Translation in general ledger process .pptx

Gl translation process

1. Cumulative Translation Adjustment Account purpose Translation functionality Period End Rate and Period Average Rate Type for translation Module : General Ledger

2. Introduction Process Content CTA Account Purpose When do you perform translation ? Required Setups How to submit Translation process Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 2 1 2 3 4 5 How to Verify the Translated Currency Amount 6

3. Introduction 1 of 2 The Translate General Ledger Account Balances is a process by which you restate an entire ledger or a set of balances for a company from the ledger currency to a reporting currency. Oracle Financials Cloud General Ledger supports translation that restates your standard actual ledger currency balances to a target currency using the appropriate currency conversion rates and translates your account balances using the period-end rates for the asset and liability accounts, the period-average rates for the revenue and expense accounts, and the historical rates or amounts for the owners' equity accounts when you translate your actual balances into another currency, Important Note :- a. Submit the process after you have completed all journal activity for an accounting period and after finalizing rates. b. Translation to Reporting currencies is required for all reports i.e. if prior periods in the current year have not yet been translated, they will be translated before the selected period. Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 3

4. Introduction 2 of 2 c. If there are prior years that have not been fully translated, you will need to translate in sequence each year that has not yet been translated and then translate the current year. Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 4

5. CTA Account Purpose (Cumulative Adjustment Account purpose) Purpose : This is the accounting code combination provided for CTA account. Any differences arising out of translation for Balance sheet accounts and P&L accounts owing to a difference in average rate and period end rates will be posted to this account. And this is the mandatory account code combination. The CTA account is not filled through a calculation, it is simply a plug between the difference in the debits and credits after translation is run. Since the Assets/Liabilities, OE(Owner's equities), and Revenue/Expenses typically use different translation rates, it is common for the translated balances not to equal. Therefore, the CTA will simply fill in the difference to make the debits equal the credits. There is no calculation for this account. Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 5

6. When do you perform translation? The Translate General Ledger Account Balances process is typically run once you have completed all journal activities for an accounting period. You run this process at the end of an accounting period, after all transactions have been processed and reconciled. You translate the actual ledger currency balances of your ledger to another reporting currency to help you consolidate the financial results. When you have foreign subsidiaries with ledgers in different currencies, use the translation feature to perform a consolidated reporting in a single designated parent reporting currency. Using translation, you convert the general ledger actual balances from the subsidiaries' ledger currency to a target reporting currency. The translated balances are available for online inquiries, consolidation, and for reporting needs Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 6

7. Required Setups Define Currency Rates types (Corporate, spot ,user ) Define daily Currency Conversion Rates (Daily Rates) Spot - These rates are entered daily for a specific date range. Corporate - When there a minor change in rate for a specific currency over a period of time specified by a particular company. User - Rates entered by user while creating multi-currency journal entry for very unstable currencies.   CTA Account Code Combination Provide the Default Period End Rate Type –  This is the currency exchange rate which will be used for translating the Balance sheet accounts – viz. Assets, Liabilities etc. When to use :- This rate type of rate used for the Year-to-Date method of translation, typically with asset and liability accounts Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 7 Spot - These rates are entered daily for a specific date range. Corporate - When there a minor change in rate for a specific currency over a period of time specified by a particular company. User - Rates entered by user while creating multi-currency journal entry for very unstable currencies.  

8. Required Setups Provide the Default Period Average rate type –  This is the currency exchange rate which will be used for translating the P&L accounts – viz. Expenses, Income etc . When to use :- This rate type of rate used for the Period to Date method of translation, typically with income statement and equity accounts . Important: The period-end and the period-average rates types you assigned to the source ledger on the Specify Ledger Options page are defaulted to the associated balance-level reporting currencies. However, you can update the default period-end and the period-average rate type assignments a balance-level reporting currency level, before you run the translation process for the first time Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 8

9. How to submit Translation process When you submit the translation process, you specify the values for the following parameters. Data Access Set : Select the applicable data access set. Ledger or Ledger Set : Select the source ledger or ledger set. Target Currency : Select the reporting currency to translate to. Accounting Period : Select the accounting period to run translation. The first accounting period translated becomes the initial translation period for the specified balancing segment values. The next time the process is submitted, the translation is processed from the initial translation period up to the accounting period parameter that you specify. Caution: If you're submitting the translation process for the first time, select the accounting Period carefully. After the initial translation period is set, you can't run the translation process for any earlier period. Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 9

10. Period End and Historical Rates In this example, a Canadian company has a Mexican subsidiary. The translation process is run on the subsidiary ledger to convert balances from the Mexican peso (MXP) to the Canadian dollar (CAD). The following figure shows an example of translation. In this example: The period end rate of 0.75 translates 100,000 MXP in assets to 75,000 CAD, and translates 60,000 MXP in liabilities to 45,000 CAD. The historical rate of 0.70 translates 40,000 MXP in Owner's Equity to 28,000 CAD. As a result, an offset of 2,000 CAD in the translation currency, created by the different rates, is recorded in the CTA account. Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 10

11. Period End and Historical Rates Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 11

12. How to submit Translation process Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 12

13. How to Verify the Translated Currency Amount 1 of 2 Once you have run translation successfully, you can review the result either by viewing the Trial balance report or by using the balance inquiry pages. Submit the Trial Balance report by navigating to the Scheduled Processes page. To get a translated trial balance specify the target reporting currency, assigned to the balance-level reporting currency in the Ledger Currency field, on the report submission page. Navigation : Tools  è  Schedule Processes Click on the Button Schedule New Process To get a translated trial balance specify the target reporting currency, assigned to the balance-level reporting currency in the Ledger Currency field, on the report submission page. When performing a balance inquiry, you must choose Total as the currency type to view the total translated balances. If you instead choose Entered as the currency type in the above inquiry, the balances will be retrieved from the source ledger that was used to enter the journals Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 13

14. How to Verify the Translated Currency Amount 2 of 2 Sample screen shot: Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 14

15. Copyright – © 2022 Oracle and/or its affiliates. All rights reserved. 15