Multi-currency account considerations

The overall multi-currency settings

The overall multi-currency processing rules for your organization are defined in Business Unit Setup and Ledger Setup (LES). The business unit definition determines whether or not the currency value is used, and whether it is mandatory or optional. For each currency value in use it identifies:

• The posting rule - for example, is a value optional or mandatory, is the value calculated if it is not entered, or is it always calculated.
• The amount balancing rule - for example, do the currency values need to balance, or are the values automatically forced to balance.

The business unit also determines how each of the currency values is calculated from the other information available. Currency values 1, 2 and 3 use the pivot currency as the basis for the currency conversions. The pivot currency is also identified on the business unit. Currency value 4 can be calculated from the any of the other currency values on the transaction as identified in the 4th Currency Calculated From field on the business unit.

Overriding these Settings for an Account

You can override some of the business unit currency processing rules for particular accounts on Chart of Accounts (COA), if required. For example, the business unit rule may allow transaction currency values (value 2) to be entered but you may wish to prevent this for a specific account.

Overriding the transaction currency cettings (value 2)

When you set up an account, you can use the Conversion Code Control option to determine the transaction currency (value 2) rules that apply to postings made to the account. There are three options available:

• Mandatory - this forces a transaction currency value to be entered (value 2), regardless of the business unit rule, (unless the transaction currency is not being used for the business unit).
• Prohibited - this prevents a foreign transaction currency value (value 2) being entered, regardless of the business unit rule.
• Ledger Default - this uses the business unit rule established for the transaction currency.

If a transaction currency value is to be entered, you can also identify a default currency code to apply to postings to this account. The default currency code appears on the Ledger Entry (LEN) for postings to the account. For example, on the debtor/receivables account for an American customer, you could enter US dollars as the default currency code.

You can also suppress the currency revaluation processing for the account, if appropriate.

Overriding the reporting currency settings (value 3)

The third financial value on a ledger posting can contain a reporting currency value or a second base currency, depending on how the business unit rules are established. If this value is used to hold a reporting currency, you can use the conversion control to allow reporting currency amounts to be entered for an account, rather than calculated.

Setting 4th and 5th currency default codes

If the fourth or fifth currency values have been defined as variable currency values for each transaction, you can set a default currency code on an account. When transactions are posted to the account, this default currency code and the appropriate exchange rate are applied accordingly.

In addition, you can identify any currencies that are not valid 4th or 5th currencies for a particular account. Transactions are rejected from the account if they contain one of these invalid currencies as their 4th or 5th currency code.