Functional Currency differs from Company Code Currency

[DerekVersola]

Hi Experts, 

We have a situation for our client wherein their functional currency does not follow their local currency. We understand in SAP S/4HANA cloud, public edition the solution for this is to define a freely defined currency as the functional currency. However, they found some potential risk to this issue particularly in product costing. Standard cost estimates only take in company code and controlling currency but not the functional currency. With this they are concerned on the exchange rate fluctuations. Furthermore, we also noticed there are some limitation in terms in reporting this freely defined currency has. For example, P&L plan/actuals and similar reports does not have the functional or freely defined currency in them. 

Surely there are other companies having the same setup, if you do, can you share your approach to this issue? Also any inputs to this is welcomed.

Regards, 

Derek

[venu-reddy]

Hi Derek,

Before release, viewing the standard cost calculation in the functional currency is not possible.
For the material cost estimate, we support Controlling Area Currency and Object/Company Code Currency, which applies to all deployment options.
Upon release, the cost is translated into all parallel currencies.

Material cost estimates are calculated and stored in the Controlling Area Currency and Object Currency, then translated into the additional currencies defined for the ledger at the time of release.

Regards,

Venu

[DerekVersola]

Hi Venu,

Thank you for the reply. I have further question. 

I assume at the time of release it will use the valid exchange rate maintained in the system. For exchange rate differences, how does the system account for this in the material valuation? It could be at the time of release the exchange rate between HUF and USD, is for example 0.10, the standard cost at the time of release is 1000 HUF > 100 USD but after a month it became 0.23 with standard cost still @ 1000 HUF but USD value now is 230 USD. (HUF is local currency while USD is the functional currency) How does the system account for this exchange rate differences?

Regards, 

Derek