How Oracle Solutions Handle Currency Changes

There’s been quite a bit of press lately about countries wanting to abandon the euro. I remember working in Development for E-Business Suite General Ledger back in 1997—2002 when we enhanced our multiple reporting currency functionality in preparation for countries adopting the euro. We spent years designing and developing the Euro as Functional Currency feature in preparation for when euro coins and notes were introduced on 1 January 2002 replacing all national currencies.

I seriously doubt that EU countries will abandon the euro (since it would lead to disastrous political consequences), but if it happened, how would Oracle’s applications support this?

I asked Seamus Moran, our resident accounting expert, and he enlightened me with the following.

According to Seamus, it would be similar to changing a country’s operating and accounting currency. In fact, we’ve deployed our currency changing software as recently as 2010 in Estonia, when they adopted the euro. We used it and earlier versions of it in many countries when they changed currency – Malta, Venezuela, Romania, Turkey and the original Euro countries, and E-Business Suite has converted about 2,000 ledgers & sets of books. PeopleSoft and JDE have similar functionality.

How it works in E-Business Suite Release 12 is that the programs create and initialize a new ledger in the target currency. They add a new currency accounting value to your existing old currency transactions in the subledgers, supporting the balances in the new currency ledger. Then, in the new currency environment, you enter your new currency invoices and transactions in your subledgers (business as usual). You will be able to pay and collect  on the old money items with the new currency. The programs also convert open orders in both the sales and procurement cycles, and other currency transactions. The software is maintained and delivered by Oracle Software Services India, part of Oracle Consulting, and takes a weekend for the production run including pre-processing work, the process, and post-process reconciliation. Usually one weekend to test the process in your environment, and another “clean” trial run are required.

 

Picture of the process:

Before

Process

After

Old Money
GL

Create new GL:
TB in New Money

New “New Money”
GL

A
|

A
|

Old Money
Subledgers

Use the same old subledger but make old money amounts be “entered” and add new money “accounting” amounts

Old “Old money”
Subledger with
New Money Accounting. Old money is FX data

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Focusing on solutions for the Office of Finance, this blog will highlight key financial management market trends, events and other news of interest.

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