- SAP Managed Tags:
In Currency translation method we need to have different process steps (Sequences) as per our translation requirement and out of which three process steps are exclusively meant for the purpose of handling the Rounding Differences. Based on the Rounding Sequence the system will total up all the Group Currency values and check if the value is equal to Zero, if not the system will post the rounding differences to the specified FS item to balance.
In the below SAP defined Translation Method S0902, we can see 3 Sequences which are related to Rounding. These Rounding Sequences are at different levels:
- Balance Sheet (All Balance Sheet FS Items are Included)
- Annual Net Income (CY Retained Earnings and Annual Net Income)
- Income Statements (All PL FS Items are Included)
Fig1: Currency Translation Method S0902 with Rounding Rules:
Before going to discuss on the Rounding errors part, let us see what is there inside these 3 rounding sequences
Method Sequence 900: Rounding rules for Balance Sheet FS Items - all BS FS items as selected by the Selection S-CT-RD-BS will be picked up for processing. For selection of FS items, we can use currency translation attribute value
The rounding difference amount of all BS FS items will be posted to the FS item for which the Role S-CT-DIFF is assigned. While posting, subitem 980 is assigned as per the configuration. This FS Item and the subitem are same for both debit and credit sides of the rounding difference
Note: In best practice content S-CT-DIFF role has been assigned to FS item 314800-Foreign Currency Translation Reserve - Type LEQ. In the Balance sheet this can be shown under the head other reserves
Fig2: Rounding Sequence definition for Balance Sheet FS Items
Method Sequence 901: Rounding rules for Annual Net Income FS Items of both BS Net Income and PL Net Income- all Net Income FS items as selected by the Selection S-CT-RD-ANI will be picked up for processing.
The rounding difference amount for all the Net Income FS items, will be posted to the FS item for which the FS item Role S-ANI-PL is assigned. While posting, subitem YB89 is assigned as per the configuration. This FS Item and the subitem are same for both debit and credit sides of the rounding difference
Note: In best practice content S-ANI-PL role has been assigned to FS item 799000-Other financial Income - Type INC. In the Income Statement this can be shown under the head Finance Income.
Fig3: Rounding Sequence definition for ANI FS Items
Method Sequence 902: Rounding rules for PL FS Items - all PL FS items as selected by the Selection S-CT-RD-PL will be picked up for processing.
The rounding difference amount for all the PL FS items will be posted to the FS item for which the Role S-CT-ROUND-PL is assigned. While posting, subitem YB89 is assigned as per the configuration. This FS Item and the subitem are same for both debit and credit sides of the rounding difference
Note: In the Best Practice Content S-CT-ROUND-PL role has been assigned to FS item 604000-Other financial Income - Type INC. In the Income Statement this can be shown under the head Finance Income.
Rounding Sequence for PL FS Items:
Fig4: Rounding Sequence definition for PL FS Items
Reasons for Rounding Errors during Currency Translation:
In the above section I have explained about the rounding related configuration part. Now we will see some of the errors we frequently encounter which are related to Rounding.
Scenario 1:
Whenever a new GL is created in FI module we need to ensure that GL Account is assigned to an existing or to a new FS item in GR module. If a New FS Item is created and the user forgot to assign the Currency Translation Attribute to the newly created FS Item, then system will through an error because of the missing CT attribute.
In this scenario, you can run the Data Monitor tasks such as Release Universal Journal, Validation of Universal Journal, Calculation of Net Income, and Validation of Reported Data etc. successfully but rounding error occurs when you run the Currency Translation Task.
E.g. Below is the trial balance for one of the Consolidation Unit and the FS Items 121190 & 121900 are the newly created FS Items without CT Attribute.
Fig5: FS item master data showing missing CT attribute
Table 1: Table showing the Trial balance Data
** Local Currency is SGD and Group Currency is USD
During execution of Currency Translation task from the Data Monitor, in the absence of CT attributes system fails to translate the LC amounts into GC amount. Because of CT failure the GC Trial Balance will not be balanced and hence system will through the error.
From the below table you can see the Trial Balance Data for the GC amount where there is a difference of -25200 because of the missing CT attributes i.e. wherever CT attributes are missing, then there is no Currency Translation for those FS items.
Table 2: Data showing GC TB is not tallied
** Note: Although some of the FS Items are Balance Sheet Items, as per our configuration AVG Rates are relevant as the amounts are related to movements.
As per the rounding rules of the CT Method, system will check at each rounding sequence level if the Amount in Group Currency is equal to Zero or not but in our example the total Trial Balance amount in Group Currency is not equal to Zero.
In the absence of the CT attributes for the two FS items 121900 & 121190 of type AST, system did not calculate the GC amount of 25200 and prompts error message. This is because of CT attributes have not been maintained for these two FS Items. Since these two FS items are of type Balance Sheet Accounts, Method Sequence 900 is relevant for the rounding error.
If the CT attributes are not missing, then the system would have been calculated the below amount of 25200 for the GC amount and there would be no rounding error.
Table 3: Data showing two FS Items LC and GC Data
If we analyse the Group currency values further, we can derive the below values against each rounding sequence. You can notice that the GC data for the CT method sequence 900 is not tallied.
Table 4: Data showing the rounding difference
Rounding Error: Below is the usual error message we get when there is a rounding related error
Fig6: Picture showing Rounding error message
How to resolve the error:
Assign the CT attribute to the Newly Created FS Item and Perform the Currency Translation Task
Fig7: Picture showing FS items with assignment of CT attributes
When you assign the CT attribute to all the FS items, then the error goes off. Below is the log after successful execution of Currency Translation Task.
Task Log:
Fig8: CT task log after successful execution
Note: Since the applicable rate type is same for all the FS items (see Table # 2), there is no balance for the FS item 314800 – Foreign Currency Translation Reserve.
Scenario 2:
As part of the consolidation process, Data was extracted from S4HANA to GR and/or Flat file to GR and then performed all the Data Monitor tasks including Currency translation task successfully. However, there may be some late coming entries/transactions posted by way of flat file upload. In this case user has to perform the Calculation of retained earnings task before running the CT task. Nevertheless, sometimes Business users may tend to execute the currency translation task immediately after flat file upload. In this case system will throw error because of non-execution of calculation of retained earnings task for the newly uploaded data.
Below table shows two-line items loaded as part of late entry for the FS Items 121100 & 583000
Table 5: Data showing GC TB is tallied
Though the value of the Amount in Group Currency is equal to Zero, CT task will get failed status as the system expects rounding at each Rounding sequence of the CT method.
For eg: At the Balance Sheet Accounts Rounding Level the Amount in Group Currency is not equal to Zero hence the rounding error occurs. The same will happen for P&L Accounts also.
Table 6: Table showing Rounding sequence level status
Rounding Error:
Fig9: Picture showing Rounding error message
How to resolve the error:
As the adjustment/Late coming entries are posted through Flat File SAP S/4HANA system will not post a financial statement balancing adjustment entry automatically but we have to execute Net Income and Currency Translation Tasks manually.
As a process run the net income task before executing CT task so at each rounding sequence level the amount in Group Currency is equal to Zero.
However, this rule is not applicable when we post transactions by way of Post Group Journal Entries. In this case, system will post an Imbalance amount to Net Income BS and PL Accounts automatically. This is called a financial statement balancing adjustment entry. (please refer my other blog on this topic - Financial Statement Imbalances in S/4HANA Group Reporting).
Now after running the Calculate net income task and then CT task, below is the result.
Table 7: Data showing GC TB is tallied and RE and NI FS items got updated
Below is the status after running the RE task and since all the balances at individual Rounding sequence level is Zero, now the CT task can be executed without any errors.
Table 8: Table showing Rounding sequence level status
Task Log:
Fig10: CT task log after successful execution
Terminology:
Table 9: Terminology
2 Comments
