Reporting Currency Setup and Usage in R12

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Blog | Aug 24, 2015

Reporting Currency Setup and Usage in R12


This blog will help readers understand the concept of reporting currency in an Oracle application. It will help both the end user as well as the implementation consultant of an Oracle Financials to fulfil the business reporting requirement across the globe of an organization dealing in multiple currencies.  

What is Reporting Currency?  

A reporting currency is a financial reporting entity associated with a ledger. The reporting currency has the same chart of accounts and accounting calendar as the ledger, but usually has a different currency. To maintain ledger transactions in multiple currencies, we use reporting currencies. There are additional currency representations of primary or secondary ledgers. Reporting currencies can be used for supplementary reporting purposes, such as consolidation or management reporting. The term Reporting Currency refers to subledger or journal-level reporting currency, rather than the balance-level reporting currency. 

Financial reporting can be performed using the ledger currency or any of the reporting currencies. When we do entries in the General Ledger, they are converted into the ledger currency and each of the reporting functional currencies. We can inquire and report on transactions and account balances in reporting currency by logging onto a responsibility that has access to the reporting currency.

Setup:

Choose the Primary Ledger and click on update in front of reporting currency.

currency

Click on add reporting currency:

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Add required information and click on apply:

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When to use Reporting Currencies: 

Reporting currencies are of use to organizations that regularly and routinely support statutory and legal reporting of both the transactions/journals and General Ledger account balances in multiple currencies--other than the ledger currency. If we only need to report account balances in a currency other than your ledger currency, we can use General Ledger translation. To use reporting currencies, we must define reporting currencies for ledger in the Accounting Setup Manager. 

Reporting currencies are not intended as a replacement for the General Ledger translation function.
Reporting currencies can be maintained at the following currency conversion levels:

  • Balance Level
  • Journal Level
  • Subledger Level

In 11i:

You can setup the reporting currency both at balance level and detail level.

If it is Balance level then it can be achieved by using the translation process to generate Trial balance in reporting currency. Detail level information such as Subledger or Journal would be achieved through Multi Reporting Currency (MRC). Reporting Currency Functionality in R12 is combination of both MRC and Reporting currency in 11i.

In AX Countries (France, Italy, Greece, Portugal, Spain, Austria) there is a concept called the Dual Posting, where we can enter in a Global Chart of Accounts and post in Local Chart of Account. However, it is required only for the following Subledgers:

  • Oracle Inventory
  • Oracle receivables
  • Oracle Payables

For all other modules in 11i you need to use a consolidation process to transfer the data from entered to a Reporting COA.


In R12: 

This functionality can be achieved through secondary Ledger where you can have a different COA than the Primary Ledger and with the help of SLA you can achieve all the statutory requirements of the organization. This feature in R12 is available for almost all modules like Accounts Payables (AP), Accounts Receivables (AR), Fixed Assets (FA), General Ledger (GL) etc. 

Secondary ledgers can be used to represent Primary Ledger's accounting data in another accounting representation that differs in one or more of the following from the Primary Ledger:

  • Chart of Accounts
  • Accounting calendar/period type combination
  • Currency
  • Subledger accounting method
  • Ledger processing options 

When to Use Secondary Ledger:

If a legal entity must perform corporate and statutory reporting, you can use the Primary Ledger to satisfy corporate reporting requirements and then use a Secondary Ledger to satisfy statutory reporting requirements. If a legal entity is a subsidiary of a parent company and must produce its financial results according to the parent company's reporting requirements in addition to its own local reporting requirements, then a secondary ledger may be used to satisfy the additional reporting requirements. 

Secondary ledgers can be maintained at the following data conversion levels:

  • Balance level Secondary Ledger
  • Subledger level secondary
  • Journal level Secondary Ledger
  • Adjustments Only Secondary Ledger

 Difference between Reporting Currency and Secondary Ledger: 

Reporting currency is used only when the Currency of Primary Ledger needs to be changed for the reporting purpose. This can be used to capture the information in reporting currency at the Balance level, Subledger level and Journal level. Secondary Ledger could be used when we need to change the Chart of Accounts and Accounting convention method to meet the statutory and corporate requirements. This is used primarily where the organizations need to report to the different local authorities, US GAAP, IFRS, IASB etc.

Translation versus Reporting Currencies:

General Ledger's translation feature (balance level reporting currency) is used to translate amounts from Ledger currency to another currency at the account balance level. Reporting currencies convert amounts from your transaction currency to a reporting currency at the transaction or journal level. Reporting currencies are specifically intended for use by organizations that must regularly and routinely report their financial results in the multiple currencies. As stated earlier, reporting currencies are not intended as a replacement for General Ledger's Translation feature.

Another benefit of reporting currencies over General Ledger's Translation feature is that with the reporting currencies, you  can inquire and report on the transaction amounts directly from your subledgers. Translation only applies to General Ledger - it cannot be used to translate transaction amounts in subledgers.

Currency Concept and Different Ledgers:

currency5

Below are the required steps to set up reporting currencies in the applications:


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Conclusion:

We have covered the basic concepts of reporting currency in Oracle applications, why we need reporting currency and what are the setup steps so that the functionality can be implemented.

This blog will help the end user/company in generating oracle reports across all the currencies for which setup has been performed as above.

Reference links:

http://docs.oracle.com/cd/E18727_01/doc.121/e12841/T120505OA1234.htm


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