25 Performing Balance Restatement

This chapter contains the following topics:

• Section 25.1, "Understanding Balance Restatement"

• Section 25.2, "Calculating Restated Balances for Balance Restatement"

25.1 Understanding Balance Restatement

If the organization has companies operating in more than one country, you might have to consolidate financial reporting among the different companies. To consolidate financial reporting, you have to restate existing company balances into one common currency. You can use detailed currency restatement balance restatement to restate amounts into one currency. However, for balance restatement, the system restates the amounts in the consolidation ledger (AC) or other user-specified ledger type at the balance level, thereby creating fewer records.

You might use balance restatement to:

• Restate balance sheet accounts at the period-end rate and income statement accounts at an average rate prior to generating consolidated financial reports. For example, you can restate subsidiary company accounts into the parent company currency for consolidated reporting.

• Combine amounts from up to three different ledgers into one ledger. For example, you can restate the AA (actual amounts) and GP (GAAP adjustments) ledgers into the AC (consolidation) ledger.

• Restate accounts for what if budget analysis. For example, you can specify a budget rate that is different from that used in the accounting books for internal comparison purposes.

This method of currency restatement restates balances into a single currency for consolidated reporting purposes.

Figure 25-1 Balance restatement process

Description of ''Figure 25-1 Balance restatement process''

This diagram shows the AC ledger and the tables used for balance restatement:

Figure 25-2 Ledgers and tables used for balance restatement

Description of ''Figure 25-2 Ledgers and tables used for balance restatement''

Balance restatement uses the F0911 table if you enter manual journal entries in the AC ledger for adjustments. You can set a processing option to specify whether to include the F0911 adjustments when you run the Compute Balance Restatement program (R11414A).

25.1.1 Prerequisite

Verify that the system is set up for balance restatement.

See Setting Up Balance Restatement and As If Restatement.

25.2 Calculating Restated Balances for Balance Restatement

This section provides an overview of the Compute Restated Balances program and discusses how to:

• Run the Compute Restated Balances program.

• Set processing options for Compute Restated Balances (R11414A).

25.2.1 Understanding the Compute Restated Balances Program

The Compute Restated Balances program (R11414A) restates balances from a source ledger into a consolidation ledger (AC). Based on the exchange rates and computations that you set up, the Compute Restated Balances program:

• Restates a selected period, or all periods up to and including the current period (year to date), as specified in a processing option.

• Applies an individual rate to each period that you are restating, or applies a single rate to all periods.

• Applies a different exchange rate for a specific range of accounts. If an exchange rate does not exist in the Currency Restatement Rates File table (F1113), the system prints a report with blanks in the exchange rate and restated balance columns. If you choose not to print restated balances for zero amounts, all of the accounts in that range are omitted from the report.

• Restates up to three source ledger types to a single destination ledger type. Currency decimals are based on the currency code of the destination ledger type.

The Compute Restated Balances program uses information from the F0902, F1113, and Company Conversions Parameter File (F1114). For adjustments made directly to the restated ledger, such as journal entries for rounding differences between currencies, the Compute Restated Balances program uses information from the F0911 table.

You can run the Compute Restated Balances program as often as necessary. Each time that you run the program, it overwrites existing balances unless you specify a different destination ledger type in a processing option. You can run this program in three different modes:

• Proof mode with report

  The system prints a report but does not create balances in the destination ledger.

• Final mode with report

  The system creates balances in the destination ledger and prints a detailed audit trail.

• Final mode without report

  The system creates balances in the destination ledger but does not print a detailed audit trail.

When reviewing the report, ensure that:

• Every AA ledger amount has an AC ledger amount.

• No manual journal entries exist for the AC ledger in the translation adjustment or retained earnings account.

For period processing, the report displays account transactions with a blank in the To Currency Period Posting and To Current Period Balance columns and a + sign to indicate that the account balance by currency amounts appear in the last transaction line for the account.

For year-to-date processing, the report displays each account transaction by originating currency in the To Current Period Posting and To Current Period Balance columns. It does not display a + sign.

25.2.1.1 How the Balance Restatement Program Works

To restate balances, the Compute Restated Balances program:

1. Uses the data selection to select only those companies that have been assigned the computation ID that is entered in the processing options.

2. Reads the F0902 table to find a beginning balance and period amount in the actual amount (AA) ledger for each GL account in the range of accounts for the specified company.

3. Applies calculations based on the calculation method, as follows:

   • Period calculation balances for period 1. The system updates beginning balances, restates the balance for the current period, and clears all periods after the current period.

   • Period calculation balances for a selected period other than period 1. The system leaves previous balances as is, restates the balance for the current period, and clears all periods after the selected period.

   • Year-to-date balances for selected periods. The system restates balances for the selected periods and clears all periods after the selected period.

     
     

     Important: Make sure that you restate balances up to and including the appropriate month and not beyond. If the current period is June, restate the year-to-date balances for January through June.

     
     

   • Amounts for a monetary account. If the currency associated with the destination ledger type matches the currency assigned to the account, the system uses the amounts from the foreign currency (CA) ledger instead of restating amounts from the AA ledger.

4. Creates or updates the destination ledger, usually ledger type AC (consolidation ledger), in the F0902 table.

   
   

   Note: If you ran the annual close for the AC ledger, the system updated the APYC and APYN fields in the AC ledger at that time. The system calculates retained earnings if the Close to Retained Earnings Account check box on the Ledger Type Rules Setup form is selected for the AC ledger.

   
   

25.2.1.2 Manual Journal Entries in the AC Ledger

Although the Compute Restated Balances program automatically creates entries for ledger type AC (or other user-defined consolidation ledger), you can manually enter journal entries for ledger type AC on the Journal Entry form. These manual journal entries are adjustments to the F0911 table.

For example, you might enter a journal entry to adjust for differences that can occur due to rounding issues between currencies. Or you might enter a journal entry to eliminate amounts that can occur when you consolidate company balances.

If you manually enter a journal entry for ledger type AC, be aware that a record must exist in the AA ledger for the same period, fiscal year, and general ledger account. If necessary, enter a manual journal entry for ledger type AA for a cent. Balance restatement does not recognize AC entries that are manually entered unless a record exists in the AA ledger. Make sure that you do not manually enter journal entries for ledger type AC against the translation adjustment or retained earnings account.

When you run the Compute Restated Balances program, you can use a processing option to specify whether you want the program to check for adjustments in the F0911 table. If you do not enter manual journal entries in the AC ledger or you choose to bypass them, you can save valuable processing time by setting this processing option accordingly.

You can rerun the Compute Restated Balances program for a period without losing the journal entries already entered for the AC ledger.

25.2.1.3 Calculating Retained Earnings for the AC Ledger

As part of year-end processing, you must calculate retained earnings for the consolidation ledger (usually AC), which is used for balance restatement.

You should follow certain steps to ensure that the AC ledger is in balance and that the calculated amount for retained earnings is correct. If you follow the steps, the Annual Close program (R098201) creates a hybrid historical rate instead of a manual calculation when it calculates retained earnings for the AC ledger. These steps are supported by Global Support Services:

1. Verify that the AAI item GLG4 for the retained earnings account is set up.

2. On the Revise Company Currency Conversions form, create a separate line for the Retained Earnings account (as specified in AAI item GLG4) and enter:

   • The retained earnings account in the From Account and Thru Account fields.

   • A valid rate type in the Rt Ty field.

   • A valid calculation method in the CM field.

   • AC (or user-specified consolidation ledger) in the Fr LT (from ledger type) field.

   • 1.0000000 in the Override Rate field.

3. Run the Compute Restated Balances program.

4. Run the Annual Close program for the AC ledger to ensure that the restated ledger balances.

25.2.2 Running the Compute Restated Balances Program

Select Financial Restatement (G1122), Compute Restated Balances.

25.2.3 Setting Processing Options for Compute Restated Balances (R11414A)

Processing options enable you to specify the default processing for programs and reports.

25.2.3.1 Mode

1. Process Mode

Specify the mode in which to run this program. Values are:

Blank or 0: Proof mode. The system does not update the F0902 table but does print a report that documents the changes that would be made to the fiscal year and period in the F0902 table.

1: Final mode with a report. The system updates the fiscal year and period in the F0902 table. The system also prints a report that shows the changes.

2: Final mode without a report. The system updates the fiscal year and period in the F0902 table. The system does not print a report.

25.2.3.2 Period or YTD

1. Period or YTD Processing

Specify whether you want to restate a specific period or restate all periods in a specific year to date. Values are:

Blank: Restate only a specific period. You can specify the period in the Restatement Period processing option. If you do not specify a period in the Restatement Period processing option, the system restates the current period.

1: Restate all periods in a specific year to date. You can specify the year in the Restatement Year processing option. If you do not specify the year in the Restatement Year processing option, the system restates the current year.

2. Restatement Period

If you leave the Period or YTD Processing processing option blank, you use this Restatement Period processing option to specify the period to restate. For example, if you leave the Period or YTD processing option blank, you can enter 8 for the eighth period of the fiscal year.

If you leave this processing option blank, the system restates the current period as defined for the JD Edwards EnterpriseOne General Accounting system on the Set Up Company form and recorded in the F0010 table.

3. Restatement Year

If you enter 1 in the Period or YTD processing option, you use this processing option to specify the year to restate. Enter the last two digits of the fiscal year to restate. For example, enter 06 for 2006.

If you leave this processing option blank, the system restates the current year to date as defined for the JD Edwards EnterpriseOne General Accounting system on the Set Up Company form and recorded in the F0010 table.

25.2.3.3 Zero Balance

1. Suppress Zero Balances

Specify whether to suppress records that do not have activity in the period being restated. Values are:

Blank: Process all records for the period.

1: Do not process records without activity for the period.

25.2.3.4 Computation ID

1. Computation ID

Specify the computation ID to use for data selection. This processing option overrides the default computation ID in the F0010 table.

If you enter a computation ID, all of the companies that you include in data selection must be assigned the computation ID you enter. If you leave this processing option blank, the program uses the default computation ID.

25.2.3.5 Ledger

1. Destination Ledger Type

Specify the ledger type to which the program restates amounts. If you leave this processing option blank, the program processes all destination ledgers. The destination ledger is also known as the to ledger. For example, you set up three calculations for Company 70. Each calculation updates a different destination ledger type.

If you leave this processing option blank, the program runs all three calculations and creates balances for each destination ledger type.

If you enter a ledger type in this processing option, the program runs only the calculation for the destination ledger type you entered.

25.2.3.6 Exchange Rate

1. Exchange Rate

Specify which exchange rate to use to restate balances. Values are:

Blank: Use the exchange rate for the current period.

1: Use the exchange rate for the period being restated.

Note: When restating year-to-date balances, enter 1 to restate all periods using the exchange rate for the period selected.

25.2.3.7 Adjustments

1. Check for Adjustments

Specify whether to include manual journal entry adjustments from the F0911 table in the restated balance. Values are:

Blank: Include manual journal entry adjustments.

1: Do not include manual journal entry adjustments. Enter this value only if you have not entered manual journal entry adjustments. The program bypasses the search for adjustments during processing.