Foreign Currency Setup

Overview Foreign Currency has been implemented into the DPHS applications to allow flexibility for those who require all or part of its features, while being transparent for those who have no need for it. Data Plus also supports 2 or 3 decimal currency. This document details setup of Foreign Currency in the General Ledger and Accounts Payable applications.

Foreign Currency can be enabled in General Ledger only, or in both General Ledger and Accounts Payable. Implementation in both applications is parameter driven. When Foreign Currency is enabled in General Ledger, you are able to remeasure 'Trial Balance Reports' and financial statements in any desired currency. Historical exchange rates are maintained and used for these reports. When Foreign Currency is enabled in Accounts Payable, you are able to enter and/or pay invoices in any desired currency.

Rules & General Ledger always stores data in functional currency. Functional

Definitions currency may be converted to any foreign currency setup in the 'Foreign

Currency' file.

Foreign Currency uses a higher/lower level relationship. The higher level contains a three character "Foreign Currency" code (supports International Banking codes), a description of the currency, a check table, and Trade Vendors and TA Commissions cash accounts.

The lower level contains the fiscal month/year this exchange data applies to, exchange rate (display format is 9,999,999.99999999), exchange method (both functional currency equivalents and foreign units per functional units are supported), and an optional budget exchange rate and method.

The user can maintain the 'Foreign Currency' file, (exchange rates and new fiscal periods setup on demand). If not maintained by the user, the system will create a new lower level record for each new fiscal period inheriting values (exchange rate and method) from the previous fiscal period. For all tasks, except financial statements, an exchange rate and method must exist for a fiscal period or an error message is issued. For financial statements, if an exchange rate for a fiscal period does not exist, the next greater fiscal period for which an exchange rate exists is used.

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¹ – The currency of the primary economic environment in which the business operates (obtains and uses cash).

When Foreign Currency is enabled in Accounts Payable, data is stored in both 'Functional' and 'Foreign Currency'. The following scenarios are supported with implementation of 'Foreign Currency':

· Enter invoices in functional currency and pay in functional currency.

· Enter invoices in foreign currency and pay in the same foreign currency. This scenario will optionally calculate 'Foreign Exchange Gains and Losses' (FEGL).

· Enter invoices in functional currency and pay in foreign currency. This may be useful for payment of 'TA Commissions'. There is no FEGL using this method as conversion occurs only at payment time.

· Enter invoices in foreign currency and pay in functional currency. This scenario will optionally calculate FEGL.

This implementation of Foreign Currency does not support entry of an invoice in one foreign currency and payment in a different foreign currency.

Company

Information Record

As mentioned in the overview, Data Plus supports 2 or 3 decimal currency. This information is specified in the Company Information record, located under File Maintenance on the main DPHS screen. If you would like to modify this field, please contact Data Plus Support.

Please Note: When setting up the system for 3 decimal currency, you must change the Fractional Divisor field in AP from 100 to 1000. This field is only accessible in Initial Setup mode. Otherwise the checks will print /100 instead of /1000 for the cents description. Contact Data Plus Support for assistance.

General Ledger

Parameters Foreign Currency processing is enabled by two fields in the General Ledger

parameters file. These fields are located on the second window and only

accessible in the Initial Setup or Recovery Processing phases. The first

field, "Enable Foreign Currency", is a logical field ("Yes"/"No") with

an initial value of "No". If you want 'Foreign Currency' enabled in

General Ledger, you must change its value to "Yes". If you do not want to

enable Foreign Currency, leave this field at "No".

When Foreign Currency is enabled in General Ledger, you must also

enter the second field, "Functional Currency Description". This field

contains the description of your functional currency and is displayed on

many reports and entry windows. If "Enable Foreign Currency" is set to

"No", you must leave this field blank. If you did not enable 'Foreign

Currency', you can ignore the rest of the General Ledger section.

Setup of After enabling 'Foreign Currency' in the General Ledger Parameters

Currencies file, you need to establish those currencies you will be using. This is done

through the 'Foreign Currency' task on the 'File Maintenance' menu in. General Ledger. For each desired currency, you need to enter a code (we recommend using the international Banking Codes), the currency description, and Trade Payables and TA Commissions Cash Accounts.

The cash accounts are required even if you are not going to enable 'Foreign Currency' in Accounts Payable. In this case entering any valid 'G/L Account' will suffice. If you are enabling 'Foreign Currency' in 'Accounts Payable' and will be printing foreign currency checks, you must enter the appropriate cash accounts. For multi-property databases, you may enter any valid 'Property ID' as part of the 'Cash Accounts'. The system will automatically substitute the appropriate 'Property ID' during check processing.

After entering the first 'Foreign Currency' window, press <F2> and the check table is displayed for this currency. The values displayed are initially in US Dollar equivalents. This check table is used when producing A/P checks in a foreign currency. If you will not be printing foreign currency checks, you only need to change one field: "Currency Symbol". This should reflect the proper symbol of the currency, as it is used on many reports and entry windows to identify the currency. Where space permits, we display the 'Foreign Currency' code or description. If you are going to print foreign currency checks, set up the table correctly.

After entering the check table, press <F2> to go to the exchange rates (lower level). You should set up an exchange rate for the current fiscal period and all prior fiscal periods for which you have General Ledger history. You should also establish exchange rate records for "EY" if you post to or produce reports for this period and "SY" if you produce reports for this period.

The exchange rate and method fields are required for each fiscal period you add. The 'Budget Exchange Rate' and Method are optional. When budgets are converted from functional currency, they will use the 'Budget Exchange Rate' and Method if they are present. If not, the conversion will use the Exchange Rate and Method. All other amounts are converted using the exchange rate and method fields.

Help text <F1> is available to assist you in determining the method to use in applying the exchange rate. Two methods are supported: "Functional Equivalents" and "Per Functional Units".

"Functional Equivalents" are the number of functional units that equal one foreign unit. The equations used in conversion are:

functional amount = foreign amount * exchange rate

foreign amount = functional amount / exchange rate

"Per Functional Units" are the numbers of foreign units that equal one functional unit. These equations used in conversion are:

functional amount = foreign amount / exchange rate

foreign amount = functional amount * exchange rate

You can specify the method based upon the exchange data you have available, and the method can change from one fiscal period to the next.

After adding a fiscal period, the next fiscal period will inherit the rate and method previously entered. They may be changed. A search of the exchange rates will display in descending fiscal period order (most recent fiscal period first, oldest last). You may set up as many Foreign Currencies as needed. Do not set up the Functional Currency in this file.

During Live Operations, the "Close Month" process in General Ledger and Accounts Payable will create a new fiscal period record for each 'Foreign Currency', if one does not already exist. The rates and methods used are inherited from the fiscal period just closed. You may edit these rates at any time, or create the record if it is needed before closing the current period. Changing the exchange rate and/or method will not affect any transactions already posted (in A/P), but new transactions will inherit the new changes.

General Ledger All data entered in General Ledger is in functional currency. 'Foreign

Processing Currency' processing in G/L is limited to:

· Displaying foreign currency amounts passed from A/P

· Restarting Trial Balance Reports and financial statements in a foreign currency

Reports that display a foreign currency amount column along with the 'Foreign Currency' code are:

· General Ledger Report

· Future Postings Report

· Journal Code Report

· YTD General Ledger Report

The 'Foreign Currency' amounts will appear only if passed from Accounts Payable.

Trial Balance The 'Trial Balance' reports can be stated in any currency established in the 'Foreign Currency' file, as well as in functional currency. The entry task to the 'Trial Balance' reports asks for a 'Foreign Currency' code. If left blank, the report will print in 'Functional Currency'. Otherwise, it will print in the currency entered. In either case, the heading on each page will display the currency description the report is expressed in.

Financial Financial statements work similar to the 'Trial Balance' reports. After

Statements you have selected the statements to print or export, the system will prompt for a 'Foreign Currency' code. If left blank the system will use functional currency, otherwise, it will convert to the currency entered.

To get the currency description to print on the statement headings, you will need to call up the 'Statement Definition' for each statement and enter <FC> in the statement headings where you want the currency description to print. You can surround the <FC> with any text you desire.

PMS Interface It is imperative that the functional currency of your PMS system and the functional currency of your DPHS applications be identical if you are using any of the PMS Interfaces.

Accounts Payable

'Foreign Currency' in Accounts Payable can only be enabled if 'Foreign Currency' is enabled in General Ledger. If you have not enabled 'Foreign Currency' in General Ledger, it will not be enabled in Accounts Payable. You will not have access to the Accounts Payable Parameter window that allows you to enable it. If 'Foreign Currency' is enabled in General Ledger, it is not automatically enabled in Accounts Payable, by default. To enable 'Foreign Currency' in Accounts Payable you must modify several fields in the A/P Parameters record. These fields are only modifiable in the 'Initial Setup' and 'Recovery Processing' phases. If you did not enable 'Foreign Currency' in General Ledger, or do not wish to enable 'Foreign Currency' Accounts Payable, you can ignore the rest of the Accounts Payable section.

Throughout Accounts Payables, entries of 'Foreign Currency' transactions are designated by the presence of the proper 'Foreign Currency' code. Absence of a code in the 'Foreign Currency' fields designates the transaction as functional currency.

Parameters Eight fields in the Accounts Payable Parameters record control 'Foreign Currency' in A/P. The first four control where 'Foreign Currency' can be processed and the last four controls how 'Foreign Currency' is processed. The window containing these fields appears between windows two and three of 'Parameters Entry'. Once again, this window appears only if 'Foreign Currency' is enabled in General Ledger.

The first four fields are on the window control where 'Foreign Currency' can be processed. These logical ("Yes"/"No") fields have an initial value of "No" and must be changed to "Yes" to enable their respective features. The fields are:

· "Enter Trade Invoices in Foreign Currency?"

· "Pay Trade invoice in Foreign Currency?"

· "Enter TA Commissions in Foreign Currency?"

· "Pay TA Commissions in Foreign Currency?"

You must enter "Yes" to any of these options in order to enable them.

The last four fields control how 'Foreign Currency' is processed. If the first four fields are set to "No", the last four are ignored during processing, but will require entry. These fields are:

· "Calculate Foreign Exchange Gain/Loss?" (default = "No")

· "FEGL G/L Distributions for Check or Invoice?"

(default = check)

· "Gains G/L Account" (default = blank)

· "Loss G/L Account" (default = blank)

The "Calculate Foreign Exchange Gain/Loss" fields have an initial value of "No". If set to "Yes", the system will calculate FEGL at the time an invoice is paid, factoring in the exchange rate when the invoice was posted verses the exchange rate when the invoice is paid. If set to "No", the system will not calculate FEGL and will use the exchange rate in effect when the invoice was entered to pay the invoice. This is done to keep General Ledger in balance. Details of FEGL and when/how it is calculated are listed in a separate section below.

The "FEGL G/L Distributions for Check or Invoice" field is only used if the system calculates FEGL. This field determines how FEGL is posted to General Ledger. If the check option is designated, 'Foreign Currency' invoices have their FEGL summarized to a single posting for the check and posted to General Ledger. If the invoice option is designated, each 'Foreign Currency' invoice FEGL amount is posted to General Ledger.

The field has an initial value of "Check" and is a factor only when multiple foreign currency invoices are paid on the same check.

The last two fields, 'Gains G/L Account' and 'Loss G/L Account', are the accounts to which the 'Foreign Exchange Gains' and 'Foreign Exchange Losses' are respectively posted. They are only used if the system is calculating FEGL. If the system is not calculating FEGL, you may enter any valid G/L account into these fields. If the system is calculating FEGL you must enter the appropriate accounts into these fields. If you maintain a single account for Gains and Losses, you may enter the same account into both fields. For multi-property databases, you may enter any valid 'Property ID' as part of the account. The system will automatically substitute the appropriate 'Property ID' during processing.

Vendors After enabling the 'Foreign Currency' options in the A/P Parameters file, you should set up your Foreign Currency Vendors. Foreign Currency Vendors are vendors who invoice and/or receive payment in a foreign currency. Valid foreign currencies are maintained in the 'Foreign Currency' file in General Ledger.

Two fields on the Vendor record establish default for the currency to use during transaction processing. The first four fields established in the A/P Parameters record control accessibility to these fields.

The first field, "FC Inv." (Foreign Currency Invoice Code), determines in what currency invoices from this vendor are usually issued. The second field, "FC Pay" (Foreign Currency Payment Code), determines in what currency payments to this vendor are usually issued. Set up of these fields on the Vendor record will facilitate entry of invoices and entry/transfer of 'TA Commissions'. When these transactions are entered, they will inherit the currency codes established on the Vendor record. If they are not correct for the transaction, the user can change them during transaction entry.

Leaving the "FC Inv." and/or the "FC Pay" fields blank on the Vendor record will designate that transactions for this Vendor will be processed in 'Functional Currency'.

Transaction Accounts Payable transactions are segregated into three types for this

Entry discussion. They are:

· Invoice transactions

· Adjustment transactions

· Payment transactions

Invoice transactions are composed of Invoices, TA Commissions, Food & Beverage Transfers, and TA Commission Transfers. Adjustment transactions are Adjustments, Debit/Credit Memos, Void Invoices, and Void Checks. Payment transactions are Computer Checks and Demand Checks. Depending on how you use 'Demand Checks', part of the transaction could be classified under the Invoices type. For this discussion, it will be included under Payments type. The entry of unposted invoices on the 'Demand Check' is similar to Invoices entry.

Invoice Invoice transactions are entered in the currency they are generated. Pay-

Transactions ment currency is also determined at this point, but may be changed after posting. Batches may contain transactions of multiple currencies, which means the "Batch Debit" and "Credit Totals" may be composed of multiple currencies. The restrictions for what can be in a single batch are:

· All transactions must post to the same accounting period

· For multi-property databases, all transactions in a batch must apply to single property

You may, (if desired), batch transactions by currency.

When entering invoice transactions, the amounts entered are in the currency of the invoice (for both the invoice and distributions). The system will lookup and display the invoice and payment currency code from the respective vendor’s record. If a 'Foreign Currency' code is entered in either the invoice or payment code fields, the system will display a second amount next to the entered amount. The second amount will be in functional currency if the invoice code is for a foreign currency, or foreign currencies if the invoice code is blank (meaning the invoice is in functional currency). The conversion is done using the exchange rate for the period designated on the batch record. Converted amounts are not displayed on the "Invoice Distribution" level, but will print on the 'Edit List' and 'Journal'.

If the currency codes inherited from the vendor record are not correct, they may be changed on the invoice record. If the exchange rate is incorrect, you may access the 'Foreign Currency' record and change the exchange rate. Changing the exchange rate will update all unposted transactions, but will not update posted transactions. If you have entered a transaction, then change the exchange rate for the appropriate period, it is not required to modify the invoice transaction further. The corresponding 'Edit List' and 'Journal' will re-calculate all conversions.

Invoice There are two invoice transfer tasks (interfaces) available with Accounts

Transfers Payable and they both have slight differences in regards to 'Foreign Currency' processing. The transfer tasks are:

· Transfer TA Commissions

· Transfer Food and Beverage Invoices

The 'Transfer TA Commission' task expects all transactions to be in functional currency. This means the PMS system must have the same functional currency as the DPHS database, unless the PMS system has the ability to convert these transactions. As each 'TA Commission' record is transferred, the DPHS system will look up the vendor record and inherit the Vendor’s 'Foreign Currency' Payment code. This will determine in what currency the 'TA Commission' will be paid. The system will leave the 'Foreign Currency' Invoice code blank, which designates functional currency. These transactions may be edited after they are transferred and before they are posted.

The Transfer Food and Beverage Invoices task has the 'Foreign Currency' code in the transfer record. This requires that identical 'Foreign Currency' codes are set up in the Food and Beverage system and the DPHS application.

As each F&B Invoice is transferred, the 'Foreign Currency' Invoice code is set to the code in the transfer record. If the Pay Trade Invoices in 'Foreign Currency' field in the A/P Parameters record is set to "Yes", the 'Foreign Currency' Payment code in the F&B Invoice is set to the same value as the Invoice code. If "Pay Trade Invoices in Foreign Currency" is set to "No", the