Currency Conversion (Balance Sheet Model)

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Return to Balance Sheet Overview

The currency conversion features the conversion of amounts stored in a source currency into a target currency. The system can be customized for any set of source currencies and for one or multiple target currencies. The target currencies are also known as group or reporting currencies.

The source currency is determined in one of two ways: implicitly, as the local currency (currency code LC), where the currency is defined though the Legal Entity; or explicitly, by storing the amount of the source currency. Both methods can be mixed. In the case of explicit source currencies, multiple source currencies can be combined at the same time.

The exchange rates to be used for the conversion can be stored and used for a variety of conversion types: 

  • Average
  • Month End
  • Month Start

The appropriate conversion type for the Balance Sheet cube is defined through either the Transaction Type dimension or the BS Account dimension.

The elements Closing and ~ of the Transaction Type dimension are defined through the Conversion Type attribute of the BS Account dimension. This ensures that the value at the end of the period is computed by the appropriate conversion type for the account. All other elements of the Transaction Type dimension except for FXDiff are defined through the Conversion Type attribute of the Transaction Type dimension. This ensures that the Opening element can be converted at the month start rate, while any changes are converted at the average rate.

By using different conversion rates for different transaction types, the currency-converted values will not reconcile anymore. This error is known as foreign exchange difference. To reconcile the currency-converted values, the element FXDiff  is calculated as the difference between the Closing value and the Opening value, and all changes are summarized by the Delta value.

Example:

The exchange rates from each source currency to each target currency are stored and maintained in the Exchange Rates cube by the Version and Month dimensions.

See the article Fact Cube Using Currency Conversion for more details on the currency conversion.

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