How to Set Up Additional Currencies in Microsoft Dynamics NAV
Microsoft Dynamics NAV (Navision) allows management to view reports in a second currency in addition to the base currency. Many companies have divisions or sister companies in foreign countries. Those companies are quite likely to be required by local governments to use the local currency for G/L reporting. The parent company may wish to view these reports in the corporate’s base currency. Having all transactions recorded in two different currencies allows such reporting capabilities.
This is not the same as reporting financial results using consolidations. In consolidations, there are requirements for converting amounts using a consolidation translation method. The use of an additional reporting currency allows management to view reports as if the transactions took place in that currency.
One, if not the first, consideration is what is the additional currency. Go to currencies (Departments > Financial Management > Periodic Activities > Currency > Currencies) and select the currency that you want to use as the additional currency. Populate the G/L account fields on the General and Reporting tabs. The General tab fields are used for realized and unrealized gains and losses when processing the daily transactions as well as the periodic activity of converting balance sheet accounts such as Accounts Payable, Accounts Receivable, and Bank Accounts.
Figure 1 – View of Currency Card, Edit mode
The Reporting tab has accounts to be used when converting base currency transactions to the additional currency. Realized G/L Gains and Losses capture gains and losses for currency adjustments between local currency (LCY) and the additional reporting currency. The residual gains and losses post rounding differences of the adjustments.
The next step is to populate the Exchange Rate Adjustment field in all G/L posting account of the Chart of Accounts.
Figure 2 – View of G/L Account Card, Edit mode
The options are:
- No Adjustment: The default selection. No adjustments are made to the account
- Adjust Amount: The LCY amount field is adjusted for any exchange rate gain or loss
- Adjust Additional-Currency Amount: The additional currency amount field is adjusted for any exchange rate gains or losses
Running the Additional Currency Batch job
A batch job is used to convert LCY transactions to ACY. The job uses the exchange rate that is valid on the work date. This batch job is run from the General Ledger Setup Page. Expand the Reporting tab and choose the additional currency to report. Click OK and the batch job opens. The Options tab has three fields to populate:
- Additional Reporting Currency contains the currency selected in the General Ledger Setup page. The Assist button allows you to update the exchange rate to use to convert LCY to ACY.
- The Document No. field is to denote the entry that is posted to the retained earnings account. This is a rounding entry on the closing date of each closed year assuring all income/expense accounts in closed years amounts to zero.
- The same account used when running the Close Income Statement batch job.
Figure 3 – General Ledger Setup page
Click OK to run the batch job. After the job is run, the following existing entries will have amounts in both LCY and ACY:
- General Ledger entries
- Analysis view entries
- Value entries
- Job ledger entries
- Production order line entries
The additional reporting currency can be viewed in a number of ways, such as the chart of accounts, account schedule overview, analysis by dimensions and G/L balance by dimensions. In the chart of accounts, chose the columns of Additional Currency Net Change, Add.- Currency Balance at Date and Additional-Currency Balance.
In addition, many of the standard reports in the general ledger can also report in additional currency simply by selecting the check box on the option tab
NOTE: If you are using VAT, there are additional setup requirements that have not been discussed in this blog. Contact ArcherPoint if you have questions regarding VAT or additional questions regarding setting up additional currencies.
Read more "How To" blogs from ArcherPoint for practical advice on using Microsoft Dynamics NAV.