Understanding currency types in SAP FI is critical for both users and consultants. If a user does not understand the currency types, then they will book entries wrong. If the consultant does not understand them, then serious valuation problems can result.
Consider the following:
We have a Mexico affiliate of a US corporation that is procuring supplies from Germany. The contract is denominated for 500 EUR, but the company reports tax locally in MXN, and operating results from all countries are consolidated into USD.
What currency should the contract be tracked in? The answer, of course, is EUR, MXN, and USD. SAP gives us the flexibility to account in different currencies for different purposes.
The document currency is the currency of the transaction which depends on the structure of the transaction. In our example, we’re legally obligated to pay 500 EUR. Thus our document currency is EUR. This currency is actually set on the document at the time of the transaction. When we start FB60 to book our vendor invoice, we select the document currency of EUR.
The local currency is the currency of the company code which represents the legal entity in a ‘standard’ SAP configuration. This currency is used to comply with local tax reporting requirements as well as representing the functional currency as seen in FAS 52 or IAS 21. In our example above, the functional currency for a Mexico entity is most likely MXN. That said, according to FAS 52 or IAS 21, if we suppose the primary business to be exporting ot the USA, then the functional currency might be USD. In any case, the currency is set on the company code as you can see below configuration screen.
To enable reporting across all entities in an SAP environment – for doing comparative metrics and quick estimations – you can use the group currency. Since our example entity is based out of the USA, then the USD would almost certainly be the group currency. The group currency is set at the client and is consistent across all company codes. You can see the configuration below.
Tying it all together
In the configuration, you specify which currencies are relevant for which company codes. Notice that you can have up to three currencies for the company code in addition to the document currency. That allows for inflation accounting and other currency types that we haven’t covered here. In this very standard setup, we have the first currency set as the company code currency (the local currency) and the second currency set as the group currency. That means, for any transaction, we’ll have a document currency, the currency of the legal entity, and the currency of the entire enterprise.
Now, when we post a document, we can see that each currency type is being calculated and tracked – even if we don’t explicitly enter it!
T-Codes, Config Paths, etc [ + ]
|2.||↑||Defined when you create the company code in SPRO->Enterprise Structure->Definition->Financial Accounting->Edit, Copy, etc Company Code|
|3.||↑||Basis can modify the client in SCC4|
|4.||↑||SPRO->Financial Accounting New->Financial Accounting Global Settings New->Ledgers->Ledger->Define Currencies of Leading Ledger|