Reporting Currency Setup and Usage in Oracle R12

What is Reporting Currency? 

A reporting currency is a financial reporting entity associated with a ledger. The reporting currency has the same Chart of Accounts and accounting calendar as the ledger, but usually has a different currency. To maintain ledger transactions in multiple currencies, you can use reporting currencies. There are additional currency representations of primary or secondary ledgers. Reporting currencies can be used for supplementary reporting purposes, such as consolidation or management reporting. The term Reporting Currency refers to subledger or journal-level reporting currency, rather than the balance-level reporting currency.

Financial reporting can be performed using the ledger currency or any of the reporting currencies. When you do entries in the General Ledger, they are converted into the ledger currency and each of the reporting functional currencies. You

 can inquire and report on transactions and account balances in reporting currency by logging onto a responsibility that has access to the reporting currency.

Setup:

Choose the Primary Ledger and click on update in front of reporting currency

Click on add reporting currency:

Add required information and click on apply:

When to use Reporting Currencies

Reporting currencies are of use to organizations that regularly and routinely support statutory and legal reporting of both transactions/journals and General Ledger account balances in multiple currencies--other than the ledger currency. If you only need to report account balances in a currency other than your ledger currency, you can use General Ledger translation. To use reporting currencies, you must define reporting currencies for ledger in Accounting Setup Manager.

Reporting currencies are not intended as a replacement for the General Ledger translation function.
Reporting currencies can be maintained at the following currency conversion levels:

1.       Balance Level

2.       Journal Level

3.       Subledger Level

In 11i
You can setup the reporting currency both at balance level and detail level.

If it is Balance level then it can be achieved by using the translation process to generate Trial balance in reporting currency. Details level information such as Subledger or Journal would be achieved through Multi Reporting Currency (MRC). Reporting Currency Functionality in R12 is combination of both MRC and Reporting currency in 11i.

In AX Countries (France, Italy, Greece, Portugal, Spain, Austria) there is a concept called the Dual posting, where you can enter in a Global Chart of Accounts and post in Local Chart of Account. However, it is required only for the following Subledgers-

1.       Oracle Inventory

2.       Oracle receivables

3.       Oracle Payables

For all other modules in 11i you need to use consolidation process to transfer the data from entered to Reporting Chart of Account.

In R12

This functionality can be achieved through secondary Ledger where you can have a different Chart of Account than the Primary Ledger and with the help of SLA you can achieve all the statutory requirements of the organization. This feature in R12 is available for almost all modules like Accounts Payables (AP), Accounts Receivables (AR), Fixed Assets (FA), General Ledger (GL) etc.

Secondary ledgers can be used to represent Primary Ledger's accounting data in another accounting representation that differs in one or more of the following from the Primary Ledger:

·         Chart of Accounts

·         Accounting calendar/period type combination

·         Currency

·         Subledger accounting method

·         Ledger processing options

When to Use Secondary Ledger

If a legal entity must perform corporate and statutory reporting, you can use the Primary Ledger to satisfy corporate reporting requirements and then use a Secondary Ledger to satisfy statutory reporting requirements. If a legal entity is a subsidiary of a parent company and must produce its financial results according to the parent company's reporting requirements in addition to its own local reporting requirements, then a secondary ledger may be used to satisfy the additional reporting requirements.

Secondary ledgers can be maintained at the following data conversion levels-

·         Balance level Secondary Ledger

·         Subledger level secondary

·         Journal level Secondary Ledger

·         Adjustments Only Secondary Ledger

 Difference between Reporting Currency and Secondary Ledger

Reporting currency is used only when the Currency of Primary Ledger needs to be changed for the reporting purpose. This can be used to capture the information in reporting currency at Balance level, Subledger level and Journal level. Secondary Ledger could be used when you need to change the Chart of Accounts and Accounting convention method to meet the statutory and corporate requirements. This is used primarily where the organizations need to report to different local authorities, US GAAP, IFRS, IASB.

Translation versus Reporting Currencies:

General Ledger's translation feature (balance level reporting currency) is used to translate amounts from Ledger currency to another currency at the account balance level. Reporting currencies convert amounts from your transaction currency to a reporting currency at the transaction or journal level. Reporting currencies are specifically intended for use by organizations that must regularly and routinely report their financial results in multiple currencies. As stated earlier, reporting currencies are not intended as a replacement for General Ledger's Translation feature.

Another benefit of reporting currencies over General Ledger's Translation feature is that with reporting currencies, you can inquire and report on transaction amounts directly from your subledgers. Translation only applies to General Ledger - it cannot be used to translate transaction amounts in subledgers.

 Currency Concept and Different Ledgers

Functional Currency	Organization’s functional currency which can be different from the ledger currency that is assigned to primary and secondary ledgers.
Ledger Currency	Currency assigned to a ledger, such as the primary ledger or secondary ledger, and represents the base currency used to record transactions and maintain accounting data for legal reporting.
Reporting Currency	Currency other than ledger currency, for which you need to report and shares the same chart of accounts and accounting calendar as the source ledger (either the primary ledger or secondary ledger), but typically uses a different currency. Reporting currency allows to report in a different currency than that of a primary or a secondary ledger.
Primary Ledger	Primary ledger acts as the main, record-keeping ledger and uses a particular chart of accounts, accounting calendar, currency, and subledger accounting method
Secondary Ledger	Optional, additional ledger associated with the primary ledger for an accounting setup and is used to represent the primary ledger's accounting data in another accounting representation that differs in one or more of the following from the primary ledger- 1. Chart of accounts 2. Accounting calendar/period type combination 3. Currency 4. Subledger accounting method 5. Ledger processing options, such as Suspense Posting

Below are the required steps to set up reporting currencies in the applications.

Conclusion

We have covered the basic concept of reporting currency in Oracle applications, why you need reporting currency and what are the setup steps so that the functionality can be achieved.

This blog will help the end user / company in generating oracle reports across all the currencies for which setup has been performed as above.

We are not planning for any follow-up blog on above topic.

Reference links

http://docs.oracle.com/cd/E18727_01/doc.121/e12841/T120505OA1234.htm