Currency Simulation

This process is used to simulate a budget to reflect changed exchange rates in order to determine the effect on budgeted actual results.

You can chose too:

  • Update an existing budget to include changes in exchange rates
  • Create a new budget based on another, but recalculated in respect to the currencies.

Before you start

  • A budget containing transactions in a foreign currency must be entered in 'Budget. Open' (BUS100)
  • If you want to create a new budget, this new budget must be defined with basic data in 'Budget. Open' (BUS100).

Follow these steps

  1. Update exchange rates

  2. Start currency simulation

  3. Simulate

  4. Update current budget or create new one

  5. Compare budget actual

Update Exchange Rates

New exchange rates must be specified for the currency codes to be simulated. This can be done in the exchange rate type used to enter the budget or in another type. Note that the simulation is done one period at a time, so the exchange rates can be specified per period. This is done in 'Exchange Rate Type. Open' (CRS056).

Start Currency Simulation

This activity is done in 'Budget. Simulate Currency/Exchange Rate' (BUS140), which is reached by using option 14='Currency sim' in 'Budget. Open' (BUS100). To start the simulation, the appropriate budget and range of currency codes are specified. If you want to create a new budget, specify the new budget's number and version as well.

A budget can be simulated for one currency code at a time to determine the effect caused by changes to each currency.

Simulate

The calculations for the simulation are made in (BUS140) by using option 9='Run'. If you do not want to automatically update the current budget or create a new budget, but rather only want to review the simulation, make sure you do not mark the Update field on the E panel.

The currency amount on a budget line is recalculated using the new exchange rate and compared to the amount in local currency on that budget line.

Assume the budgeted costs in USD are as follows:

USD 10,000 SEK 75,000

The new exchange rate for USD is set at 6.85. This results in the following changes:

USD 10,000 SEK 68,500—a difference of SEK 6,500.

Update Current Budget or Create New One

This activity involves changing the current budget stated in the local currency. You do this in (BUS140) by using option 9='Run' and selecting the Update field on the E panel. The foreign currency is not affected.

When updated, the amounts in the local currency in the new budget are those calculated as above, while the totals in the foreign currency remain the same as in the original budget.

Compare Budget Actual

The actual results in the new budgets can be used to compare the differences between the original budget and simulated budgets in the report generator by using 'Report. Open' (RGS600). In this way, the original budget can be compared to a budget based on more pessimistic exchange rate fluctuations or on more positive ones.