GRIR FX Valuation Treatment

[former_member293658]

Hi Gurus,

We are running transaction F.05 (program SAPF100) to re-measure FX movements on our GL Accounts. We have chosen the option to 'Evaluate GR/IR Account'. We noticed that after the program had been executed the system performs an automatic reversal of the postings for the GRIR account on the first posting date of the new month.

Looking at the program documentation for SAPF100, it states the following in relation to the GRIR account:

Reset all valuation postings if the valuation does not affect the financial statements.

Always applies for GR/IR accounts

However, we do not understand why the program would reverse the entries on the GRIR account. Our accountants say that the GRIR account does display out on the Financial Statements and therefore any FX remeasurement on this account should display out on the Statements.

Could you please provide detailed logic or the business reasons about why the SAPF100 program performs an automatic reversal of GRIR Foreign Exchange transactions please?

Thanks for your help.

Michael Ryan.

[Former Member]

Hi,

This is standard functionality available in F.05, wherein the need for running the revaluation periodically (say every month) is met, so that reporting is done with the forex impact. As this is middle of the FY reporting, the system reverses the posting in the first of the subsequent month.

At the end of the period, when you need to make a permanent revaluation, there is a check box for Reverse postings, you need to uncheck that. You also need to check the boxes; Create Postings and bal. Sheet prep (this one is optional, though recommended for year end). These postings will then not be reversed.

Trust this helps.

Cheers..

[former_member293658]

Hi Neeraj,

I understand that it is standard that the system reverses the posting for the GRIR account. But why does it reverse this for the GRIR account and not reverse for other GL accounts valuated in the same run? What is special about the GRIR account that it reverse at the start of each noew month whereas the other GL accounts do not reverse?

We don't understand why the GRIR account should reverse while other GL accounts do no.

Thanks for your help.

Michael

[Former Member]

Ok got you...

GR/IR accounts do not form a part of the financial statement, thus reval makes sense only for reporting purposes.

The reval of these accounts happen at the PO currency, as GR/IR accounts are maintained only in local currency. What this means is that for other items, reval happens when document currency is different than local curr and valuation change is stored for these items. There is no valuation stored for GR/IR items and on clearing of items in the GR/IR account do not reverse or set off the valuation diff, as there in no foreign currency involved in GR/IR clearing.

Thus reval for these accounts will always reverse, whatever be your selections.

Cheers...

[former_member293658]

Hi Neeraj,

Thank you for your help on this!!

I don't think I understand fully what you mean. Based on your reply I understand:

The GRIR account is flagged 'Only Balances in Local Currency'.

Therefore, this means all items posted on the GRIR account will be in the local company code currency only.

The local company code currency is the same as PO currency..?

As the items on the GRIR account are posted in local currency there will never be any FX Revaulation from document/transaction curreny to local currency because they will alwyas be the same currency.

Am I correct on the points above?

However, there will be a translation from local (company code) currency to Group (Consolidated Group Head Company).

So why is this revaluation reversed? You say that the GRIR is only Relavued for 'reporting purposes' but has no effect on teh Financial Statements. Why is the revaluation from local to group currency not relevant here?

Thanks again for your guidnace to try to understand this.

Regards

Michael