Balancing Allocations in a Multi-Currency Environment
In a multi-currency environment, you can choose to balance the allocations in any of the currencies that are valid balancing alternatives. When you post or save the allocations, you must select the Post By currency to balance by. Typically this is either the base or transaction currency values.
The allocations must balance in the chosen balancing currency before you can post the allocations, regardless of the balancing rule set for this currency in Business Unit Setup.
The system will attempt to balance the allocations automatically in the balancing currency by treating the difference as either discount or a write off, depending on whether or not the Write On/Off Balancing feature is enabled. If the allocations still do not balance because the imbalance is outside of the discount or write on/write off thresholds, you must balance the allocation manually in this currency.
Once the balancing currency values balance, the Business Unit Setup balancing rules defined for the remaining currencies in Business Unit Setup are applied.
It begins by checking the non-balancing currency values, that is all of the other variable transaction currencies in use. For example, if you chose to balance the allocations in the transaction currency it then checks the base currency values, and fourth currency values if they are in use. If these currency values do not balance, it applies the balancing rules. Based on the rules it either generates a balancing posting in the appropriate currency automatically, or forces you to balance the allocations in each currency manually.
Finally, it checks that the fixed currency values balance, that is the second base or reporting currency values, if they are being used. The balancing rules that apply depend on whether these values are being used as second base or reporting currency. This also determines whether any automatic posting reflects a currency exchange difference or a rounding difference.
Balancing in the Base Currency
If you choose to save the allocations in the base currency, the base currency values must balance before the allocations can be posted. You are forced to balance the allocations manually in the base currency, even if the Base Currency Amount Balancing setting in Business Unit Setup is set to Automatic.
Once the base currency allocation totals balance the system checks the transaction currency values balance. If these values balance, the second base/reporting currency values are checked and the allocations are posted.
If the transaction currency values do not balance, the Other Currency Amount Balancing field setting for the business unit determines how the imbalance is treated.
If the Other Currency Amount Balancing field for the business unit is set to None, the transaction amount allocation totals are ignored because they do not need to balance.
If the Other Currency Amount Balancing field for the business unit is set to Manual, you must manually balance the transaction currency values in the journal.
Balancing in the Transaction Currency
If you choose to save the allocations in the transaction currency, the transaction currency values on the allocated transactions must match before the allocations can be posted.
Once the transaction currency allocation totals balance the system checks the allocation totals in the other currencies. It checks the base currency and fourth currency totals before the second base/reporting currency totals.
If the base currency allocation totals do not balance, the difference is generated as the realized exchange difference, regardless of the option set in the Base Currency Amount Balancing field in Business Unit Setup. This means that there is no tolerance limit on balancing postings that can be made, when manual balancing has been requested for base currency.
Balancing in the Fourth Currency
You can only choose to save the allocations in the fourth currency if this currency is in use for the business unit. The fourth currency can be used as a fixed or variable currency.
If you choose to save the allocations in the fourth currency, the fourth currency values on the allocated transactions must match before the allocations can be posted.
Once the fourth currency allocation totals balance the system checks the allocation totals in the other currencies. It checks the base currency and transaction currency totals before the second base/reporting currency totals.
If the base currency allocation totals do not balance, the difference is typically the realized exchange difference. How this difference is treated depends on the Base Currency Amount Balancing rule for the business unit.
If the Base Currency Amount Balancing field for the business unit is set to Automatic, and the difference is within the automatic balancing threshold, the system automatically posts the difference to the realized exchange gain or loss account. If the Base Currency Amount Balancing field for the business unit is set to Manual, you are forced to manually balance the allocations in this currency.
Balancing the Second Base/Reporting Currency
You cannot choose to save, and thus balance, the allocations using the second base/reporting currency. However, once the base and transaction currencies balance for the allocations, the system checks the second base/reporting currency values, if Value 3 is being used.
If these values balance, the allocations are posted.
If these values do not balance, the difference is treated in different ways depending on whether Value 3 is being used as a second base currency or a reporting currency, and on the Value 3 Cur Amount Balancing rule.
If the Value 3 Cur Amount Balancing setting for the business unit is set to Automatic, the difference is posted automatically. If Value 3 is a second base currency, the difference is posted as a rounding difference to the balancing account identified on Business Unit Setup. If Value 3 is a reporting currency, the difference is posted as an exchange difference to the realized gain or loss for the currency.