Applications

OATUG,

I have a requirement that I have not had before and I am having a very difficult time figuring out a solution. 

Client is setting up operations in UK.  They are a US Company.   They have opted to observe ASC 830 by:
1. Setting up the UK in the GBP Ledger
2. As Intercompany will not be settled on a regular basis, they want to treat as equity which means it will translate at the PTD Average Rate which is typical for Owners Equity.  The customer is using AGIS which requires an Asset for the receivable and a liability as the Payable.  To effectuate this, we defined a very simple allocation to reclass the I/C Accounts to an Equity Account each month.  Translates exactly as the client wants. 
3. On the US Side, AGIS transactions come over as entered, in GBP.  The issue is at month end, when we run revaluation, Oracle uses the YTD weighted average, which is not the same as what is being used in the UK Ledger and lo and behold, we have IC variances due to FX. 

I have considered enforcing Global Currency of US, as the documentation says that eliminates the issues however the translation to get back to USD for GBP still must occur so I don't see how that helps but willing to consider.


I have been an OATUG contributor for 20 years and never asked a question (answered quite a few) so I'd really appreciate an assist on this. I have to believe I am missing something obvious.  

Thanks

------------------------------
Thomas Simkiss
Director of Cloud Solutions
Creoal Consulting
Bethesda MD
(844) 621-9127 x403
------------------------------

Original Message:
Sent: 3/5/2021 12:14:00 PM
From: Thomas Simkiss
Subject: FX and Intercompany

OATUG,

I have a requirement that I have not had before and I am having a very difficult time figuring out a solution. 

Client is setting up operations in UK.  They are a US Company.   They have opted to observe ASC 830 by:
1. Setting up the UK in the GBP Ledger
2. As Intercompany will not be settled on a regular basis, they want to treat as equity which means it will translate at the PTD Average Rate which is typical for Owners Equity.  The customer is using AGIS which requires an Asset for the receivable and a liability as the Payable.  To effectuate this, we defined a very simple allocation to reclass the I/C Accounts to an Equity Account each month.  Translates exactly as the client wants. 
3. On the US Side, AGIS transactions come over as entered, in GBP.  The issue is at month end, when we run revaluation, Oracle uses the YTD weighted average, which is not the same as what is being used in the UK Ledger and lo and behold, we have IC variances due to FX. 

I have considered enforcing Global Currency of US, as the documentation says that eliminates the issues however the translation to get back to USD for GBP still must occur so I don't see how that helps but willing to consider.


I have been an OATUG contributor for 20 years and never asked a question (answered quite a few) so I'd really appreciate an assist on this. I have to believe I am missing something obvious.  

Thanks

------------------------------
Thomas Simkiss
Director of Cloud Solutions
Creoal Consulting
Bethesda MD
(844) 621-9127 x403
------------------------------

Hi Tom.  I agree with Arvind's recommendation.  I am assuming you meant when you run Translation (not Revaluation) at month end on the US books, there is a difference?  If that is the case, you should be able to use Historical rates to drive the desired result.  The formula used for Translation is as follows:

If Historical rate or amount is defined for the account then Historical rate or amount is used Else If account type is assets or liability then Rate used will be period end Else if account type is expenses or revenue then Rate used will be average period. Else if account type is owner's equity then If GL: Owners Equity Translation Rule is set to PTD then Rate used is Period Average Else /* GL: Owners Equity Translation Rule is set to YTD */ Rate used is Period End End if End if End if

Hope that helps.  Give me a call if you want to discuss.  I think you still have my number :)

------------------------------
Donna DuBois
Business Systems Analyst
ViaSat
Carlsbad CA
(760) 893-1911
------------------------------

Original Message:
Sent: 03-05-2021 12:13
From: Thomas Simkiss
Subject: FX and Intercompany

OATUG,

I have a requirement that I have not had before and I am having a very difficult time figuring out a solution. 

Client is setting up operations in UK.  They are a US Company.   They have opted to observe ASC 830 by:
1. Setting up the UK in the GBP Ledger
2. As Intercompany will not be settled on a regular basis, they want to treat as equity which means it will translate at the PTD Average Rate which is typical for Owners Equity.  The customer is using AGIS which requires an Asset for the receivable and a liability as the Payable.  To effectuate this, we defined a very simple allocation to reclass the I/C Accounts to an Equity Account each month.  Translates exactly as the client wants. 
3. On the US Side, AGIS transactions come over as entered, in GBP.  The issue is at month end, when we run revaluation, Oracle uses the YTD weighted average, which is not the same as what is being used in the UK Ledger and lo and behold, we have IC variances due to FX. 

I have considered enforcing Global Currency of US, as the documentation says that eliminates the issues however the translation to get back to USD for GBP still must occur so I don't see how that helps but willing to consider.


I have been an OATUG contributor for 20 years and never asked a question (answered quite a few) so I'd really appreciate an assist on this. I have to believe I am missing something obvious.  

Thanks

------------------------------
Thomas Simkiss
Director of Cloud Solutions
Creoal Consulting
Bethesda MD
(844) 621-9127 x403
------------------------------

Historical is not going to work.   That rate is to be held constant each month (its used for acquisitions typically).

We wound up setting up an autotamted reclass to an IC Account setup as Expense Type.  This allows us to Revalue using the PTD Avg method, same method as the UK I/C being treated as equity.  

This is a big hole in the ERP solution for companies that don't settle Intercompany regularly and want to treat as equity.   EPM and FCCS lets you do this

------------------------------
Thomas Simkiss
Director of Cloud Solutions
Creoal Consulting
Bethesda MD
(844) 621-9127 x403
------------------------------

Original Message:
Sent: 03-09-2021 16:44
From: Donna DuBois
Subject: FX and Intercompany

Hi Tom.  I agree with Arvind's recommendation.  I am assuming you meant when you run Translation (not Revaluation) at month end on the US books, there is a difference?  If that is the case, you should be able to use Historical rates to drive the desired result.  The formula used for Translation is as follows:

If Historical rate or amount is defined for the account then Historical rate or amount is used Else If account type is assets or liability then Rate used will be period end Else if account type is expenses or revenue then Rate used will be average period. Else if account type is owner's equity then If GL: Owners Equity Translation Rule is set to PTD then Rate used is Period Average Else /* GL: Owners Equity Translation Rule is set to YTD */ Rate used is Period End End if End if End if

Hope that helps.  Give me a call if you want to discuss.  I think you still have my number :)

------------------------------
Donna DuBois
Business Systems Analyst
ViaSat
Carlsbad CA
(760) 893-1911

Original Message:
Sent: 03-05-2021 12:13
From: Thomas Simkiss
Subject: FX and Intercompany

OATUG,

I have a requirement that I have not had before and I am having a very difficult time figuring out a solution. 

Client is setting up operations in UK.  They are a US Company.   They have opted to observe ASC 830 by:
1. Setting up the UK in the GBP Ledger
2. As Intercompany will not be settled on a regular basis, they want to treat as equity which means it will translate at the PTD Average Rate which is typical for Owners Equity.  The customer is using AGIS which requires an Asset for the receivable and a liability as the Payable.  To effectuate this, we defined a very simple allocation to reclass the I/C Accounts to an Equity Account each month.  Translates exactly as the client wants. 
3. On the US Side, AGIS transactions come over as entered, in GBP.  The issue is at month end, when we run revaluation, Oracle uses the YTD weighted average, which is not the same as what is being used in the UK Ledger and lo and behold, we have IC variances due to FX. 

I have considered enforcing Global Currency of US, as the documentation says that eliminates the issues however the translation to get back to USD for GBP still must occur so I don't see how that helps but willing to consider.


I have been an OATUG contributor for 20 years and never asked a question (answered quite a few) so I'd really appreciate an assist on this. I have to believe I am missing something obvious.  

Thanks

------------------------------
Thomas Simkiss
Director of Cloud Solutions
Creoal Consulting
Bethesda MD
(844) 621-9127 x403
------------------------------