Working with foreign exchange

If your company does business in different countries, you likely need to have consolidated financial information expressed in one or more reporting currencies. You can use the data translation functionality to handle complex foreign exchange.

To use currency translation in your system, you must prepare and define the related parameters. If users try to input or import amounts before the system has been properly prepared, translated amounts appear as zeros.

This chapter provides information on the following topics:

• “Understanding accounts and foreign exchange”
• “Understanding translation settings tables”
• “Understanding alternative configurations for foreign exchange”
• “Setting attributes for Foreign Exchange”
• “Setting symbols in foreign exchange”
• “Configuring parameters in foreign exchange”
• “Specifying foreign exchange rates”
• “Setting rates for specific dimensions”

Understanding accounts and foreign exchange

While any account can be configured to translate, only accounts with a balance type of Credit or Debit affect translation adjustment. It is important to ensure that only accounts that are part of the trial balance are set with a balance type of Debit or Credit. Also, the CTA and TA accounts must also have a balance type of Debit or Credit.

• “Understanding CTA and TA Accounts”
• “Understanding Operations Type”

Understanding CTA and TA Accounts

The ZFXAccountsCTA symbol attribute determines the account that is designated as CTA. CTA (Cumulative Translation Adjustment) records the cumulative impact of changing exchange rates as part of equity (or cumulative comprehensive income). TA (Translation Adjustment) records the current period impact of changing exchange rates as part of profit and loss (for the Operations Type Integrated) or as part of comprehensive income (for the Operations Type Self Sustaining).

For the Self-Sustaining Operations Type, both CTA and TA accounts must be configured. The TA account must not be included in any retained earnings calculation.

For Integrated Operations Type, only the TA account must be configured. The TA account is included in any retained earnings calculation.

Understanding Operations Type

The Operations Type setting is used to reduce the need to manually specify some of the settings related to foreign exchange and to better handle treatment of certain types of accounts in different scenarios.

Self-Sustaining

Self-sustaining is the Operations Type associated with the current method.  This method generally treats accounts as follows.

Integrated

Integrated is the Operations Type associated with the temporal method. This method generally treats accounts as follows:

Understanding foreign exchange account types

The ZFXAccountType symbol attribute determines an account’s foreign exchange account type. If your company is using currency translation, you must set the value for this attribute for each relevant account.

You can set ZFXAccountType to one of the following values:

• Monetary
• Equity
• NonMonetary
• LongTermMonetary
• RevenueExpense

For information on setting this attribute, see “Specifying foreign exchange account type”.

Longview treats accounts in the following ways during translation:

• Current—Accounts are translated based on the current balance at the specified rate (Balance * Effective Rate).
• Historical—Accounts are translated based on the current balance at a blended historical rate. This is achieved by translating the current activity at the specified rate (Translated Value in Prior Period +  Change in Balance * Effective Rate).

The Effective Rate is the rate used to translate the account in the period. This could be the rate as specified in the account translation table or an override rate. The Period End Rate is the rate specified by the SFXPeriodEndRate system attribute. For more information on setting these rates, see “Setting attributes for Foreign Exchange”.

Monetary

This is the default setting for all carryforward accounts.

Recommended configuration:

Treatment:

Equity

This is the typical setting for all equity accounts (for example, capital stock and retained earnings).  This setting differs from other historical treatment settings in that these accounts do not generate translation adjustment between periods unless the effective rate is not the period end rate.

Recommended configuration:

Treatment:

NonMonetary

This is the typical setting for all non-monetary assets (for example, priority plant and equipment) and non-monetary liabilities (for example, long term bonds). The Cumulative Translation Adjustment Account is ignored when the operation type is Integrated (there will be no values generated in the CTAA account regardless of the attribute set up).

Recommended configuration:

Treatment:

LongTermMonetary

This is special setting used only in cases where translation adjustment is recorded in a separate account when using the Integrated operations type. The Cumulative Translation Adjustment Account is ignored when the operation type is Self-Sustaining (there will be no values generated in the CTAA account regardless of the attribute set up).

Recommended configuration:

Treatment:

RevenueExpense

This is the default setting for all standard accounts, typically profit and loss, so there is no need to set the account type attribute for these accounts.

Recommended configuration:

Treatment:

Understanding translation settings tables

This following table outlines where the translation setting tables data is stored.  You can access translation setting tables data using Application Administrator or any other interface that allows you to view or modify data (import functionality, Longview Analysis and Reporting).

To take advantage of being able to set entity translation and account translation settings at a parent level, ensure the intersection is static.  Usually, setting the default accounts dimension symbol to static is a good practice.

Understanding alternative configurations for foreign exchange

This section explains the different foreign exchange configurations you can use with Longview Application Administrator: the traditional method, and the alternative configuration.

• “Data translation: traditional configuration”, used by Longview Tax
• “Data translation: alternative configuration”, used by Longview Close

Data translation: traditional configuration

In the traditional currency setup, each reporting currency requires a parent symbol containing the total values in that currency—for example, TUSD. The total value in the parent symbol can come from one or both of the following sources:

• source currency, as input by users
• server-calculated currency translated from other source currency, for example:
• TUSD is total U.S. dollars and the sum of source currency symbol USD, and server translated symbols USDCAD, and USDCEUR.
• USDCAD is U.S. dollars, translated from CAD, Canadian source dollars
• USDEUR is U.S. dollars, translated from EUR, euro source dollars

You may choose to use the traditional method for several reasons:

• if you want to understand where all data is coming from, and isolate translation effects independent of source currency (at a consolidated level)
• if you have complex translation requirements (in particular, multiple functional currencies on a single entity)

Data translation: alternative configuration

Instead of having one currency symbols for each translation to the same currency, you can use only one source currency symbol and one translated currency symbol per currency in most cases. Each reporting currency requires a parent symbol containing the total values in that currency—for example, USDT. The total value in the parent symbol can come from one or both of the following sources:

• source currency, as input by users
• server-calculated currency translated from other source currency, for example:
• USDT is total U.S. dollars and is the sum of source currency symbol USD, and server translated symbol USDFX.

For example:

• CAD translated to USDFX
• USD translated to CADFX
• GBP translated to USDFX

With the alternative configuration, ensure user access and template design correctly reflects proper currency access. Only one functional currency per entity is permitted.

Use the alternative configuration:

• when you want currencies to be more intuitive for end users
• when you want easier configuration and manipulation of data for input and comparative reporting

Setting attributes for Foreign Exchange

The following general system attributes must be set before you can properly configure and use Foreign Exchange:

The following Foreign Exchange-specific system attributes must be set before you can properly configure and use Foreign Exchange:

Setting symbols in foreign exchange

This section explains how to designate symbols to use for foreign exchange. You can set translation methods, currency translations, and exchange rates.

For more information, see the following sections:

• “Configuring Translation methods”
• “Configuring Currency translations”
• “Configuring Foreign exchange rates”

Configuring Translation methods

To set foreign exchange translation methods, follow these steps:

1. Open Longview Application Administrator.
2. Select Tools > Foreign Exchange Setup. The Foreign Exchange Setup dialog opens.
3. In the Foreign Exchange Setup dialog, select Translation Methods.

   

4. In the Name column, enter a name for the method.

   Translation method	Description
   Temporal	Mainly used in Canada and Europe, this method uses the historical rate and value of assets at the time of acquisition. Gain/loss goes to the Income Statement.
   Current	Widely used in the U.S., this method uses the month end data translation rate. Gain/loss goes to the equity section of the Balance Sheet.

5. Click in the Translation Adjustment Account column to activate the symbol selector button ( ... ). Click the button. An account selection dialog appears.
6. Select the translation adjustment account from the list of available accounts and click OK. The selected account is placed in the column.
7. In the Operations Type column, use the drop-down list to select how the various account types are handled by foreign exchange. The choices are:
   • Self-sustaining
   • Integrated

   Note: Operations Type choices are also affected by the Translation Method used. For more information Operations Type, see “Understanding Operations Type”.

8. When you are finished adding or modifying translation methods, click OK to save your work and close the dialog.

Configuring Currency translations

To set foreign exchange currency translations, follow these steps:

1. Open Longview Application Administrator.
2. Select Tools > Foreign Exchange Setup. The Foreign Exchange Setup dialog opens.
3. In the Foreign Exchange Setup dialog, select Currency Translations.

   

4. In the Name column, enter a name for the currency translation using the convention TTargetCurrencySouceCurrency.
5. In the Description column, enter a description for the currency translation using the convention Target Currency from Source Currency. For example, CAD from GBP.
6. When you are finished adding or modifying currency translations, click OK to save your work and close the dialog.

Configuring Foreign exchange rates

To set foreign exchange rates, follow these steps:

1. Open Longview Application Administrator.
2. Select Tools > Foreign Exchange Setup. The Foreign Exchange Setup dialog opens.
3. In the Foreign Exchange Setup dialog, select Foreign Exchange Rates.

   

4. In the Name column, type a name for the foreign exchange rate type.
5. In the Description column, type a description for the foreign exchange rate type.
6. In the Type column, use the drop-down list to select the type. The choices are:
   • Global: If the rate varies by time and currency only (for example, a period end rate).
   • Entity: If the rate varies by time, currency, and entity (for example, a proportionate ownership rate).
7. When you are finished adding or modifying exchange rate types, click OK to save your work and close the dialog.

Configuring parameters in foreign exchange

This section explains how to set parameters in foreign exchange. You can set Entity translations and Account translations.

Configuring Entity Translation

To set entity translations, follow these steps:

1. Open Longview Application Administrator.
2. Select Tools > Foreign Exchange Setup. The Foreign Exchange Setup dialog opens.
3. In the Foreign Exchange Setup dialog, select Entity Translation.
   
4. Click in the Entity column to activate the symbol selector button ( ... ).
5. Click the symbol selector button. The Select ENTITIES Symbol dialog appears.
6. Select the entity from the list of available entities and click OK. The selected entity appears in the Entity column.
7. Click in the Currency column to activate the symbol selector button ( ... ).
8. Click the symbol selector button. The Select CURRENCY Symbol dialog appears.
9. Select the currency from the list and click OK. The selected currency appears in the Currency column.
10. Click in the Translation Method column to activate the symbol selector button ( ... ).
11. Click the symbol selector button. A selection dialog appears.
12. Select the translation method from the list of available methods and click OK. The selected method appears in the Translation Method column.
13. When you are finished adding or modifying method assignments, click OK to save your work and close the dialog.

Configuring Account Translation

To set account translations, follow these steps:

1. Open Longview Application Administrator.
2. Select Tools > Foreign Exchange Setup. The Foreign Exchange Setup dialog opens.
3. In the Foreign Exchange Setup dialog, select Account Translation.
   
4. Click in the Account column to activate the symbol selector button ( ... ).
5. Click the symbol selector button. The Select ACCOUNTS Symbol dialog appears.
6. Select the account from the list of available accounts and click OK. The selected account appears in the Accounts column.
7. Click in the Translation Method column to activate the symbol selector button ( ... ).
8. Click the symbol selector button. A selection dialog appears.
9. Select the translation method from the list of available methods and click OK. The selected method appears in the Translation Method column.
10. Click in the Foreign Exchange Rate column to activate the symbol selector button ( ... ).
11. Click the symbol selector button. A selection dialog appears.
12. Select the rate from the list and click OK. The selected rate appears in the Foreign Exchange Rate column.
13. When you are finished adding or modifying rows in the rate table, click OK to save your work and close the dialog.

Specifying foreign exchange rates

This section explains how to set rates to be used in foreign exchange. You can set global rates, Entity rates, and override rates.

Specifying global rates

To set global rates, follow these steps:

1. Open Longview Application Administrator.
2. Select Tools > Foreign Exchange Setup. The Foreign Exchange Setup dialog opens.
3. In the Foreign Exchange Setup dialog, select Global Rates.

   

4. Click in the Foreign Exchange Rate column to activate the symbol selector button ( ... ).
5. Click the symbol selector button. A selection dialog appears.
6. Select the rate from the list and click OK. The selected rate appears in the Foreign Exchange Rate column.
7. Click in the Time Period column to activate the symbol selector button ( ... ).
8. Click the symbol selector button. A selection dialog appears.
9. Select the time period from the list and click OK. The selected time period appears in the Time Period column.
10. Click in the Currency Translation column to activate the symbol selector button ( ... ).
11. Click the symbol selector button. A selection dialog appears.
12. Select the currency translation method from the list and click OK. The selected method appears in the Currency Translation column.
13. In the Rate column, enter a rate for the exchange in the cell for the current row.
14. When you are finished adding or modifying rows in Global Rates, click OK to save your work and close the dialog.

Specifying Entity Rates

To set entity rates, follow these steps:

1. Open Longview Application Administrator.
2. Select Tools > Foreign Exchange Setup. The Foreign Exchange Setup dialog opens.
3. In the Foreign Exchange Setup dialog, select Entity Rates.

   

4. Click in the Foreign Exchange Rate column to activate the symbol selector button ( ... ).
5. Click the symbol selector button. A selection dialog appears.
6. Select the rate from the list and click OK. The selected rate appears in the Foreign Exchange Rate column.
7. Click in the Time Period column to activate the symbol selector button ( ... ).
8. Click the symbol selector button. A selection dialog appears.
9. Select the time period from the list and click OK. The selected time period appears in the Time Period column.
10. Click in the Entity column to activate the symbol selector button ( ... ).
11. Click the symbol selector button. A selection dialog appears.
12. Select the entity from the list of available entities and click OK. The selected entity appears in the Entity column.
13. Click in the Currency Translation column to activate the symbol selector button ( ... ).
14. Click the symbol selector button. A selection dialog appears.
15. Select the currency translation method from the list and click OK. The selected method appears in the Currency Translation column.
16. In the Rate column, enter a rate for the exchange in the cell for the current row.
17. When you are finished adding or modifying rows in the rate table, click OK to save your work and close the dialog.

Specifying override rates

To set override rates, follow these steps:

1. Open Longview Application Administrator.
2. Select Tools > Foreign Exchange Setup. The Foreign Exchange Setup dialog opens.
3. In the Foreign Exchange Setup dialog, select Override Rates.

   

4. Click in the Account column to activate the symbol selector button ( ... ).
5. Click the symbol selector button. A selection dialog appears.
6. Select the account from the list of available accounts and click OK. The selected account appears in the Account column.
7. Click in the Time Period column to activate the symbol selector button ( ... ).
8. Click the symbol selector button. A selection dialog appears.
9. Select the time period from the list and click OK. The selected time period appears in the Time Period column.
10. Click in the Entity column to activate the symbol selector button ( ... ).
11. Click the symbol selector button. A selection dialog appears.
12. Select the entity from the list of available entities and click OK. The selected entity appears in the Entity column.
13. Click in the Currency Translation column to activate the symbol selector button ( ... ).
14. Click the symbol selector button. A selection dialog appears.
15. Select the currency translation method from the list and click OK. The selected method appears in the Currency Translation column.
16. In the Rate column, enter a rate for the exchange in the cell for the current row.
17. When you are finished adding or modifying rows in the rate table, click OK to save your work and close the dialog.

Setting rates for specific dimensions

It is possible to set translation rates for specific symbols in additional dimensions of your own choosing. This involves specifying those dimensions in two attributes to access the function for those dimensions:

Setting the SFXGlobalRateDimensions attribute

To set dimensional values for the Global and Entity Rate attribute, follow these steps:

1. Open Longview Application Administrator.
2. In the Server Explorer pane, expand Attributes, and select System. A list of all the System attributes appears in the Contents window.
3. Navigate to the SFXGlobalRateDimensions attribute, and right-click it. A pop-up menu appears.
4. Select Set Value. The Attribute Values dialog opens.
5. In the Enter New Value field, type the name of the dimension for which you want to set global and entity rates.
6. Click Add to list to enter the value. Repeat step 5 to add other dimensions if desired.
7. Optionally, you can select a value in the value list and use the arrow buttons to move it up and down in the list, and the delete button to remove the value from the list.
8. When you have finished assigning the value(s), click Apply to save your changes.
9. Click OK. The Attribute Values dialog closes.

Setting the SFXOverrideRateDimensions attribute

To set dimensional values for the Override Rate attribute, follow these steps:

1. Open Longview Application Administrator.
2. In the Server Explorer pane, expand Attributes, and select System. A list of all the System attributes appears in the Contents window.
3. Navigate to the SFXOverrideRateDimensions attribute, and right-click it. A pop-up menu appears.
4. Select Set value. The Attribute Values dialog opens.

   

5. In the Enter New Value field, type the name of the dimension for which you want to set the override rate.
6. Click Add to list to enter the value. Repeat step 5 to add other dimensions if desired.
7. Optionally, you can select a value in the value list, and use the arrow buttons to move it up and down in the list and the delete button to remove the value from the list.
8. When you have finished assigning the value(s), click Apply to save your changes.
9. Click OK. The Attribute Values dialog closes.

Setting the dimension-specific Global Rates

To set the Global Rate for a specific dimension, follow these steps:

Note: This procedure assumes you have completed the setup of this feature as explained in “Setting the SFXGlobalRateDimensions attribute”.

1. Open Longview Application Administrator.
2. Select Tools > Foreign Exchange Setup. The Foreign Exchange Setup dialog opens.
3. Under Dimension Specific in the Foreign Exchange Setup dialog, select Global Rates.

   

4. Click in the Foreign Exchange Rate column to activate the symbol selector button ( ... ).
5. Click the symbol selector button. A selection dialog appears.
6. Select the rate from the list and click OK. The selected rate appears in the Foreign Exchange Rate column.
7. Click in the Time Period column to activate the symbol selector button ( ... ).
8. Click the symbol selector button. A selection dialog appears.
9. Select the time period from the list and click OK. The selected time period appears in the Time Period column.
10. Click in the Currency Translation column to activate the symbol selector button ( ... ).
11. Click the symbol selector button. A selection dialog appears.
12. Select the currency translation method from the list and click OK. The selected method appears in the Currency Translation column.
13. The subsequent columns prior to Rates, if any, will have the name of the dimension or dimensions set in the SFXGlobalRateDimensions attribute. Click in the dimension’s column to activate the symbol selector button ( ... ).
14. Click the symbol selector button. A selection dialog for that dimension appears.
15. Select the symbol from the list and click OK. The selected symbol appears in the dimension column.
16. Repeat step 13 to step 15 for other dimensions, if any.
17. In the Rate column, enter a rate for the exchange in the cell for the current row.
18. When you are finished adding or modifying rows in the rate table, click OK to save your work and close the dialog.

Setting the dimension-specific Entity Rates

To set the Entity Rate for a specific dimension, follow these steps:

Note: This procedure assumes you have completed the setup of this feature as explained in “Setting the SFXGlobalRateDimensions attribute”.

1. Open Longview Application Administrator.
2. Select Tools > Foreign Exchange Setup. The Foreign Exchange Setup dialog opens.
3. Under Dimension Specific in the Foreign Exchange Setup dialog, select Entity Rates.

   

4. Click in the Foreign Exchange Rate column to activate the symbol selector button ( ... ).
5. Click the symbol selector button. A selection dialog appears.
6. Select the rate from the list and click OK. The selected rate appears in the Foreign Exchange Rate column.
7. Click in the Time Period column to activate the symbol selector button ( ... ).
8. Click the symbol selector button. A selection dialog appears.
9. Select the time period from the list and click OK. The selected time period appears in the Time Period column.
10. Click in the Entity column to activate the symbol selector button ( ... ).
11. Click the symbol selector button. A selection dialog appears.
12. Select the entity from the list of available entities and click OK. The selected entity appears in the Entity column.
13. Click in the Currency Translation column to activate the symbol selector button ( ... ).
14. Click the symbol selector button. A selection dialog appears.
15. Select the currency translation method from the list and click OK. The selected method appears in the Currency Translation column.
16. The subsequent columns prior to Rates, if any, will have the name of the dimension or dimensions set in the SFXGlobalRateDimensions attribute. Click in the dimension’s column to activate the symbol selector button ( ... ).
17. Click the symbol selector button. A symbol selection dialog for that dimension appears.
18. Select the symbol from the list and click OK. The selected symbol appears in the dimension column.
19. Repeat step 16 to step 18 for other dimensions, if any.
20. In the Rate column, enter a rate for the exchange in the cell for the current row.
21. When you are finished adding or modifying rows in the rate table, click OK to save your work and close the dialog.

Setting the dimension-specific Override Rates

To set Override Rates for a specific dimension, follow these steps:

Note: This procedure assumes you have completed the setup of this feature as explained in “Setting the SFXOverrideRateDimensions attribute”.

1. Open Longview Application Administrator.
2. Select Tools > Foreign Exchange Setup. The Foreign Exchange Setup dialog opens.
3. Under Dimension Specific in the Foreign Exchange Setup dialog, select Override Rates.

   

4. Click in the Account column to activate the symbol selector button ( ... ).
5. Click the symbol selector button. A selection dialog appears.
6. Select the account from the list of available accounts and click OK. The selected account appears in the Accounts column.
7. Click in the Time Period column to activate the symbol selector button ( ... ).
8. Click the symbol selector button. A selection dialog appears.
9. Select the time period from the list and click OK. The selected time period is placed in the column.
10. Click in the Entity column to activate the symbol selector button ( ... ).
11. Click the symbol selector button. A selection dialog appears.
12. Select the entity from the list of available entities and click OK. The selected entity appears in the Entity column.
13. Click in the Currency Translation column to activate the symbol selector button ( ... ).
14. Click the symbol selector button. A selection dialog appears.
15. Select the currency translation method from the list and click OK. The selected method appears in the Currency Translation column.
16. The subsequent columns prior to Rates, if any, will have the name of the dimension or dimensions set in the SFXOverrideRateDimensions attribute. Click in the dimension’s column to activate the symbol selector button ( ... ).
17. Click the symbol selector button. A symbol selection dialog for that dimension appears.
18. Select the symbol from the list and click OK. The selected symbol appears in the dimension column.
19. Repeat step 16 to step 18 for other dimensions, if any.
20. In the Rate column, enter a rate for the exchange in the cell for the current row.
21. When you are finished adding or modifying rows in the rate table, click OK to save your work and close the dialog.

Specifying foreign exchange account type

The ZFXAccountType Symbol attribute specifies the foreign exchange type for account symbols. For more information on foreign exchange, see “Setting symbols in foreign exchange”.

To specify foreign exchange type:

1. In the Server Explorer pane, expand Attributes and select SYMBOL.
2. In the Contents window, right-click ZFXAccountType, and select Set Value. The Attribute Values dialog opens.
3. In the Object Selection area, select the symbol to set the foreign exchange type for.
4. In the Values area, specify a value for ZFXAccountType in Enter New Value. The current value for ZFXAccountType displays in Value.
   1. Possible values for ZFXAccountType include the following:

      Value	Description
      Monetary	The account balance is translated at the current period rate.
      NonMonetary	The account balance is treated differently depending on Operations Type. For more information, see “Understanding Operations Type”.
      LongTermMonetary	The account balance is treated differently depending on operations type. For more information, see “Understanding Operations Type”.
      Equity	The account valance is translated using a blended historical rate.
      RevenueExpense	This attribute value is not currently used. The account balance is translated using a blended historical rate. This is the default value for Standard accounts.

5. In the Values area, click Assign to value.
6. Click Apply.
7. Click OK.