Budgeting in More Than One Currency (SAP Library

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. The system also saves the amount in the controlling area object currencies if they differ from the first currency.

The system calculates each exchange rate using the exchange rate type and the value date. These are contained in the budget profile for the total values, and from plan version 0 for the annual values.

In the budget profile or the plan version, if the exchange rate type or the value date are different, the total and annual values may also have different exchange rates, and thus differ from each other.

The budgeting function helps you enter your budgeting data, but has limitations in the following areas:

Availability control and distributed value check within a project hierarchy
The system only does this in the controlling area currency.

Budget carryforward to the following fiscal year
The system only does this in the controlling area currency.

For each project profile or order type, you specify in the budget profile in which currency the budget is to be entered in.

Budgeting in the controlling area currency
The controlling area currency is the currency used for the controlling area. If you are using the controlling area currency for budgeting, you can only use this currency for entering the budget items.

Budgeting in the object currency
This is the currency used for the object (such as the WBS element), and is specified in the master data for the object (such as, WBS element). If you specify the object currency for budgeting, you can only enter the budget items using their respective object currencies.

Budgeting in any currency required
Being able to select any currency enables you to budget independently of the controlling area currency and object currencies. If you selected your own currency for budgeting, you can also choose the currency to be used for posting each budget line item. You can use as many currencies as required for budgeting.

The system valuates 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 further information, see:

Budget Supplements

Budget Returns

Budget Transfers

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: Budget Value Display

If you use more than one currency for budgeting, then system checks are very important.
For more information on budget checks, see: Budget Checks

Activities

Scenario 1

You set a global controlling area, and want to monitor the budgets for all international subsidiaries. Your project managers run their national projects in the currency of that country. You should proceed as follows:

Use the object currency for budgeting
Define the object currencies of all WBS elements for a project depending on each national currency.
Assign the budget to the projects in their corresponding country currency. Your project managers then distribute the budget in the country currency within the project hierarchies.

Availability control takes place in the controlling area currency for all budget values, so you can check all budgets at any time.

Even if exchange rates change, the overall budget for the corporate group cannot be exceeded. However, the project managers can only use the budgets entered in the country currency as a guide. They should include exchange rate variances in their budget planning, as the system checks available budget in the controlling area currency.

Scenario 2

You have one controlling area for all countries with global projects and want to monitor the budgets in all of the international subsidiaries. You should proceed as follows:

Use the object currency for budgeting
Define the object currencies for the WBS elements in different currencies as required.
Assign the budget to the projects in the object currency of the top hierarchy node. Your project managers then distribute the budget in the project hierarchies.

There may be budget line items that have a different currency than the object currency when you make budget transfers, supplements and returns.
For more information, see Budget Transfers.

Availability control takes place in the controlling area currency so you can check all budgets at any time.

Scenario 3

You have a global controlling area with global projects. Costs are also incurred in more than one currency on each WBS element. You want to monitor the budgets for all of the international subsidiaries. You should proceed as follows:

Select your own currency for budgeting
The person responsible for the budget of a project, a subhierarchy, or a WBS element enters the budgets in the currency in which future expenditure is planned.

Availability control takes place in the controlling area currency so you can check all budgets at any time. The system ensures that the total of annual budgets for each currency does not exceed the total budget.

In the project hierarchy, the system checks the distributed values in the controlling area currency, not the individual currencies.

Recommendations

Keep the exchange rates as stable as possible. In particular, you should not change the exchange rates while entering the original budget.

Define special reports that account for the problems caused by different currencies.
For more information, see: Report: Updating Budgets:

Use as few currencies as possible, as the system often displays totals values in controlling area or object currencies only. You cannot make a direct comparison of budgets that have been entered in different currencies.