Skip to content

FX rates

Tagetik is a multi-currency system and allows the user to manage amounts:

  • in the transaction currency. This is the currency in which a certain transaction was performed, regardless of the currency in which the entity that performed it operates;
  • in the financial statement currency. This is the currency in which the entity draws up and publishes its financial statements;
  • in the consolidation currency. This is the currency in which the consolidated financial statements are generated, and is generally the currency in which the group’s holding company operates.

When a financial statement balance, an intercompany entry or an adjustment entry is made, it is possible to indicate the amount in the financial statement currency and the amount in the transaction currency, while the consolidation currency is used to convert all amounts from the original currency during the consolidation process. Therefore, in Tagetik, every data item is always characterised by two amounts: the transaction amount / financial statement amount for original data, or the financial statement amount / consolidated amount, for consolidated data.

Three different types of FX rates can be managed for each currency:

  • final FX rate. These are essentially the period-end FX rates, and they are used for the balance sheet accounts, with the exception of the equity accounts, which are typically converted at the historical FX rate;
  • average FX rate. These are the FX rates generally used for P&L accounts;
  • period average FX rate. This type of FX rate allows the user to perform more precise conversions than when using the average FX rate, since it applies a different FX rate for every period of the year.

To convert an amount from currency A to currency B, the system takes the amount, divides it by the FX rate for currency A and then multiplies the result by the FX rate for currency B.

The management of FX rates is accessible from the administrator-user’s web interface, following the path User > Rates > FX Rates.

Since FX rates can vary over time, their management is “time-dependent”, or by original scenario / period. In addition to the scenario / period, every FX rate is identified:

  • by the non-derived currency, i.e. a currency for which, on the list, the “Reference Currency” field to which the FX rate refers has no value entered;

It is not necessary to insert FX rates for derived currencies. For derived currencies, the fixed coefficient indicated on the list is always valid with regard to the reference currency

  • by the value of the final FX rate;
  • by the value of the average FX rate;
  • by the value of the period average FX rate.

The FX rate is necessary for every currency, and therefore also in the event that only companies operating in euros are being managed, for example. Obviously, in this case the FX rate will be 1 to 1. If the FX rate, including the euro FX rate, is not completed, there will be an error during the performance of the data processing and the system will give a warning that the FX rate has not been entered for the scenario/period.

Utilities

Copy

FX rates can be defined manually for every scenario/period, or it is possible to copy the definition:

  • from one scenario to another. This copy utility is accessible from the Copy to Original scenarios wizard in the FX rates management window.

  • from one scenario/period to another. This copy utility is accessible from the Copy to Original scenarios/periods wizard in the FX rates management window.

After performing the copy, it is possible to make the necessary changes.

In the first case, the user must select:

  • the origin original scenario (from which to copy the FX rates);
  • the target original scenario (to the FX rates are to be copied);

while in the second case:

  • the origin original scenario/period (from which to copy the FX rates);
  • the target original scenario/period (to the FX rates are to be copied);

In both cases, the system updates the existing data and then inserts the FX rates missing from those existing in the original scenario from which to perform the copy in the first case and in the scenario/period in the second case.