Foreign Currency Translation Issue

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We have a company setup to use two currencies. Canadian Dollars is the Local Currency and US Dollars is the Additional Reporting Currency.

When the Adjust Exchange Rate program posts the adjustment for US Currency Vendor Invoices, the adjustment to Accounts Payable and Foreign Exchange (gain)loss accounts is only made to the Local Currency (Canadian) and not to the Additional Reporting Currency.

Our Accounting department claims this journal entry does not follow GAAP rules. The journal entry should be made for both currencies. If Nav were to post the entry in both currencies, we would then need to post an additional journal entry to translate the Additional Reporting Currency again.

I was wondering if anyone else has run into this issue and how you solved it. We have confirmed with Microsoft Support that NAV is processing the transactions correctly and we have the company configured correctly.

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Aleksandar Totovic 16,765 on at

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RE: Foreign Currency Translation Issue

This is correctly posting for additional currency in NAV. If you have posting in vendor/customer currency same the additional currency, when you run Adjust Exchange Rate, you will not get posting in additional currency.

I will give you one example:

First rate is 1 USD = 1,05 CAD

When you post invoice with 1.000 USD, this is 1.050 CAD.

Second rate is 1 USD = 1,10 CAD

When you run Adjust Exchange Rate, you will get only 50 CAD on Accounts Payable and Foreign Exchange (gain)loss accounts /(1,10-1,05)x1000/.

You will get posting only on Local Currency, not on Additional Reporting Currency, because it is correct. Changing of USD/CAD rate is related only on Local Currency posting, because you must to see only initially 1.000 USD posting. If you get posting for Additional Reporting Currency, you will change initially value for this correction. 1.000 USD is always 1.000 USD. You have changing only in your Local Currency (CAD).

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Jens Glathe 6,092 on at

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RE: Foreign Currency Translation Issue

Hi,

as Aleksandar (and Microsoft) said, this is correct. The general rule is: Transaction Currency = ACY -> you get the transaction currency amount as the ACY amount. The reason behind this is simply that you can't have two different exchange rates for the same currency in one transaction. For the exchange rate adjustment, the transaction currency amount is always zero. Therefore, if your vendor has entries in USD, you get LCY only postings. That's also the reason why you shouldn't have your LCY currency as separate currency code in a company.

with best regards

Jens

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Community Member on at

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RE: Foreign Currency Translation Issue

Hi! I have a related question I think. We have the set up with additional currency, but don't use it yet for reporting/batch jobs. However, when we make our monthly adjustment of currency rates (for the LCY), we get zero-postings on the G/L account (saying: residual due to rounding-off of additional currency). Does anyone know if it is possible to set the system to not book these zero-posts? Best regards, Marie Nilsson

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Jens Glathe 6,092 on at

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RE: Foreign Currency Translation Issue

Hi Marie,

did you check the ACY values of these entries? There are some scenarios where you can get complete zero postings, but not many.

with best regards

Jens

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Community Member on at

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RE: Foreign Currency Translation Issue

Sorry I see now, this is not when we do the adjustment for currency, but whenever we book something on the G/L account for exchange rates. Both for manual G/L entries as well as prel. and finally booked supplier invoices. There is never any amount on this residual posting, only zero-amounts. So maybe there is a setting somewhere?

I am not sure what you mean with checking the ACY-values (is it still relevant even though it is not for currency adjustment batch jobs?). We are quite new users of NAV, hence all the questions. :)

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Jens Glathe 6,092 on at

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RE: Foreign Currency Translation Issue

Hi Marie,

this is the balance checking (and handling) of the posting routine. The consistency rule is: Amount must be zero by posting date and amount (LCY), and amount (ACY). To ensure this, the ACY gets rounded (it has a conversion rate already, by G/L entry - the ACY is rounded by entry) and "topped up". So, nothing to worry about.

with best regards

Jens

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Community Member on at

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RE: Foreign Currency Translation Issue

Ok, so you could say it is a built-in control function in the system that also zero-posts are booked in the G/L? We are using G/L-reports a lot for internal control of the book-keeping and these zero-posts are in that case not of use for us, they just make the report longer. That is why I was wondering if there was some setting to not book these automatically, if the amount is zero anyway. But as I understand it now it is not possible? Thank you for you help!

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Jens Glathe 6,092 on at

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RE: Foreign Currency Translation Issue

Hi Marie,

yes :) They are required. If your report would also show Additional Reporting Currency amounts, you will see that these postings are not zero. The only way to switch it off would be to disable the Additional Reporting Currency. You can filter empty entries out in G/L reports, though.

with best regards

Jens

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Community Member on at

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RE: Foreign Currency Translation Issue

oh, that's a good idea, is that by filtering out something when printing the report then I guess? Do you have a suggestion for how to do that?

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Jens Glathe 6,092 on at

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RE: Foreign Currency Translation Issue

Usually you do this in the report design itself (with an option, "show zero lines", for example). It is a customization, but it should only affect the Detail Trial Balance. So... not much.

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