SAP 106094 - Dealing with minor differences

LFACIF3X

106094 - Dealing with minor differences

Symptom

Rounding differences occur when you post a foreign currency document.How are these distributed?

Other Terms

Rounding, currency translation, distribution of rounding differences

Reason and Prerequisites

When you enter a document in a foreign currency, the amount in the local currency is calculated for each line item.If the document is simulated or posted, the system checks for a zero balance.Due to rounding, a balance can be created in the local currency, that is, the total of the line items in the local currency deviates slightly from the total amount of the document in the local currency. How is this rounding difference distributed? The logic is different.

1. In a pure financial accounting document, this rounding difference is added to the first non-automatically generated item with the corresponding debit/credit indicator.The same procedure is used for parallel currencies.

2. If you post the document via FI/CO interface, for example an SD billing document, then the rounding difference is added to or subtracted from the first non-automatically generated G/L account, material or asset account item depending on the +/- sign in the document. The amount of a vendor line item or customer line item is only changed if special prerequisites are met (the document contains, for example no G/L line item 87283 or only lines with small amounts 160719) because the previous application is supposed to display the same amounts for business partners than the ones that are posted in Financial Accounting.

Solution

Dealing with currency differences in FI was checked within the certification of FI and was declared to be in accordance with the principles of database accounting. Customers and partners can display the certificate via address http://service.sap.com/certificates.

160719 - VF02: F5735 during Release ToAccounting

Version 3 from 09.07.1999 in EnglishShow Changes

Component:FI-AR-AR-J

Priority:Correction with medium priority

Category:Program error

Release Status:Released for Customer

Corrections:3

Manual Activities:0

Prerequisites:0

DescriptionSoftware ComponentsCorrection InstructionsSupport Packages

References

Languages

Symptom

The error message F5735 'FI interface: Small difference & & & cannot be distributed' may be generated when you post foreign currency documents which contain items with small amounts.

Other Terms

VF01, FI/CO, LFACIF3X

Reason and Prerequisites

The difference might not be assigned to an item when distributing small differences which are created during translation from document into local currency.

Solution

Implement the program corrections. The error no longer occurs for all the documents posted after the correction.

547946 - FAQ Interface: Currency translation, rounding, field status

Version 3 from May 12, 2006 in EnglishShow Changes

Component:FI-GL-GL-J

Priority:Recommendations / Additional Info

Category:FAQ

Release Status:Released for Customer

Corrections:0

Manual Activities:0

Prerequisites:0

DescriptionSoftware Components

References

AttributesLanguages

Symptom

FAQ

Other Terms

FAQ, Q+A

Reason and Prerequisites

Solution

[1] Question: Why can apparently incorrect currency translations occur in the local currency with FI documents generated via the FI interface? [2] Question: How does the system distribute the rounding differences that occur via the interface when you post a foreign currency document? [3] Question: How does the field status check for FI documents that are generated from postings in other modules occur? [4] Question: Why are the contents of fields for which the field status 'Hide' has been defined not deleted? [1] Question: Why can apparently incorrect currency translations occur in the local currency with FI documents generated via the FI interface? Answer: In the FI interface, the system first translates the currency amounts and then totals them, if necessary, due to the summarization. This can result in a slightly different result than when the amount is totaled first and then translated into another currency. You can find details on this in Note 410747. [2] Question: How does the system distribute the rounding differences that occur via the interface when you post a foreign currency document? Answer: The system usually, adds the rounding difference to the first G/L, material or asset account item that is not a tax item depending on the sign of the difference added to or subtracted from it. Make sure that sign of the item does not change. In this case, the system attempts to distribute the difference to the next appropriate line. The system only distributes the rounding difference to a subledger account line under very specific circumstances. You can find details on this in Note 106094. [3] Question: How does the field status check for FI documents that are generated from postings in other modules occur? Answer: If a required entry is defined for a field in the field status control, the system checks whether the field is filled. If the field is not filled, the system issues the error message F5808 ('& is required entry for G/L account &') and it does not execute the posting. The contents of fields for which the field status 'Hide' has been defined are not deleted. [4] Question: Why are the contents of fields for which the field status 'Hide' has been defined not deleted? Answer: The field status 'Hide' is meant for the online entry of FI documents with an FI posting transaction: the system does not display hidden fields on the screen and, therefore, it is not possible for you to make any entries. These fields can, however, be filled in the background by substitution or derivation (for example) and must not be deleted. The field status control is not designed to subsequently delete entries in the sender transaction (which are not required in the FI) before the transfer to the FI.

Explanation for Delta Logic in Foreign Currency Revaluation

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Foreign currency revaluation is done to revalue the AP/AR and other GL accounts (e.g. bank GL account) balances in foreign currency in order to bring them to the market value during the month end closing rate. The revaluation will be done for all open items and account balances in foreign currency. The practice of foreign currency revaluation is required as per IAS 21 as well as local GAAP requirement.

It is a practice to revalue the AP/AR and other account balances at month-end rate or closing rate at the last day of the month. Subsequently, these transaction posting is reversed at the first day of the following month.

Figure 1 is a simple illustration of the accounting flow of FX revaluation. Pls. note that the illustrations on the accounting flow are given based on the scenario of having an open payable item transaction currency in USD and the functional currency of the company is in SGD, and the fiscal year of the company is Jan-Dec.

Figure 1. Illustration of accounting flow for FX revaluation

However, for certain countries like Korea and Hungary, it is not allowed to reverse the revaluation to the following year (i.e. 01 Jan XXXX). SAP has provided the Delta Logic Functionality for the Foreign Currency Revaluation. So, how does this delta logic functionality works accounting-wise?

The Delta logic can be activated in SAP configuration. The focus of the document is to explain the accounting flow and FX revaluation execution for this document, but before proceeding we can touch on briefly the basic configuration requirement for Delta Logic. Figure 2 is the activation of Delta Logic in FX revaluation in SAP.

Figure 2. Screenshot of the Delta Posting Logic.

There are several tickbox for the table. Below is the explanation of the configuration as per SAP documentation:

1- “+” – If this switch is set, a delta logic is used for the foreign currency valuation.

2- “Cl.Date” – If this indicator is set, the clearing date of the valuated item is used for the reversal postings.

3- “Mon.Rev.” – Allows the reversal of mid-fiscal year valuation within delta logic. If you set this indicator, you will be able to specify whether the reversal of valuation postings is possible in the Foreign Currency Valuation report in conjunction with the delta logic.

Necessary configuration still needs to be maintained (for example, account determination, GL master data settings, Valuation Areas, and others); the intention of the document is to explain the accounting flow and not serve as a configuration guide.

Upon activation of the Delta Logic activated in FX revaluation, there will be a slight change in the selection screen. That is, two new fields will show to determine whether the revaluation is “Year-End Revaluation” or “Mid-Year Revaluation”. Finance will need to select “Year-End Closing Valuation” for Dec; Select “Mid-Fiscal Year Valuation” for the other months (e.g. Jan – Nov).

Figure 3. Screenshot of the changes in the FX revaluation selection screen for Delta Logic.

To illustrate the accounting flow for Delta Logic, pls. refer to Figure 4 below. At year-end closing, the open AR is revaluated based on Dec 31, 2012 closing rate of @1.30. The revaluation will result to unrealized exchange loss of 50 SGD. Since it is year-end closing, there will be no reversal posting on Jan 1, 2013. Assuming no payment has been received for Jan. The same open item will be revaluated again on Jan 31, 2013 with a new month-end exchange rate of 1.32 SGD.

Figure 4. Illustration of accounting flow for Delta Logic of FX revaluation

SAP system will consider December’s revaluation in calculating the current month revaluation. In the FX revaluation report, finance users will be able to see the following columns:

Old Revaluation – latest revaluation amount for the open item

New Revaluation – New revaluation based on current month

Amount to be Posted – Difference (or Delta) amount

Figure 5 is a screenshot of the FX report and where users can see the difference.

Figure 5. Sample screenshot from SAP of FX revaluation Report

Continuing on the same flow, the subsequent month posting is shown in Figure 6. Since this is not a year-end revaluation, the revaluation will

be reversed on the 01-Feb. The customer made a payment for the invoice @ 1.37 on Feb 15, 2014; the corresponding realized exchange gain of 20 SGD will be posted. Subsequently, at month end revaluation, the reversal posting will be posted accordingly.

Figure 6. Illustration of accounting flow for Delta Logic of FX revaluation (cont)

In SAP FX revaluation report, there will be an icon called “Cleared Items” and within this report, finance will be able to see the reversal of the revaluation for the cleared item (Figure 7).

Figure 7. FX revaluation Screenshot of Cleared Items and its report.

A variant in the accounting flow is that the reversal of unrealized gain/loss for the payable will be posted at the time payment clearing. It can be done also just by selecting the indicator “Cl.Date” in the configuration.

In summary, this is marked improvement from the previous versions of the program. SAP has enhanced flexibility on the features and functionality in order to meet the different legal and reporting for Finance users.

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Assigned tags

FIN (Finance)

accounting

delta logic

foreign currency valuation

year end closing

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SAP 106094 - Dealing with minor differences

160719 - VF02: F5735 during Release ToAccounting

Symptom

Other Terms

Reason and Prerequisites

Solution

547946 - FAQ Interface: Currency translation, rounding, field status

Symptom

Other Terms

Reason and Prerequisites

Solution

Explanation for Delta Logic in Foreign Currency Revaluation

Assigned tags

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