Planning and Budgeting in Multiple Currencies
Use
Multinational companies with subsidiaries in various countries using different currencies might find it necessary to perform planning and budgeting of investment programs in multiple currencies.
Features
Each line item for planning and budgeting is stored in the currency in which it was entered (planning or budgeting currency). In addition, each amount is stored in the controlling area currency and the object currency, if these differ from the budgeting currency.
The system determines the exchange rate from the exchange rate type and the value date. For overall values, this information comes from the plan or budget profile; for annual plan values, from the year-dependent settings for the plan version; for annual budget values, from the year-dependent settings for plan version 0.
In the standard system, the overall values of a plan or budgeting line item are translated independently of the annual values. However, if you set the Remainder Translat. (remainder translation) indicator in the plan or budget profile, then the translation of the overall value takes place using a different logic.
This logic is especially useful when you want the overall value to always represent the sum of the annual values, without showing deviations related to currency translation. You specify in the planning and budget profile, per investment program type, which planning or budgeting currency is allowed:
The controlling area currency is the currency in which the controlling area is managed. If you plan or budget in the controlling area currency, you can enter planning and budget line items only in the controlling area currency.
The object currency is the currency in which the investment program position is managed. The object currency is entered in the master data of the investment program position. If you plan or budget in the object currency, you can enter planning or budget line items only in the currency of the investment program.
In the initial screen of the given planning or budgeting function, you can enter the currency in which you want to enter planning or budget line items. You can thereby plan or budget in any number of different currencies. If you do not enter a currency on the initial screen of the function, then the object currency or the controlling area currency is offered as a default, depending on whether or not the Default Object Currency indicator is set.
Regardless of which currency you use for budgeting, the system always translates the entered planning and budget line items into the controlling area currency and object currency, and updates the values in both currencies. As a result, you can display the current plan or budget in either the controlling area currency or in the object currency in the planning and budgeting functions at any time.
The consistency checks triggered by the Check function during planning or budgeting are based on either
Often you initially have to enter a preliminary exchange rate for the translation between the controlling area currency and object currency, and then update this exchange rate at a later date. In this case, you have to have the system recalculate the plan and budget values that have already been entered, using the updated exchange rate. You can have the system translate the values into the object currency from the controlling area currency, or vice versa.
Sometimes inconsistencies can arise in the plan or budget values as a result of the translation, although the values were consistent beforehand. However, you can have the system automatically correct these inconsistencies.
The programs for subsequent currency translation and for correcting inconsistencies are found in the Easy Access Menu. Choose Accounting ® Investment Management ® Programs ® Environment ® Tools.