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<ManualTopic ID="/baanerp/tc/onlinemanual/000459" xml:lang="en">
   <Header>
      <Title>Standard currency system</Title>
      <Keyword type="header" order="d1e1148004">
         <Level1>Standard currency system</Level1>
         <Level2>overview</Level2>
      </Keyword>
      <Keyword type="header" order="d1e1148009">
         <Level1>Currency</Level1>
         <Level2>standard currency system</Level2>
      </Keyword>
   </Header>
   <GeneralSection>
      <List>
         <ListIntro>To meet the financial and tax reporting requirements of
		  multinational companies with subsidiaries in many countries, the standard
		  currency system in LN offers:</ListIntro>
         <ListItemHead>Direct translation of foreign currency
		  transactions</ListItemHead>
         <ListItem>
            <Paragraph>Foreign currency transactions are translated
			 straight from the <Link href="/baanerp/tc/glossary/glossary#000372" role="glossary" Update="No">transaction</Link> currency to the local currency, without <Link href="/baanerp/tc/glossary/glossary#000078" role="glossary" Update="No">triangulation</Link> through the <Link href="/baanerp/tc/glossary/glossary#000017" role="glossary" Update="No">reference</Link> currency. By default, reporting currencies are
			 directly translated from the transaction currency into the reporting currency.
			 However, reporting currencies can also be translated from the local
			 currency.</Paragraph>
         </ListItem>
         <ListItemHead>Integrations and multiple reporting
		  currencies</ListItemHead>
         <ListItem>
            <Paragraph>Transactions can be recorded in one local
			 currency and up to two <Link href="/baanerp/tc/glossary/glossary#000065" role="glossary" Update="No">reporting</Link> currencies. Only the local currency amounts are
			 logged in the integration transactions, fixed assets, and reconciliation data.
			 Before reporting in one of the reporting currencies, reconciliation of
			 subledgers in the company’s local currency must take place. Adjustment of
			 reporting currency balances for <Link href="/baanerp/tf/glossary/glossary#CurrenDiffer_tf" role="glossary">currency differences</Link> is supported by the <GUIRef href="/baanerp/tf/gld/tfgld5201m000" role="session">Calculate Currency Differences (tfgld5201m000)</GUIRef> session, which can be run for the local
			 and the reporting currencies independently. For each of the home currencies the
			 differences will be posted in separate transactions. Reconciliation of
			 integration transactions on business object level is only possible in the local
			 currency.</Paragraph>
         </ListItem>
         <ListItemHead>Multiple home currencies</ListItemHead>
         <ListItem>
            <Paragraph>A home currency is the <Link href="/baanerp/tc/glossary/glossary#000062" role="glossary" Update="No">local</Link> currency, or a reporting currency used by a company
			 for preparing the financial statement. Amounts in foreign currency are
			 translated into amounts in any of the home currencies by using direct currency
			 rates for the local currency and, depending on the <GUIRef href="/baanerp/tc/emm/tcemm1170m000#tcemm170.tmub" role="manual">Translation Method</GUIRef> setting in the <GUIRef href="/baanerp/tc/emm/tcemm1170m000" role="session">Companies (tcemm1170m000)</GUIRef> session, either the
			 transaction, or the local currency amount for the translation into the
			 reporting currency amounts.</Paragraph>
         </ListItem>
         <ListItemHead>Currency rotation</ListItemHead>
         <ListItem>
            <List>
               <ListIntro>Rotate Currency functionality is available:</ListIntro>
               <ListItem>In <GUIRef href="/baanerp/tf/gld" role="module">General Ledger</GUIRef>, ledger history and dimension history sessions.</ListItem>
               <ListItem>In <GUIRef href="/baanerp/tf/acp" role="module">Accounts Payable</GUIRef> and <GUIRef href="/baanerp/tf/acr" role="module">Accounts Receivable</GUIRef>, sessions that display information on open
				items.</ListItem>
            </List>
            <Paragraph>In these sessions, within a single company,
			 Rotate Currency is available for every implemented home currency. Within a
			 multicompany selection, Rotate Currency is available for every common currency,
			 using <Link href="/baanerp/tf/glossary/glossary#000497" role="glossary" Update="No">reporting currency groups</Link>.</Paragraph>
            <Paragraph>Because reporting currencies are translated
			 according to predefined rules and rate types, currency rates for the reporting
			 currencies cannot be modified during transaction entry.</Paragraph>
         </ListItem>
         <ListItemHead>Currency rates retrieved from the Internet</ListItemHead>
         <ListItem>
            <Paragraph>Import of currency rates from the Internet
			 is enabled by the <GUIRef href="/baanerp/tc/mcs/tcmcs0102m000#tcmcs002.iccc" role="manual">ISO Currency Code</GUIRef> field in the <GUIRef href="/baanerp/tc/mcs/tcmcs0102m000" role="session">Currencies (tcmcs0102m000)</GUIRef> session.</Paragraph>
            <Paragraph>To import the currency rates, you must write
			 your own program. LN only provides the interface.</Paragraph>
         </ListItem>
         <ListItemHead>Calculation and posting of currency
		  differences</ListItemHead>
         <ListItem>
            <Paragraph>The <GUIRef href="/baanerp/tf/gld/tfgld5201m000" role="session">Calculate Currency Differences (tfgld5201m000)</GUIRef> session can be run for each home currency
			 separately and independently. The currency differences calculation process also
			 considers the exchange rate type, specified on the ledger account, for the
			 local and the reporting currencies independently.</Paragraph>
            <Paragraph>Currency difference transactions are always
			 created for each home currency separately.</Paragraph>
            <Paragraph>The method of calculating currency
			 differences depends on the <GUIRef href="/baanerp/tc/emm/tcemm1170m000#tcemm170.tmub" role="manual">Translation Method</GUIRef> setting in the <GUIRef href="/baanerp/tc/emm/tcemm1170m000" role="session">Companies (tcemm1170m000)</GUIRef> session.</Paragraph>
         </ListItem>
         <ListItemHead>Interim accounts</ListItemHead>
         <ListItem>
            <Paragraph>For several interim accounts, the original
			 posting and the account clearing posting are not transacted in the same
			 currency. For example, the purchase receipt / warehouse receipts that post over
			 the interim transit 3 account, can have different transaction currencies. The
			 purchase receipt may be in US dollars, whereas the warehouse receipt is always
			 transacted in the local currency of the warehouse. In this case, a currency
			 translation will take place, using the account that is defined in the <GUIRef href="/baanerp/tf/gld/tfgld0503m000" role="session">Company Parameters (tfgld0503m000)</GUIRef> session. LN will detect any difference between the transaction currencies
			 within a pair of debit/credit postings (one of these being the local currency
			 of the particular company), and automatically create the additional translation
			 transactions.</Paragraph>
         </ListItem>
         <ListItemHead>Intercompany transactions</ListItemHead>
         <ListItem>
            <Paragraph>Intercompany transactions are reconciled in
			 the transaction currency. For calculating the local and reporting currency
			 amounts in intercompany transactions, only the transaction amount is
			 used.</Paragraph>
            <Paragraph>If required, in the standard currency
			 system, intercompany accounts can be defined by transaction currency, meaning
			 that the transaction currency determines to which intercompany account the
			 transaction is posted.</Paragraph>
         </ListItem>
         <ListItemHead>Chart of accounts</ListItemHead>
         <ListItem>
            <List>
               <ListIntro>For each financial company, reporting rate type
				characteristics can be defined on ledger account level in the <GUIRef href="/baanerp/tf/gld/tfgld0128m000" role="session">Ledger Account Settings by Individual Account (tfgld0128m000)</GUIRef> session. Here, you
				can set the reporting rate type to:</ListIntro>
               <ListItem> 
                  <GUIRef href="/baanerp/tc/domains/rdrc#adopt" role="option">Adopt Transaction's Exchange Rate Type</GUIRef>
               </ListItem>
               <ListItem> 
                  <GUIRef href="/baanerp/tc/domains/rdrc#own" role="option">Own Exchange Rate Type</GUIRef>
               </ListItem>
               <ListItem> 
                  <GUIRef href="/baanerp/tc/domains/rdrc#default" role="option">Company's Default</GUIRef>
               </ListItem>
            </List>
            <Paragraph>If set to <GUIRef href="/baanerp/tc/domains/rdrc#own" role="option">Own Exchange Rate Type</GUIRef>, a rate type for the particular reporting currency must be
			 entered. If no characteristics are entered for a specific ledger
			 account, LN will use
			 the company’s default defined in the <GUIRef href="/baanerp/tc/emm/tcemm1170m000" role="session">Companies (tcemm1170m000)</GUIRef> session.</Paragraph>
            <Paragraph>Tax accounts of the same financial company
			 and tax origin (purchase/sales), as well as control accounts of the same
			 financial company and origin (supplier/customer), must have the same reporting
			 rate types characteristics. Therefore, reporting rate type features will be
			 definable on these levels as well.</Paragraph>
         </ListItem>
         <ListItemHead>Use of exchange rate types</ListItemHead>
         <ListItem>
            <Paragraph>To translate the transaction amount into the
			 local currency amount, LN uses the rate belonging to the exchange rate type specified on the
			 transaction. The currency rate used for the translation into the reporting
			 currency depends on the exchange rate type specified on the ledger account to
			 which it is posted.</Paragraph>
            <Paragraph>Cash transactions will typically be
			 translated against the spot exchange rate whereas monthly rates can be used for
			 inventory and work in process. Typical exchange rate types known are daily
			 rates, average rates, and monthly rates.</Paragraph>
            <Paragraph>The calculate currency differences process
			 can retrieve a rate based on the ledger account exchange rate type.</Paragraph>
         </ListItem>
         <ListItemHead>Multiple reporting currencies in Accounts Payable and
		  Accounts Receivable</ListItemHead>
         <ListItem>
            <Paragraph>The open entries in the <GUIRef href="/baanerp/tf/acp" role="module">Accounts Payable</GUIRef> and <GUIRef href="/baanerp/tf/acr" role="module">Accounts Receivable</GUIRef> modules are recorded in the company’s local currency and
			 reporting currencies.</Paragraph>
            <Paragraph>In the standard currency system, local
			 currency amounts are translated using the exchange rate type as specified on
			 the transaction. Reporting currency amounts are calculated using the exchange
			 rate type as specified on the control ledger account. Within a financial
			 company, all control ledger accounts in a business partner group must have the
			 same exchange rate types for the reporting currencies.</Paragraph>
         </ListItem>
         <ListItemHead>Multiple reporting currencies in tax analysis and
		  reporting</ListItemHead>
         <ListItem>
            <Paragraph>Because the same currency can be used as
			 home currency more than once, it is possible to choose which home currency is
			 used for tax analysis and which for tax declarations. This is useful to
			 facilitate legal compliant reporting using a specific set of rates for tax. In
			 the tax declaration master you can select the home currency position to be used
			 in the tax declaration.</Paragraph>
            <Paragraph> LN calculates reporting currency amounts
			 using the exchange rate type as specified on the tax ledger account. Within a
			 financial company, all purchase tax ledger accounts must have the same exchange
			 rate types for the reporting currencies. The same applies to the sales tax
			 ledger accounts.</Paragraph>
         </ListItem>
         <ListItemHead>Write off currency differences on the ACP/ACR control
		  accounts</ListItemHead>
         <ListItem>
            <Paragraph> LN calculates reporting currency differences
			 using the exchange rate type and rate as specified on the control ledger
			 account for each home currency. For each of the home (local and reporting)
			 currencies, the currency difference is posted using a separate financial
			 transaction.</Paragraph>
         </ListItem>
         <ListItemHead>Reference currency</ListItemHead>
         <ListItem>
            <List>
               <ListIntro>In the standard currency system, the reference
				currency:</ListIntro>
               <ListItem>Can be defined independently of the local and reporting
				currencies.</ListItem>
               <ListItem>Can be, but does <Emphasis>not</Emphasis> have to be, one
				of the <Link href="/baanerp/tc/glossary/glossary#000064" role="glossary" Update="No">home currencies</Link>.</ListItem>
               <ListItem>Can be used to express amounts that represent amounts
				across multiple companies, for example, lot prices in <GUIRef href="/baanerp/wh" role="package">Warehousing</GUIRef>.</ListItem>
            </List>
         </ListItem>
         <ListItemHead>Reports</ListItemHead>
         <ListItem>
            <Paragraph>In various print sessions data can be
			 selected across multiple companies. In the standard currency system, financial
			 reports can only be printed across financial companies that have at least one
			 common currency. If there is more than one common currency, choose in which
			 common currency the report must be printed using the appropriate <Link href="/baanerp/tf/glossary/glossary#000497" role="glossary">reporting currency group</Link>.</Paragraph>
            <Paragraph>If no common currency exists, printing
			 reports across multiple companies is not possible.</Paragraph>
         </ListItem>
         <ListItemHead>Logistical reports with currencies</ListItemHead>
         <ListItem>
            <Paragraph>The rate type to be used in translation to
			 the reporting currency is also available in report sessions.</Paragraph>
         </ListItem>
         <ListItemHead>Rate determiner</ListItemHead>
         <ListItem>
            <Paragraph>In the standard currency system, the rate
			 determiner is only used to switch to manually entered rates. All other
			 functions of the rate determiner have been moved to the rate type. In
			 transaction entry sessions, the <GUIRef href="" role="optionlist">Currency Rate Determiner</GUIRef> field will show <GUIRef href="/baanerp/tc/domains/fcrt#docd" role="option">Document Date</GUIRef> by
			 default. If you want to overwrite the defaulted rate, set the rate determiner
			 to <GUIRef href="/baanerp/tc/domains/fcrt#manual" role="option">Manually Entered</GUIRef>.</Paragraph>
         </ListItem>
         <ListItemHead>Finalization reports</ListItemHead>
         <ListItem>
            <Paragraph>Finalization reports must always be printed
			 in the local currency of the company of the transactions concerned. As a
			 result, if a batch for Company 100 contains transactions for Company 200,
			 Company 200 transactions are printed on a separate report page in the local
			 currency of Company 200.</Paragraph>
         </ListItem>
         <ListItemHead>Shared balances</ListItemHead>
         <ListItem>
            <Paragraph>In LN various balances are kept on the level of
			 an entire group of companies, for example, business partner balances and credit
			 limits. In the standard currency system, balances are also kept on company
			 level in the company’s local currency. The group company balances are either
			 kept in the reference currency, or in a user-definable currency. When these
			 balances are recalculated, they are updated in the local currency. When the
			 local currency is updated, the group balances are recalculated as
			 well.</Paragraph>
         </ListItem>
      </List>
   </GeneralSection>
   <RelatedTopics>
      <SectionTitle> Related topics</SectionTitle>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000030" role="manual">Currencies - overview</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000029" role="manual">Currencies for non-enterprise units</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000056" role="manual">To use currency exchange rate types</Link>
      </RelTopic>
      <RelTopic>
         <Link href="/baanerp/tc/onlinemanual/000458" role="manual">Other currency systems</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>