In Fusion Financials, you need to define the currencies in which your organization either transacts or reports. For example an American company might have operations in United Kingdom and Denmark. Therefore they will have transactions in USD, GBP & DKK [Danish Krone]. But in Denmark, there may be a reporting requirement to produce their balance sheet in EURO. In this case you will define USD,GBP, DKK & EURO currencies in Fusion Financials. Once you have defined these currencies, the currency code in ISO itself becomes the primary key in the currency table. Therefore you can not change the currency code after you have defined it, because the currency code gets referenced into many of the transactional tables.

You can also capture currencies with an effective start date, i.e becoming effective in future, for example Euro was started in Jan 2002, and if you were to have implemented a system prior to that date, you can in theory create these currency codes well in advance.

In this article you will learn how currencies are defined in Fusion Financials, their various configuration options and how they get used by various processes in Fusion Financials.

Note - It is assumed that you have already read the previous article for defining calendars in Fusion Financials as per this link.

First, the steps in defining the currencies

In the Search Tasks, search for Currency as shown in image below

Click on the plus icon, and add USD

Expand the USD box and define the following

ISO

Usually in Europe and US, ISO currency codes get used. So ensure this is ticked on.

Type = Currency or Statistical

The statistical unit currency type is used only for the Statistical currency. For example, if you wish to distribute the costs of electricity bills to different cost centres that have staff in the building, then you will use Allocations in GL to write formulas to distribute the costs by the head count in each cost centre. In other words, the Statistical currency is used to record statistics such as the number of items bought or sold or used. Statistical balances are typically used financial reports, allocation formulas.

Symbol

This is the special letter associated to the currency code.

Precision and Extended Precision

Precision is the number of digits after the decimal point used in

currency transactions. Extended precision is the number of digits after the decimal point used in calculations for this currency. For example, GBP would have

2 for precision because amounts are transacted as £1.20 for example. However for doing the calculations, you will want the application calcs to be more accurate than just the two decimal digits.

Derivation Type, Factor and Date

Some have fixed conversion rate to EURO. For those currencies you multiply derivation factor to Euro amount to get the equivalent EMU currency amount.

Next define the GBP Currency by going to Manage Currecies - Currency Code - GBP

Define the precision, symbol for GBP

Conversion rates

In Fusion Financials you can maintain different conversion rates between currencies for the same period with the Oracle Fusion General Ledger conversion rate types screen. There are Four predefined daily conversion rate types

Spot

Corporate

User

Fixed

When you create a journal, the conversion rate is defaulted automatically by the

Fusion General Ledger based on the selected conversion rate type and currency. It must be noted that when the rate type is user then default of rate does not happen. In this case the user has to manually enter the conversion rate. This can be very error prone process if the users forget to put the decimals into the transaction. If you forget the decimal, then you may end up creating a trillion dollar transaction, and therefore it is a good idea to define some alerts to see if user rates have deviated way too much from the Corporate or the Spot rate that can be used for guidance.

Besides the conversion rate types listed above, in Fusion General Ledger you can define further additional rate types as required for your implementation. When you have many rate types, you should set your most frequently used rate type

as the default.

You can also assign conversion rate types to automatically populate the associated rate for your period average and period end rates for the ledger. For example, you can assign the rate type of “Spot” to populate period average rates and the rate type “Corporate” to populate the period end rates. Period average and period end rates are used in translation of account balances.  

The conversion rate types are also automatically automatically by the system to derive the rate for

1. For converting journal amounts from source ledgers to reporting currencies secondary ledgers

2. By the Revaluation or Translation processes

Revaluation is where you recalculate your asset value. For example, lets say a British company in London have an invoice that you sent to a customer for 1Million Dollar. The invoice would be paid in 1 month time. It means, for 1 month, there is a debit to the asset account for 1 million dollar. But during the period of this one month, the value of GBP/USD rate would change and therefore asset corresponding to this invoice must be revalued. This revaluation process of course requires a conversion rate to be used for revaluing your asset

Translation is the process whereby you report your General Ledger balances in another currency. Again, for this you need convertion rates between the currencies.

When you define conversion rates you have the further following options

1. Enforce inverse relationships

Tick the checkbox for Enforce Inverse Relationship to specify whether or not to

enforce the automatic calculation of inverse conversion rates when defining daily

rates. For example, if GBP to USD is 1.6702, then USD to GBP will be 0.5988

Once you have defined inverse relation, then any changes to the rate will automatically trigger Fusion Financials to calculate the inverse rate as well.

2. Select pivot currencies

Pivot currency is your main currency that is commonly used during conversion rates. For example, when you set up a daily rate between the GBP and the

DKK and another between the GBP and the CHF. Then in this case GBP will be the pivot currency in creating a rate between DKK and CHF.

DKK and CHF are in this case the contra currencies. During the implementation you may want the application to create rates against a base currency, and in this case you must  define the base currency as the pivot currency for the given rate type.

3. Select contra currencies

These are the currencies to which a pivot currency is applied during rate type definition.

4. Enable cross rates and allow cross rate overrides

Enable Cross Rates check box when checked will ensure that Fusion Financials automatically defines the conversion rates between the contra currencies. For example, if you have daily rates defined for the pivot currency, GBP to the

contra currency, DKK, and GBP to another contra currency, CHF, the application

will automatically create the rates between DKK to CHF and CHF to DKK. This

prevents the need to manually define the DKK to CHF and CHF to DKK rates.

When definiting the conversion rates, you can check the “Allow Cross Rates Override” check box to allow override system generated cross rates.

Mass Uploading Currency Rates
Fusion Financials comes out of the box with a excel based add on to allow upload of conversion rates. This uses the ADF Desktop Integrator, which is similar to the WebADI in Oracle EBusiness Suite.

Anil Passi

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