Balancing a Multi-Currency Journal

In a multi-currency environment a journal transaction can contain up to four currency values: base currency, transaction currency, second base/reporting currency, and a fourth currency.

The base currency values in the journal must always balance and business unit balancing rules determine how an imbalance is handled.

Note: If amount balancing is set on the Business Unit Setup for the transaction currency (Value 2) or the fourth currency (Value 4), then the debit and credits totals for each value must balance within a journal, however, the balancing of each currency within a journal is not enforced (considering Value 2 and Value 4 may include mixed currencies). Therefore, if a journal contains multiple transactional currencies which happen to balance to zero, there is no validation that each currency balances individually.

Note: If you are matching in a non-base currency, the transactions being matched can only contain one set of variable currencies. This means that you cannot match transactions where both the transaction currency and fourth currency values reference multiple currencies.

Balancing rules are also established for the other currencies available on each transaction. The rules are defined in Business Unit Setup and determine:

whether the currency values must balance
whether an imbalance is to be corrected manually or automatically
the balancing accounts
the automatic balancing tolerance value.

Slightly different balancing rules can be set for each currency.

Transaction Currency Balancing

The balancing rule for the transaction currency (Value 2) can be set to:

None - to allow a journal to be posted with unbalanced transaction currency values
Manual - to force the transaction currency values to balance and only allow the imbalance to be corrected manually.

Second Base/Reporting Currency Balancing

The balancing rule for the second base/reporting currency (Value 3) can be set to:

None - to allow a journal to be posted with unbalanced second base/reporting currency values
Automatic - to force the second base/reporting currency values to balance and allow the system to automatically post a balancing amount to a nominated balancing account.

Fourth Currency Balancing

The balancing rule for the fourth currency (Value 4) can be set to:

None - to allow a journal to be posted with fourth currency values regardless of whether they balance
Automatic - to force the fourth currency values to balance and allow the system to automatically post a balancing amount to a nominated balancing account.
Manual - to force the fourth currency values to balance and only allow the imbalance to be corrected manually.

Currency Gains, Losses and Rounding Differences

Imbalances in one or more currency values may be caused by a currency exchange difference, or a currency conversion rounding difference.

There are a number of Financials forms that calculate and post these differences automatically to the appropriate gain/loss or balancing adjustment account.

If the transaction currency, second base/reporting currency, or fourth currency values do not balance, and the amount of the imbalance is within the rounding tolerance set for the type of currency, the imbalance is treated as a rounding difference and posted to the balancing account. Otherwise it is treated as realized or unrealized currency gain or loss, depending on the form.