What is rate tolerance checking?

Tolerance checking is used to ensure that realistic currency exchange rates are entered or calculated throughout the system. It is also used to ensure adherence to official euro rates.

If you manually enter an exchange rate on a transaction, or the system calculates a rate from other currency values, the tolerance checks ensure this new rate is within the selected percentage of the system rate.

For example:

The currency GBP to EUR rate for a period is 1.63 and the tolerance percentage is set to 10%. If you entered a rate of 163 (instead of 1.63), the difference between 1.63 and 163 is more than the 10% tolerance allowed for this rate, so the rate of 163 would be rejected.

How Does Rate Tolerance Checking Work?

You set the rate tolerance requirements for a rate in Currency Period Rates (CNP) or Currency Daily Rates (CND). You set the Rate Tolerance Checking option if tolerance checking is required, and enter the allowable tolerance in the Rate Tolerance Percentage field.

Any manually entered or calculated rates for the currency rate must be within this percentage of the corresponding system rate.

Overriding the Tolerance Checking

You can override the rate tolerance checking, for a journal type using Journal Type (JNT).

Journal Types includes five Override Rate Tolerance fields, one for each of the four currency values that can be held on a transaction and one for the fifth currency where only the currency and rate are actually held (the fifth values are calculated where necessary in certain programs). This allows you to override the rate checking, depending on the type of value the rate is being used to calculate, that is:

  • base rate (pivot value to base currency).
  • transaction rate (pivot value to transaction currency).
  • reporting rate (pivot value to second base or reporting currency).
  • Fourth currency rate (4th currency calculate from field on Business Unit Setup to the fourth currency).
  • Fifth currency rate (5th currency calculate from field on Business Unit Setup to the fifth currency).

For example, you may only wish to override the tolerance check, if the rate is being used to calculate a reporting currency.

When you set a rate tolerance override flag on Journal Types, the tolerance checking facility refers to the global tolerance checking settings for the ledger to determine whether a tolerance check is still required, and if so, the tolerance percentage to use.

Global Override Tolerance Checking Details

The global tolerance checking rules are used when the rate tolerance checking is overridden on a journal type. The global tolerance settings are defined using Ledger Setup (LES).

When setting an override for a journal type, the override rules defined for that rate in the Ledger Setup are used.

You can choose, for each type of rate:

  • whether or not you wish to apply an override tolerance check at all.
  • if you do, the global tolerance percentage to be used to check the rate.

For example, you may wish to apply a 10% global override tolerance check on all currency rates used to calculate base currency values, but not apply a check at all on rates used to calculate transaction currency values.

Uwaga:  Where Values 1, 2 and 3 only are in use, only up to two of the currency values at any one time has rate tolerance applied to its associated rate. This is because one rate must be the pivot rate, which converts from the pivot to itself, and is always equal to zero or one. Where fourth and fifth values are in use tolerance checks can be applied additionally to those rates.