Currency Translation

[ChrisZheng]

How does the currency conversion functionality in group reporting resolve the issue of generating cash flow statements? Since the balance sheet uses period-end exchange rates for conversion (i.e., cash items are translated at the closing rate), while the opening amount in the cash flow statement equals the previous period"s amount. This results in a discrepancy where the closing value of the cash flow statement does not match the cash item amount on the balance sheet.

[GregoireDesombre]

Hello,

Indeed the balances of B/S FS items (except Investments and Equity) are translated using the closing rates, but this is just an aggregation of the detailed movements:

- the opening balance is kept as it was translated in the opening period , and the currency difference (between opening value and closing rate) is posted on the same FS item on the sub item 980

- the movements of the period are translated using the average rate, and the currency difference (between average and closing rate) is posted on the same FS item on the sub item 980

See https://help.sap.com/docs/SAP_S4HANA_CLOUD/90c07e91c7a64f328be3fd6b48955b13/1eac9a4436204081956213fb...

The Cash Flow Statement is then built by selecting the relevant FS items / sub items combinations and isolating then the currency differences. This is done using the Reporting Items and Reporting Rules.

See https://help.sap.com/docs/SAP_S4HANA_CLOUD/90c07e91c7a64f328be3fd6b48955b13/d2262f866c164543a66684f6... 

The delivered Reporting Items delivered by SAP are included in the hierarchy X2.

On this video (start 1:30) you can see how Reporting Items select the relevant FS items / Sub items for Cash Flow: https://www.sap.com/assetdetail/2022/06/96f6cbc5-307e-0010-bca6-c68f7e60039b.html 

Hope this helps.

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