Advanced Foreign Currency Valuation in SAP S/4HANA CLOUD

[Raman_Rana]

Introduction

Advanced Foreign Currency valuation helps user for creation of financial statements. Advanced foreign currency valuation can be performed in functional currency by using different valuation rules. If functional currency is not defined, then it is performed in local currency of company code.

CBC users have to setup only realized, unrealized gain and loss account. There is no need to set up reconciliation account for balance sheet account. Posting is directly made in reconciliation accounts defined against semantic tag in FSV.

Once Advanced Foreign Currency Valuation is activated, the following apps cannot be used:

• Perform Foreign Currency Valuation (FAGL_FCV)


• Regroup Receivables / Payables (FAGLF101)


• Perform Further Valuations (F107)

If there are no postings in production environment, then Advanced Foreign Currency Valuation can be deactivated. Advanced foreign currency valuation also supports latest valuation like parallel accounting and integrated with  the SAP S/4HANA Cloud for Advanced Financial Closing.

 Advanced foreign currency valuation has following capabilities.

•  Selection of the items relevant for valuation


• Determination of open items and balances


• Valuation of open items and balances


• Posting of valuation differences

 Configurations

CBC users must complete below configuration in configuration environment of your system to run Advanced Foreign Currency Valuation.

• Define Financial statement version

CBC users must create financial statement version from configuration environment via Define Financial Statement Versions.

 

 

• Assign Semantic tag to FSV

CBC users must assign relevant GL account to semantic tag “FX” to consider in Advanced Foreign Currency Valuation. GL account defined against semantic tag must be considered for Advanced foreign currency valuation.

 

• Define rules for Advanced Foreign Currency Valuation

CBC user must define a rule which will control advanced foreign currency valuation. CBC user must assign realized, unrealized gain and loss P&L account here.

 

• Assign Financial Statement Versions to Accounting Principle

In this configuration, CBC user must assign the financial statement versions to the accounting principle.

 

• Activate Advance foreign currency valuation

CBC users activate advanced valuation for an accounting principle. Advanced valuation can then be carried out for all company codes to which the accounting principle is assigned.

 

• Activate Additional Fields for Foreign Currency Translation

In this configuration, CBC users must assign additional account assignment fields which system will consider during valuation run like advanced foreign currency valuation and currency translation.

 

Process

• Customer/Vendor/GL open items on Foreign Currency

All open items and balances in a foreign currency will be converted to local currency using the current exchange rate maintained in the system during Advanced foreign currency valuation. It will post to original G/L account defined in configuration environment under “FX” semantic tag.

i.e., We have posted a Vendor Invoice on 1000 EUR which is equivalent to 1100 USD based on exchange rate (EUR:USD - 1:1.10000).

 

• Schedule General Ledger Jobs app 

User has to run schedule general ledger jobs app and needs to select template for advanced foreign currency valuation.

After the execution you can check the header, the results in different currencies, logs, and a document list of Advanced foreign currency valuation.

 

Step 1 : Template Selection

Go to Schedule General Ledger Job app and click on Create button. Select Advanced Foreign Currency Valuation template to schedule the job.

 

Step 2 : Scheduling Options

User can define recurring pattern, If user want to run this job just once or specific interval.

 

Step 3: Parameters

User can specify a company code, ledger, Valuation key date. User can also decide to run this on test run or update run.

Click on Check and Schedule button.

 

Result

Advanced foreign exchange valuation Accounting document posted with delta exchange rate into reconciliation account and loss/gain currency valuation account.

 

Value Proposition

• All Advanced Foreign currency valuation posted to original G/L Account.


• Advanced Foreign currency valuation is integrated with the SAP S/4HANA Cloud for Advanced Financial Closing.


• Support latest innovation i.e., Parallel Accounting


• Full traceability of advanced foreign currency valuation.


• Simple definition of valuation scope by use of semantic tags in the financial statement version.

 

Reference SAP Best practice : J58

You can also refer below links for more information.

https://help.sap.com/viewer/0fa84c9d9c634132b7c4abb9ffdd8f06/2202.500/en-US/e3f896e4b0af4d1dbf00420e...

 

Thanks for reading this blog post. I would like to see your comments and  would like to  answer questions which u can post  at Q&A tag area : https://answers.sap.com/tags/66233466-fcd6-45d2-a9ae-2cba38c72e19

[setiadidoank]

Dear Mr Raman,

Thanks for the information for this functionality advance currency valuation in S4/HANA Cloud, I have some question as followrs:

1). How to exclude the Advance payment reconcile account which is i do not want to be revaluated ?

2). How to define the gain/loss balance sheet account with Cash/Banks ?

Regards,

Setiadi

 

[Raman_Rana]

Hi,

In case if you don't want to run for certain reconciliation account in advanced foreign currency valuation then you need not to assign those reconciliation account to FX semantic tag.

Cash / Banks are non open item managed account. User needs to assign those GL against FX semantic tag for advanced foreign currency valuation. you can define gain/loss GL in CBC under Define Rules for Advanced Foreign Currency Valuation.

 

regards

Raman Rana

 

[setiadidoank]

Dear Mr Raman,

Thanks for your information.

Regards,

Setiadi

[former_member480141]

Hi Raman,

Thanks for the write-up, I had following doubts:

• From which version is this advanced foreign currency valuation available?


• Is this applicable in a organisation which has more than one ledger?


• Are both reconciliation and open item account revaluation posted to the original GL?

Thanks in advance for the response.

Nicky

[former_member132112]

This blog seems to be focused on FAGL_FC_VAL and the translation of the balance sheet. How would customers moving from OP to S4HC go about translating their P&L. I have a customer that is currently using FAGL_FC_TRANS for this?

[steve_wayland]

Hi Mr Raman,

This blog is very helpful. Thank you. But similar to previous question, I have a client that runs FAGL_FCV for revaluation of local currency balances for which gains/losses are posted to P&L. This will work well with Advanced Foreign Currency Valuation. However, we also have non-USD company codes that we run FAGL_FC_TRANS, and the account determination for this is different - the gains and losses are posted to CTA accounts in Equity.

How are we meant to handle different account determination requirements for revaluation of Group Currency balances (curr type 30) vs Local (Company Code, curr type 10) balances?

Thanks, 

Steve

[micheletassini92]

Hi Gurus,

Do you know which is the new table store after the effective running?

The former table was FAGL_BSBW_HISTRY but now I can't find.

Thank you

[Martina_Manzoli]

Hi,

thank you for the blog, if we switch from Classic to Advanced, in which part of the new job the valuation area and method are taken into consideration? This is no clear to me, in the job we only have the company code.

Thanks

Martina 

[BilalHashmi]

HI 

I have activated WBS element field in following config above 

• Activate Additional Fields for Foreign Currency Translation

Assigned the WBS while posting journal.

but I does not perfrom valuation for WBS or Project as I cannot see WBS for FX Journal ?