Reporting Currency and the Foreign Exchange (Fx) Adjustment

You can process the cash flow statement for one or more business units having different base currencies using one or more ledgers. PeopleSoft Asset Management and Treasury tables are also sources for the cash flow statement. The transaction amounts must be available in the base currency of the applicable business units. For example, when an Asset Management transaction occurs in GBP it is converted in the normal processing of the transaction to the base currency of the applicable business unit which in this instance is defined as EUR and then to the reporting currency USD for the cash flow statement. The base currency amounts are the basis or starting point for the cash flow statement.

Where the base currency of the source is not the same as the reporting currency, translation to the reporting currency is required using the Fx Adjustment function, which uses average rates as prescribed by FASB and IAS rules.

If the scope is one business unit and the cash flow statement is built on source data where the base currency equals the reporting currency, no Fx adjustment is necessary for the direct or indirect methods. If the scope is based on consolidated business units and the base currency of the ledgers or transaction tables is different than the reporting currency, then a translation is necessary.

When the system performs a translation, the following applies for all elements where the base currency does not equal the reporting currency:

• Calculate the opening balance utilizing the opening rate and populate the Beginning Balance field on the transition grid with the value.

• Calculate the closing balance utilizing the closing rate and populate the Ending Balance field on the transition grid with the value.

• Calculate the variation, which is the ending balance minus the beginning balance using the average rate and populate the Variation field on the transition grid with the value.

• Each element is translated if necessary and the Fx Adjustment value is only shown at the transition grid level for that element.

  The Fx Adjustment is shown in composite at the worksheet level for the cash element because the Fx Adjustment is calculated for the cash element when preparing the actual cash flow statement. This composite Fx Adjustment is displayed on the worksheet with the difference between the beginning and ending cash position after the flows have been added and subtracted. The difference between the opening and closing cash balances is the composite, or sum of the flows and the individual element Fx Adjustment.