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Lauren Zhang: Our company code is live, but we didn't enable Group

Currency. Now we want to enable Group Currency. What are the things we
could do, and have to be careful of?
Rohana Gunawardena: Lauren, thank you for the first question. The
good news is that Group Currency can be activated post go-live for
company codes in New-GL and Classic-GL; howeve r, this is not an end
user process. It requires special conversion tools to enable Group Currency
as data records need to be populated for all historic GL transactions. I
have personally worked on Group Currency conversions and my company,
QS&S, provides this specialist service including the conversion tools which
we have built.
The conversion process is relatively quick for an SAP project with this level
of impact. Remember, it hits typically 12 16 weeks with on-site
resources to help guide you through the project. The key aspect is the
testing of all financial processes to ensure there are no custom processes
which have not been converted. Typically, there are three test
conversions: Sandbox, Dev, and QA, prior to the production conversion.

Pallavi Rastogi: FAGL_FC_TRANS posts based on a financial statement

version into, usually, CTA accounts setup to account for financial
statement buckets. Is there a way for it to go back and post to the source
GL account instead of just acknowledging the source GL account in the
Rohana Gunawardena: Pallavi, great to get your question. The posting
behavior you request can be achieved for non-open item accounts
through the application of an SAP Note. I have implemented this for
several clients and it works very well and simplifies config. and postings
for end users. As with many SAP notes, the description and instructions do
not sound quite like what you may want, but it will do the job. There will
be quite a bit of config. change to achieve your end result after applying
the note:
- SAP Note 1227385 -- FAGL_FC_TRANS: Using valuated account as
adjustment account

Fariyal K: When the company code has more than one currency, one is
Group Currency and the other is Company Code Currency. At the time of
Clearing transaction in the local currency system translates the value in
Group Currency, which creates a line item for the Exchange rate difference
gain/loss account. How can we avoid this?
Rohana Gunawardena: Generally, most US accounting departments like
this functionality as it helps them keep track of realized FX gains and
losses. I would be most interested in understanding your accounting
departments requirement to eliminate this posting.
The automated posting to the Exchange rate difference account occurs as
the document must balance Dr & Cr postings in all currencies. As the
original open item and the new clearing item are posted at different dates,
different exchange rates are picked up for the GC calculation, resulting in
an imbalance. SAP posts the difference to the Exchange rate difference
To eliminate the difference, you would have to manually enter the GC
value for the clearing item at the same time as the LC value -- instead of
letting SAP calculate GC at the current rate -- so the GC value of the
clearing item matches the GC value of the open item. What you need to
consider is if using a historic exchange rate for an open item clearing
posting is the correct accounting process. In most cases, I would say this
is not the correct accounting.
Consider a customer invoice with LC 100 GC 120. When the payment
comes in 3 months later, the values are LC 100 GC 110. Standard clearing
would force GC 10 to the Exchange rate difference account. Manually
changing the cash posting to LC 100 GC 120 would get the desired result,
but you have overstated the cash account by GC 10. This will be corrected
when you run translation at month end and post to the CTA account. The
process mentioned could be incorporated as part of a Z clearing program.
I would strongly advise mapping out the accounting on a spreadsheet and
walking through it with your Finance users so they fully understand the
impact, e.g. valuation of cash, before proceeding with this type of change.

Adriana Marturet: Is the valuation in each period closing for Bank GL

accounts on foreign currency registered on the same correction account
(Local Account for Adjusting Receivables/Payables)?
The currency valuation of bank GL Account is reversed in each period
closing. Is it considered difference realized?
Rohana Gunawardena: Adriana, great to hear from you. When monthly
valuation is run, there is a two sided JV. One side will post back to the
bank account or an offsetting adjustment account; the other side posts to
the CTA (Cumulative Translation Adjustment) account. Both sides of the JV
can be controlled by configuration. Depending on the configuration, these
accounts may or may not be the same as the adjustment accounts for
receivables and payables. Even the CTA account can vary by source G/L
Configure both posting accounts using IMG node Prepare Automatic
Postings for Foreign Currency Valuation (OBA1) -- will use key KDB or KDF
depending on the config. approach you take. This applies for valuation in
New-GL and Classic-GL. (There are quite a few steps to the config. I cant
list all of it here. I went through this at SAP Financials 2012 Las Vegas
but send me an e-mail if you want to go through this with me.)
The term realized gain/loss is typically applied to gains/losses when an
open item (receivable or payable) is cleared, e.g. vendor payment i s
made or customer payment is received. Generally I would not apply the
phrases realized/unrealized gain or loss to a cash account. In this case, I
assume you are talking about a foreign currency bank account, otherwise
no valuation change relative to local currency, as this would be a balance
in foreign currency and not local currency. I would consider it unrealized. It
is only realized on conversion of the bank balance to local currency.

Gerry Rodrigues: We are about to add two additional local currencies to

each company code and have the following questions:
1) Is it mandatory that you have depreciation areas for each additional
local currency? If so, when the asset reconciliation accounts are translated
at month end in ECC, will they not be out of balance with the asset
subledger depreciation areas for the additional local currencies?

2) What are the advantages of running month end translation in ECC (New
GL) vs. only in the consolidation tool e.g. EC-CS or BPC?
3) The New GL foreign currency revaluation process (FAGL_FC_VAL) does
not allow posting of the adjustment back to the original open item
account. SAP notes 1227385, 1094379, and 884639 apply only when you
have one ledger. Do other customers have this requirement to post the FX
reval adjustment back to the original open item account? If so, what
solutions are possible?
4) Does adding a third local currency e.g. type 40 or 50 extend the classic
GL table GLT0 (which only has transaction, local, and group currency
fields) to include the third local currency, or is this currency stored in a
different table?
Rohana Gunawardena: Gerry, thank you for your questions. Do refer to
my response to the first question which talked about the special
conversion tools required to activate additional local currencies post golive.
1) Yes you do need matching depreciation areas for each additional local
currency. During the currency activations I have been involved with, there
have been no issues with out of balance depreciation areas. Again,
generating the depreciation areas requires custom tools as a straight copy
will not create asset history.
2) I recommend running translation in ECC over BI for the following
- Adjustments are closer to the source data so its easier to track any
- Valuation and translation functionality is most developed in GL, so it
allows the most flexibility
- Easier to include valuation and translation as part of the close cycle
- If valuation and translation are part of the close cycle, its easier to
detect issues early on and the pressure is on to clean up the data
- If valuation and translation are performed downstream, cleaning up any
issues can be problematic as end users have moved on to the next
months issues

3) All customers I have worked with have used an offsetting account for
translation posting back to an open item account. At first, posting back to
the open item account sounds like a good idea, but if you think through
the details, it will be a problem for end users, e.g. customer reconciliation
account. They will need to post entries per customer and will have many
adjustment postings which may get printed on customer statements or
confuse AR clerks.
4) The classic G/L table GLT0 only has three currency buckets (by month)
which cover document currency, local currency 1, and local currency 2
(typically set up as Document/Transaction Currency, Local/Company Code
Currency and Group Currency). When you set up Local Currency 3 (e.g.
Hard Currency) there is no bucket left in GLt0 and the table cannot be
modified. What is required is a new ledger using table GLT0, using
transaction OBS2 create ledger L2 with total table GLT0, define 2nd
currency as Hard Currency or other currency type you will store in LC3.
Do note for New-GL monthly balances are held in table FAGLFLEXT which
already has 4 currency buckets so it can accommodate LC3.
Vijayakumar Aluru: To Gerry Rodrigues' 3rd question: Chile has a
statutory requirement to state revaluated debtor and creditor balances
and this was possible in R/3 4.7 version where we had the ability to check
"Balancesheet Valuation" and SAP did not reverse the FC valuation. But
with ECC 6 its no longer possible -- all FC valuations get reversed. How
can we state revaluated balances?
Rohana Gunawardena: Vijay, thanks for the clarification. Now I know
what the real question is.
SAP currently posts 100% valuation each month reversing prior month
valuation. The option you mention is called Delta valuation, where only
one months delta is posted on each valuation run. Delta valuation is an
option in New-GL.
See SAP Notes:
1006684 FAGL_FC_VAL Delta Logic Enhancement
960661 - FAGL_FC_VAL Delta Logic Foreign Currency Valuation

SAP recognizes delta postings are a legal requirement in some

countries. This configuration is not heavily used and has a lot of notes. I
would recommend heavy testing of multiple scenarios prior to go-live.
I have clients who operate in some countries (not Chile) that at first
instance appear to require delta postings; however, after working with
their external auditors, they managed to get an exception from the local
regulator or foun d a legal workaround so they did not need to activate
delta postings. This may be something your users want to look at.
Vijayakumar Aluru: Group currency is USD. Funds are transferred from
CAD to USD accounts at different banks. Lets say CAD1000 was
transferred at USD 1099 by different banks. When we account in SAP, the
exchange rate is different and auditors are stating our actual balance in
bank in CAD & USD is not the same as banks balances that we show in
books. Its similar to physical cash, and SAP values should be same as
bank balances.
So we are manually entering these bank transfers in SAP with exact
values as per bank statements in CAD and USD. Is there a better way?
Rohana Gunawardena: This additional detail makes things clearer. I
agree the USD and CAD should match the bank statements. You do need
to manually enter both the USD and CAD amounts in the JV rather than let
SAP calculate the other value.
One option to save work on data entry is have a look at the SAP Electronic
Bank Statement functionality. However, this loads one bank account at a
time and will not cross-ref transactions across different accounts.
To really see what is a workable solution for you, I will need to see the step
by step process you follow and the exact issue the auditors have.

Harish Menta: Hi Rohana, I have a few questions.

1) The Group currency config. in OB22 should have the Source Currency
option 1 or 2 for doing the Foreign Currency Translation?
2) When Journal entry posted in the system, the system converts the
document currency to Local Currency and also to Group Currency. Do
these conversions happen only if you have config. in O B22? If not, what

config. system is looking at for converting the Document Currency to Local

Currency and also Document Currency to Group Currency? Could you
please explain the behavior of the system?
Rohana Gunawardena: Harish, thanks for your question.
1) SAP best practice is setting 2, Translation from first local currency -the reason being the companys local legal books are based on local
currency balances in most cases. See SAP Note 335608 for more details.
2) As standard SAP FI-GL always has document currency and local
currency active, Group Currency, Hard Currency, etc. are only active if
they are configured in OB22 per company code. For LC to DC or DC to LC
conversion, the systems look at the local currency config. in T001,
OBY6. As mentioned in an earlier reply, Group Currency, Hard Currency,
etc. can only be activated post go-live with a special conversion. If you do
not have them in OB22, they cannot simply be added.
Harish Menta: But the argument is if the option for the group currency
source translation is 1, then the system will pick up directly Document
currency to Group currency, that way it avoids decimal differences that
might cause due to DC--> LC (happens at the time of Valuation with the
oprion1) and LC -->GC (happens at the time of translation) when system
is doing Foreign Currency Translation, right?
So why does SAP suggest to use 2 instead of 1 for Group Currency Config
in Ob22?
Rohana Gunawardena: Whichever option you choose, 1 or 2, there will
be scenarios where the outcome is not what is expected. I have been at a
client that started with option 1 and then switched to option 2:
SAP Note 335608 -- Trnsln of 2nd and 3rd lcl crcy fm 1st lcl/trns crcy
In the SAP Note, there are some examples that will expand on the impact
of the two options.
You need to choose what is right for your business, which may
not necessarily be standard best practice.
I would recommend working with your accounting department running
through key business transactions with setting 1 and setting 2 in a

sandbox system and comparing the accounting results. Make sure you get
end user sign-off on your decision.

James Abbott: Has anyone installed SAP/FI without GC enabled and then
had to enable it years later? If so, what are some of the lessons you
learned from the project?
Rohana Gunawardena: Great question.
This is a scenario many companies find themselves in, e.g. company who
did not activate Group Currency for company codes when they went live
and now have issues with consolidated financial statements or are looking
to move to New-GL to meet IFRS (International Financial Reporting
Standards) requirements and cannot get the required reporting without
GC being active. See my comment to Lauren, above, with more details on
that scenario.

Al Susinskas: When defining multiple local currencies for a company

code, how should the "source currency" setting be typically set for the
additional local currencies?
Rohana Gunawardena: Al, this is a simple setting in SAP but does cause
a lot of discussion.
SAP best practice is setting 2, Translation from first local currency, the
reason being the companys local legal books are based on local currency
balances in most cases.
See SAP Note 335608 - Trnsln of 2nd and 3rd lcl crcy fm 1st lcl/trns crcy
for more details. The note has some good examples.

Henri Barnard: We have foreign subs with local currencies other than
USD. When they invoice sales and receipt cash in their own local currency,
SAP does not correctly reflect a realized currency gain or loss on the
transactions. However, on the Group Currency side (LC2), SAP reflects
USD realized gains and losses in the same transactions. With these
subsidiaries not being branches of the parent company, how come SAP

calculates the realized gains and losses in my subsidiaries' books at group

currency level?
Rohana Gunawardena: Henri, this is an interesting scenario. Reading
your question, I agree that this is unusual behavior. My first inclination
would be to check the configuration, but I assume you have done this
already. This is an issue that will take some investigation. It is unlikely I
can solve it on the forum. Send me an e-mail and we can set up a time to
go through this in detail. It is likely I will have to logon to your system to
see the issue.
Henri Barnard: When we run valuations in SAP i.e. FAGL_FC_VAL it does
not post the corresponding impact in group currency (LC2).
Rohana Gunawardena: I have worked on this issue:
Look at configuration in IMG node, IMG > Financial Accounting (New)>
General Ledger Accounting (New)> Periodic Processing> Valuate> Define
Valuation Areas. Have you made an entry in either of the two columns
marked as Add.curr., fields T033-CURTP2 and T033-CURTP3? These fields
should be blank. If not, postings are only made if the currency code of the
first currency type m atches the currency code of the additional currency
type. If you look at the data in your ledger carefully, you may see some
company codes have the GC value for valuation postings and others do
The solution above worked at another client, and took quite a bit of work
to get to it.
If the solution does not work for you, e-mail me so I can look at this in
more detail with you.