How to Make Peoplesoft Multi-Currency / Multi-Book Work for You!

How to make PeopleSoft Multi-Currency / Multi-Book Work for You!

Millie Babicz, SpearMC Consulting www.spearmc.com

1 Session Objectives

Learn about how to configure Multi-Currency functionality, including multi-book. Achieve a better understanding of global reporting to ensure accuracy and to ensure your sub-ledger transactions reconcile regardless which currency is being reported. – Get users comfortable with setting up multi-currency / multi-book environment – Tips and tricks on reconciliation in multi-currency environments – Best practices in getting accurate report results

2 About SpearMC

SpearMC is a full-service consulting and technology services firm with specific focus on PeopleSoft Our consultants and network of PeopleSoft Analysts, Technical Leads and Project Managers average fifteen years of PeopleSoft experience We are North America’s leading provider of custom-tailored PeopleSoft Financial training solutions and educational content development. It is our mission to provide the highest levels of professional service at competitive rates About Your Presenter

Millie Babicz, CPA – Principal [email protected] 866-SPEARMC x802

Millie Babicz, CPA – SpearMC Principal Joined SpearMC Consulting in 2007 PeopleSoft Financials, Financial Control and Reporting Expert Certified PeopleSoft v9.1 Financials 20+ Years Experience…majority PeopleSoft How PeopleSoft Supports Multi-Currency and Multi-National

Accounting Requirements – Multi-currency views of the ledger – Re-measurement of gains/losses at ledger, customer and vendor levels – Visibility of multiple accounting GAAPs in the same ledger through the use of book code or though separate ledgers – Financial statutory reporting through automated mapping of corporate chart of accounts to statutory account requirements by used of Alternate Account chartfield

5 Ledger Approach Book Code Approach Local GAAP L = LOCAL Book Code Multi -GAAP Ledger C = Corp Book Code Local GAAP IFRS Common B = COMMON Book Code Adjustments Adjustments Single ledger holds transactions for all GAAPs; Book Code ChartField IFRS used to identify transactions; Ledger Code is used to produce the Local GAAP and IFRS reports. Transactions are posted to the respective ledgers, nVision is used to produce reports for Local GAAP and IFRS. Ledger Code = LOCAL Local Common only

IFRS only Ledger Code = IFRS Alternate Account

6 Ledger Approach

• The Ledger approach allows users to define different or multiple ledgers to suit the organization’s structure. • The user can have one ledger that addresses common transactions. • A second ledger that groups IFRS adjustments. • A third ledger for entering local GAAP adjustments. • The user can then create reports using nVision and Tree Manager to group the ledgers as appropriate.

7 Book Code Approach

• You can use Book Code to handle multiple GAAP requirements within the same ledger. • The Book Code ChartField can identify a transaction as either local GAAP, IFRS or both. • This allows items that affect both local GAAP and IFRS simultaneously to be entered only once rather than duplicated to each associated ledger. • Users can then use Ledger Codes to define what transactions (based on Book Codes) to use in their reports. • This allows organizations to ensure consistency with accounting and data gathering across the world, while at the same time recording transactions in compliance with local regulation.

8 MULTI-CURRENCY / MULTI-NATIONAL CONFIGURATION Book Code:

• Supported only by the GL and AM products • If you activate the book code, you must specify a book code for each account value. – You can attach these book codes to accounts as attributes – A unique account value must be created for each book code – Book code appears as a read only field on the journal entry page • Can override at time of Journal Entry – The Allow Book Code Override option that is set on the ChartField Account page – Using this method, you can associate any of your book codes with the same account value to record related amounts in the same ledger

10 Ledger Code:

• Use this page to create ledger codes • Assign them to the applicable book codes to define subsets that segregate various accounting treatments of transactions

11 Adjustment Type:

• Define an adjustment type for each combination of ledger code and book code. • Adjustment types are used for prior period adjustments are entries that are mandated by local accounting rules that require that certain entries be made to the local books for a specified period of time after corporate books must be closed.

12 Ledger:

• You can define multiple ledgers for various multi-national reporting

• Ledgers in Sync – When you enter a two line journal entry for a ledger group that contains two ledgers, the system creates two additional lines.

13 Keep Ledgers in Sync:

• The following query shows journal lines generated for the two ledgers in this example: – ACT_LOC is the primary ledger – SEC_USD is the translate ledger, which translates transactions in real time

14 Currency: • You can define and maintain tables that describe currency codes, exchange rates, market rates, and currency rate types. • PeopleSoft software converts journal entries that are denominated in a foreign currency to the base currency and stores all relevant information for later analysis and reporting. – Multicurrency journal entries are posted in both foreign and base currencies. – A foreign currency is any currency other than the base currency. • The multibook feature allows you to use multiple base currencies, each in the form of a ledger that is defined for a Business Unit. 15 Market Rate:

16 Loading Market Rates:

• PeopleSoft comes delivered with standard currency codes, however, if a particular code does not exist then: – Insert currency into CURRENCY_CD_TBL – Insert currency quotation method into CURR_QUOTE_TBL – Insert market rate definition into RT_RATE_DEF_TBL • Update Rates for existing currency code: – Insert market rate for current effective period into RT_RATE_TBL

17 Loading Market Rates:

Rate File

New YES Currency CURRENCY_CD_TBL CURR_QUOTE_TBL

RT_RATE_TBL RT_RATE_DEF_TBL Currency Quotation Method:

• Indirect – Determine whether you want the rates for a currency pair quoted indirectly. – For example, in converting United States dollars (USD) to Swiss francs (CHF), an indirect quote would indicate that USD x.xxxx = CHF 1 • Direct – Determine whether you want the rates for a currency pair quoted directly. – For example, in converting United States dollars (USD) to Swiss francs (CHF), a direct quote would indicate that USD 1 = CHF x.xxxx. In this case, Swiss francs are quoted directly against the United States dollar

19 Quotation Method: Currency Precision Rounding:

• Currency dictates the precision of monetary amounts. • For example, United States dollar amounts have two digits to the right of the decimal and Japanese yen have none. • PeopleSoft software addresses currency precision as follows: – PeopleSoft delivers currency sensitive amount fields with a standard length of 23.3 (23 digits to the left of the decimal point and 3 digits to the right of the decimal point) – By default, PeopleSoft software rounds all currency sensitive amount fields to the currency precision of the associated currency. This action is a PeopleTools option that you can deactivate. – All numbers on SQR reports are currency sensitive. For reporting with Crystal and PS/nVision, the display is equal to the field precision, but you can increase the number of decimals. – The journal entry screen will show an error if a user enters more decimal places than specified on the currency code page

21 Currency Precision: • Currency precision ranges from zero decimal points to three decimal points per ISO standard • The journal will be in error if more decimal places than specified on the currency code page are entered Currency Triangulation: • Cross currency triangulation allows you to convert two currency pairs, which do not exist as standard pairs, using a third currency as a reference • Currency Controls – Business Unit Level – Journal Source Level

24 MULTI-CURRENCY RE-MEASUREMENT Translation • For reporting purposes, you can translate base currency balance of foreign entity to your reporting currency. • You can maintain a secondary ledger (SEC_USD) for real time translation at the effective CRRNT, AVG rate, etc. • Translation takes place at the end of each accounting period for all accounts after revaluation. • Translation only occurs for Business Units with non-USD base currency (if translating to USD base amount BU). • The process creates corresponding entries for any gain or loss that results from the translation. – Ledger: SEC_USD (in this example) – Timespan: BAL (Balance Sheet accounts) PER (Income Statement accounts) – Rate Type: CRRNT (Balance Sheet accounts) AVG (Income Statement accounts) 26 • Translation Example

27 Revaluation

• You may need to revalue the base currency of the balance sheet accounts that you maintain in foreign currencies to reflect changes in value due to fluctuations in exchange rates • Revaluation process adjusts the base currency value of the account balances by creating adjusting entries for the accounts being revalued. • The process creates corresponding entries for any gain or loss that results from the revaluation. • Revaluation takes place at the end of each accounting period for all Asset and Liability accounts prior to translation. – Ledger: ACT_LOC (in this example) – Timespan: BAL – Rate Type: CRRNT

28 • Revaluation Example

Note: Same $87.67 transaction is now worth $100.88

29 Revaluation at Subsystem:

• Re-measurement of gains/losses at ledger, customer and vendor levels • Accounts Payable – The PS/AP Revaluation process finds all unpaid, posted vouchers for the specified business units as of the specified date whose transaction currency is not the same as the base currency of the general ledger business unit. – For each unpaid voucher, it uses the specified exchange rate and calculates a revaluation amount. – The accounting entry consists of an unrealized gain or loss entry with a matching offset on the payables account.

30 MULTI-CURRENCY GL ADJUSTMENTS Update Currency Effective Date at Header Level

32 Journal Line – Primary Ledger

• Adjust Amount or Rate for Primary Ledger (ACT_LOC)

• If you change either the Amount, Base Amount or Rate, you can have the system calculate one of the three by changing the Calculate value or just leave the System Rule default

33 Journal Line – Secondary Ledger

• Adjust Base Amount or Rate for Secondary Ledger (SEC_USD) to update the translated values

34 Scenario 1 – Adjust Original Base Amount • Adjustment in Period 2

• Since the original transaction amount never goes to zero, you will always have a “revaluation adjustment” from month to month

Scenario 1 – Adjust Original Base Amount • Adjustment in Period 2

• Since the original transaction amount never goes to zero, you will always have a “revaluation adjustment” from month to month

Scenario 2 – Adjust Translated Amount • Adjustment in Period 2

• Since the original transaction amount never goes to zero, you will always have a “revaluation adjustment” from month to month • But now you will have revaluation for GBP and USD amounts

Scenario 2 – Adjust Translated Amount • Adjustment in Period 2

• Since the original transaction amount never goes to zero, you will always have a “revaluation adjustment” from month to month • But now you will have revaluation for GBP and USD amounts

Scenario 3 – Adjust Original Transaction Amount • Adjustment in Period 2 – using same rate

• Adjustment in Period 2 – using current rate

• You will have a temporary residual until “revaluation” is processed

MULTI-CURRENCY REPORTING GL Currency Mapping

41 Reporting from GL Ledger Table

• Transaction Amount (POSTED_TRAN_AMT) – Can be in any currency code – Serves as the foreign amount when the currency code is different then the base currency code defined for that Business Unit • Base Amount (POSTED_BASE_AMT) – Only one currency code can be defined for a Business Unit • Posted Total Amount (POSTED_TOTAL_AMT) – Any amount that is posted to Ledger, can be in foreign currency or base currency – When used in reporting, you will always have to specify the currency code 42 Ledger Example

• For multi-currency ledger reporting it is safest to use Posted Base Amt • If you used Posted Total Amt, you always have to make sure to designate the correct currency

nVision Report • Layout Tips – Use Based Amount (POSTED_BASE_AMT) so you won’t have to identify the currency – Include all currency codes as nVision automatically defaults to USD if not specified

Other SpearMC Tools & Resources can be found at www.spearmc.com

Questions? SpearMC Education Sessions:

• Dos and Don’ts of ERP Training and use of UPK – Session 9227 on Sunday 1/22/12 – 1:00 – 2:00 pm – Lagoon A • Advanced PeopleSoft Security Audit – Session 92250 on Thursday 4/26/12 – 9:45 – 10:45 am – Jasmine B • How to make PeopleSoft Multi-Currency / Multi-Book Work for You – Session 9224 on Thursday 4/26/12 – 11:00 – 12:00 am – Breakers H

47 Contact Information:

• Millie Babicz, Financials Solution Architect [email protected] • Marcus Bode, Principal [email protected] • David Pigman, Technical Architect [email protected] • Keith Harper, SCM Solution Architect [email protected]