Beyond the EU: DORA and NIS 2 Directive's Global Impact
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CURRENCY LEDGET AND PARALLEL CURRENCY FOR SAP USERS
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SAP FICO Ledger, Currencies, Accounting Principles, Parallel Currency
1 Accounting Principles to be used in the Company
IFRS Group Reporting - Consolidation
GAAP Comapany Reporting - Legal Requirement - Country Level
Any company having business across globe should have minimum 2 Accouting priciples
2 Reporting Periods
IFRS Jan - Dec
GAAP Apr - Mar
3 Reporting Currencies
IFRS USD - Common Global Currency
GAAP INR / EURO / SGD / AUD
4 Ledgers
0L Leading Ledger
1L Non-Leading Ledger
5 Types of Reporting
Local Reporting
Group Reporting
6 Ledgers
Non-Leading Ledger Leading Ledger
US 1L 0L
IND 1L 0L
Singapore 1L 0L
Dubai 1L 0L
Australia 1L 0L
7 Ledger & Accouting Principle Mapping
Group Local
Country Acct.Principle Currency Fiscal year
Posting
Period
Variant
Leading
Ledger
Non-
Leading
Ledger
US IFRS USD Jan-Dec 0L 1L
IND IND AS IND Apr-Mar 0L 1L
Singapore Singapore AS SGD Jan-Dec 0L 1L
Dubai Dubai AS AED Jan-Dec 0L 1L
Australia Australia AS AUD July-June 0L 1L
8 Localization / Legal Requirements / Country specific requirements
Fixed Assets
Taxations
Adjustments can be done
Ledger specific posting in either leading or non-leading leder to meet accouting principles of respective country
T-code FB01L
T-code FB50L
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Currency Keys
Currency keys or currency codes are identical alphabetical codes for the recordation of transactions where the
amounts are managed with currency keys in the SAP system such as USD, EUR, INR & PKR. We have an option to
select the currency key almost in all the transactional T-Codes to specify the currency of the transaction or
document.
T-Code: OY03
Currency Keys
SAP has already defined all the worldwide used currencies in a system with ISO global standard marks as general
settings and provides the Independence to define new currency codes in the system as well with 5-character alpha-
numeric currency keys with alpha-numeric ISO codes, or you can use several currency keys with same ISO code with
âPrimaryâ Check box. (Highlighted in the below screenshot)
Creation of Currency Key
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2. Currency Types
Currency types are another essential functionality of SAP. The currency type specifies the role of a currency in the
SAP system. We cannot directly assign any currency key to the ledger; instead, we set the currencies to
organizational entities or units, as per business scenario, and the system automatically assigns the currency keys to
currency types.
For example, suppose we assign the USD to a company code in the T-Code OX02. In that case, the system
automatically considers it as company code currency or local currency. Automatically, USD is assigned with currency
type 10, and the same currency type will be given to the ledger and Company Code.
Tabular Summary Of Currency Types
Letâs explore the currency types and their assignments in the SAP S/4HANA system.
1. Document Currency (00) â Document currency is the currency that is applied for the document and
company code currency is the currency where the document is generated.
Example : An Indian company does a posting for a Sale of goods in USA. In this case the document currency
would be USD and the Company code currency would be INR
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2. Company Code Currency (10) â Company code is an independent organizational unit, and we assign the
currency to the company code. Currency given with company code is considered as company code
currency.
Company code can represent the region, division, or country in business organizational structure for the
external accounting. We can assign different currencies to different company codes, and the currency of
the company code will be considered as local currency or company code currency (Currency type 10)
Path SPRO-> Enterprise Structure-> Definition-> Financial Accounting-> Edit, Copy,
Delete, Check Company Code
Transaction Code OX02
Path SPRO-> Enterprise Structure-> Financial Accounting->Define company
Transaction
Code
OX15
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3. Controlling Area Currency (20) â In the controlling area, we can select the currency type 20 and assign any
currency key to the controlling area. Currency given with the Controlling area will be considered as
Controlling area currency. Here the recommendation is not to use controlling area currency. We can use
any other currency type, such as Group currency, Hard Currency, and Index Currency.
Controlling area is also the part of business organization which assists us for cost or management
accounting purposes. The controlling area can have different currency from company codes, and several
company codes can be assigned to the controlling area. If we select the controlling area currency
(Currency type 20) and assign EUR in the controlling area, then EUR will be the controlling area currency
in our parallel currencies.
Path SPRO-> Enterprise Structure-> Definition-> Controlling-> Maintain Controlling
Area
Transaction Code OKKP
As per best practice and recommendation, we should not use currency type 20. Instead of Controlling
area currency, we can use group, hard or index-based currency for management accounting purposes.
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4. Group Currency (30) â Group Currency is the client currency of the SAP S/4HANA system, configured at the
time of client configuration. We can display it in T-code SCC4 or Table T000. The currency assigned to the
client depends on the business requirement.
Client Administration (SCC4)
The client is a commercial, organizational unit in SAP S/4 HANA System, and It has its own set of master
data with independent table sets. Client Currency is the only currency known as Group Currency (Currency
type 30). In Short, the Client is at the highest level in the organizational hierarchy. Client currency is
permanently assigned at the time of client configurations by the administration.
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5. Index-based Currency (40) â index Based Currency is fictitious and country-based. This currency assists
businesses in reporting their financials in abnormal periods such as high degrees of inflation or an
emergency.
6. Hard Currency (50) â Hard Currency can be the secondary currency for the country and can assist in
inflation or any abnormal period of time like index-based currency. It is also a country-based currency and
assigned to the country in T-Code OY01.
Hard Currency or Index-based currency is that currency issued by a nation that is seen as politically and
economically stable. Index and Hard, both the currencies, must be maintained at the country level.
Path SPRO-> SAP NetWeaver-> General settings-> Set Countries-> Define Countries in
mySAP Systems
Transaction Code OY01
7. Global Company Currency (60) â Company code can represent the region, division, or country in
organizational structure. It may have separate currencies, so company currency can assist in consolidating
reporting. We can have consolidation reporting in the business desired currency by assigning the currency
to the company. Company currency is also known as âGlobal Company Currencyâ or âConsolidation
currency.â
Currency Types Summary
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Assign Currency Types to Company code and Ledger
After assigning all required currencies to organizational entities, we must assign currency types to the company
code. In this vital step, we must maintain the leading ledger too.
Path SPRO-> Financial Accounting-> Financial Accounting Global Settings
-> Ledgers-> Ledger-> Define Settings for Ledgers and Currency Types
Transaction Code FINSC_LEDGER
A. Currency types
Here we must tell the system which currency type will be used at the client or company code levels.
Company Code Currencies only can be defined for company codes. Global Currencies will be fixed for all the
Company codes in the same client.
B. Global Currencies Conversion Settings
For Global Currencies, we must tell the system the âSource Currencyâ & Exchange Rate Type with a Translation Date
type. Letâs make the base theoretically sharp before starting the crucial configuration.
Source Currency -> The currency system will convert to the target currency. We are selecting the âDocument
Currency,â which means SAP S/4HANA System that will Convert the amount from Document Currency into desired
and assigned Currencies. Document Currency can be any currency, whichever we are entering when posting the
financial Documents.
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Exchange Rate Type -> we can use several exchange rates for particular currency pair with the âExchange Rate
Typeâ functionality. For example, any business can maintain a different exchange rate for the same currency pair
for the same period, say, Different exchange rates for import transactions and different exchange rates for export
transactions.
We must maintain the exchange rate type for a particular foreign currency exchange rate, such as M (Standard
Translation), against the currency type. The system will opt only for that exchange rate maintained with exchange
rate type M for the conversion.
Here is the list of some standard exchange rate types, and letâs look at these as well.
Exchange Rate Type G -> Bank buying rate, also known as the purchase price. It is the rate at which banks buy
foreign currencies from customers and companies. This exchange rate is mainly maintained for export purposes.
Exchange Rate Type B -> It is the rate banks sell foreign currency to customers/companies. This exchange rate is
used to import purposes.
Exchange Rate Type M-> This is an average rate of the above exchange rate types and is commonly used for
currency valuation across worldwide multinational companies.
Translation date Type â A translation date is a date used to convert the foreign currency to local currency. Since
the exchange rate is picked based on the translation date, it is a very critical date component. In standard SAP, the
translation date is automatically derived from the posting date, or we can select the posting date or document date
for the exchange rate conversion.
Real-Time Conversion -> If the real-time conversion is active, the SAP system will convert the document as it gets
posted; otherwise, it will convert at the time of foreign currency valuation.
Global Currency Conversion Settings
C. Currency Conversion Settings for Company Codes
If the currency type is defined at the company code level, we must maintain the currency type for the company
code.
Currency of currency types will be fetched automatically from organizational hierarchy units.
Currency Conversion Settings for Company Codes
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D. Currency Types & Ledger Assignment
Here, in this critical step, we must assign all the currency types, including global and company code, specific to
company code & ledger.
Company Code Settings for the Ledger
5. Maintain Foreign Exchange Rates (OB08)
We also must maintain the exchange rates between different currencies before posting any financial transaction.
The system will convert all currencies based on the newly updated exchange rates in OB08. We also can upload
the exchange rates through T-Code TBEX.
Need to enter the following. The exchange rate maintained from the date maintained in Valid from date and it
continues till further date is maintained.
The exchange rate maintenance is depending upon the company requirement. It can be maintained through
manually using OB08 or it can be uploaded through upload program. Also, it can be automated.
Automation of Exchange Rate Feed-in SAP
The exchange rate is the most essential financial need to operate any global enterprise.
(The above image is created by myself using photo-editing tools)
SAP provides multiple ways to update the exchange rate in SAP and has provided different methods, exchange
rate types within SAP to handle exchange rate update.
Path SAP Menu-> Accounting-> Financial Accounting-> General Ledger-> Environment-> Current
Settings-> S_BCE_68000174 â Enter Translation Rates
T-Code OB08
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Exchange Rate Tables in SAP
Exchange rates are updated in table TCURR.
Two common ways to update the exchange rate table TCURR within SAP are:
Two ways to update the exchange rate
ďˇ Manual Upload â Using SAP T-code OB08
ďˇ Automated upload â Using SAP T-code TBD4
Automation of Exchange Rate Feed-in SAP
Prerequisites:-
Exchange rate Provider
We need a third party exchange rate feed, a provider like Refinitiv DataScope, FINISS.
These third-party suppliers can provide feed as per business need and no instruments needed.
Example â Instruments are the pair like EUR to USD is one Instrument.
These third-party suppliers sell these instruments in the package like 125 instruments with X$ amount or All
instruments with Y$ amount with frequency per day/hour.
SAP system has access to the internet
To check the connection to SAPHTTPA and the correct configuration. Execute the program RSHTTP05 using the
transaction SE38
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Market Data Feed Provider
Setup to connect with feed provider
Depending upon business needs, feed providers will be selected and they will provide their URL with unique
credentials to connected to their server.
URL and connection URL can be saved by running program RSHTTP20 from SE38.
After filling the information, you will get the connection status as per below.
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Data Feed configuration and customizing feed.
As per below, all Market Data feed configuration is getting done under SPRO>Financial Supply Chain Management
> Cash Management > DataFeed
Define Currencies
Each currency pair has to be configured for the given Datafeed to update the exchange rate. This step is an
addition to whatever fundamental has been done in the system at the enterprise level in the path SPRO >
NetWeaver > General Settings > Currencies.
Exchange Rate Types in SAP
Itâs essential to check which and all exchange rate types per currency need to be updated as each currency will be
required to be setup.
Common exchange rate types in SAP are,
Bank Buying Rate (G Type) â This rate type is used for when the bank is buying from Company. For. Exports.
Bank Selling Rate (B Type) â This rate is used when the bank is selling to a company. e.g. Imports
Average Type(M Type) â This is the average exchange rate. F
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Path to define currencies for the data source
SPRO>Financial Supply Chain Management > Cash Management > DataFeed > Translation Table > Define
Currencies ( Fill the DataSource created in Step #1)> New Entry
Each currency has to be defined with correct instruments mapping
Once after configuring each currency setup, we can run the transaction to pull the data from the Datafeed.
DataFeed Run
Datafeed request for current market data can be run manually by running the transaction TBD4 and filling the
information including the data source filled
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After execute â We will get below screen with currency market data from the data source
This Transaction TBD4 has to be set as a background job in Tcode -SM37 to run automatically as per business
needs. Depending upon the business need this job can be set hourly/daily/monthly.
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Checking of Datafeed update in SAP ERP
Go to transaction SE16n and put the table name â TCURR (Exchange Rates)
Go to transaction OB08 (This is the same transaction where you can maintain the rates manually as mentioned
above) and can see the exchange rate updated automatically.
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Inputs to be provided while manually updating the currency using T-code : OB08
Example of Indirect Quot and Dir.Quot
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Journal Voucher Posting (FB50)
Whatever Currency we will give in the financial document will be considered as âDocument Currencyâ (Currency
type 00), and it can be any currency per business requirements for day-to-day transactions.
Document posted in Document currency @ $100
To check the document value Local currency (click on Display currency on header data)
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With the above exchange rate and translation date financial document has been posted.
Document posted successfully in all below maintained currencies
S.No Org. Entity Currency type Currency type name Currency key
1 Document 00 Document currency USD
2 2222 10 Local/ Company code currency INR
Posted Document â Currencies Table
General Ledger Account Line-Item Report
We can have a list of all the currency types and their currency amount in the general ledger account line-item
report â FAGLL03
GL Account Line Item Report â FAGLL03
8. Summary
With the help of all the configurational steps and assignments, we can achieve the parallel currency in SAP S/4HANA
System. All the financial documents will be posted with assigned currency types, including asset depreciation
documents. This functionality can help multi-national companies to maintain their financial records in different
currencies.
9. Conclusion
During the financial postings, the SAP S/4HANA system will save the amounts in all the parallel currencies and
monetary values will be translated automatically. Amounts in all currencies can be seen and analyzed in G/L
accounts reports. We can configure that the translation of currencies will be real-time or at the time of foreign
currency valuation execution.
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Parallel Accounting
Parallel Accounting: The âParallel Accountingâ in SAP is achieved by storing and posting data in various âaccounting
principalâ in separate ledgers, with the data for one accounting principle stored in the G/L (leading ledger) as the
âleadingâ valuation view. Additional ledgers (non-leading ledgers) are used for each of the (parallel) accounting
principles.
The advantages are:
ďˇ No additional G/L account are required
ďˇ Each accounting principle is maintained in a separate ledger
ďˇ Different fiscal year variant can be used
ďˇ Ability to make use of the standard reporting functionality for bringing out financial statements under this
customizing step, the following activities are carried out:
ďˇ Define accounting principles: The required accounting principles, as decided by the local and group
statutory reporting, are defined
ďˇ Assign âledger groupsâ to accounting principles
Define Accounting Principles:
Path IMG-Financial Accounting (New)-Financial Accounting Global Setting (New)-Ledgers-Parallel
Accounting-Define Accounting Principles
Transaction code SPRO
Create new entries by clicking on New Entries. On the âNew Entries: Overview of Added Entriesâ screen creates the
required accounting principles.
1. Accounting Principles: Enter an identifier for the accounting principles. We will use âIASâ, âGAAPâ and
âLOGAâ to denote the various accounting principles.
2. Name/ Description of Accounting Principles: An appropriate description is entered in this field against the
accounting principle identifier entered in above.
Save the configuration once it is completed.
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Assign accounting principles to Ledger Group
ďˇ On the âChange View âAssignment of Accounting Principles to Target Ledger Groupâ: Overviewâ screen,
create new entries by clicking on New Entries.
1. Accounting Principle: Select the accounting principle from the drop-down list.
2. Target Ledger Group: Select the appropriate ledger group to be tagged to the accounting printiple
selected in (1) above.
3. Description: The system brings up the description of the ledger group.
ďˇ (ii) Save the entries.
Path IMG-Financial Accounting (New)-Financial Accounting Global Setting (New)-Ledgers-Parallel
Accounting-Assign Accounting Principles to ledge group
Transaction code SPRO