Foreign Currency Issues

Each unit is designated a currency type and exchange rate that are used to convert the unit's functional currency information to reporting currency. Enter 1 for the exchange rates when the functional and reporting currency are the same.

In converting currency, there are several potential issues that can occur. The Pre-Tax Book Income (PTBI) provided may be converted at different exchange rates. On a unit basis, the PTBI policy can be selected so that the correct exchange rate is used to convert the provision numbers. The interplay of the Weighted Average and Spot rates may require that a Currency Translation Adjustment (CTA) be posted to account for the difference in rates. The system automatically posts the CTA as an equity adjustment to the deferred tax asset/liability.

There is only one reporting currency conversion in the system. This allows the combination of units in sub-consolidated or consolidated reports in the reporting currency view. However, the functional currency view of the report may not make sense unless all units have the same currency.