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Multicurrency Processing in Dynamics GP
Rod O’Connor, MVP Business Solutions Briware Solutions Inc. #CollaborateCanada
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Agenda Introduction Why use Multicurrency
Types of Currency related gains and losses Realized gain and loss Exchange rate entry Day to day processing Unrealized gain and loss Month End Revaluation Questions?
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Introduction Rod O’Connor Briware solutions Inc. Experience:
Started career in accounting, then programming First implementation in 1996 ERP Consultant since 2000 (Mostly) Started Briware Solutions in 2012 as a side project Specialties: Translating geek (with particular focus on finance and IT), streamlining business processes with clever applications of technology and psychology.
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Why use Multi Currency Any time we need to track a transaction and/or account balance in a currency other than our “Functional” currency, Multi- Currency streamlines our processes Briware Solutions (CAD) Accounts Receivable (USD) Bank Account (USD) Accounts Payable (USD)
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Um…Functional Currency?
Functional Currency: The currency for our Financial Reports, usually set by our local tax authority (IRS, CRA, etc) Originating Currency: The currency assigned to the transaction or account balance. May or may not be the same as functional currency.
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The “functional” value of transactions over time
Functional Currency = CAD Invoice Period End Settlement USD $100.00 $100.00 $100.00 Rate 1.05 1.06 1.03 CAD $105.00 $106.00 $103.00 Gain/Loss 1.00 -2.00 UNREALIZED GAIN/LOSS REALIZED GAIN/LOSS
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Why use Multi Currency When consolidating 2 or more companies with different functional currencies, you need to “Translate” the published Financials for each company to a common reporting currency Briware Solutions Holdings (CAD) All accounting standards have similar rules for translation, most of which are highly susceptible to interpretation Briware Solutions Inc (CAD) Briware Solutions USA Inc (USD)
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Translation overview Canadian GAAP
Monetary items to be translated at the exchange rate in effect at the balance sheet date Non-monetary items to be translated at historical exchange rates Revenue and expense items are translated at the exchange rate in effect on the dates they occur Depreciation or amortization of assets is translated at the same exchange rates as the assets to which it relates.
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Translations gain/loss
Due to the translation of different accounts at different rates, everything goes out of whack – this is Translation gain/loss. Different standards treat this differently, but often goes into Retained Earnings area
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Calculating Gains/Losses
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Realized Gain and Loss Drivers for Realized Gain/Loss:
Multicurrency Setup – Functional Currency Exchange Table from Originating to Functional Exchange Rates
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How often do we update Exchange Rates?
Depends on the complexity of your business and reporting requirements Most guidelines leave it to the discretion of management Personally, I recommend daily unless there are very few transactions
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Should we let users enter a rate without saving to the table?
This is a multicurrency setup option Based on internal control requirements, HOWEVER When transactions are assigned a rate specifically (e.g. account transfers), it is appropriate to allow users to override the rate. Normally, this rate is outside of the regularly scheduled rate entry and I do not like to muddy the tables
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When you settle a receivable transaction…
Dr Cash Receipt Exchange Rate Cr Original Invoice Exchange Rate Dr/Cr Gain/Loss account for difference Payables is the same, only backwards!
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Calculating Month End Gain/Loss
Financial -> Routines -> Revaluation Will likely require minimum 3 options Financial: Revalues Account Balances Sales: Revalues Receivable Documents Purchasing: Revalues Payable Documents
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Revaluation - Finance Use for Cash, Investment, Non-Subledger liabilities or receivables Drivers: Exchange Table from Originating to Functional (All Originating in Balance) Exchange Rates Account Currencies – Revalue Account
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Financial is actually Realized!
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Financial Restrictions
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Revaluation – Sales Use for Open Receivables Drivers:
Exchange Table from Originating to Functional (All Originating Currencies) Customer Maintenance – Options Exchange Rates
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Revaluation - Sales
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Sales Restrictions
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Revaluation – Purchasing
Use for Open Payables Drivers: Exchange Table from Originating to Functional (All Originating Currencies) Vendor Maintenance – Options Exchange Rates
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Revaluation - Purchasing
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Purchasing Restrictions
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Questions? Rod O’Connor rod@briwaresolutions.com 844-BRIWARE, ext 110
(cell) @Briware_Rod
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Appendix In the session, I made reference to videos that I had about multicurrency. The links are: Intro to Multicurrency concepts: Accounting for Foreign Currency Transactions in a non-multicurrency environment: foreign-currency-transactions-in-dynamics-gp/
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Appendix The Belinda Allen videos for Multicurrency setup can be found here: y=Multicurrency
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