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[Steve Latta]

?Hello all.

We currently are on AX 2012 R3 CU11. We have our company set up in AX under 3 legal entities, a North American corporate headquarters and 2 manufacturing plants, all in the US. In addition, we will have a 3rd manufacturing plant in the US coming online next year. We are in the initial stages of adding a new manufacturing plant in Ireland in the coming year or two.

Historically, we have done all our financial reporting and consolidation in Management Reporter. With all entities in the US, we haven’t had to deal with foreign currencies or differing charts of accounts. I’ve done a bit of research, and there seem to be two schools of through on consolidation. One is to set up a financial entity to perform the consolidation in, complete with postings for currency revaluations and their realized/unrealized gain and loss. The other seems to be to use Management Reporter, and presumably you’d calculate those gains and losses at runtime and there would be no postings associated with them. Management Reporter would also allow mapping of different charts of accounts to a global or consolidation format. That seems to be similar to the default consolidation account field in the Main Account setup.

It also sounds like you need to use historic exchange rates for some things, a month end spot rate for balance sheet items and a period average for P & L items, which would cause those calculations to change as your reporting period changes, wouldn’t they – if you didn’t post journal entries. What have other folks here done?  

Has anyone here actually set up and used OANDA for getting exchange rate details in AX 2012? I found documentation on how to set it up, but that documentation carries a disclaimer about not being for use in a production environment. I’m sure that’s mostly (or entirely) there for legal protection in case it doesn’t work for some reason, but I’d really like to hear from anyone who has gotten it to work. Hopefully we’ll be on D365FO before our Ireland plant is operational, but we still would like to get it up and running in AX 2012 for testing and historical data purposes.

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Steve Latta
Accountant
Ortec, Inc.
Easley SC
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[Steve Latta]

?Following up on the OANDA question, are the 3 out of the box services for exchange rates in AX 2012 used because they are free, or do they require subscriptions?

Are exchange rates global in AX, that is do they need to be imported separately into each legal entity or will one import make the data available to all legal entities in an AX instance?

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Steve Latta
Accountant
Ortec, Inc.
Easley SC
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[Phil Dawson]

Hi Steve,

In AX2012, the exchange rates are global as long as each legal entity is pointing to the same “Exchange Rate Type”.

Regarding the 3 default services provided by Microsoft, I am not sure of the logic behind it.  OANDA is a subscription service, however it is preferred amongst many companies as their auditors prefer it 🙂  Just be aware if you are looking at the 3 default ones, I believe Yahoo is no longer providing a service so you can’t use that one.

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Phil Dawson
Data#3 Limited

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[Daren Phillips]

I have done extensive Foreign Currency Consolidations using both the Online Consolidation and Management Reporter.  There are pros and cons to each.  Generally, I recommend using the Online Consolidation since you will have balances which are set and won’t change.  Using Management Report is good but someone could change a historical exchange rate and then you financials could change.  Ping me if I can be of further assistance.

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Daren Phillips
Manager
RSM LLP
Dallas TX
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[Greg Griffith]

When doing Foreign Currency Consolidations, I have seen a problem with the opening balance amounts in the Consolidation Company.

The Transaction Currency for the Opening Balance transactions match the Accounting Currency of the Consolidation Company rather than the Transaction Currency of the Underlying Company.  This is a problem if we want to do GL Foreign Currency Revaluation for Year-to-date amounts in the Consolidation Company.  We can revalue amounts from Operating Periods (where the Transaction currency from the underlying Company is retained) but we cannot revalue the amounts for the Opening Balance in the Opening Period (where the Transaction currency from the underlying Company is not retained). 

Does anyone have an “elegant” solution for this?

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Greg Griffith
Hitachi Solutions
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[Vy Ngo]

Hi Steve,
We are using OANDA for getting exchange rate details into our D365 (should be the same for AX2012). We have 30 entities including 3 consolidation entities and we are using the consolidation online and foreign currency revaluation for the consolidation process. I think it’s better to keep the numbers in the consolidation entity than reply to Management Reporter calculation that applies the one selected rate date for all transactions. My accounting team also want to see the amount in reporting currency for each entity as well, especially all the international entities,  so we have built the TB for reporting currency in D365.

If you consider to use the consolidation entity for your consolidation process, you should use financial dimension for Legal entity  (we are using two financial dimensions for two level entities in consolidation). With this setup, you can run the TB by multiple entities in Management Reporters and your finance and accounting teams can see where the values come from easily.
Hope it helps.
Thanks,
Vy

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Vy Ngo
Sr Manager ERP Systems
Gigamon Inc.
Santa Clara CA
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[Zvika Rimalt]

2 comments – 

you did not mention it – you are likely to also need several elimination journals – mostly to get rid of inter-company balances and possibly to accommodate different accounting standards in between your legal entities and the location of the consolidated reporting.

Also – for approach 2 of using management reporter, you can actually use a “hybrid” approach where you create an additional company just to store the consolidation/elimination journals, and include it into the total your MR creates.

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Zvika Rimalt
BSA Finance
Vancouver BC
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