Managing FX rates for the consolidation process
Currency types¶
CCH Tagetik is a multi-currency system. In fact, it allows you to manage amounts in several types of currency.
| Currency type | Description |
|---|---|
| Transaction currency | The currency in which a transaction was performed, regardless of the currency in which the entity that performed it operates. |
| Financial statement currency | The currency in which the entity draws up and publishes its financial statements. |
| Consolidation currency | The currency in which the consolidated financial statements are generated, and is generally the currency in which the group’s holding company operates. |
The financial statement currency is inserted in the entity list, but can be overridden on the process.
The transaction currency, if managed, is specified when the transaction is performed. When a financial statement amount, an intercompany entry or an adjustment journal is inserted, you can specify the transaction currency and/or the financial statement currency. The consolidation currency, on the other hand, is specified during the consolidation process to covert all the amounts from their original currency.
Each data item can be characterised by two amounts:
- for original data, the transaction amount / financial statement amount
- for consolidated data, the financial statement amount / consolidated amount
FX rate calculation¶
To convert an amount from currency A to currency B, CCH Tagetik takes the amount, divides it by the FX rate for currency A and then multiplies the result by the FX rate for currency B.
IMPORTANT: The FX rate value in configuration is required for every currency, even if all the managed companies operate with the same currency. In this case the FX rate will be 1 to 1. If the FX rate is not indicated, an error will be returned when the data processing is run.