MassBudget journals

Journal Entry Creates?

No

Yes

No

Yes

No

No

Yes

E t B d t A t


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Enter Budget Amounts

Budget rules are

predefined methods for

calculating and

distributing amounts toall periods.

You can apply budget

rules for up to 13 periodsat a time; if your calendar

contains more than 13

periods, each year is

automatically divided into

several period ranges.

E t B d t J l


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Enter Budget Journals

Steps:

Enter journalsRun journal import

Post budget journals

Budget Rules can beapplied

Enter budget journals for

STAT currency

T f B d t


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Transfer Budgets

Transfer budget amounts between

accounts:

In different budget organizationsWithin the same budget

organization

Transfer by:

Budget Amounts or PercentagesUsing Budgetary Control (optional)

Steps to transfer:

Enter details

Import journalPost journal

B dget Wi ard (Web ADI)


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Budget Wizard (Web ADI)

Enter BudgetEnter Budgetthroughthrough WebADIWebADI

GL_BUDGET_INTERFACEGL_BUDGET_INTERFACE General LedgerGeneral Ledger

Web ADI: Create Document


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Web ADI: Create Document

Step 3: Defining Segment Values


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Step 3: Defining Segment Values

Enter valid values for each segment before using them in the

Accounting Flexfield segments.

Review & Correct Budget


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Review & Correct Budget

If a budget journal entry is generated, then, review and correct via:

Enter Budget Journal screen: if the journal has been posted.

Enter Journals screen: if the journal is in the unposted status.

If a budget journal entry is NOT generated, then, review and correct

via:

Enter Budget Amounts screen

Budget Wizard

Freeze Budgets


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Freeze a budget, budget organization, budget formula batch or range of budget

accounts to prevent accidental or unauthorized changes.

Freeze or unfreeze an entire budget by changing the budget status in the

Define Budget window.

Freeze Budgets

Budget Inquiry


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Budget inquiry can be performed through:

Account inquiry: view specific account balances

Budget inquiry: review master and detail budgets

Budget Inquiry

Step 3: Defining Segment Values Account


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Step 3: Defining Segment ValuesAccount

Hierarchy Manager

With the Account Hierarchy Manager you can:

Graphically create, maintain, and review account structure hierarchies

Define new parent and child segment values, as well as change parent/child

dependencies

Create new rollup groups from the Account Hierarchy Manager and have your

changes reflected automatically in both the Key Segment Values and Rollup

Groups windows

Module Highlights


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Module Highlights

MultiCurrency Foreign Currency Journals

Conversion

Translation

Revaluation

Multi-Currency Reports & Profile Options

Budgeting Budget Accounting Cycle

Define Budgets & budget organization

Enter amounts methods

Review and correct budgets Freeze budgets

Budget Inquiry

4 Multi-Currency & Budgeting

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Transcript of 4 Multi-Currency & Budgeting