R12: Oracle Financials

MultiCurrency & Budgeting

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Module: MultiCurrency & Budgeting

Module Objectives
Discussion on the following concepts:
MultiCurrency

Foreign Currency Journals

Conversion
Translation
Revaluation

Multi-Currency Reports & Profile Options

Budgeting

Budget Accounting Cycle

Budget Inquiry

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MultiCurrency

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What is MultiCurrency?

Capability to handle transactions in any

number of currencies.
Helps to develop and maintain productive

relationships with international customers

and vendors.

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Foreign Currency Concepts

Three key foreign currency concepts:
Conversion:

Conversion refers to foreign currency transactions that are immediately

converted at the time of entry to the functional currency of the ledger in
which the transaction takes place.
Revaluation:

Revaluation adjusts asset or liability accounts that may be materially

understated or overstated at the end of a period due to a significant
fluctuation in the exchange rate between the time the transaction was
entered and the end of the period.
Translation:

Translation restates an entire ledger or balances for a company from the

functional currency to a foreign currency.

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Setup: Defining Foreign Currencies

Enable multiple currencies as the first step to use the multi-currency

features.

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Setup: Conversion Rate Types

Conversion rate is used to convert foreign currency journal amounts

to functional currency equivalents.

Conversion rate types:

Spot
Corporate
User
EMU Fixed
User Defined

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Setup: Rates
Rates are shared across ledgers
Subledgers share the same General Ledger rate definition
Loading rates automatically
Maintain daily and historical rates

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Setup: Rates Manager

A new user-friendly tool to manage daily and historical rates
Cross Rate rules can be applied to maintain consistency

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Foreign Currency Journals from Subledger

Many foreign-denominated transactions are originally entered and

then settled in subledgers such as Payables and Receivables.

Foreign currency
obligation is
entered in Oracle
Payables

Foreign currency
obligation is paid
in Oracle
Payables

MultiCurrency & Budgeting

Payables journal
Foreign currency is
entry is recorded in revalued and the
General Ledger
unrealized gain or
lost is recorded

Realized foreign
currency gain or loss
is calculated

Payables journal
entry is recorded in
General Ledger

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Concepts: Conversion
Based on the foreign currency, conversion rate type and conversion

rate, General Ledger converts foreign currency journal amounts to

functional currency equivalents.
DR. Rent...2,500 Euro
CR.

Cash..2,500 Euro
Foreign currency

CONVERT 1 Euro = .9 US Dollars

DR. Rent... 2,250 US$
CR.

Cash..... 2,250 US$

Functional currency

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Concepts: Revaluation
Revalue account balances to reflect the change in the exchange rate

between the transaction entry date and the reporting date.

Upon revaluation, the change will be applicable only on the functional

currency.
Foreign
currencies

Functional currency
Conversion at the time of the
foreign currency transaction

MultiCurrency & Budgeting

Foreign
currencies

Functional currency
Revaluation at the end of
the accounting period

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Concepts: Revaluation Example

Entered Journal Entry Lines
DR. Rent.10,000 Euro
CR.

Cash.10,000 Euro

Convert 1 Euro = .8 US Dollars

DR. Rent. 8,000 US$
CR. Cash.... 8,000 US$

REVALUE 1 Euro = .81 US Dollars

DR. Rent.... 100 US$
CR. Unrealized Gain.. 100 US$

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Concepts: Translation
Foreign currency translation is a process that lets you restate your

functional currency account balances into a reporting currency.

Functional currency

Functional
Balance Sheet
Assets
Liabilities
100,000
60,000
Period end
Rate = 0.75
Owner's Equity
Period end
Rate = 0.75

Foreign currency

40,000

Foreign
Balance Sheet
Assets
Liabilities
75,000
45,000

Historical
Rate = 0.70
Owner's Equity
28,000

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Concepts: Translation
General Ledger selects translation rates based on the GL Account

Type and Translation Rate Type:

GL Account Type

Translation Rate Type

Monetary Assets, Liabilities

Period-End

Non-Monetary Assets, Liabilities

Historical

Revenue, Expense

Period-Average

Equity

Historical

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Translation: Balances & Rates Used

Account Type

Balance and Rate Used in Translation

Assets

Cumulative balance and period-end rate

Liabilities

Cumulative balance and period-end rate

Revenue

Periodic balances and period average rates

Expense

Periodic balances and period average rates

Equity

Cumulative balance and period-end rate unless

historical rates are defined for these accounts

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Foreign Currency Reports

Daily Conversion Rates Listing
Historical Rates Listing
Period Rates Listing
Foreign Currency General Ledger Report
Foreign Currency Journals Report
Foreign Currency Detail Trial Balance Report
Foreign Currency Summary 1 Trial Balance
Translation Trial Balance
Foreign Account Analysis Report
Foreign Account Analysis Report with Payables Detail

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MultiCurrency Profile Options

GL: Income Statement Accounts Revaluation Rule

GL: Revaluation: Autoquery Last Run Ranges
GL: Owners Equity Translation Rule
Journals: Allow Multiple Exchange Rates
Journals: Display Inverse Rate

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Budgeting

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What is Budgeting?

Budgeting is the process of

identifying, gathering,
summarizing, and
communicating financial and
non-financial information about
an organization's future activities.

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Anatomy of a Budget

A budget consists of periods, accounts, and amounts

Name: FY08PLAN
Jan-2008 to Dec-2008

Periods
Accounts

CC100
CC200

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..

$3000
$1500

Amounts

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Budgeting in Oracle
Oracle provides various tools to define, maintain and track budgets:

Manual Budgets in General Ledger

Enterprise Planning and Budgeting
Upload via ADI
Upload from non-oracle systems

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Budget Accounting Cycle

Steps of the budget accounting cycle:
Define budgets and budget organizations.
Enter budget amounts.
Review and correct budgets.
Freeze Budgets.
Report on budgets.

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Define Budgets
Create a budget to represent a

collection of estimated
amounts for a range of
accounting periods.
You can create budget

hierarchies by assigning
lowerlevel budgets to a
master budget:
Top-down budgeting
Bottom-up budgeting
Middle-out budgeting
Maintain multiple versions of

the budgets.

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Define Budget Organizations

Budgeting hierarchies enable you to

control budgeting authority, and
easily identify budgets that exceed
control limits.
Contain ranges of accounts that
make up the budget.
Create as many budget

organizations as you need, provided

their account ranges do not overlap
for the same currency within the
same ledger.

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Budget Entry Methods

Methods to enter budgets:

Journal Entry Creates?

Enter budget amounts

No

Enter budget journals

Yes

Upload budgets

No

Transfer budgets

Yes

Budget Wizard (ADI)

No

Create Budget Formula

No

Create MassBudget journals

Yes

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Enter Budget Amounts

Budget rules are

predefined methods for

calculating and
distributing amounts to
all periods.
You can apply budget

rules for up to 13 periods

at a time; if your calendar
contains more than 13
periods, each year is
automatically divided into
several period ranges.

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Enter Budget Journals

Steps:

Enter journals
Run journal import
Post budget journals
Budget Rules can be

applied
Enter budget journals for

STAT currency

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Transfer Budgets

Transfer budget amounts between

accounts:
In different budget organizations
Within the same budget
organization

Transfer by:
Budget Amounts or Percentages
Using Budgetary Control (optional)

Steps to transfer:
Enter details
Import journal
Post journal

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Budget Wizard (Web ADI)

Enter Budget
through WebADI

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GL_BUDGET_INTERFACE

General Ledger

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Web ADI: Create Document

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Step 3: Defining Segment Values

Enter valid values for each segment before using them in the

Accounting Flexfield segments.

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Review & Correct Budget

If a budget journal entry is generated, then, review and correct via:

Enter Budget Journal screen: if the journal has been posted.

Enter Journals screen: if the journal is in the unposted status.
If a budget journal entry is NOT generated, then, review and correct

via:
Enter Budget Amounts screen
Budget Wizard

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Freeze Budgets
Freeze a budget, budget organization, budget formula batch or range of budget

accounts to prevent accidental or unauthorized changes.

Freeze or unfreeze an entire budget by changing the budget status in the
Define Budget window.

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Budget Inquiry
Budget inquiry can be performed through:

Account inquiry: view specific account balances

Budget inquiry: review master and detail budgets

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Step 3: Defining Segment Values
Account

Hierarchy Manager
With the Account Hierarchy Manager you can:

Graphically create, maintain, and review account structure hierarchies

Define new parent and child segment values, as well as change parent/child
dependencies

Create new rollup groups from the Account Hierarchy Manager and have your
changes reflected automatically in both the Key Segment Values and Rollup
Groups windows

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Module Highlights
MultiCurrency

Foreign Currency Journals

Conversion
Translation
Revaluation

Multi-Currency Reports & Profile Options

Budgeting

Budget Accounting Cycle

Define Budgets & budget organization
Enter amounts methods
Review and correct budgets
Freeze budgets
Budget Inquiry

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