Budgeting in More Than One Currency
Use
Having multinational locations with different national currencies may mean that you need to use different currencies for budgeting. This can also be useful if your costs are incurred abroad by goods procurement in different currencies.
Features
Each budget line item is saved in the currency in which you entered it (budgeting currency). The system also saves the amount in the controlling area and object currencies if they differ from the budgeting currency.
The system calculates each exchange rate using the exchange rate type and the value date. These are contained in the associated budget profile for the total values, and in plan version 0 for the annual values.
Usually, the total and annual values for budgeting line items are translated independently of each other. However, if you set the Translation of Residual Value indicator in the associated budgeting profile, translation of the total value is executed using sophisticated logic.
This sophisticated logic is particularly useful if the total value is always meant to display the total of the annual values, and is not dependent on currency translations.
In the budget profile or the plan version, if the exchange rate type or the value date is different, the total and annual values may also have different exchange rates, and thus differ from each other.
You define the permitted budgeting currency in each budget profile (per project definition or request type):
If you use more than one currency for budgeting, it may be more difficult to analyze the values displayed in the budget.
For more information on the values displayed in budgeting, see:
If you use availability control, you also define in the budget profile whether the assigned funds are to be checked against the budget values in the controlling area currency (default), or in the object currency. You can only plan a check against the budget values for projects if the object currency (national currency) for each WBS element does not change during the project.
For more information, see Availability Control.
Irrespective of the currency in which budgeting is executed, the entered budget items are always translated and updated in the controlling area and object currencies. In the budgeting functions, you can always display the current budget in both the controlling area and object currency.
Either the controlling area currency or the object currency is used as the basis for the checks triggered in the Check function.
For more information on budget checks, see:
The system evaluates budget line items using the current exchange rate. If the exchange rate changes after the budget has been entered, this can cause significant differences between budget values that were entered in different currencies. In particular, when you reduce the budget, this may result in values that are difficult to analyze and that are in currencies other than the controlling area currency.
For more information on budgeting items, see
Displaying Budgeting Items.For more information on retrospective updates to budget values, see
The exchange rates specified for translations between the controlling area and object currencies are often provisional and then updated at a later date. If so, you can translate existing budgets using the updated rates. You can recalculate the values in the object currency from the values in the controlling area currency, and vice-versa.
It may be the case, that previously consistent budget values produce inconsistencies after the translation. However, you can get the system to correct these inconsistencies automatically.
You can find the programs for retrospective translation and for removing inconsistencies in the Easy Access Menu under Accounting®
Project System ®
Controlling ®
Budgeting ®
Tools and for orders under Accounting®
Controlling ®
Internal Orders ®
Environment ®
Tools.
Activities
The following scenarios provide recommendations for budgeting and availability control for projects. The following questions are taken into account:
(Note: As we are only looking at things with regard to currency, enterprises or projects that took part in European monetary union are treated as "national" enterprises or projects.)
Scenario 1
National enterprise, national projects, costs only in national currency.
Controlling area uses national currency.
Budgeting of WBS elements done in controlling area currency = national currency.
Availability control also executed in the controlling area currency = national currency.
Therefore, you choose the following settings in the budget profile:
System runs consistency checks for the budget based on the controlling area currency = national currency.
Scenario 2
National enterprise, national projects, costs also in foreign currencies.
Controlling area uses national currency.
As costs can also be incurred in foreign currencies, it is also advisable to budget projects in foreign currencies.
Availability control executed in the controlling area currency = national currency.
Therefore, you choose the following settings in the budget profile:
System runs consistency checks for the budget based on the controlling area currency = national currency.
Scenario 3
National enterprise, national projects, costs only in corresponding country currency.
Controlling area uses group currency.
WBS elements use relevant country currency as object currency. This is integrated in the project hierarchy.
Budgeting of WBS elements done in object currency = national currency.
Availability control executed in the object currency.
Therefore, you choose the following settings in the budget profile:
System runs consistency checks for the budget based on the object currency = national currency.
Scenario 4
International enterprise, national projects, costs also in foreign currencies.
Controlling area uses group currency.
WBS elements use relevant country currency as object currency. This is integrated in the project hierarchy.
As costs can also be incurred in foreign currencies, it is also advisable to budget them in foreign currencies.
Availability control executed in the object currency = national currency.
Therefore, you choose the following settings in the budget profile:
System runs consistency checks for the budget based on the object currency = national currency.
Scenario 5
International enterprise, international projects, costs only in corresponding country currency.
Controlling area uses group currency.
WBS elements use relevant country currency as object currency. This must not be integrated in the project hierarchy.
Budgeting of WBS elements done in object currency = national currency.
Therefore, you choose the following settings in the budget profile:
System runs consistency checks for the budget based on the object currency = national currency.
As the object currency does not have to be integrated into the project, availability control can only be executed against the budget in the controlling area currency = group currency!
Scenario 6
International enterprise, international projects, costs also in foreign currencies.
Controlling area uses group currency.
WBS elements use relevant country currency as object currency. This must not be integrated in the project hierarchy.
As costs can also be incurred in foreign currencies, it is also advisable to budget them in foreign currencies.
Therefore, you choose the following settings in the budget profile:
System runs consistency checks for the budget based on the object currency = national currency.
As the object currency does not have to be integrated into the project, availability control can only be executed against the budget in the controlling area currency = group currency!
Recommendations
Activities for Internal Orders
For internal orders, you should use the same criteria as for projects when you select the budgeting currency and the currency for availability control checks. As internal orders cannot set up hierarchies, only scenarios 1-4 are possible.